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 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.
During and for the year ended June 30, 1998, the Company did not pay nor declare
any dividends.


                       Date                    High ($)                Low ($)
                       ----                    --------                -------

August 27, 1997 to September 30, 1997           14.25                    10.00

October 1, 1997 to December 31, 1997            14.25                    13.75

January 1, 1998 to March 31, 1998               16.375                   14.25

April 1, 1998 to June 30, 1998                  17.00                    14.88


         The number of  shareholders  of record of common stock as of the record
date of  September 1, 1998,  was  approximately  241.  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, 1998,  there were  330,600  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
liquidation  account  established in connection with the Conversion,  or (2) the
regulatory capital requirements imposed by the OTS.

                                      -4-

<PAGE>

Selected Financial Ratios and Other Data

<TABLE>
<CAPTION>
                                                                 For the Years Ended
                                                                       June 30,                 
                                                                 --------------------                 
                                                                   1998 (%)  1997 (%) 
                                                                   --------  -------- 
<S>                                                               <C>      <C>   
Return on average assets
  (net income divided by average total assets) ............          .32     (0.38)

Return on average equity
  (net income divided by average equity) ..................         2.70     (5.86)

Average equity to average assets ratio
  (average equity divided by average total assets) ........        11.83      6.42

Equity to assets at period end ............................        12.54      6.04

Net interest rate spread ..................................         2.61      2.68

Net yield on average interest-earnings assets .............         3.25      3.07

Non-performing loans to total assets ......................          .79      2.34

Non-performing loans to total loans .......................         1.82      5.42

Allowance for loan losses to non-performing assets ........        65.91     25.86
</TABLE>


                                      -5-

<PAGE>


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

         Workingmen's  Bank (the  "Bank")  converted  from a  federal  chartered
mutual  savings  bank to a federal  chartered  stock  savings bank on August 27,
1998. In the  conversion,  330,600 shares of common stock of WSB Holding Company
(the "Company") were sold,  generating net proceeds after conversion expenses of
$3,012,535.  Of this amount,  $1,625,000 was used to purchase 100% of the common
stock of the Bank and $264,480 to fund the stock  purchase  made by the Employee
Stock Ownership Plan. The remainder was retained by the Company.

         The Bank Is principally  engaged in the business of accepting  deposits
from the general public and  originating  mortgage loans that are secured by one
to four family residential  properties located in its market area. The Bank also
originates  multi-family  and  non-residential  real estate  loans and  consumer
loans.

         The  Bank's  net  income is  dependent  primarily  on its net  interest
income,  which is the difference between interest income earned on its loans and
investments  and  interest  paid  on  interest  bearing   liabilities.   Lending
activities are  influenced by the demand for and supply of housing,  competition
among  lenders,  the  level of  interest  rates and the  availability  of funds.
Deposit flows and cost of funds are  influenced  by  prevailing  market rates of
interest,  primarily on competing investments,  account maturities and the level
of personal income and savings in the Bank's market area.

Asset and Liability Management

         The Bank's objective in its  asset/liability  management  program is to
manage liquidity and interest rate risk, so as 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.
The Bank, like many other thrift institutions,  is 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  the  Bank's  earnings.   The  Bank  is  reducing  this  exposure  by
diversifying  the loan portfolio to include more consumer loans.  Consumer loans
by their nature have shorter maturities.

         The Bank attempts to manage the interest rate it pays on deposits while
maintaining  a  stable  deposit  base  and  providing  quality  services  to its
customers.  The Bank has continued to rely primarily upon deposits at its source
of funds.  To the  extent  the Bank is unable  to  invest  these  funds in loans
originated  in the  Bank's  market  area,  it  will  continue  to  purchase  (i)
mortgage-backed securities and (ii) high quality investment securities.

Net Portfolio Value

         Management  measures the Bank's interest rate risk by computing amounts
by which the net present value of the Bank's cash flow from assets,  liabilities
and off balance sheet items (net  portfolio  value or "NPV") would change in the
event of a range of assumed changes in market interest rates. These computations
estimate the effect on the Bank's NPV from  instantaneous and permanent 1% to 4%
(100 to 400 basis  points)  increases and  decreases in market  interest  rates.
Based upon OTS assumptions,  the following table presents the Bank's NPV at June
30, 1998.

                                      -6-
<PAGE>




                             Changes in Net Portfolio Value

              Changes
             in Market                                         Change in
           Interest Rates             NPV Ratio(1)             NPV Ratio(2)
           --------------             ------------             ------------

                +400 bp                   -39.0%                  -378 bp

                +300 bp                   -28.9%                  -274 bp

                +200 bp                   -18.3%                  -169 bp

                +100 bp                   - 8.2%                  - 73 bp

                   0 bp                       0                      -

                -100 bp                    11.6%                   103 bp

                -200 bp                    23.4%                   240 bp

                -300 bp                    36.9%                   314 bp

                -400 bp                    51.7%                   432 bp

-------------
(1)  Calculated as the estimated NPV divided by present value of total assets.
(2)  Calculated  as the  excess  (deficiency)  of the  NPV  ratio  assuming  the
     indicated change in interest rates over the estimated NPV ratio assuming no
     change in interest rates.

         These  calculations  indicate that the Bank's net portfolio value could
be  adversely  affected by  increases  in interest  rates but could be favorably
affected by decreases in interest rates.  In addition,  the Bank would be deemed
to have  more  than a normal  level  of  interest  rate  risk  under  applicable
regulatory capital requirements.

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

Comparison of Financial Condition at June 30, 1998 and 1997

         Total consolidated  assets increased by approximately $4.4 million,  or
13.01% to $38.2 at June 30,  1998  from  $33.8  million  at June 30,  1997.  The
increase in total assets was primarily attributable to the net proceeds received
from the  initial  public  offering.  The  increase in total  assets  reflects a
$221,000 increase in investments and  mortgage-backed  securities,  a $2,029,000
increase in loans and real estate,  net and a $2.4 million  increase in cash and
cash equivalents.

                                      -7-
<PAGE>



         Deposits increased $3.5 million,  or 12.2% to $31.9 million at June 30,
1998 from $28.4 million at June 30, 1997. Interest bearing liabilities increased
$599,000,  or 2.0% to $30.4  million at June 30, 1998 from $29.8 million at June
30, 1997.  The increase  reflects a $2.6  million  increase in interest  bearing
deposits and repayments of FHLB borrowings of $2.0 million.

Average Balance Sheet

         The  following  table sets forth  certain  information  relating to the
Company's average interest earning assets,  interest bearing liabilities and net
interest income.

                                      -8-
<PAGE>


<TABLE>
<CAPTION>

                                                                       For the Year Ended June 30,
                                              -------------------------------------------------------------------------------

                                                            1998                                       1997
                                              ----------------------------------             --------------------------------

                                                Average                  Average              Average                Average
                                                Balance    Interest   Yield/Cost              Balance   Interest  Yield/Cost
                                                -------    --------   ----------              -------   --------  ----------
<S>                                           <C>         <C>             <C>                <C>        <C>          <C>  
Interest-earning assets:

  Loans receivable                            $  15,507   $   1,308         8.44%           $  14,412   $  1,176        8.16%

  Investment securities                          14,840         999         6.73               14,451      1,022        7.07

  Other interest-earning assets                   4,185         283         6.77                1,909         90        4.73
                                               --------     -------       ------             --------    -------     -------

Total interest-earning assets                    34,532       2,590         7.50               30,772      2,288        7.44
                                                            -------                                      -------

Non-interest-earning assets                       1,735                                         1,577
                                               --------                                      --------

Total assets                                  $  36,267                                     $  32,349
                                               ========                                      ========

Interest-bearing liabilities:

  Passbook and club accounts                     10,364         320         3.09%              10,147        320        3.15

  Certificates of deposit                        17,913       1,049         5.86               16,607        927        5.58

  Other liabilities                               1,708          97         5.69                1,500         98        6.53
                                                -------     -------      -------              -------     ------     -------

Total interest-bearing liabilities               29,985       1,466         4.89               28,254      1,345        4.76
                                                            -------                                      -------

Non-interest-bearing liabilities                  2,001                                         2,030
                                                -------                                       -------

Total liabilities                                31,986                                        30,284
                                                -------                                       -------

Stockholders' equity                              4,281                                         2,065
                                                -------                                       -------

Total liabilities and Stockholders' equity    $  36,267                                      $ 32,349
                                                =======                                       =======

  Net interest income                                      $  1,124                                     $    943
                                                            =======                                     ========

Interest rate spread                                                        2.61%                                       2.68%

Net yield on interest-earning assets                                        3.25%                                       3.07%

Ratio of average interest-earning assets                                                                              108.91%
  to average interest-bearing liabilities                                 115.16%

</TABLE>

                                      -9-

<PAGE>



Rate/Volume Analysis

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


                                               Year Ended June 30,
                                        --------------------------------
                                                 1998 vs. 1997
                                        --------------------------------
                                              Increase (Decrease)
                                                    Due to
                                        --------------------------------
                                                           Rate
                                         Volume   Rate    Volume    Net
                                         ------   ----    ------    ---

Interest income:

  Loans receivable                       $ 104   $  26    $   2    $ 132

  Investment securities                     28     (50)      (1)     (23)

  Other interest-earning assets            108      39       46      193
                                         -----   -----    -----    -----

    Total interest-earning assets        $ 240      15    $  47    $ 302
                                         =====   =====    =====    =====

Interest expense:

  Passbook and club accounts             $   7   $  (7)   $--      $--

  Certificates of deposit                   73      46        3      122

  Other liabilities                         14     (13)      (2)      (1)
                                         -----   -----    -----    -----

    Total interest-bearing liabilities   $  94   $  26    $   1    $ 121
                                         =====   =====    =====    =====

Change in net interest income            $ 146   $ (11)   $  46    $ 181
                                         =====   =====    =====    =====



Comparison of Operating Results for the Years Ended June 30, 1998 and 1997

         Net Income.  Net income increased $179,000 or 279.7% from a net loss of
$64,000 for the year ended June 30, 1997 to net income of $115,000  for the year
ended June 30, 1998.  The increase in net income was  primarily  the result of a
reduction of $104,000 in the  provision  for credit losses and a decrease in the
SAIF  insurance  assessment  in the amount of $108,000  (after taxes) during the
year ended June 30, 1997.

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

                                      -10-

<PAGE>



         Our net interest income  increased  $181,000 or 19.2% to $1,124,000 for
the year ended June 30, 1998  compared  to $943,000  for the year ended June 30,
1997.  The increase was due primarily to the growth of average  interest-earning
assets from $30.8  million for the year ended June 30, 1997 to $34.5 million for
the year ended June 30,  1998.  The  increase  in our  average  interest-earning
assets of $3.7 million reflects an increase of $1.1 million in average loans, an
increase of $389,000 in average investment and mortgage-backed securities and an
increase of $2.2 million in average other interest-earnings assets.

         Our  interest  rate  spread  decreased  and  our  net  interest  margin
increased  for the year ended June 30, 1998  compared to the year ended June 30,
1997.  This was due  primarily to the increase in the yield on  interest-earning
assets  from 7.44% for the year ended June 30,  1997 to 7.50% for the year ended
June 30,  1998,  offset by an increase in our average  cost on interest  bearing
liabilities  to 4.89% at June 30, 1998 from 4.76% at June 30, 1997. The yield on
our average  interest-earning  assets increased for the year ended June 30, 1998
due to an increase in the average  balance of loans and  investment  securities.
The  increase in our average cost of funds was  primarily  due to an increase in
average interest-bearing liabilities.

         Provision for Loan Losses.  Our provision for loan losses  decreased to
$104,000  from $136,000 for the year ended June 30, 1997 to $32,000 for the year
ended June 30, 1998.  The decrease in the provision for loan losses for the year
ended June 30, 1998 was  attributable to the large provision we recorded for the
year  ended  June 30,  1997.  This was due to a change in one of our  borrower's
ability to repay. The borrower had  outstanding,  14  non-performing  loans that
ranged from $30,000 to $100,000,  totaling $665,000,  secured by 1- to 4- family
residences.  Full  payment  of these  loans  was due  June 30,  1997 and was not
received.  Since then we were repaid in full on six loans,  and we foreclosed on
six properties for which we subsequently  sold four of the six without incurring
any additional losses. For the remaining two loans we do not expect to incur any
additional losses.

         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. Because of the increased coverage of the allowances
for loan losses to total  loans,  management  believes  the  allowance  for loan
losses is at level that is  considered  to be adequate to provide for  estimated
losses:  however,  there can be no assurance that further  additions will not be
made to the allowance and that such losses will not exceed the estimated amount.

         Non-Interest  Expense. Our non-interest expense increased by $17,000 or
1.6% from $1,025,000 for the year ended June 30, 1997 to $1,042,000 for the year
ended June 30, 1998,  primarily as a result of anticipated  expenses  related to
compensation  increases and the  implementation  of the ESOP and the  restricted
stock plan totaling  $90,000.  Due to the special SAIF assessment paid in fiscal
1997, FDIC insurance premiums decreased  $179,000.  Legal,  accounting and other
fees increased $60,000 due to activities relating to being a public company. The
remainder  of  the  increases  in  non-interest  expenses  was  associated  with
increased loan expenses,  advertising  and upgrades  associated  with the Bank's
technology.

         Income Tax Expense.  Our income tax expense for the year ended June 30,
1998 was $47,000  compared to an income  benefit of $(67,000) for the year ended
June 30, 1997. The $114,000 increase was the result of pre-tax income increasing
by $294,000.  Additionally, we invest in tax-exempt securities which provided us
with non-taxable income.

                                      -12-
<PAGE>




Liquidity and Capital Resources

         The Bank is  required to maintain  minimum  levels of liquid  assets as
defined by the OTS regulations.  The OTS minimum required liquidity ratio is 4%.
Short-term  liquidity at June 30, 1998 was 64%.  The Bank adjusts its  liquidity
levels in order to meet  funding  needs for  deposit  outflows,  payment of real
estate taxes from escrow accounts on mortgage loans,  loan funding  commitments,
and repayment of  borrowings,  when  applicable.  The Bank adjusts its liquidity
level as appropriate to meets it asset/liability  objectives. The primary source
of funds are deposits,  amortization and prepayment of loans and mortgage-backed
securities,  maturity of investments,  and funds provided from operations. As an
alternative to supplement  liquidity  needs,  the Bank has the ability to borrow
from the Federal Home Loan Bank of Pittsburgh.  Scheduled loan  amortization and
maturing  investment  securities are a relatively  predictable  source of funds,
however,  deposit flow and loan  prepayments  are greatly  influenced  by, among
other things, market interest rates, economic conditions,  and competition.  The
Bank's  liquidity,   represented  by  cash,  cash  equivalents,  and  securities
available  for sale,  is a product of its  operating,  investing,  and financing
activities.

Year 2000 Compliance

         A great  deal of  information  has been  disseminated  about the global
computer  crash that may occur in the year 2000 which would affect the speed and
accuracy of the data  processing  that is essential to our  operations.  We have
established a Year 2000 Plan to review our internal  information systems as well
as the efforts of our outside data processing service provider.  The progress of
the Plan is monitored by the Board and is progressing satisfactorily.

         All of our  material  data  processing  that could be  affected by this
problem is provided by a third party service  bureau  ("service  bureau").  This
service bureau has advised us that it expects to resolve this potential  problem
before the year 2000.  However, if this service bureau is unable to resolve this
potential  problem in a timely  manner,  the Bank will activate all  contingency
plans in an attempt to avoid what would otherwise be significant data processing
delays,  mistakes or  failures.  Any delays,  mistakes or failures  could have a
significant  adverse  impact  on our  financial  condition  and our  results  of
operations.

         The Bank is monitoring its service bureau to evaluate  whether its data
processing  system will fail and is being provided with periodic  updates on the
status of testing and  upgrades  being made by the service  bureau.  If the Bank
service  bureau fails,  the Bank will attempt to locate an  alternative  service
bureau that is year 2000 compliant.  If the Bank is unsuccessful,  the Bank will
enter deposit and loan  transactions  by hand in its general  ledger and compute
loan payments and deposit balances and interest in its existing computer system.
The Bank  believes  that they  would be able to  operate  in this  manner  for a
limited time, until their existing service bureau, or their replacement, is able
to again provide data  processing  services.  If very few financial  institution
service  bureaus  were  operating  in the year 2000,  their  replacement  costs,
assuming the Bank could negotiate an agreement, could be material.

Impact of New Accounting Standards

         Comprehensive  Income.  In June 1997,  the FASB  issued  SFAS No.  130,
"Reporting  Comprehensive  Income". This statement is effective for fiscal years
beginning  after  December 15, 1997.  This statement  establishes  standards for
reporting  and display of  comprehensive  income and its  components  (revenues,
expenses,  gains,  and  losses)  in a  full  set  of  general-purpose  financial
statements.  This  statement  requires  that all items that are  required  to be
recognized under accounting  standards as components of comprehensive  income be
reported in a financial statement that is displayed with the same

                                      -13-
<PAGE>



prominence as other  financial  statements.  It also requires that an enterprise
(a) classify items of other comprehensive  income by their nature in a financial
statement  and (b) display  accumulated  balance of other  comprehensive  income
separately from retained  earnings and additional  paid-in capital in the equity
section of a financial statement of financial  position.  The Company intends to
adopt SFAS No. 130 on July 1, 1998.  Management  does not expect the adoption of
SFAS No. 130 to have a material effect on the Company's  consolidated  financial
condition or results of operations.

         Pensions and other Postretirement  Benefits. In February 1998, the FASB
issued  SFAS  No.  132,   "Employers'   Disclosures   about  Pension  and  other
Postretirement  Standards".   This  statement  is  effective  for  fiscal  years
beginning after December 15, 1997. Restatement of comparative period disclosures
is required unless the information is not readily  available,  in which case the
notes to the financial statements shall include all available  information and a
description of the information not available.  This statement  standardizes  the
disclosure requirements of SFAS No. 87 and No. 106 to the extent practicable and
recommends a parallel format for presenting information about pensions and other
postretirement benefits. Statement 132 does not change any of the measurement or
recognition  provisions  provides  for in SFAS No.  87, No. 88 or No.  106.  The
Company  intends  to adopt SFAS No.  132 on July 1,  1998.  Management  does not
expect the adoption of SFAS No. 132 to have a material  effect on the  Company's
consolidated financial condition or results of operations.

                                      -13-

<PAGE>
                                                                          [LOGO]
                                                           Stokes Kelly & Hinds,

                                                    Certified Public Accountants
                                                             & Business Advisors



                                                             Members:
                                            American and Pennsylvania Institutes
                                              of Certified Public Accountants

            INDEPENDENT AUDITOR'S REPORT

                                                     Division for CPA Firms:
                                                       SEC Practice Section





The Board of Directors
WSB Holding Company


We have audited the accompanying  consolidated statements of financial condition
of WSB Holding  Company and subsidiary  (the  "Company") as of June 30, 1998 and
1997 and the related consolidated  statements of income,  stockholders'  equity,
and cash flows for the years ended. These consolidated  financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of WSB Holding Company
and subsidiary as of June 30, 1998 and 1997, and the results of their operations
and their  cash  flows for the years then  ended in  conformity  with  generally
accepted accounting principles.

/s/Stokes Kelly & Hinds, LLC

Pittsburgh, Pennsylvania
September 1, 1998
                  
                                                           9401 McKnight Road
                                                        Pittsburgh, Pennsylvania
                                                             15234-6000
                                                           Phone 412-364-0590
                                                         Voice Mail 412-364-6070
                                                            Fax 412-364-6176

                                       -14-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             June 30, 1998 and 1997


<TABLE>
<CAPTION>

                                     ASSETS

                                                                                    1998                    1997
                                                                             -----------------       ---------------
<S>                                                                              <C>                   <C>         
Cash and cash equivalents:
   Interest bearing                                                              $  4,750,915          $  2,547,897
   Non-interest bearing                                                               406,629               256,907
Securities held-to-maturity (estimated fair
   value of $ 11,701,996 and $ 11,980,616 in 1998 and 1997)                        11,667,658            12,007,456
Securities available-for-sale, at fair value                                        3,245,015             2,684,039
Loans and real estate, net                                                         16,620,321            14,590,996
Federal Home Loan Bank stock, at cost                                                 153,300               153,300
Accrued interest receivable                                                           228,175               299,469
Premises and equipment, net                                                         1,017,168             1,057,667
Other assets                                                                          106,431               146,503
Income taxes receivable                                                                 9,859                -
Deferred income taxes                                                                   3,001                52,426
                                                                                  -----------           -----------

         TOTAL ASSETS                                                             $38,208,472           $33,796,660
                                                                                  ===========           ===========



                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                          $31,867,605           $28,405,775
Federal Home Loan Bank advances                                                     1,000,000             3,000,000
Advances from borrowers for taxes and insurance                                       223,848               233,818
Accrued expenses and other liabilities                                                327,473               113,272
                                                                                  -----------           -----------

         TOTAL LIABILITIES                                                         33,418,926            31,752,865
                                                                                  -----------           -----------

Commitments and contingencies

Stockholders' equity:
   Preferred stock ($ .10 par value, 1,000,000 shares
      authorized, none outstanding)                                                    -                     -
   Common stock ($ .10 par value, 4,000,000 shares
      authorized; 330,600 shares issued and
      outstanding at June 30, 1998)                                                    33,060                -
   Additional paid-in capital                                                       2,989,212                -
   Retained earnings, substantially restricted                                      2,179,378             2,063,990
   Unearned Employee Stock Ownership Plan (ESOP) shares                               (242,438)              -
   Unearned compensation - Restricted Stock Plan (RSP)                                (197,864)              -
   Treasury stock, at cost; 1,165 shares                                               (19,431)              -
   Net unrealized gain (loss) on securities
      available-for-sale, net of applicable
      income taxes of $17,360 and $ (9,124)                                            47,629                (20,195)
                                                                                  ------------          ------------

         TOTAL STOCKHOLDERS' EQUITY                                                 4,789,546             2,043,795
                                                                                  -----------           -----------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $38,208,472           $33,796,660
                                                                                  ===========           ===========
</TABLE>

                                      -15-

See accompanying notes to consolidated financial statements.
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                       Years Ended June 30, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                     1998                  1997
                                                                                --------------       --------------
<S>                                                                                 <C>                 <C>        
INTEREST AND DIVIDEND INCOME
   Loans                                                                            $1,308,118          $ 1,176,149
   Investments                                                                         998,625            1,021,953
   Other interest earning assets                                                       283,488               90,343
                                                                                    ----------         ------------

         TOTAL INTEREST AND DIVIDEND INCOME                                          2,590,231            2,288,445
                                                                                    ----------         ------------

INTEREST EXPENSE
   Deposits                                                                          1,368,937            1,246,448
   Advances from FHLB                                                                   97,047               98,571
                                                                                    ----------         ------------

         TOTAL INTEREST EXPENSE                                                      1,465,984            1,345,019
                                                                                    ----------         ------------

         NET INTEREST INCOME                                                         1,124,247              943,426

PROVISION FOR LOAN LOSSES                                                               32,113              136,039
                                                                                    ----------         ------------

         NET INTEREST INCOME AFTER
           PROVISION FOR LOAN LOSSES                                                 1,092,134              807,387
                                                                                    ----------         ------------

NONINTEREST INCOME
   Service charges and other fees                                                       83,401               83,330
   Net gain (loss) on sales of
      securities available-for-sale                                                     24,245                (1,608)
   Income from real estate rental                                                        4,325                4,300
                                                                                    ----------           ----------

         TOTAL NONINTEREST INCOME                                                      111,971               86,022
                                                                                    ----------           ----------

NONINTEREST EXPENSE
   Compensation and benefits                                                           513,032              423,786
   Occupancy and equipment expense                                                     142,619              142,352
   Federal insurance premiums                                                           29,883              208,873
   Other                                                                               356,013              249,986
                                                                                   -----------           ----------

         TOTAL NONINTEREST EXPENSE                                                   1,041,547            1,024,997
                                                                                   -----------           ----------

         INCOME (LOSS) BEFORE INCOME TAXES                                             162,558              (131,588)

INCOME TAX EXPENSE (BENEFIT)                                                            47,170               (67,128)
                                                                                    ----------           -----------

         NET INCOME (LOSS)                                                          $  115,388           $   (64,460)
                                                                                    ==========           ===========


Earnings per common share-BASIC (since inception)                                    $     .28                 N/A
                                                                                     =========         ===========
Earnings per common share-DILUTED (since inception)                                  $     .28                 N/A
                                                                                     =========         ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -16-


<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       Years Ended June 30, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                                          Net Unrealized
                                                                                                          Gain (Loss) on
                               Additional                    Unearned       Unearned                    Securities
                      Common    Paid-in      Retained         ESOP        Compensation    Treasury     Available-for-
                      Stock    Capital        Earnings      Shares         - RSP           Stock          Sale          Total
                    --------  ------------  --------------------------  --------------   -----------   ------------   -------------
<S>                  <C>      <C>          <C>             <C>            <C>            <C>            <C>            <C>       
BALANCE 
  AT JULY 1, 1996    $  --     $      --     $  2,128,450    $      --      $      --      $      --      $   (41,293)   $ 2,087,157

Change in 
   unrealized gain 
   (loss) on
   securities 
   available-for-
   sale, net of 
   applicable 
   income taxes
   of $19,571            --            --            --             --             --             --           21,098        21,098

Net (loss)               --            --         (64,460)          --             --             --             --         (64,460)
                      -------   -----------   -----------    -----------    -----------    -----------    -----------    ----------

BALANCE AT 
  JUNE 30, 1997          --            --       2,063,990           --             --             --          (20,195)    2,043,795

Proceeds from sale
   of common stock,
   net of issuance 
   costs               33,060     2,979,475          --         (264,480)          --             --             --       2,748,055

ESOP shares 
  allocated              --           9,737          --           22,042           --             --             --          31,779

Award of shares 
   under 
   restricted
   stock plan            --            --            --             --         (208,278)          --             --        (208,278)

Amortization of
   restricted 
   stock plan            --            --            --             --           10,414           --             --          10,414

Purchase of 
   treasury stock        --            --            --             --             --          (19,431)          --         (19,431)

Change in 
   unrealized 
   gain (loss) on
   securities 
   available-for-
   sale, net of 
   applicable 
   income taxes
   of $26,484            --            --            --             --             --             --           67,824        67,824

Net income               --            --         115,388           --             --             --             --         115,388
                      -------   -----------   -----------    -----------    -----------    -----------    -----------    ----------

BALANCE AT 
  JUNE 30, 1998       $33,060   $ 2,989,212  $  2,179,378    $  (242,438)   $  (197,864)   $   (19,431)   $    47,629    $4,789,546
                      =======   ===========   ===========    ===========    ===========    ===========    ===========    ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -17-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                         1998                    1997
                                                                                   -----------------        --------------
<S>                                                                                   <C>                    <C>          
OPERATING ACTIVITIES
   Net income (loss)                                                                  $     115,388          $   (64,460)
   Adjustments to reconcile
      net income (loss) to net cash provided
      by operating activities:
          Amortization of:
             Deferred loan origination fees                                                  (3,730)              (4,411)
             Premiums and discounts on investment securities                                 (9,758)               2,010
             Unearned ESOP shares                                                            31,779               -
             Compensation expense related to RSP                                             10,414               -
          Provision for loan losses                                                          32,113              136,039
          Net (gain) loss on sales of
             securities available-for-sale                                                  (24,245)               1,608
          Depreciation of premises and equipment                                             52,940               53,170
          (Increase) decrease in:
             Accrued interest receivable                                                     71,294              (64,035)
             Other assets                                                                    40,072              (63,121)
             Income taxes receivable                                                         (9,859)               3,537
             Deferred income taxes                                                           22,941              (62,909)
          Increase (decrease) in:
             Accrued expenses and other liabilities                                           5,923               53,826
                                                                                        ------------          ----------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                            335,272               (8,746)
                                                                                        -----------           ----------


INVESTING ACTIVITIES
   Purchases of securities held-to-maturity                                             (13,650,000)          (4,710,730)
   Proceeds from maturities of and principal
      repayments on securities held-to-maturity                                          14,000,056            3,595,776
   Purchases of securities available-for-sale                                            (1,276,813)             -
   Proceeds from maturities of and principal repayments
      on securities available-for-sale                                                      580,890              439,033
   Proceeds from sales of securities available-for-sale                                     253,000              231,369
   Net loan originations and principal
      repayments on loans                                                                (2,057,708)          (1,093,900)
   Net (purchase) sale of Federal
      Home Loan Bank stock                                                                   -                   (20,100)
   Purchases of premises and equipment                                                      (12,441)             (38,243)
                                                                                        ------------          -----------

NET CASH USED BY INVESTING ACTIVITIES                                                    (2,163,016)          (1,596,795)
                                                                                        ------------          -----------
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -18-

<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years Ended June 30, 1998 and 1997

<TABLE>
<CAPTION>

                                                                                           1998                1997
                                                                                    ----------------      --------------
<S>                                                                                     <C>                 <C>         
FINANCING ACTIVITIES
   Net increase in deposits                                                             $ 3,461,830         $    248,984
   Net increase (decrease) in FHLB advances                                              (2,000,000)           3,000,000
   Purchase of treasury stock                                                               (19,431)              -
   Proceeds from issuance of common stock                                                 3,041,520               -
   Payments of conversion costs                                                            (293,465)              -
   Net decrease in advances from borrowers
      for taxes and insurance                                                                (9,970)             (44,670)
                                                                                        -----------          -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 4,180,484            3,204,314
                                                                                        -----------          -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 2,352,740            1,598,773

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                            2,804,804            1,206,031
                                                                                        -----------          -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                                $ 5,157,544          $ 2,804,804
                                                                                         ==========          ===========


SUPPLEMENTAL DISCLOSURES Cash paid during the period for:
   Interest on deposits, advances,
      and other borrowings                                                              $ 1,496,794          $ 1,299,115
   Income taxes                                                                         $    25,000          $      -

Noncash investing and financing activities:

      Transfer from loans to real estate owned                                          $   319,073          $      -

      Total increase (decrease) in unrealized
          gain (loss) on securities
          available-for-sale                                                            $    94,308          $    40,669

      Less: income tax expense (benefit)                                                     26,484               19,571
                                                                                         ----------           -----------

      Net increase (decrease) in unrealized
          gain (loss) on securities
          available-for-sale                                                            $    67,824          $    21,098
                                                                                         ==========           ===========

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

See accompanying notes to consolidated financial statements.

                                      -19-




<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1998 and 1997



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

WSB Holding  Company  (the  "Company")  was  incorporated  under the laws of the
Commonwealth of Pennsylvania  for the purpose of becoming the holding company of
Workingmens  Bank (the "Bank") in connection  with the Bank's  conversion from a
federally  chartered mutual savings bank to a federally  chartered stock savings
bank,  pursuant to its Plan of Conversion.  The Company commenced  operations on
August 27, 1997, the date of a Subscription Offering of its shares in connection
with the  conversion  of the Savings  Bank (the  "Conversion").  Prior to fiscal
1998, the financial statements include the accounts of the Bank only.

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

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

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

Use of Estimates

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

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

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

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

                                      -20-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Principles of Consolidation

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

Cash and Cash Equivalents

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

Investment and Mortgage-Backed Securities

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

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

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


                                      -21-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Loans Receivable

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

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

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

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

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

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

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

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

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

                                      -22-


<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Real Estate Owned

Real estate  acquired by foreclosure or voluntary deed in lieu of foreclosure is
initially  carried at the lower of fair value minus estimated  disposal costs or
the balance of the loan on the property at the date of  acquisition.  Fair value
is determined on the basis of current  appraisals,  comparable  sales, and other
estimates  of  value  obtained   principally  from  independent   sources.   Any
write-downs  based on the asset's fair value at date of acquisition  are charged
to the  allowance  for loan losses.  Subsequent  costs  directly  related to the
development  or  improvement  of real  estate are  capitalized.  Other  costs of
maintaining  real  estate ($ 0 in fiscal  years  1998 and 1997) are  charged  to
income as  incurred  and are  reported  in "Other  Noninterest  Expense."  Gains
recognized on the  disposition  of the  properties  are recorded in  noninterest
income.

Federal Home Loan Bank Stock

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

Premises and Equipment

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

Income Taxes

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

Earnings per Share

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

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

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

                                      -23-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



EPS is not  applicable  for periods prior to the  completion of the Bank's stock
conversion on August 27, 1997.  EPS for fiscal 1998 has been computed based upon
net income per share for the post conversion period from August 27, 1997 to June
30, 1998.

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

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

   Basic EPS                            $ 85,384        $ 305,363      $ 0.28
   Effect of dilutive securities            -                -
                                        --------        ---------

   Diluted EPS                          $ 85,384        $ 305,363      $ 0.28
                                        ========        =========      ======


Conversion to Stock Form of Ownership

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

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

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

                                      -24-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Pension Plan

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

Fair Values of Financial Instruments

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

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

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

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

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

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


                                      -25-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






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

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

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

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

Recent Accounting Pronouncements

In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. This
statement  establishes  standards  for reporting  and  displaying  comprehensive
income and its components in a full set of general purpose financial statements.
SFAS No.  130  requires  all items  that are  required  to be  recognized  under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  in equal  prominence  with  the  other
financial statements.  The term "comprehensive  income" is used in the statement
to describe the total of all components of  comprehensive  income  including net
income.  "Other comprehensive income" refers to revenues,  expenses,  gains, and
losses that are  included in  comprehensive  income but excluded  from  earnings
under current accounting standards.  Currently, "other comprehensive income" for
the Company consists of items previously  recorded directly in equity under SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities.  SFAS
No. 130 is effective for financial statements for years beginning after December
15, 1997. The Company will adopt SFAS No. 130 effective July 1, 1998.


                                      -26-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE B - INVESTMENT SECURITIES

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

<TABLE>
<CAPTION>

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

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

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


<TABLE>
<CAPTION>

                                                                               1997
                                              ---------------------------------------------------------------------
                                                                         GROSS             GROSS
                                                AMORTIZED              UNREALIZED        UNREALIZED       FAIR
                                                  COST                   GAINS             LOSSES         VALUE
                                              ------------             ----------        ----------    ------------
<S>                                           <C>                       <C>              <C>            <C>        
U.S. Government and
   government agency
   obligations                                $ 11,882,290              $ 22,193       $  (46,412)     $ 11,858,071

Collateralized mortgage
   obligations                                     125,166                  -              (2,621)          122,545
                                              ------------              --------       -----------     ------------

                                              $ 12,007,456              $ 22,193       $  (49,033)      $11,980,616
                                              ============              ========       ==========       ===========
</TABLE>
                                                    
                                      -27-




<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





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

<TABLE>
<CAPTION>

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

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

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

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

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

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

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

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


                                      -28-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                                                               1997
                                              ---------------------------------------------------------------------
                                                                         GROSS             GROSS
                                                AMORTIZED              UNREALIZED        UNREALIZED             
                                                  COST                   GAINS             LOSSES       FAIR VALUE
                                              ------------             ----------        ----------    ------------
<S>                                           <C>                       <C>              <C>             <C>        
Mortgage-backed securities:
   Federal Home Loan Mortgage
     Corporation                              $     90,610               $  1,281         $   -           $     91,891

   Government National Mortgage
     Association                                 1,352,482                 19,660           (2,407)          1,369,735

   Federal National Mortgage
     Association                                   456,103                   -             (12,629)            443,474

FHLMC Preferred Stock                              256,750                   -              (8,000)            248,750

Corporate Notes                                    499,267                   -             (12,687)            486,580

Collateralized mortgage
   obligations                                      58,146                   -             (14,537)             43,609
                                               -----------               --------        ---------          ----------

                                              $  2,713,358               $ 20,941        $ (50,260)         $2,684,039
                                               ===========               ========        =========          ==========
</TABLE>

The amortized cost and  approximate  fair values of securities  held-to-maturity
and  available-for-sale  as of June 30, 1998, by contractual  maturity are shown
below.

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

<S>                                            <C>                    <C>            <C>                 <C>          
Due within one year                            $ 1,150,000            $ 1,149,086      $   200,066        $    199,723
Due from one to five years                       4,413,366              4,424,878          299,286             297,150
Due from five to ten years                       4,719,303              4,743,623           -                   -
Due after ten years                              1,384,989              1,384,409        1,731,070           1,734,493
                                               -----------            -----------      -----------         -----------

                                               $11,667,658            $11,701,996      $ 2,230,422         $ 2,231,366
                                               ===========            ===========      ===========         ===========
</TABLE>

                                      -29-
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






NOTE C - LOANS AND REAL ESTATE

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


                                            1998                1997
                                         -------------      ------------
First mortgage loans:
   Secured by 1-to-4 family residences   $11,032,985        $ 11,034,886
   Secured by over 4 family units          1,636,997           1,294,595
   Commercial                              1,085,968             598,866
Home equity and second mortgage loans      1,441,620           1,213,212
Lease pools                                     -                  4,043
Share loans                                  449,801             396,133
Consumer loans                               858,036             267,773
Real estate owned                            319,073                -
                                          ----------           ---------

                                          16,824,480          14,809,508
Allowance for loan losses                   (198,168)           (208,791)
Deferred loan origination fees                (5,991)             (9,721)
                                          ------------        ----------  

                                         $16,620,321        $ 14,590,996
                                          ==========          ==========


The Company  conducts its business  through two offices  located in  Pittsburgh,
Pennsylvania.  As of June 30, 1998, the majority of the Company's loan portfolio
was secured by properties  located in this region.  The Company  evaluates  each
customer's credit worthiness on a case-by-case  basis.  Collateral held includes
mortgages on residential and income-producing  properties.  The Company does not
believe  it has  significant  concentration  of credit  risk to any one group of
borrowers given its underwriting and collateral requirements.

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

First mortgage loans which are contractually  past due ninety days or more total
approximately $ 301,000 at June 30, 1998. The amount the Company will ultimately
realize  from these loans could  differ  materially  from their  carrying  value
because of unanticipated future developments affecting the underlying collateral
or the  borrower's  ability  to repay  the  loans.  If  collection  efforts  are
unsuccessful,  these  loans will be subject to  foreclosure  proceedings  in the
ordinary course of business.  Management  believes that the Company has adequate
collateral on these loans and additional losses are not expected to occur in the
event of foreclosure.

At June 30, 1998 and 1997, the Company had  approximately  $301,000 and 743,000,
respectively,  of nonaccrual  loans  primarily  consisting of residential  first
mortgage loans.  Interest income on nonaccrual loans for the year ended June 30,
1998,  which  would  have  been  reported  on  an  accrual  basis,  amounted  to
approximately $30,000.

                                      -30-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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

<TABLE>
<CAPTION>
                                                                                        1998                1997
                                                                                     -----------         --------

<S>                                                                                   <C>                  <C>      
      Beginning balance                                                               $ 208,791            $  75,694
      Provision for loan losses                                                          32,113              136,039
      Charge-offs                                                                       (42,736)              (4,091)
      Recoveries                                                                           -                   1,149
                                                                                      ---------            ---------

      Ending balance                                                                  $  198,168           $ 208,791
                                                                                      ==========           =========
</TABLE>


In the ordinary  course of business,  the Company has and expects to continue to
have transactions, including borrowings, with its officers, directors, and their
affiliates   (totaling   $6,000  and  $  74,397  at  June  30,  1998  and  1997,
respectively).   In  the  opinion  of  management,  such  transactions  were  on
substantially the same terms, including interest rates and collateral,  as those
prevailing at the time of comparable transactions with other persons and did not
involve  more  than a  normal  risk  of  collectibility  or  present  any  other
unfavorable features to the Company.

NOTE D - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following at June 30:

<TABLE>
<CAPTION>
                                                                                      1998                  1997
                                                                                  --------------        ------------

<S>                                                                                <C>                   <C>        
Loans                                                                              $     73,932          $   156,714
Investments                                                                             180,917              217,602
                                                                                   ------------          -----------

                                                                                        254,849              374,316
Allowance for uncollectible interest                                                    (26,674)             (74,847)
                                                                                   -------------          -----------

                                                                                   $    228,175          $   299,469
                                                                                   ============          ===========
</TABLE>

NOTE E - PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                                       1998                1997
                                                                                  --------------      --------------

<S>                                                                                 <C>                  <C>        
   Land                                                                             $   121,027          $   121,027
   Buildings and improvements                                                           993,265              991,989
   Furniture, fixtures, and equipment                                                   405,855              394,689
                                                                                   ------------         ------------

                                                                                      1,520,146            1,507,705
   Accumulated depreciation                                                            (502,978)            (450,038)
                                                                                    ------------         ------------

                                                                                    $ 1,017,168          $ 1,057,667
                                                                                    ===========          ===========
</TABLE>

                                      -31-

<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE F - DEPOSITS

Deposits at June 30, are summarized as follows:

<TABLE>
<CAPTION>
                                                                    1998                          1997
                                                      ---------------------------------------------------------------
                                                        WEIGHTED                         WEIGHTED
                                                        AVERAGE                          AVERAGE
                                                         RATE             AMOUNT          RATE                AMOUNT

<S>                                                    <C>            <C>                <C>             <C>       
NOW accounts                                             0.00 %         $2,476,029         0.00 %          $1,613,841
Passbook savings                                         3.16           10,378,217         3.16            10,295,942
                                                      -------          -----------      -------           -----------

                                                         2.55           12,854,246         2.76            11,909,783
                                                      -------          -----------      -------           -----------
Certificates of deposit:
   3.00% to 3.99%                                         -                -               3.00                 3,675
   4.00% to 4.99%                                        4.93            1,812,885         4.96             1,952,445
   5.00% to 5.99%                                        5.52            9,987,486         5.42             8,797,914
   6.00% to 6.99%                                        6.18            6,788,251         6.24             4,574,096
   7.00% to 7.99%                                        7.04              424,737         7.09             1,167,862
                                                      -------          -----------      -------           -----------

                                                         5.73           19,013,359         5.71            16,495,992
                                                      ------           -----------      -------           -----------

                                                         4.45 %        $31,867,605         4.47 %         $28,405,775
                                                       ======          ===========       ========         ===========
</TABLE>


At June 30, 1998, the aggregate  maturities of certificates of deposit in fiscal
years 1999 through 2003 is $ 8,794,553,  $ 2,974,425, $ 3,268,187, $ 820,928 and
$ 3,155,266 respectively.  The aggregate amount of certificates in denominations
of $ 100,000 or more totaled $ 2,038,656.

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

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

Interest  expense and accrued  interest  payable on  deposits  consisted  of the
following at June 30:
<TABLE>
<CAPTION>
                                                    ACCRUED INTEREST PAYABLE                   INTEREST EXPENSE
                                                    ------------------------                   ----------------
                                                   1998                    1997               1998            1997
                                                ----------              ----------         ----------      ----------

<S>                                               <C>                     <C>             <C>             <C>        
Passbook savings                                  $  1,475                $  1,561        $   320,046     $   319,945
Certificate accounts                                41,042                  51,068          1,048,891         926,503
                                                  --------                --------        -----------    ------------

   Total interest on deposits                      $42,517                 $52,629         $1,368,937      $1,246,448
                                                   =======                 =======         ==========      ==========
</TABLE>

                                      -32-
 
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE G - ADVANCES FROM FEDERAL HOME LOAN BANK

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

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

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

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

At June 30, 1997,  the Company had the following  outstanding  advances from the
Federal Home Loan Bank (FHLB):

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

            10/25/96         10/25/01         5.78%              $ 1,000,000
            3/19/97          12/19/01         5.86%                1,000,000
            3/26/97          9/26/97          5.93%                1,000,000
                                                                ------------

                                                                 $ 3,000,000
                                                                 ===========

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

NOTE H - BENEFIT PLANS

Pension Plan

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

The  following  table sets forth the plan's funded status as of the latest dates
valuations were prepared:

<TABLE>
<CAPTION>
                                                                                    JUNE 30,        JUNE 30,
                                                                                      1998           1997
                                                                                   -----------     -----------

<S>                                                                                 <C>               <C>      
Vested accumulated benefit obligation                                               $ 341,130         $ 230,341
Nonvested accumulated benefit obligation                                                4,055             1,280
                                                                                    ---------         ---------

Accumulated benefit obligation                                                        345,185           231,621
Effect of projected salary increases                                                  113,774                (1)
                                                                                    ---------         ---------

Projected benefit obligation                                                          458,959           231,620

Fair value of plan assets                                                             391,058           315,032
                                                                                    ---------         ---------

Plan assets in excess of project benefit
   obligation (unfunded projected benefit
   obligation)                                                                        (67,901)           83,412
Unrecognized net (gain) loss                                                           71,711           (97,685)
Unrecognized net obligation                                                             1,188             1,310
                                                                                    ---------         ---------

Prepaid pension cost (pension liability)                                            $  (4,998)        $ (12,963)
                                                                                    =========         =========

</TABLE>


                                      -33-
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




The  following  table  represents  certain   significant   assumptions  used  in
determining the actuarial present value of the projected benefit obligations and
the net periodic pension costs at June 30, 1998 and 1997:

<TABLE>
<CAPTION>

                                                      1998             1997
                                                    --------         ---------
<S>                                                 <C>               <C>     
Weighted average discount rate used to
   calculate benefit obligations                      7.00%             7.00%
Assumed rate of future compensation
   increases                                          4.00%             4.00%
Expected long-term rate of return of
   plan assets                                        7.50%             7.50%

Components of net pension cost are as follows:

                                                      1998              1997
                                                    ---------        ---------

Service cost                                        $ 28,942         $  27,982
Interest cost                                         28,237            25,378
Actual return on plan assets                         (22,919)          (11,197)
Net amortization on deferrals                            886            (5,766)
                                                    --------          ---------

Net periodic pension cost                           $ 35,146          $ 36,397
                                                    ========          ========

</TABLE>

Employee Stock Ownership Plan (ESOP)

As part of the conversion  discussed in Note A, an Employee Stock Ownership Plan
(ESOP) was  established for all employees who have completed one year of service
and have  attained  the age of 21. The ESOP  borrowed $ 264,480 from the Company
and used the funds to  purchase  26,448  shares of common  stock of the  Company
issued in the offering.  The loan will be repaid  principally from the Company's
contributions  to the ESOP over a period of 10 years. On June 30, 1998, the loan
had an  outstanding  balance of $ 244,642 and an interest rate of 8.5%. The loan
obligation  of the  ESOP is  considered  unearned  compensation  and,  as  such,
recorded as a reduction of the  Company's  stockholders'  equity.  Both the loan
obligation  and the unearned  compensation  are reduced by an amount of the loan
repayments made by the ESOP. Shares purchased with the loan proceeds are held in
a suspense  account for  allocation  among  participants  as the loan is repaid.
Contributions  to the ESOP and shares  released  from the  suspense  account are
allocated  among  participants  on the  basis  of  compensation  in the  year of
allocation.  Benefits  become  fully vested at the end of seven years of service
under the terms of the ESOP  Plan.  Benefits  may be  payable  upon  retirement,
death,  disability,  or  separation  from service.  Since the  Company's  annual
contributions  are  discretionary,  benefits  payable  under the ESOP  cannot be
estimated.

At June 30, 1998,  2,201 ESOP shares have been  allocated  to the  participating
employees.  For purposes of computing net income per share, the remaining 24,247
unallocated   shares   are   not   considered   outstanding   until   they   are
committed-to-be-released   for   allocation.   The  Company  is  recognizing  as
compensation  expense  the fair  market  value  of the  Company's  common  stock
allocated to participating  employees.  Compensation  expense  recognized by the
Company during the year ended June 30, 1998 was $ 31,779.


                                      -34-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Stock Option Plan

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

Stock option activity is as follows:

                                                      Year ended
                                                     June 30, 1998
                                                     -------------

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

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

Options exercisable at end of year                         -
                                                         ======

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


The  options  outstanding  at June 30, 1998 had a  weighted-average  contractual
maturity of 9.7 years and exercise price of $15.75.

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

                                      -35-
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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

                                               Year Ended
                                              June 30, 1998
                                              -------------

   Net income:
      As reported                                 $ 115,388
      Pro forma                                     111,486
   Net income per share:
      As reported:
          Basic                                         .28
          Diluted                                       .28
      Pro forma:
          Basic                                         .27
          Diluted                                       .27

Restricted Stock Plan

In March 1998, the Company  established a Restricted  Stock Plan ("RSP").  Under
the terms of the RSP, a total of 13,224 shares of the Company's  common stock is
available for the granting of awards to officers, directors and employees during
a period of  twenty-one  years,  unless  sooner  terminated.  The  Company  will
contribute  sufficient  funds to the RSP to  purchase  shares  of the  Company's
common stock either in the open market or from unissued or treasury shares.  All
stock to be  purchased  by the RSP will be purchased at the fair market value on
the date of purchase. Stock awarded is earned at a rate of 20% annually with the
first 20% awarded on the one-year  anniversary of the date of grant.  The market
value of the common  stock at the date of award is included  as a  reduction  of
stockholders'  equity  in the  consolidated  balance  sheet and is  recorded  as
compensation  expense using the straight-line  method over the vesting period of
the awards.  The awards vest pro rata over five years at each anniversary of the
award.  On March 16,  1998,  13,224  shares of the  Company's  common  stock was
awarded under the RSP. The fair market value of the Company's stock on March 16,
1998 was $ 15.75 per share.  Aggregate  compensation expense with respect to the
foregoing awards was $10,414 for the year ended June 30, 1998.

Summary  information  regarding  outstanding  RSP  awards  at June  30,  1998 is
presented below:

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

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



                                      -36-


<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE I - INCOME TAXES

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

                                                 1998             1997
                                                 ----             ----

   Federal:
       Current (benefit)                       $24,206        $  (1,935)
       Deferred                                 22,964          (65,193)
                                              --------       ----------

                                              $ 47,170        $ (67,128)
                                              ========        =========

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



   Totals:
      Current (benefit)                       $ 24,206        $  (1,935)
      Deferred                                  22,964          (65,193)
                                              --------        ---------

                                              $ 47,170        $ (67,128)
                                              ========        =========


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

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


                                                1998             1997
                                              ---------        ---------


Computed income tax expense (benefit)         $  55,270        $ (44,740)
Increase (decrease) resulting in:
   Tax-exempt income                             (2,774)          (7,271)
   Other, net                                    (5,326)         (15,117)
                                              ---------        ---------

Actual income tax
   expense (benefit)                          $ 47,170         $ (67,128)
                                              ========         =========

Effective tax rate (benefit)                     29.02%            (51.0)%
                                                ======           =======

                                      -37-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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


<TABLE>
<CAPTION>
                                                  1998            1997
                                               ---------        ----------

Deferred tax assets:
<S>                                           <C>                <C>      
   Loan origination fees, net                 $   1,600          $   2,873
   Allowance for loan losses                     52,935             61,712
   Accrued pension expense                        3,462              3,831
   Net operating loss carryforward                 -                 8,768
   State net operating loss carryforward         27,200             39,000
   Restricted Stock Plan accrual                  2,782               -
   ESOP accrual                                   2,601               -
   Unrealized loss on securities
      available-for-sale                           -                 9,124
                                               --------          ---------

                                                 90,580            125,308
                                               --------          ---------


Deferred tax liabilities:
   Premises and equipment                       (15,664)           (12,748)
   Accrued interest receivable                  (27,355)           (21,134)
   Unrealized gain on securities            
      available-for-sale                        (17,360)              -
                                               --------          ---------
                                            
                                                (60,379)           (33,882)
                                               --------          ---------
                                            
                                                 30,201             91,426
                                            
Valuation allowance                             (27,200)           (39,000)
                                               --------          ----------
                                            
Net deferred asset                             $  3,001          $  52,426
                                               ========          =========
</TABLE>                                   


The  Company's  annual  addition to its reserve for bad debts  allowed under the
Internal  Revenue Code may differ  significantly  from the bad debt expense used
for  financial  statement  purposes.  Such bad debt  deductions  for  income tax
purposes  are  included  in taxable  income of later  years only if the bad debt
reserves are used for purposes  other than to absorb bad debt losses.  Since the
Company  does not intend to use the  reserve for  purposes  other than to absorb
losses,  no deferred  income taxes have been  provided on the amount of bad debt
reserves for tax purposes that arose in tax years beginning  before December 31,
1987, in accordance with SFAS No. 109. Therefore,  retained earnings at June 30,
1998 and 1997,  includes  approximately  $ 143,000,  representing  such bad debt
deductions for which no deferred income taxes have been provided.

The Company has available  Pennsylvania  net  operating  loss  carryforwards  of
approximately $ 236,000.  This carryforward can be utilized in fiscal years 1998
through 2001. The deferred tax benefit associated with this loss carryforward is
approximately $ 27,200. This benefit has been fully reserved.

                                      -38-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE J - INTEREST AND DIVIDEND INCOME ON INVESTMENTS

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

                                             1998           1997
                                          -----------    -----------

   Taxable interest income                $  983,516     $   997,135
   Nontaxable interest income                 14,737           5,120
   Dividends                                     372          19,698
                                          ----------     -----------

                                          $  998,625     $ 1,021,953
                                          ==========     ===========

NOTE K - COMMITMENTS AND CONTINGENCIES

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

The Company has outstanding commitments to originate loans as follows:

                                              1998            1997
                                            ---------      ---------

First mortgage loans                        $ 131,000      $ 106,000
Secured consumer (unused
  lines of credit) loans                    $ 391,395      $ 386,000

NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

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

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

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


                                      -39-
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE M - DEPOSIT INSURANCE ASSESSMENT

The  Company  incurred  an  expense  for the year  ended  June 30,  1997 for the
one-time  special  assessment  levied  by  the  omnibus  appropriation  bill  to
recapitalize  the SAIF  insurance  fund.  The  special  assessment  for  deposit
insurance  premiums  was  approximately  $ 161,000,  with an after tax impact of
approximately  $ 108,000.  Effective  January 1, 1997,  the Company began paying
reduced premium assessments in accordance with the new SAIF assessment rates.

NOTE N - FAIR VALUES OF FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>

                                                       1998                                 1997
                                        ---------------------------------------------------------------
                                          CARRYING              FAIR              CARRYING              FAIR
                                           AMOUNT              VALUE               AMOUNT              VALUE
                                           ------              -----               ------              -----
<S>                                      <C>                  <C>                <C>              <C>         
Financial assets:
   Cash and cash
   equivalents                           $  5,157,544         $ 5,157,544         $  2,804,804     $  2,804,804

   Investment and mortgage-
     backed securities                     14,912,673          14,947,011           14,691,495       14,664,655

   Loans                                   16,620,321          17,447,788           14,590,996       14,794,171

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

   Accrued interest
     receivable                               228,175             228,175              299,469          299,469

Financial liabilities:
   Deposits                                31,867,605          32,016,399           28,405,775       28,445,929

   FHLB advances                            1,000,000           1,000,000            3,000,000        3,000,000

   Advances from borrowers
     for taxes and
     insurance                                223,848             223,848              233,818          233,818

</TABLE>


                                      -40-

<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE O - REGULATORY MATTERS

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

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum  amounts and ratios of:  total  risk-based
capital  and  Tier  I  capital  to  risk-weighted  assets  (as  defined  in  the
regulations), Tier I capital to adjusted total assets (as defined), and tangible
capital to adjusted total assets (as defined).  Management believes,  as of June
30, 1998, that the Bank meets all capital  adequacy  requirements to which it is
subject.

As of June 30,  1998,  the most  recent  notification  from the Office of Thrift
Supervision  categorized  the  Bank as well  capitalized  under  the  regulatory
framework for prompt  corrective  action. To be categorized as well capitalized,
the Bank must maintain  minimum total  risk-based,  Tier I risk-based and Tier I
leverage  ratios as set forth in the table.  There are no  conditions  or events
since those  notifications  that  management  believes  have  changed the Bank's
capital category.

<TABLE>
<CAPTION>
                                                                                                 To Be Well
                                                                                              Capitalized Under
                                                                 For Capital                  Prompt Corrective
                                            Actual            Adequacy Purposes               Action Provision
                                        --------------     ----------------------           ------------------------
                                                                        Ratio                            Ratio
                                                                     greater than                     greater than
                                        Amount   Ratio      Amount   or equal to              Amount  or equal to
                                        ------   -----      ------   -----------              ------  -----------
                                                                 (In thousands)
<S>                                     <C>      <C>        <C>       <C>                    <C>         <C>
As of June 30, 1998:
     Total Capital
       (to Risk-Weighted Assets)        $4,008   25.3%      $1,269     8%                     $1,586      10%
                                                                                              
     Tier I Capital                                                                           
       (to Risk-Weighted Assets)         3,815   24.1          634     4                         952      6
                                                                                              
     Tier I Capital                                                                           
       (to average assets)               3,815   10.5        1,447     4                        2,179     5
                                                                                              
As of June 30, 1997:                                                                          
     Total Capital - risk-based                                                               
       (to risk-weighted assets)         2,240   15.9        1,128     8                        1,411     10
                                                                                              
     Tier I Capital - risk-based                                                              
       (to risk-weighted assets)         2,064   14.6          564     4                          846     6
                                                                                              
     Tier I Capital - leverage                                                                
       (to average assets)               2,064    6.1        1,352     4                        1,690     5
</TABLE>                                              
                                                                
                                      -41-                  
                                                         
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



  NOTE P - PARENT COMPANY FINANCIAL INFORMATION

  The  following  represents  condensed  financial  information  of WSB  Holding
Company (Parent company only).


                             CONDENSED BALANCE SHEET
                                  June 30, 1998
<TABLE>
<CAPTION>

                                  ASSETS


<S>                                                                              <C>        
Cash                                                                             $   139,562
Securities available-for-sale, at fair value                                       1,013,649
Interest receivable from subsidiary                                                    1,898
Note receivable from subsidiary                                                      244,642
Prepaid income taxes                                                                  26,700
  Investment in subsidiary, at equity                                              1,752,354
                                                                                 -----------
       TOTAL ASSETS                                                              $ 3,178,805
                                                                                 ===========



                     LIABILITIES AND STOCKHOLDERS' EQUITY


  Liabilities:
      Deferred income taxes                                                      $    13,639
                                                                                 -----------
                                                                                      13,639
                                                                                 -----------
  Stockholders' Equity:
      Preferred stock ($.10 par value,
       1,000,000 shares authorized,  none outstanding) Common stock ($ .10 par
       value, 4,000,000 shares authorized; 330,600 shares 
       issued and outstanding                                                         33,060
     Additional paid-in capital                                                    2,989,212
     Retained earnings                                                               115,388
     Treasury stock, at cost                                                         (19,431)
     Net unrealized gain on securities available for sale                             46,937
                                                                                 -----------
                                                                                   3,165,166
                                                                                 -----------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $ 3,178,805
                                                                                 ===========
</TABLE>

                                      -42-
<PAGE>

                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                          CONDENSED STATEMENT OF INCOME
                            Year Ended June 30, 1998

<TABLE>
<CAPTION>


<S>                                                                              <C>      
 Interest and dividends on investments                                           $  31,752
 Interest on loan to subsidiary                                                     18,761
 Gain on sale of investments                                                         9,932
Operating expenses                                                                 (77,557)
Income tax benefit                                                                   5,146
                                                                                 ---------
                                                                                
Income before equity in undistributed                                            
  income of subsidiary                                                             (11,966)
                                                                                 
Equity in undistributed income                                                   
  of subsidiary                                                                    127,354
                                                                                 ---------
                                                                                
                                                                                 $ 115,388
                                                                                 =========
</TABLE>

                                      -43-
<PAGE>
                       WSB HOLDING COMPANY AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        CONDENSED STATEMENT OF CASH FLOWS
                            Year Ended June 30, 1998

OPERATING ACTIVITIES

  Net income                                               $   115,388
  Adjustments to reconcile net income to
    net cash provided by operating activities:
       Equity in undistributed income of subsidiary           (127,354)
       Gain on sale of investments                              (9,932)
       (Increase) in interest receivable from subsidiary        (1,898)
       (Increase) in prepaid income taxes                      (26,700)
       (Increase) in deferred income taxes                      (3,469)
       Amortization of ESOP shares                               9,737
                                                           -----------

NET CASH USED BY OPERATING ACTIVITIES                          (44,228)
                                                           -----------

INVESTING ACTIVITIES

  Purchases of securities available-for-sale                (1,019,672)
  Proceeds from sales of securities available-for-sale          80,000
  Purchase of subsidiary stock                              (1,625,000)
  Net change of subsidiary loan                               (244,642)
                                                           -----------

NET CASH USED BY INVESTING ACTIVITIES                       (2,809,314)
                                                           -----------

FINANCING ACTIVITIES

  Purchase of treasury stock                                   (19,431)
  Proceeds from issuance of common stock                     3,306,000
  Payments of conversion costs                                (293,465)
                                                           -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                    2,993,104
                                                           -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                      139,562

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                    --
                                                           -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                   $   139,562
                                                           ===========

Noncash investing activities:
  Total increase in unrealized gain on securities
    available-for-sale                                          64,045
  Less: income tax expense                                      17,108
                                                           -----------

                                                           $    46,937
                                                           ===========

                                      -44-