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($)
                       ----               --------   -------        -----------
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, 2000             11.25       9.00              --
July 1, 1999 to September 30, 1999         10.75      10.00             .08
October 1, 1999 to December 31, 1999       10.50      10.00              --
January 1, 2000 to March 31, 2000          15.00      10.00              --
April 1, 2000 to June 30, 2000             11.25      10.13              --

         The number of  shareholders  of record of common stock as of the record
date of  September 1, 2000,  was  approximately  222.  This does not reflect the
number of persons or entities who held stock in nominee or "street" name through
various  brokerage  firms.  At  September  1, 2000,  there were  302,684  shares
outstanding. The Company's ability to pay dividends to stockholders is dependent
upon the dividends it 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

                                       2
<PAGE>
liquidation  account  established in connection with the Conversion,  or (2) the
regulatory capital requirements imposed by the OTS.

Selected Financial Ratios and Other Data

<TABLE>
<CAPTION>
                                                                 For the Years Ended
                                                                       June 30,
                                                                 --------------------
                                                                  2000        1999
                                                                 --------    --------
<S>                                                             <C>       <C>
Return on average assets
  (net income divided by average total assets) ...........          .58%       .31%

Return on average equity
  (net income divided by average equity) .................         5.05%      2.56%

Average equity to average assets ratio
  (average equity divided by average total assets) .......        11.52%     12.03%

Equity to assets at period end ...........................        11.92%     11.57%

Dividend payout ratio
  (dividends declared per share divided by net income
   per share) ............................................         9.09%      9.76%

Net interest rate spread .................................         2.55%      2.25%

Net yield on average interest-earnings assets ............         3.12%      2.96%

Non-performing loans to total assets .....................          .75%        --

Non-performing loans to total loans ......................         1.64%        --

Allowance for loan losses to non-performing assets .......        50.00%        --

Book value per share .....................................     $  16.30   $  15.29

</TABLE>


                                       3
<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 Savings 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  noninterest
expenses,  such as compensation and employee benefits,  noninterest 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  one  percent to three  percent  (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, 2000.

                                       4
<PAGE>

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

         +300bp                     4.14%                        -598bp

         +200bp                     6.22%                        -390bp

         +100bp                     8.23%                        -188bp

            0bp                    10.11%                           0bp

         -100bp                    11.40%                         129bp

         -200bp                    11.70%                         159bp

         -300bp                    11.43%                         131bp

-------------
(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.

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 remained relatively unchanged at $41.4 million at June
30, 2000 and 1999.  While total  consolidated  assets did not change,  net loans
increased  by  $1.9  million  and  investments  and  mortgage-backed  securities
increased  by $260,000  which was offset by a $2.2  million  decline in cash and
cash equivalents. The decline in cash and cash equivalents was used to fund loan
and investment growth.

Deposits  decreased  $665,000,  or 1.9 %, to $34.6  million  at June  30,  2000.
Savings  accounts  declined  by $680,000  and  certificate  of deposit  accounts
declined by $252,000 while  noninterest-bearing  checking accounts  increased by
$268,000.  We operate in a highly competitive market with other larger financial
institutions as well as brokerage firms, mutual funds, and insurance  companies.
While the 2000 period end levels of deposits are below that of 1999, the average
balances  have  increased in all deposit  categories.  We will continue to offer
customers competitive deposit products with lower service charge costs than many
of our competitors to promote continued deposit growth.

                                       5
<PAGE>
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
have been no tax equivalent adjustments made to yields.

<TABLE>
<CAPTION>
                                                              For the Year Ended June 30,
                                    ------------------------------------------------------------------------------

                                                     2000                                    1999
                                    ---------------------------------------  ---------------------------------------
                                          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                   $     18,532  $     1,468     7.92%     $    16,762   $     1,323      7.89%

  Investment securities                    18,779        1,230     6.59           16,391         1,033      6.30

  Other interest-earning assets             1,761           83     4.71            4,511           301      6.67
                                          -------      -------                   -------        ------
Total interest-earning assets              39,072        2,781     7.20           37,664         2,657      7.06

Noninterest-earning assets                  2,541                                  1,891
                                          -------                                 ------
Total assets                         $     41,613                            $    39,555
                                           ======                                 ======
Interest-bearing liabilities:

  Passbook and club accounts         $     10,763  $       321     2.98%     $    10,360   $       330      3.18%

  Certificates of deposit                  21,036        1,132     5.38           20,401         1,135      5.56

  Other interest-bearing liabilities        1,822          110     6.04            1,000            62      6.17
                                           ------        -----                    ------        ------
Total interest-bearing liabilities         33,621        1,563     4.65           31,761         1,527      4.81

Noninterest-bearing liabilities             3,197                                  3,020
                                          -------                                 ------
Total liabilities                          36,818                                 34,781
                                          -------                                 ------
Stockholders' equity                        4,795                                  4,774
                                          -------                                 ------
Total liabilities and
  stockholders' equity               $     41,613                            $    39,555
                                           ======                                 ======
  Net interest income                              $     1,218                             $     1,130
                                                         =====                                   =====
Interest rate spread                                               2.55%                                    2.25%
                                                                   ====                                     ====
Net yield on interest-earning
  assets                                                           3.12%                                    2.96%
                                                                   ====                                     ====
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                                   116.21%                                  118.59%
                                                                 ======                                   ======
</TABLE>
                                                                   6
<PAGE>
Rate/Volume Analysis

The table  below  sets  forth  information  regarding  our  interest  income and
interest expenses for the years ended June 30, 2000 and 1999. 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).  Increases and  decreases due to both rate and volume,  which cannot be
separated,  have been allocated  proportionally  to the change due to volume and
the change due to rate.

                                                         Year Ended June 30,
                                                 -------------------------------
                                                           2000 vs. 1999
                                                 -------------------------------
                                                      Increase (Decrease)
                                                              Due to
                                                 -------------------------------
                                                 Volume        Rate        Net
                                                 ------        ----        ---
                                                          (In thousands)
Interest income:

  Loans receivable                                $ 140       $   5       $ 145

  Investment securities                             150          47         197

  Other interest-earning assets                    (183)        (35)       (218)
                                                  -----       -----       -----
Total interest-earning assets                     $ 107       $  17       $ 124
                                                  =====       =====       =====

Interest expense:

  Passbook and club accounts                      $  13       $ (22)      $  (9)

  Certificates of deposit                            35         (38)         (3)

  Other liabilities                                  51          (3)         48
                                                  -----       -----       -----
Total interest-bearing liabilities                $  99       $ (63)      $  36
                                                  =====       =====       =====

Change in net interest income                     $   8       $  80       $  88
                                                  =====       =====       =====


Operating Results

Net Income.  Net income  increased  $120,000 or 98.1%,  to $242,000 for the year
ended June 30,  2000,  as compared to $122,000 for the year ended June 30, 1999.
This  increase  resulted  primarily  from  increases  of $88,000 in net interest
income and $24,000 in noninterest  income and a decrease in noninterest  expense
of $50,000, offset by an increase in income tax expense of $41,000.

                                       7
<PAGE>
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,  investments 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.  Our net interest income  increased to $1,218,000
for the year ended June 30, 2000, as compared to  $1,130,000  for the year ended
June 30, 1999.

Interest on interest-earning assets increased $124,000, primarily as a result of
an increase of $1.4 million in the average balance of  interest-earning  assets.
Average loans and average  investments,  including  mortgage-backed  securities,
increased by $1.8 million and $2.4 million,  respectively.  These increases were
offset   by   a   decrease   in   other   interest-earning   assets,   primarily
interest-bearing  deposits in other banks,  of $2.8 million.  Funds  received as
part of the initial stock  offering  were  invested  into loans and  investments
during the later part of fiscal  1999.  There was also a slight  increase in the
net  yield on  earning  assets of 14 basis  points  as a result  of  reinvesting
short-term  liquid assets into longer-term  loans and investments.  See "Average
Balance Sheet" for fuller detail.

Interest on  interest-bearing  liabilities  increased  $36,000,  primarily  as a
result of an increase in average  interest-bearing  liabilities of $1.9 million.
This was coupled with a slight decline in the average costs of  interest-bearing
liabilities of 16 basis points. See "Average Balance Sheet" for fuller detail.

Provision for Loan Losses.  There was no provision for loan losses for the years
ended June 30, 2000 and 1999. At June 30, 2000,  we had $310,000  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 a 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.

Noninterest  Income.   Noninterest  income  consists  substantially  of  service
charges,  fees on  deposit  accounts,  and net  gains or  losses  from  sales of
securities and foreclosed real estate.  Noninterest income increased $23,600, or
11.4 %, to $231,100 for the year ended June 30, 2000 from  $207,500 for the year
ended June 30, 1999. In fiscal 2000,  net gains on sales of securities and other
real estate owned decreased $8,200 and $18,800, respectively.  Other noninterest
income increased by $51,600, primarily the result of increased value in the cash
surrender value of the bank owned life insurance purchased in 1999 of $39,000.

Noninterest  Expense.  Our  noninterest  expense  decreased  $49,700,  or 4.2 %,
primarily due to a decline in compensation and benefits expense of $50,400.  The
decline in  compensation  and benefits  expense is due to a reduction in pension
expense based on actuarial  calculations  and a reduction in expense relating to
our employee  stock option plan and our  restricted  stock plan as a result of a
decline in the market value of our stock.

Income Tax Expense.  Our income tax expense for the year ended June 30, 2000 was
$75,700  compared to $35,000 for the year ended June 30, 1999.  The increase was
mainly  attributable to higher levels of taxable income resulting from the above
mentioned factors.

                                       8
<PAGE>
Liquidity and Capital Resources

Our primary sources of funds include deposits,  loan repayments and prepayments,
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, 2000, our commitments to fund loans totaled  $145,000,
and we had unused lines of credit of $624,000.

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,  2000 was  $243,000  as  compared to $65,000 for the
year ended June 30, 1999.

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, 2000 totaled $2,161,500, which represents
a decrease of $2,643,500  from  $4,805,000  for June 30, 1999.  The decrease was
primarily  attributable  to less  investing  activity in fiscal 2000 compared to
1999.  During 1999,  management  restructured the investment  portfolio and used
$3,189,000 to fund the net increase in investment securities.

Net cash used for our financing  activities (i.e., cash receipts  primarily from
net  increases in deposits)  for the year ended June 30, 2000 was  $277,000,  as
compared to providing cash of $2,995,000 during fiscal 1999.

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.

                                       9
<PAGE>
SNODGRASS
Certified Public Accountants and Consultants



                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------

[LOGO]

Board of Directors and Stockholders
WSB Holding Company

We have  audited  the  accompanying  consolidated  balance  sheet of WSB Holding
Company and  subsidiaries  as of June 30,  2000,  and the  related  consolidated
statements of income,  changes in stockholders'  equity,  and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements based on our audit. The consolidated  financial statements
of WSB Holding  Company and  subsidiaries  as of June 30, 1999, and for the year
then ended,  were audited by other auditors  whose report,  dated July 30, 1999,
expressed an unqualified opinion of those financial statements.

We conducted our audit 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 audit provides 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, 2000, and the results of their  operations and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.


/s/S.R. Snodgrass, A.C.

Wexford, PA
July 20, 2000


<TABLE>
<CAPTION>
<S>                                                     <C>
S.R. Snodgrass, A.C.
1000 Stonewood Drive, Suite 200 Wexford, PA  15090-8399  Phone: 724-934-0344 Facsimile: 724-934-0345
</TABLE>
                                       10
<PAGE>
                               WSB HOLDING COMPANY
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                        June 30,
                                                                   2000            1999
                                                              ------------    ------------
<S>                                                          <C>             <C>
ASSETS
     Cash and due from banks                                  $    301,724    $    250,666
     Interest-bearing deposits in other banks                      915,437       3,161,518
                                                              ------------    ------------

     Cash and cash equivalents                                   1,217,161       3,412,184

     Investment securities available for sale                    2,209,267       2,497,658
     Investment securities held to maturity (market
       value of $14,033,582 and $13,571,429)                    14,894,110      13,978,012
     Mortgage-backed securities available for sale               1,116,035       1,412,097
     Mortgage-backed securities held to maturity (market
       value of $313,838 and $388,392)                             323,803         395,801
     Loans receivable (net of allowance for loan losses
       of $155,000 and $165,482)                                18,866,204      16,989,946
     Bank owned life insurance                                   1,214,106       1,162,749
     Accrued interest receivable                                   351,453         303,415
     Premises and equipment                                        916,305         986,468
     Federal Home Loan Bank stock                                  200,000         153,300
     Other assets                                                   85,904          64,927
                                                              ------------    ------------
         TOTAL ASSETS                                         $ 41,394,348    $ 41,356,557
                                                              ============    ============

LIABILITIES
     Deposits                                                 $ 34,585,942    $ 35,250,627
     Advances by borrowers for taxes and insurance                 247,127         227,241
     Federal Home Loan Bank borrowings                           1,500,000       1,000,000
     Accrued interest payable and other liabilities                128,353          94,361
                                                              ------------    ------------
         TOTAL LIABILITIES                                      36,461,422      36,572,229
                                                              ------------    ------------

COMMITMENTS AND CONTINGENCIES                                            -               -

STOCKHOLDERS' EQUITY
     Preferred stock, par value $.10, 1,000,000 shares
       authorized; none issued and outstanding                           -               -
     Common stock, par value $.10 per share; 4,000,000
       shares authorized; 330,600 issued                            33,060          33,060
     Additional paid-in capital                                  2,994,998       2,994,026
     Retained earnings - substantially restricted                2,504,860       2,287,772
     Accumulated other comprehensive income (loss)                    (689)         29,929
     Unallocated shares held by Employee Stock
       Ownership Plan (ESOP)                                      (189,538)       (215,988)
     Unallocated shares held by Restricted Stock Plan (RSP)        (98,023)       (139,679)
     Treasury stock (27,916 and 17,666 shares at cost)            (311,742)       (204,792)
                                                              ------------    ------------
         TOTAL STOCKHOLDERS' EQUITY                              4,932,926       4,784,328
                                                              ------------    ------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 41,394,348    $ 41,356,557
                                                              ============    ============

</TABLE>

See accompanying notes to the consolidated financial statements.

                                       11
<PAGE>
                               WSB HOLDING COMPANY
                        CONSOLIDATED STATEMENT OF INCOME


                                                       Year Ended June 30,
                                                         2000      1999
                                                      ----------   ----------
INTEREST INCOME
     Loans receivable                                 $1,467,624   $1,322,470
     Interest-bearing deposits in other banks             83,156      300,701
     Investment securities
        Taxable                                        1,183,839    1,010,384
        Exempt from federal income tax                    45,613       22,959
                                                      ----------   ----------
        Total interest income                          2,780,232    2,656,514
                                                      ----------   ----------
INTEREST EXPENSE
     Deposits                                          1,453,375    1,464,853
     FHLB borrowings                                     109,536       61,723
                                                      ----------   ----------
        Total interest expense                         1,562,911    1,526,576
                                                      ----------   ----------

NET INTEREST INCOME                                    1,217,321    1,129,938

     Provision for loan losses                                 -            -
                                                      ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES    1,217,321    1,129,938
                                                      ----------   ----------
NONINTEREST INCOME
     Service fees on deposit accounts                     43,770       44,686
     Investment securities gains, net                     63,556       71,787
     Gain on sale of other real estate owned               6,727       25,555
     Other                                               117,095       65,486
                                                      ----------   ----------
        Total noninterest income                         231,148      207,514
                                                      ----------   ----------
NONINTEREST EXPENSE
     Compensation and employee benefits                  517,193      567,592
     Occupancy and equipment                             170,616      166,757
     Federal insurance premium                            27,397       31,451
     Data processing                                     141,830      141,037
     Professional services                                94,032      110,536
     Other                                               179,393      162,767
                                                      ----------   ----------
        Total noninterest expense                      1,130,461    1,180,140
                                                      ----------   ----------

     Income before income taxes                          318,008      157,312
     Income tax expense                                   75,700       35,000
                                                      ----------   ----------

NET INCOME                                            $  242,308   $  122,312
                                                      ==========   ==========
EARNINGS PER SHARE:

        Basic                                         $     0.89   $      0.41
        Diluted                                       $     0.89   $      0.41

See accompanying notes to the consolidated financial statements.

                                       12

<PAGE>
                               WSB HOLDING COMPANY
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                              Accu-
                                                              mulated
                                                              Other
                                                              Compre-    Unallocated  Unallocated                Total
                                    Additional                hensive      Shares         Shares                 Stock   Compre-
                         Common      Paid-in       Retained   Income       Held by        Held by    Treasury    holders' hensive
                         Stock       Capital       Earnings   (Loss)        ESOP           RSP        Stock      Equity  Income
                        -------  -------------  -----------  ---------  ------------  ------------  --------- ---------- --------
<S>                    <C>      <C>            <C>          <C>        <C>           <C>          <C>        <C>         <C>
 Balance, June 30, 1998 $33,060  $   2,989,212  $ 2,179,378  $ 47,629   $  (242,438)  $  (197,864) $ (19,431) $4,789,546

 Net income                                         122,312                                                      122,312  $122,312
 Other comprehensive
   income:
   Unrealized
     loss on available
     for sale securities,
     net of
     reclassification
     adjustment,
     net of tax
     benefit $9,118                                           (17,700)                                           (17,700)  (17,700)
                                                                                                                           -------
 Comprehensive income                                                                                                     $104,612
                                                                                                                          ========
 ESOP shares released                    4,814                               26,450                               31,264
 RSP shares released                                                                       58,185                 58,185
 Cash dividends ($.04
 per share)                                         (13,918)                                                     (13,918)
 Purchase treasury stock                                                                            (185,361)   (185,361)
                        -------  -------------  -----------  --------  ------------  ------------  ---------  ----------
 Balance, June 30, 1999  33,060      2,994,026    2,287,772    29,929      (215,988)     (139,679)  (204,792)  4,784,328

 Net income                                         242,308                                                      242,308  $242,308
 Other comprehensive
   income:
   Unrealized
     loss on available
     for sale securities
     net of
     reclassification
     adjustment, net of
     tax benefit of
     $15,773                                                  (30,618)                                           (30,618)  (30,618)
                                                                                                                          --------
 Comprehensive income                                                                                                     $211,690
                                                                                                                          ========
 ESOP shares released                      972                               26,450                               27,422
 RSP shares released                                                                       41,656                 41,656
 Cash dividends
 ($.08 per share)                                   (25,220)                                                     (25,220)
 Purchase treasury stock                                                                            (106,950)   (106,950)
                        -------  -------------  -----------  --------  ------------  ------------  ---------  ----------
 Balance, June 30, 2000 $33,060  $   2,994,998  $ 2,504,860  $   (689) $   (189,538) $    (98,023) $(311,742) $4,932,926
                        =======  =============  ===========  ========  ============  ============  =========  ==========

                                                                            2000          1999
                                                                       ------------  ------------
 Components of comprehensive income:
     Change in net unrealized gain (loss) on investment securities
       available for sale                                              $     11,329  $     29,679
     Net realized gains included in net income,
       net of taxes $21,609 and $24,408                                     (41,947)      (47,379)
                                                                       ------------  ------------
 Total                                                                 $    (30,618) $    (17,700)
                                                                       ============  ============
</TABLE>
See accompanying notes to the consolidated financial statements.

                                                                 13
<PAGE>
                               WSB HOLDING COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                     Year Ended June 30,
                                                                     2000            1999
                                                                ------------    ------------
<S>                                                            <C>             <C>
OPERATING ACTIVITIES
     Net income                                                 $    242,308    $    122,312
     Adjustments to reconcile net income to
       net cash provided by operating activities:
         Depreciation                                                 76,585          62,000
         Amortization of premium and discount on investments            (431)        (39,046)
         Investment securities gains, net                            (63,556)        (71,787)
         Deferred income taxes                                         5,538          11,541
         Increase in accrued interest receivable                     (48,038)        (75,240)
         Amortization of ESOP and RSP unearned compensation           69,078          72,919
         Gain on sale of other real estate owned                      (6,727)        (25,555)
         Other, net                                                  (31,300)          7,529
                                                                ------------    ------------
         Net cash provided by operating activities                   243,457          64,673
                                                                ------------    ------------
INVESTING ACTIVITIES Investments available for sale:
         Purchases                                                  (658,851)     (6,736,933)
         Proceeds from sales                                         836,380       1,319,329
         Maturities and repayments                                   380,582       4,841,654
     Investment held to maturity:
         Purchases                                                (1,100,000)    (15,143,656)
         Maturities and repayments                                   256,331      12,437,311
     Net increase in loans receivable                             (1,895,783)       (774,225)
     Purchase of life insurance                                            -      (1,150,000)
     Proceeds from sale of other real estate owned                    26,252         432,831
     Purchase of premises and equipment, net                          (6,422)        (31,300)
                                                                ------------    ------------
         Net cash used for investing activities                   (2,161,511)     (4,804,989)
                                                                ------------    ------------
FINANCING ACTIVITIES
     Net increase (decrease) in deposits                            (664,685)      3,383,022
     Net increase in advances by borrowers
       for taxes and insurance                                        19,886           3,393
     Net increase in short-term FHLB borrowings                    1,500,000               -
     Repayment of long-term FHLB borrowings                       (1,000,000)              -
     Common stock aquired by RSP                                           -        (192,180)
     Purchase of treasury stock                                     (106,950)       (185,361)
     Cash dividends paid                                             (25,220)        (13,918)
                                                                ------------    ------------
         Net cash provided by (used for) financing activities       (276,969)      2,994,956
                                                                ------------    ------------
         Decrease in cash and cash equivalents                    (2,195,023)     (1,745,360)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                     3,412,184       5,157,544
                                                                ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                        $  1,217,161    $  3,412,184
                                                                ============    ============
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       14
<PAGE>
                               WSB HOLDING COMPANY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary  of  significant  accounting  and  reporting  policies  applied in the
presentation of the accompanying financial statements follows:

Nature of Operations and Basis of Presentation
----------------------------------------------

WSB  Holding  Company  (the  "Company")  is a  Pennsylvania  corporation  and is
registered  under the Bank Holding  Company Act. The Company was organized to be
the holding  company of  Workingmens  Bank (the  "Bank").  The Company's and the
Bank's  principal  sources of revenue  emanate  from  interest  earnings  on its
investment  and  mortgage-backed  securities,  and mortgage  and  consumer  loan
portfolios  as well as a variety of deposit  services  provided to its customers
through two locations. The Company and the Bank are subject to regulation by the
Office of Thrift Supervision ("OTS").

The consolidated financial statements of the Company include the accounts of 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  transactions have been eliminated in consolidation.
The investment in the subsidiary on the parent company  financial  statements is
carried at the Company's equity in the underlying assets of the Bank.

The  accounting  principles  followed by the Company and the methods of applying
these principles conform with generally accepted accounting  principles and with
general  practice  within the  banking  industry.  In  preparing  the  financial
statements, management is required to make estimates and assumptions that affect
the reported  amounts of assets and liabilities as of the balance sheet date and
related  revenues  and  expenses  for the period.  Actual  results  could differ
significantly from those estimates.

Investment and Mortgage-backed Securities
-----------------------------------------

Investment  and  mortgage-backed  securities  are  classified  at  the  time  of
purchase,  based on  management's  intention and ability,  as securities held to
maturity or securities  available for sale. Debt  securities,  acquired with the
intent and  ability to hold to  maturity  are  stated at cost and  adjusted  for
amortization  of premium and accretion of discount,  which are computed  using a
level yield method and are recognized as adjustments of interest income. Certain
other debt and equity  securities  have been classified as available for sale to
serve principally as a source of liquidity.  Unrealized holding gains and losses
for  available  for sale  securities  are  reported as a separate  component  of
stockholders' equity, net of tax, until realized.  Realized securities gains and
losses are  computed  using the  specific  identification  method.  Interest and
dividends on investment securities are recognized as income when earned.

Common stock of the Federal  Home Loan Bank of  Pittsburgh  ("FHLB")  represents
ownership  in  an  institution   which  is   wholly-owned   by  other  financial
institutions.  This  equity  security  is  accounted  for at cost  and  reported
separately on the accompanying consolidated balance sheet.

Loans Receivable
----------------

Loans  receivable  are  stated  at their  unpaid  principal  amounts  net of the
allowance for loan losses. Interest on loans is recognized as income when earned
on the accrual method. Interest accrued on loans more than 90 days delinquent is
generally offset by a reserve for uncollected  interest and is not recognized as
income.

                                       15
<PAGE>



1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans Receivable (Continued)
----------------

The accrual of interest is generally  discontinued  when  management has serious
doubts about further  collectibility  of principal or interest,  even though the
loan may be currently  performing.  A loan may remain on accrual status if it is
in the process of collection  and is either  guaranteed or well secured.  When a
loan is placed on nonaccrual status,  unpaid interest is charged against income.
Interest  received on  nonaccrual  loans is either  applied to the  principal or
reported  as  interest  income  according  to  management's  judgment  as to the
collectibility of the principal.

Loan Origination Fees
---------------------

Loan origination and commitment fees and certain direct loan  origination  costs
are being deferred, and the net amount amortized as an adjustment of the related
loan's yield.  The Company is amortizing these amounts over the contractual life
of the related loans using the interest method.

Allowance for Loan Losses
-------------------------

The allowance for loan losses  represents the amount which management  estimates
is adequate to provide for potential losses in its loan portfolio. The allowance
method is used in providing  for loan losses.  Accordingly,  all loan losses are
charged to the  allowance,  and all recoveries are credited to it. The allowance
for loan losses is  established  through a provision for loan losses  charged to
operations.  The  provision  for loan losses is based on  management's  periodic
evaluation of individual  loans,  economic  factors,  past loan loss experience,
changes in the  composition  and  volume of the  portfolio,  and other  relevant
factors.  The estimates  used in  determining  the adequacy of the allowance for
loan losses,  including the amounts and timing of future cash flows  expected on
impaired loans, are particularly susceptible to changes in the near term.

A loan is  considered  impaired  when it is probable  that the borrower will not
repay  the  loan  according  to the  original  contractual  terms  of  the  loan
agreement.  Management has  determined  that first mortgage loans on one-to-four
family   properties   and  all  consumer   loans   represent   large  groups  of
smaller-balance  homogeneous  loans  that  are  to  be  collectively  evaluated.
Management  considers an insignificant  delay,  which is defined as less than 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  during the period of the  delay.  All loans  identified  as  impaired  are
evaluated  independently by management.  The Company  estimates credit losses on
impaired  loans  based on the present  value of expected  cash flows or the fair
value of the  underlying  collateral  if the loan  repayment is expected to come
from the sale or  operation  of said  collateral.  Impaired  loans,  or portions
thereof,  are  charged  off  when it is  determined  that a  realized  loss  has
occurred.  Until such time,  an  allowance  for loan  losses is  maintained  for
estimated  losses.  Cash receipts on impaired loans are applied first to accrued
interest receivable, unless otherwise required by the loan terms, except when an
impaired  loan is also a  nonaccrual  loan,  in which  case the  portion  of the
receipts related to interest is recognized as income.

Premises and Equipment
----------------------

Premises  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation is calculated using  straight-line and accelerated methods over the
useful lives of the related assets. Expenditures for maintenance and repairs are
charged to operations as incurred. Costs of major additions and improvements are
capitalized.

                                       16
<PAGE>

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Owned
-----------------

Real estate owned  acquired in settlement of foreclosed  loans is carried at the
lower of cost or fair value minus estimated cost to sell.  Valuation  allowances
for  estimated  losses are  provided  when the carrying  value  exceeds the fair
value.  Direct  costs  incurred on such  properties  are recorded as expenses of
current operations.

Income Taxes
------------

Deferred tax assets or liabilities are computed based on the difference  between
the financial statement and income tax basis of assets and liabilities using the
enacted  marginal tax rates.  Deferred income tax expenses or benefits are based
on the changes in the deferred tax asset or liability from period to period.

Earnings Per Share
------------------

The Company provides dual  presentation of basic and diluted earnings per share.
Basic  earnings per share is calculated  utilizing net income as reported in the
numerator and average shares outstanding in the denominator.  The computation of
diluted  earnings per share  differs in that the  dilutive  effects of any stock
options, warrants, and convertible securities are adjusted in the denominator.

Employee Benefit Plan
---------------------

The Bank sponsors a trusteed, defined benefit pension plan covering all eligible
employees. The Bank's funding policy is to make annual contributions, as needed,
based upon the funding formula developed by the plan's actuary.

Stock Options
-------------

The Company  maintains  a stock  option plan for the  directors,  officers,  and
employees.  When the exercise  price of the  Company's  stock options is greater
than or equal to the  market  price of the  underlying  stock on the date of the
grant,  no  compensation  expense  is  recognized  in  the  Company's  financial
statements. Pro forma net income and earnings per share are presented to reflect
the impact of the stock  option  plan  assuming  compensation  expense  had been
recognized based on the fair value of the stock options granted under the plan.

Comprehensive Income
--------------------

The Company is required to present comprehensive income in a full set of general
purpose  financial  statements for all periods  presented.  Other  comprehensive
income is comprised  exclusively  of unrealized  holding  gains  (losses) on the
available for sale securities  portfolio.  The Company has elected to report the
effects of other  comprehensive  income as part of the  Statement  of Changes in
Stockholders' Equity.

Cash Flow Information
---------------------

The Company has defined cash and cash  equivalents as those amounts  included in
the  balance  sheet  captions,  Cash and due  from  banks  and  Interest-bearing
deposits in other banks.

Cash  payments for  interest in 2000 and 1999 were  $1,559,667  and  $1,571,980,
respectively.  Cash  payments for income  taxes  amounted to $18,500 in 2000 and
$2,400 in 1999. The transfer of loans to other real-estate owned totaled $19,525
in 2000 and $103,626 in 1999.


                                       17
<PAGE>

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Pending Accounting Pronouncements
---------------------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments  and Hedging  Activities,"  as amended in June 1999 by SFAS No. 137,
"Accounting for Derivative  Instruments and Hedging  Activities-Deferral  of the
Effective Date of FASB Statement No. 133." The Statement provides accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments  embedded in other contracts,  by requiring the recognition of those
items as assets or liabilities in the statement of financial position,  recorded
at fair value.  Statement  No. 133  precludes a held to maturity  security  from
being designated as a hedged item;  however,  at the date of initial application
of this  Statement,  an entity is  permitted  to  transfer  any held to maturity
security  into the  available  for sale or trading  categories.  The  unrealized
holding gain or loss on such transferred securities shall be reported consistent
with the requirements of Statement No. 115,  "Accounting for Certain Investments
in Debt and Equity  Securities."  Such transfers do not raise an issue regarding
an entity's intent to hold other debt securities to maturity in the future. This
Statement  applies  prospectively for all fiscal quarters of all years beginning
after June 15, 2000.  Earlier  adoption is permitted for any fiscal quarter that
begins after the issue date of this Statement.

Reclassification of Comparative Amounts
---------------------------------------

Certain comparative account balances for the prior period have been reclassified
to conform to the current period classifications. Such reclassifications did not
affect net income or stockholders' equity.

2.    EARNINGS PER SHARE

There  are no  convertible  securities  which  would  affect  the  numerator  in
calculating  basic and  diluted  earnings  per share;  therefore,  net income as
presented on the Consolidated Statement of Income will be used as the numerator.
The following table sets forth a reconciliation  of the denominator of the basic
and diluted earnings per share computation.

                                                    2000              1999
                                               --------------  ----------------

Weighted-average common shares and
  common stock equivalents used to
  calculate basic earnings per share                 273,154           296,964

Additional common stock equivalents
  (stock options) used to calculate
  diluted earnings per share                               -                 -
                                               --------------  ----------------
Weighted-average common shares and
  common stock equivalents used
  to calculate diluted earnings per share            273,154           296,964
                                               ==============  ================




                                       18
<PAGE>

3.    INVESTMENT SECURITIES

The  amortized  cost  and  estimated  market  values  of  investment  securities
available for sale and held to maturity are summarized as follows:

<TABLE>
<CAPTION>

                                                            2000
                                      -------------------------------------------------
                                                      Gross        Gross      Estimated
                                         Amortized  Unrealized   Unrealized    Market
                                            Cost      Gains        Losses      Value
                                      ------------- ----------  -----------   ---------
<S>                                  <C>             <C>       <C>           <C>
Available for Sale
Obligations of state and
  political subdivisions              $     949,018   $      -  $   (85,173)  $     863,845
Corporate debt securities                   299,857          -       (7,471)        292,386
                                        ------------  --------  -----------   -------------
     Total debt securities                1,248,875          -      (92,644)      1,156,231

Mutual funds                                841,140    119,208            -         960,348
Federal National Mortgage
  Association common stock                   56,750          -       (4,562)         52,188
Federal Home Loan Mortgage
  Corporation preferred stock                45,945          -       (5,445)         40,500
                                        ------------  --------  -----------   -------------
               Total                  $   2,192,710   $119,208  $  (102,651)  $   2,209,267
                                        ============  ========  ===========   =============
Held to Maturity
U.S. Government agency
  securities                          $  14,794,110   $      -  $  (856,540)  $  13,937,570
Corporate debt securities                   100,000          -       (3,988)         96,012
                                        ------------  --------  -----------   -------------
               Total                  $  14,894,110   $      -  $  (860,528)  $  14,033,582
                                        ============  ========  ===========   =============

</TABLE>

                                       19

<PAGE>
3.    INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                            1999
                                      -------------------------------------------------
                                                     Gross       Gross      Estimated
                                       Amortized   Unrealized   Unrealized     Market
                                         Cost        Gains       Losses        Value
                                      -----------  -----------  ----------  -----------
<S>                                  <C>           <C>         <C>         <C>
Available for Sale
Obligations of state and
  political subdivisions              $   948,699   $       -   $(57,610)   $   891,089
Corporate debt securities                 299,571          64     (1,829)       297,806
                                       ----------   ---------   --------    -----------
     Total debt securities              1,248,270          64    (59,439)     1,188,895

Mutual funds                            1,021,022      98,370          -      1,119,392
Federal National Mortgage
  Association common stock                100,789       1,582          -        102,371
Federal Home Loan Mortgage
  Corporation preferred stock              82,699       4,301          -         87,000
                                       ----------   ----------  ---------   -----------
               Total                  $ 2,452,780   $ 104,317   $ (59,439)  $ 2,497,658
                                       ==========   =========   =========   ===========

Held to Maturity
U.S. Government agency
  securities                          $13,879,012   $       -   $(406,583)  $13,472,429
Certificates of deposit                    99,000           -           -        99,000
                                       ----------   ---------   ---------   -----------
               Total                  $13,978,012   $       -   $(406,583)  $13,571,429
                                       ==========   =========   =========   ===========
</TABLE>

The amortized cost and estimated  market value of investments in debt securities
at June 30, 2000, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
                                         Available for Sale         Held to Maturity
                                     -------------------------  --------------------------
                                                    Estimated                   Estimated
                                       Amortized     Market      Amortized       Market
                                          Cost       Value         Cost          Value
                                      -----------  ----------   -----------    -----------
<S>                                  <C>          <C>          <C>            <C>
     Due within one year              $        -   $        -   $         -    $         -
     Due after one year through
       five years                        548,482      519,620     3,098,732      2,989,918
     Due after five years through
       ten years                               -            -     4,870,719      4,630,561
     Due after ten years                 700,393      636,611     6,924,659      6,413,103
                                       ---------   ----------   -----------    -----------
                    Total             $1,248,875   $1,156,231   $14,894,110    $14,033,582
                                       =========   ==========   ===========    ===========

</TABLE>

Proceeds  from the sales of  investment  securities  available  for sale and the
gross  realized gains and losses on those sales for the years ended June 30, are
as follows:

                                              2000       1999
                                            --------   ----------

     Proceeds from sales                    $836,380   $1,319,329
     Gross gains                              67,573       71,787
     Gross losses                              4,017            -


                                       20
<PAGE>

4.    MORTGAGE-BACKED SECURITIES

The amortized  cost and  estimated  market value of  mortgage-backed  securities
available for sale and held to maturity are summarized as follows:
<TABLE>
<CAPTION>
                                                            2000
                                      -------------------------------------------------
                                                     Gross       Gross      Estimated
                                       Amortized   Unrealized   Unrealized     Market
                                         Cost        Gains       Losses        Value
                                      -----------  -----------  ----------  -----------
<S>                                <C>            <C>           <C>         <C>
Available for Sale
     Government National
        Mortgage Association        $    878,265   $    4,575    $(11,090)   $  871,750
     Federal National Mortgage
        Association                      200,713            -      (9,158)      191,555
     Federal Home Loan
        Mortgage Corporation              44,226            -         (50)       44,176
     Collateralized mortgage
        obligations                       10,432            -      (1,878)        8,554
                                    ------------   ----------    --------    ----------
                    Total           $  1,133,636   $    4,575    $(22,176)   $1,116,035
                                    ============   ==========    ========    ==========
Held to Maturity
     Collateralized mortgage
        obligations                 $    323,803   $        -    $ (9,965)   $  313,838
                                    ------------   ----------    --------    ----------
                    Total           $    323,803   $        -    $ (9,965)   $  313,838
                                    ============   ==========    ========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                            1999
                                      -------------------------------------------------
                                                     Gross       Gross      Estimated
                                       Amortized   Unrealized   Unrealized     Market
                                         Cost        Gains       Losses        Value
                                      -----------  -----------  ----------  -----------
<S>                                  <C>          <C>          <C>         <C>
Available for Sale
     Government National
        Mortgage Association          $ 1,072,996  $    8,794   $  (2,206)  $ 1,079,584
     Federal National Mortgage
        Association                       264,129           -      (5,421)      258,708
     Federal Home Loan
        Mortgage Corporation               53,684       1,160           -        54,844
     Collateralized mortgage
        obligations                        23,409           -      (4,448)       18,961
                                      -----------  ----------   ---------   -----------
                    Total             $ 1,414,218  $    9,954   $ (12,075)  $ 1,412,097
                                      ===========  ==========   =========   ===========
Held to Maturity
     Collateralized mortgage
        obligations                   $   395,801  $       10   $  (7,419)  $   388,392
                                      -----------  ----------   ---------   -----------
                    Total             $   395,801  $       10   $  (7,419)  $   388,392
                                      ===========  ==========   =========   ===========
</TABLE>

                                       21
<PAGE>



4.    MORTGAGE-BACKED SECURITIES (Continued)

The amortized cost and estimated market value of  mortgage-backed  securities at
June 30,  2000,  by  contractual  maturity,  are  shown  below.  Mortgage-backed
securities  provide for periodic  payments of  principal  and  interest.  Due to
expected repayment terms being  significantly less than the underlying  mortgage
loan pool contractual maturities,  the estimated lives of these securities could
be significantly shorter.

<TABLE>
<CAPTION>
                                        Available for Sale        Held to Maturity
                                      -----------------------  -----------------------
                                                  Estimated                  Estimated
                                      Amortized     Market      Amortized      Market
                                         Cost       Value         Cost         Value
                                      ----------  -----------   ---------   ---------
<S>                                  <C>          <C>          <C>         <C>
     Due within one year              $        -   $        -   $       -   $       -
     Due after one year through
       five years                              -            -           -           -
     Due after five years through
       ten years                               -            -           -           -
     Due after ten years               1,133,636    1,116,035     323,803     313,838
                                       ----------  -----------  ----------   ---------

                    Total             $1,133,636   $1,116,035   $ 323,803   $ 313,838
                                       ==========  ===========  ==========   =========
</TABLE>

5.    LOANS RECEIVABLE

Loans receivable consist of the following:

                                                    2000        1999
                                                 ----------- -----------
Mortgage loans:
     1 - 4 family                                $11,620,137 $10,567,077
     Home equity                                   1,762,009   1,694,438
     Multi-family                                  3,251,524   2,483,369
     Commercial                                    1,211,944   1,297,790
                                                  ----------  ----------
                                                  17,845,614  16,042,674
                                                  ----------  ----------
Consumer loans:
     Share loans                                     377,725     429,091
     Other                                           797,865     683,663
                                                  ----------  ----------
                                                   1,175,590   1,112,754
                                                  ----------  ----------
                                                  19,021,204  17,155,428
Less:
     Allowance for loan losses                       155,000     165,482
                                                  ----------  ----------
                    Total                        $18,866,204 $16,989,946
                                                  ==========  ==========

The Company's  primary  business  activity is with customers  located within its
local trade area.  Commercial,  residential,  and  personal  loans are  granted.
Although the Company has a diversified loan portfolio at June 30, 2000 and 1999,
the repayment of these loans is dependent upon the local economic  conditions in
its immediate trade area.

                                       22
<PAGE>
5.    LOANS RECEIVABLE (Continued)

Activity  in the  allowance  for loan  losses for the years ended June 30, is as
follows:

                                             2000          1999
                                          ----------    ----------

     Balance, July 1,                     $  165,482    $  198,168

     Loans charged off                       (10,582)      (32,686)
     Recoveries                                  100             -
                                           ---------    ----------
     Net loans charged off                   (10,482)      (32,686)
     Provision for loan losses                     -             -
                                           ---------    ----------
     Balance, June 30,                    $  155,000    $  165,482
                                           =========    ==========

The  Company  had  nonaccrual  loans  of  $309,519  at June 30,  2000,  which in
management's opinion did not meet the definition of impaired. Interest income on
loans  would  have been  increased  by $9,830 if these  loans had  performed  in
accordance with their original terms. There were no nonaccrual loans at June 30,
1999.

6.    ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following:

                                                      2000         1999
                                                   ---------    ----------

     Investments                                   $ 262,564    $  226,158
     Loans receivable                                 88,889        77,257
                                                    ---------   -----------
                  Total                            $ 351,453    $  303,415
                                                    =========   ===========

7.    PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

                                                    2000          1999
                                                 ----------    ----------

     Land and improvements                       $  121,027    $  121,027
     Buildings and improvements                     998,184       995,487
     Furniture and equipment                        438,657       434,932
                                                  ---------    ----------
                                                  1,557,868     1,551,446
     Less accumulated depreciation                  641,563       564,978
                                                  ---------    ----------
                    Total                        $  916,305    $  986,468
                                                  =========    ==========

Depreciation  expense for the years ended June 30, 2000 and 1999 was $76,585 and
$62,000, respectively.

8.    FEDERAL HOME LOAN BANK

The Bank is a member of the FHLB  System.  As a member,  the Bank  maintains  an
investment in the capital stock of the FHLB of Pittsburgh, at cost, in an amount
not less than the greater of one percent of its  outstanding  home loans or five
percent of its outstanding notes payable to the FHLB of Pittsburgh as calculated
at December 31 of each year.

                                       23
<PAGE>
9.    DEPOSITS

Comparative details of deposits are as follows:

<TABLE>
<CAPTION>
                                                 2000                          1999
                                      -------------------------     --------------------------
                                        Amount           %             Amount           %
                                      ------------  -----------     ------------   -----------

<S>                                  <C>              <C>         <C>                <C>
Savings                               $10,154,570        29.37%     $10,835,383         30.74%
Noninterest-bearing checking            3,320,279         9.60        3,052,472          8.66
                                      -----------   ----------      -----------    ----------
                                       13,474,849        38.97       13,887,855         39.40
                                      -----------   ----------      -----------    ----------
Time certificates of deposit:
     3.00 - 3.99%                          59,854         0.17           58,432          0.17
     4.00 - 4.99%                       4,607,802        13.32        6,911,509         19.61
     5.00 - 5.99%                       8,058,691        23.30        7,765,369         22.03
     6.00 - 6.99%                       8,353,051        24.15        6,200,306         17.59
     7.00 - 7.99%                          31,695         0.09          427,156          1.21
                                      -----------   ----------      -----------    ----------
                                       21,111,093        61.03       21,362,772         60.60
                                      -----------   ----------      -----------    ----------
               Total                  $34,585,942       100.00%     $35,250,627        100.00%
                                      ===========   ==========      ===========    ==========
</TABLE>

The aggregate  amount of certificates of deposit with a minimum  denomination of
$100,000 was $1,552,103 at June 30, 2000. Deposits in excess of $100,000 are not
federally insured.

The scheduled maturities of time certificates of deposit as of June 30, 2000 are
as follows:

     Within one year                                           $ 11,382,403
     Beyond one year but within three years                       7,966,253
     Beyond three years but within five years                     1,762,437
     Beyond five years                                                    -
                                                                -----------
              Total                                            $ 21,111,093
                                                                ===========

Interest expense by deposit category for the years ended June 30, is as follows:

                                                      2000         1999
                                                   ----------    ----------

     Savings                                       $  320,918    $  329,639
     Time certificates of deposit                   1,132,457     1,135,214
                                                    ---------    ----------
              Total                                $1,453,375    $1,464,853
                                                    =========    ==========


                                       24
<PAGE>

10.   FEDERAL HOME LOAN BANK BORROWINGS

The Bank has the  capability to borrow funds through a credit  arrangement  with
the FHLB. The FHLB  borrowings are subject to annual  renewal,  incur no service
charges,  and are secured by a blanket security  agreement on certain investment
and mortgage-backed securities, qualifying residential mortgages, and the Bank's
investment  in FHLB stock.  At June 30,  2000,  the Bank's  remaining  borrowing
capacity with the FHLB was approximately $15 million.

Short-term Borrowings
---------------------

At June 30,  2000  the  Bank  had  outstanding  FHLB  short-term  borrowings  of
$1,500,000  at a rate  of  7.08  percent.  The  average  balance  of  short-term
borrowings outstanding during the year was $1,497,260 at an average rate of 6.10
percent.  The  maximum  amount  of  short-term  borrowings  outstanding  at  any
month-end during the year was $3,000,000.  The Bank had no short-term borrowings
during 1999.

Long-term Borrowings
--------------------

At June  30,  1999  the  Bank  had  outstanding  FHLB  long-term  borrowings  of
$1,000,000  maturing  on  October  25,  2001  bearing an  interest  rate of 5.78
percent. The Bank had no long-term borrowings outstanding at June 30, 2000.

11.   INCOME TAXES

The  components of the income taxes for the years ended June 30, are  summarized
as follows:

                                       2000          1999
                                     ----------   ---------
Current payable:
     Federal                         $  70,162    $  27,704
     State                                   -            -
                                      --------    ---------
                                        70,162       27,704

Deferred federal taxes                   5,538        7,296
                                      --------    ---------
                         Total       $  75,700    $  35,000
                                      ========    =========


                                       25

<PAGE>

11.   INCOME TAXES (Continued)

The  following  temporary  differences  gave rise to the net deferred tax assets
(liabilities):

                                                              2000       1999
                                                            --------   --------
Deferred tax assets:
     Loan origination fees, net                             $    294   $    530
     Allowance for loan losses                                52,700     26,403
     Accrued pension expense                                       -      2,068
     State net operating loss carryforward                    19,826     34,672
     Restricted stock plan accrued                            14,126      6,629
     Net unrealized loss on securities                           355          -
                                                            --------   --------
                    Total gross deferred tax assets           87,301     70,302
                    Less valuation allowance                  19,826     34,672
                                                            --------   --------
                          Net deferred tax assets             67,475     35,630
                                                            --------   --------
Deferred tax liabilities:
     Net unrealized gain on securities                             -     12,826
     Premises and equipment                                   27,415     14,268
     Accrued interest receivable                              26,727     12,542
     Prepaid pension                                           9,696          -
                                                            --------   --------
                    Total gross deferred tax liabilities      63,838     39,636
                                                            --------   --------
                          Net deferred assets               $  3,637   $ (4,006)
                                                            ========   ========

The  reconciliation  of the federal  statutory rate and the Company's  effective
income tax rate is as follows:

                                           2000                    1999
                                   ---------------------   ---------------------
                                                 % of                    % of
                                                Pre-tax                 Pre-tax
                                      Amount    Income       Amount     Income
                                   ----------  ---------    ---------  ---------
Federal income tax at
  statutory rate                    $ 108,123    34.0 %     $ 53,486      34.0 %
Tax-exempt income                     (15,508)   (4.9)       (13,564)     (8.6)
Other                                 (16,915)   (5.3)        (4,922)     (3.1)
                                     ---------  -----       --------   -------
     Actual tax benefit
       and effective rate           $  75,700    23.8 %     $ 35,000      22.3 %
                                     =========  =====       ========   =======

The Company is subject to the Pennsylvania Mutual Thrift Institution's tax which
is calculated at 11.5 percent of earnings based on generally accepted accounting
principles  with  certain  adjustments.   At  June  30,  2000  the  Company  has
Pennsylvania net operating loss  carryforwards  of approximately  $172,000 which
will begin to expire in fiscal  year June 30,  2001.  The  deferred  tax benefit
associated with this loss carryforward is $19,826 and a valuation  allowance has
been established at 100 percent.

                                       26
<PAGE>

12.   EMPLOYEE BENEFITS

Defined Benefit Plan
--------------------

The  Bank   sponsors  a  trusteed,   defined   benefit   pension  plan  covering
substantially all employees and officers. The plan calls for benefits to be paid
to eligible  employees at retirement  based primarily upon years of service with
the Bank and compensation rates near retirement. The Bank's funding policy is to
make annual  contributions as needed based upon the funding formula developed by
the plan's actuary.

The following table sets forth the change in plan assets and benefit  obligation
at June 30:

                                                         2000           1999
                                                       ---------      ---------

Plan assets at fair value, beginning of year           $ 474,418      $ 391,058
Actual return (loss) on plan assets                       64,560         25,675
Employer contribution                                     78,946         57,685
Benefits paid                                             (5,524)             -
                                                       ---------      ---------
Plan assets at fair value, end of year                   612,400        474,418
                                                       ---------      ---------

Benefit obligation, beginning of year                    588,818        537,803
Service cost                                              44,757         43,145
Interest cost                                             41,014         41,146
Actuarial adjustments                                    (22,496)       (33,276)
Benefits paid                                             (5,524)             -
                                                       ---------      ---------
Benefit obligation, end of year                          646,569        588,818
                                                       ---------      ---------

Funded status                                            (34,169)      (114,400)
Transition adjustment                                        944          1,066
Unrecognized net loss from past experience
  different from that assumed                             62,142        115,143
                                                       ---------      ---------

Prepaid pension liability                              $  28,917      $   1,809
                                                       =========      =========

The plan assets are invested  primarily in stocks and bonds under the control of
the plan's trustees as of June 30, 2000.

Assumptions used in the accounting for the defined benefit plan are as follows:

                                                      2000                1999
                                                -------------         ----------
     Discount rate                                    7.00%               7.00%
     Expected return on plan assets                   7.50%               7.50%
     Rate of compensation increase                    4.00%               4.00%

The plan utilizes the  straight-line  method of  amortization  for  unrecognized
gains and losses.

                                       27
<PAGE>

12.   EMPLOYEE BENEFITS (Continued)

Defined Benefit Plan (Continued)
--------------------

Net periodic pension cost includes the following components:

                                                           2000          1999
                                                         --------      --------

Service cost of the current period                       $ 44,757      $ 43,145
Interest cost on projected benefit obligation              41,014        41,146
Actual (return) loss on plan assets                       (65,560)      (25,675)
Net amortization and deferral                              30,627         2,258
                                                         --------      --------
Net periodic pension cost                                $ 50,838      $ 60,874
                                                         ========      ========



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  certain  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.
The accumulated benefit was $16,199 at June 30, 2000.

Employee Stock Ownership Plan ("ESOP")
--------------------------------------

The Company has an ESOP for the benefit of  employees  who meet the  eligibility
requirements which include having completed one year of service with the Company
or its subsidiary and attained age 21. The ESOP trust purchased 26,450 shares of
common stock since the date of  conversion  with  proceeds  from a loan from the
Company.  The Bank  makes  cash  contributions  to the ESOP on an  annual  basis
sufficient to enable the ESOP to make required loan payments to the Company. The
loan bears an interest rate of 8.50 percent with interest payable  quarterly and
principal  payable in equal  annual  installments  over ten  years.  The loan is
secured by the unallocated shares of stock.

As the debt is repaid,  shares are released  from  collateral  and  allocated to
qualified  employees  based on the  proportion of debt service paid in the year.
Accordingly,  the shares pledged as collateral are reported as unallocated  ESOP
shares  in  the  consolidated   balance  sheet.  As  shares  are  released  from
collateral, the Company reports compensation expense equal to the current market
price of the shares,  and the shares become  outstanding  for earnings per share
computations.  Compensation expense for the ESOP was $27,422 and $31,264 for the
years ended June 30, 2000 and 1999, respectively.

                                       28
<PAGE>

12.  EMPLOYEE BENEFITS (Continued)

Employee Stock Ownership Plan (Continued)
-----------------------------

The following table presents the components of the ESOP shares:

                                                 2000         1999
                                               -------      -------

Allocated shares                                 5,951        4,841

Shares released for allocation                   1,543            -

Shares distributed                                   -            -

Unreleased shares                               18,956       21,609
                                               -------      -------

Total ESOP shares                               26,450       26,450
                                               =======      =======

Fair value of unreleased shares               $213,255     $216,090
                                               =======      =======

Stock Option Plan
-----------------

During  1998,  the  Board  of  Directors  adopted  a stock  option  plan for the
directors,  officers, and employees. An aggregate of 33,060 shares of authorized
but unissued common stock of the Company were reserved for future issuance under
this  plan.  The stock  options  typically  have  expiration  terms of ten years
subject to certain extensions and terminations.  The per share exercise price of
a stock  option  shall be, at a  minimum,  equal to the fair value of a share of
common stock on the date the option is granted.

Qualified  stock  options  were  granted  for the  purchase  of  21,820  shares,
exercisable  at the market price of $15.75.  The recipients of the stock options
vest over a  five-year  period.  At June 30,  2000,  there  were  11,240  shares
available for future grant.

The following table presents share data related to the outstanding options:

                                        Weighted-                Weighted-
                                         average                  average
                                        Exercise                  Exercise
                               2000      Price         1999         Price
                           ----------- ----------   ---------   -----------
     Outstanding, July 1   $   21,820       15.75   $  21,820        15.75
          Granted                   -           -           -            -
          Exercised                 -           -           -            -
          Forfeited                 -           -           -            -
                           ----------               ---------

     Outstanding, June 30      21,820       15.75      21,820        15.75
                           ==========               =========

                                       29


<PAGE>

12.   EMPLOYEE BENEFITS (Continued)

Stock Option Plan (Continued)
-----------------

The following table summarizes the  characteristics of stock options outstanding
at June 30, 2000:

                                 Outstanding                  Exercisable
                     -----------------------------------  ----------------------
                                              Average                  Average
                                   Average    Exercise                Exercise
    Exercise Price      Shares       Life      Price        Shares      Price
    --------------
                     ----------   ---------  -----------    -------  -----------
        $ 15.75         21,820       7.7      $ 15.75        9,819     $ 15.75

For purposes of computing  pro forma  results,  the Company  estimated  the fair
values of stock options using the Black-Scholes  option pricing model. The model
requires the use of  subjective  assumptions  which can  materially  effect fair
value  estimates.  Therefore,  the pro forma results are estimates of results of
operations as if compen-sation  expense had been recognized for the stock option
plans.  The fair value of each stock  option  granted  was  estimated  using the
following weighted-average assumptions for grants in 2000: (1) expected dividend
yield of 0.8 percent;  (2) risk-free interest rate of 5.45 percent; (3) expected
volatility of 15.0 percent; and (4) expected life of 8.75 years.

The Company  accounts for its stock option plans under provisions of APB Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
Under this Opinion, no compensation  expense has been recognized with respect to
the plans  because the exercise  price of the Company's  employee  stock options
equals the market price of the underlying stock on the grant date.

Had  compensation  expense  for  the  stock  option  plans  been  recognized  in
accordance with the fair value  accounting  provisions of Statement of Financial
Accounting  Standards No. 123,  "Accounting for Stock-based  Compensation,"  net
income  applicable  to common  stock,  basic and  diluted  net income per common
share, for the years ended June 30 would have been as follows:

                                                    2000               1999
                                                -----------         ---------

    Net income applicable to common stock:
       As reported                              $   242,308         $ 122,312
       Pro forma                                    236,036           107,661
    Basic net income per common share:
       As reported                              $      0.89         $    0.41
       Pro forma                                       0.86              0.36
    Diluted net income per common share:
       As reported                              $      0.89         $    0.41
       Pro forma                                       0.86              0.36

Restricted Stock Plan ("RSP")
-----------------------------

In 1998,  the Board of  Directors  adopted a RSP for  directors,  officers,  and
employees.  The  objective of this plan is to enable the Company and the Bank to
retain  its  corporate  directors,  officers,  and key  employees  who  have the
experience and ability necessary to manage these entities. Directors,  officers,
and key employees who are selected by members of a Board-appointed committee are
eligible to receive  benefits under the RSP. The  non-employee  directors of the
Company and the Bank serve as trustees  for the RSP and have the  responsibility
to invest all funds contributed by the Company to the Trust created for the RSP.

                                       30
<PAGE>

12.   EMPLOYEE BENEFITS (Continued)

Restricted Stock Plan ("RSP") (Continued)
-----------------------------

In 1998, the Trust  purchased,  with funds  contributed  by the Company,  13,224
shares of the common stock of the Company,  of which 3,965 shares were issued to
directors,  4,892 shares were issued to officers and employees, and 5,027 shares
remain unissued as of June 30, 2000. Directors,  officers, and key employees who
terminate  their  association  with the Company  shall  forfeit the right to any
shares which were awarded but not earned.

The Company  granted a total of 8,857 shares of common stock in March 1998.  All
plan share awards  granted are earned at a rate of 20 percent one year after the
date of grant and 20 percent  annually  thereafter.  The unearned RSP shares are
excluded from stockholders' equity. The Company recognizes  compensation expense
in the  amount of fair value of the common  stock at the grant  date,  pro rata,
over the years  during  which the shares are payable and recorded as an addition
to the stockholders'  equity. Net compensation  expense attributable to the RSPs
amounted  to $41,656  and  $58,185  for the years  ended June 30, 2000 and 1999,
respectively.

13.   COMMITMENTS AND CONTINGENT LIABILITIES

Commitments
-----------

In the normal course of business,  there are various outstanding commitments and
contingent  liabilities  which are not reflected in the  accompanying  financial
statements. 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. Such
commitments  involve,  to varying degrees,  elements of credit and interest rate
risk in  excess  of the  amount  recognized  in the  financial  statements.  The
exposure to loss under these commitments is limited by subjecting them to credit
approval and monitoring procedures. The amount of collateral obtained, if deemed
necessary by the Company,  upon the extension of credit is based on management's
credit evaluation of the  counterparty.  Substantially all commitments to extend
credit are contingent upon customers  maintaining  specific credit  standards at
the time of the loan  funding.  Management  assesses the credit risk  associated
with  certain  commitments  to  extend  credit in  determining  the level of the
allowance for loan losses.  Since many of the commitments are expected to expire
without  being  drawn upon,  the total  contractual  amounts do not  necessarily
represent future funding requirements.

The off-balance sheet commitments were comprised of the following:

                                                       2000
                                                   ------------
     Commitments to extend credit:
         One-to-four family                       $    145,013
         Unfunded lines of credit                      624,204

All of the Company's  commitments to fund future  one-to-four family real estate
loans are fixed rates and at June 30, 2000, those rates ranged from 7.25 percent
to 8.25 percent.  The rates on unfunded lines of credit are indexed to the prime
lending rate.

Contingent Liabilities
----------------------

In the normal  course of  business,  the Company is  involved  in various  legal
proceedings  primarily  involving the collection of outstanding  loans.  None of
these  proceedings  are  expected  to have a  material  effect on the  financial
position or operations of the Company.

                                       31

<PAGE>



14. REGULATORY MATTERS

Dividend Restrictions
---------------------

The Bank is subject to a dividend  restriction which generally limits the amount
of dividends that can be paid by an OTS-chartered  bank. OTS regulations require
that the  Bank  give  the OTS 30 days  notice  of any  proposed  declaration  of
dividends to the Company,  and the OTS has the authority  under its  supervisory
powers to prohibit the payment of dividends by the Bank to the Company.

Regulatory Capital Requirements
-------------------------------

Federal regulations require the Company and the Bank to maintain minimum amounts
of capital.  Specifically,  each is required to maintain  certain minimum dollar
amounts  and ratios of Total and Tier I capital to  risk-weighted  assets and of
Tier I capital to average total assets.

In  addition  to  the  capital  requirements,   the  Federal  Deposit  Insurance
Corporation  Improvement  Act  ("FDICIA")  established  five capital  categories
ranging from "well  capitalized"  to "critically  undercapitalized."  Should any
institution  fail  to  meet  the  requirements  to  be  considered   "adequately
capitalized,"  it would become subject to a series of  increasingly  restrictive
regulatory actions.

As of June 30, 2000 and 1999, the Office of Thrift  Supervision  categorized the
Bank as well capitalized  under the regulatory  framework for prompt  corrective
action.  To be classified as a well  capitalized  financial  institution,  Total
risk-based,  Tier 1 risk-based,  Tier 1 Leverage  capital,  and Tangible  equity
capital ratios must be at least 10.0 percent,  6.0 percent, 5.0 percent, and 1.5
percent, respectively.

                                       32


<PAGE>

14. REGULATORY MATTERS (Continued)

Regulatory Capital Requirements (Continued)
-------------------------------

Actual capital levels of the Bank and minimum required levels are as follows:

<TABLE>
<CAPTION>
                                                 2000                          1999
                                    ---------------------------  -----------------------------
                                      Amount         Ratio            Amount           Ratio
                                    -----------   ----------     -----------------  ----------
<S>                               <C>                <C>          <C>                  <C>
Total Capital
  (to Risk-weighted Assets)
  -------------------------

Actual                              $ 4,238,006        23.7 %       $ 3,985,000          22.2 %
For Capital Adequacy Purposes         1,430,000         8.0           1,436,000           8.0
To Be Well Capitalized                1,787,500        10.0           1,795,000          10.0


Tier I Capital
  (to Risk-weighted Assets)
  -------------------------

Actual                              $ 4,083,006        22.8 %       $  3,819,000         21.3 %
For Capital Adequacy Purposes           715,000         4.0              718,000          4.0
To Be Well Capitalized                1,072,500         6.0            1,077,000          6.0


Core Capital
  (to Adjusted Assets)
  --------------------

Actual                              $ 4,083,006        10.1 %       $  3,819,000         10.1 %
For Capital Adequacy Purposes         1,220,831         4.0            1,549,000          4.0
To Be Well Capitalized                2,034,719         5.0            2,323,000          5.0


Tangible Capital
  (to Adjusted Assets)
  --------------------

Actual                              $ 4,083,006        10.1 %       $  3,819,000         10.1 %
For Capital Adequacy Purposes           610,416         1.5              567,178          1.5
To Be Well Capitalized                      N/A         N/A                  N/A          N/A

</TABLE>
                                       33
<PAGE>
15.   FAIR VALUE DISCLOSURE

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

<TABLE>
<CAPTION>
                                                  2000                          1999
                                      ----------------------------  ----------------------------
                                        Carrying         Fair         Carrying         Fair
                                         Value           Value         Value           Value
                                      -------------   ------------  -------------   ------------
<S>                                  <C>             <C>            <C>            <C>
Financial assets:
     Cash and due from banks,
        interest-bearing deposits
        in other banks, and
        certificates of deposit
        in other banks                $  1,217,161    $ 1,217,161    $ 3,412,184    $ 3,412,184
     Investment securities:
        Available for sale               2,209,267      2,209,267      2,497,658      2,497,658
        Held to maturity                14,894,110     14,033,582     13,978,012     13,571,429
     Mortgage-backed securities:
        Available for sale               1,116,035      1,116,035      1,412,097      1,412,097
        Held to maturity                   323,803        313,838        395,801        388,392
     Loans receivable                   18,866,204     18,491,204     16,989,946     17,315,681
     Bank owned life insurance           1,214,106      1,214,106      1,162,749      1,162,749
     Accrued interest receivable           351,453        351,453        303,415        303,415
     FHLB stock                            200,000        200,000        153,300        153,300
                                       ------------    -----------    -----------    -----------
        Total                         $ 40,392,139    $39,146,646    $40,305,162    $40,216,905
                                       ============    ===========    ===========    ===========

Financial liabilities:
     Deposits                         $ 34,585,942    $34,226,942    $35,250,627    $35,521,863
     Advances by borrowers
        for taxes and insurance            247,127        247,127        227,241        227,241
     Short-term borrowings               1,500,000      1,500,000              -              -
     Long-term borrowings                        -              -      1,000,000        989,605
     Accrued interest payable               20,660         20,660         17,416         17,416
                                       ------------    -----------    -----------    -----------
        Total                         $ 36,353,729    $35,994,729    $36,495,284    $36,756,125
                                       ============   ===========    ===========    ===========
</TABLE>


Financial  instruments are defined as cash, evidence of an ownership interest in
an entity,  or a contract  which  creates an  obligation  or right to receive or
deliver  cash or  another  financial  instrument  from/to  a  second  entity  on
potentially favorable or unfavorable terms.

Fair value is defined as the  amount at which a  financial  instrument  could be
exchanged  in a current  transaction  between  willing  parties  other than in a
forced  or  liquidation  sale.  If a  quoted  market  price is  available  for a
financial  instrument,  the estimated fair value would be calculated  based upon
the market price per trading unit of the instrument.

If no readily  available  market exists,  the fair value estimates for financial
instruments are based upon  management's  judgment  regarding  current  economic
conditions,  interest rate risk,  expected cash flows,  future estimated losses,
and other factors as  determined  through  various  option  pricing  formulas or
simulation modeling.  As many of these assumptions result from judgments made by
management  based upon estimates which are inherently  uncertain,  the resulting
estimated fair values may not be indicative of the amount realizable in the sale
of a particular financial instrument. In addition, changes in the assumptions on
which the estimated  fair values are based may have a significant  impact on the
resulting estimated fair values.

                                       34
<PAGE>
15.   FAIR VALUE DISCLOSURE (Continued)

As certain assets,  such as deferred tax assets and premises and equipment,  are
not  considered  financial  instruments,  the estimated  fair value of financial
instruments would not represent the full value of the Company.

The Company employed simulation modeling in determining the estimated fair value
of financial instruments for which quoted market prices were not available based
upon the following assumptions:

Cash and Due from Banks,  Interest-bearing  Deposits in Other Banks,  Bank Owned
--------------------------------------------------------------------------------
Life Insurance,  Accrued Interest Receivable,  FHLB Stock, Advances by Borrowers
--------------------------------------------------------------------------------
for Taxes and Insurance, Short-term Borrowings, and Accrued Interest Payable
--------------------------------------------------------------------------------

The fair value is equal to the current carrying value.

Investment and Mortgage-backed Securities
-----------------------------------------

The fair  value of these  securities  is equal to the  available  quoted  market
price. If no quoted market price is available, fair value is estimated using the
quoted market price for similar securities.

Loans Receivable and Deposits
-----------------------------

The fair value of loans is estimated by discounting  the future cash flows using
a simulation  model which estimates  future cash flows based upon current market
rates adjusted for prepayment risk and credit quality.  Savings,  checking,  and
money market  deposit  accounts are valued at the amount payable on demand as of
year-end.  Fair values for time deposits are estimated  using a discounted  cash
flow calculation that applies  contractual  costs currently being offered in the
existing portfolio to current market rates being offered for deposits of similar
remaining maturities.

Commitments to Extend Credit
----------------------------

These  financial  instruments  are generally not subject to sale,  and estimated
fair values are not readily  available.  The carrying value,  represented by the
net deferred fee arising from the  unrecognized  commitment  and the fair value,
determined by  discounting  the remaining  contractual  fee over the term of the
commitment  using fees currently  charged to enter into similar  agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded commitments are presented in Note 13.

                                       35