SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-KSB
(Mark One):

      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1996,
      OR

|_|   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to .

Commission File Number:  0-23878

                             BECKLEY BANCORP, INC.
                             ---------------------
            (Exact name of registrant as specified in its charter)

Delaware                                                  55-0733525
--------                                                  ----------
(State or other jurisdiction of incorporation          I.R.S. Employer
or organization)                                      Identification No.

200 Main Street, Beckley, West Virginia                      25801
---------------------------------------                      -----
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:     (304) 252-6201
                                                        --------------

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

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

                    Common Stock, par value $0.10 per share
                    ---------------------------------------
                               (Title of Class)

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.
[ X ]
      State issuer's revenues for its most recent fiscal year. $3.2 million.

      As of March 14, 1997, there were issued and outstanding  601,465 shares of
the registrant's Common Stock.

      The registrant's  voting stock is traded  over-the-counter.  The aggregate
market value of the voting stock held by non-affiliates of the registrant, based
on the average bid and ask price of the  registrant's  common stock on March 14,
1997, was $9.3 million (based on $19.75 per share).

Transition Small Business Disclosure Format (check one)
YES      NO  X
     ---    ---
                      DOCUMENTS INCORPORATED BY REFERENCE

      1.    Portions of Annual Report to Stockholders for the Fiscal Year ended
December 31, 1996.  (Parts I and II)
      2.    Portions of proxy statement dated April 21, 1997 (Part III)



<PAGE>



                                     PART I

Item 1.  Business
-------  --------

The Company

      Beckley Bancorp,  Inc. (the "Company") is a Delaware corporation organized
in 1994 at the  direction of the Board of Directors of Beckley  Federal  Savings
Bank (the "Bank" or "Beckley  Federal") to acquire all of the capital stock that
the Bank issued upon its conversion  from the mutual to stock form of ownership.
The OTS approved the Holding Company's  application to become a savings and loan
holding  company and the Holding  Company used 50% of the net proceeds  from the
issuance  of the Common  Stock to purchase  all of the common  stock of the Bank
issued upon Conversion.

The Bank

      Beckley Federal, a wholly owned subsidiary of the Company,  was founded in
1939 and is primarily engaged in attracting deposits from the general public and
using those funds to originate  mortgage  loans for the purchase or refinance of
single-family homes in Beckley, West Virginia, and surrounding communities,  and
for the purchase of  mortgage-backed  and other securities.  To a lesser extent,
the Bank  makes  consumer  loans.  To an even  lesser  extent,  the  Bank  makes
nonresidential  real estate loans and construction  loans. The Bank has a branch
office located at 1723 Harper Road, Beckley, West Virginia.

      The  principal  sources of funds for the  Bank's  lending  activities  are
deposits and the  amortization,  repayment and maturity of loans and  investment
securities.  Primary  sources  of  income  are  interest  and fees on loans  and
investment  securities  and customer  service fees and  commissions.  The Bank's
primary expense is interest paid on deposits.

Market Area/Competition

      Among its other lending activities, Beckley Federal has focused on serving
its customers located in Beckley,  West Virginia and surrounding  communities in
Raleigh  County,  West  Virginia.  The Bank's  immediate  market area features a
variety of industries such as coal mining and related support industries, health
care,  retailing,  tourism,  and  light  manufacturing.  Raleigh  County  has  a
population  of 77,000  with  approximately  76% of the  residents  living in the
Bank's primary market area.  During the past several years,  the  performance of
the West  Virginia  economy has  generally  been less than that of the  national
economy  and  many  other  state   economies   with  per  capita  income  levels
significantly   below  other  areas  of  the  country  and  unemployment   rates
substantially higher, although there has been some economic resurgence in recent
periods for the reasons discussed below.

      The Beckley/Raleigh  County area is served by two major interstate highway
systems.   Since  the  completion  of  the   interstate   system  in  1990,  the
Beckley/Raleigh  County area has  experienced a growth in population  and in the
establishment  of new  businesses  accompanied  by an increase in tourism.  This
growth has helped to  strengthen  the retail  segment of the local  economy.  In
addition,  a new federal prison has been  constructed in the Raleigh County area
and construction has begun on a federal office building in downtown Beckley.



<PAGE>



Lending Activities

      General. The principal lending activity of Beckley Federal continues to be
the  origination  of mortgage  loans for the purpose of financing or refinancing
one- to four-family residential real estate. However, during the past two years,
the Bank  has  diversified  its  lending  products  and has  begun to  originate
non-mortgage   loans,   primarily   those  secured  by   automobiles.   Although
non-mortgage  loans  generally have a higher amount of risk  associated with the
potential  decline  in the  value  of  the  collateral,  such  loans  provide  a
relatively  short-term high yielding investment when compared to mortgage loans.
The  non-mortgage  portfolio  has  performed  at or  above  levels  expected  by
management.  As of  December  31,  1996,  the  Bank  had  only  experienced  one
charge-off of approximately $4,000 in its non-mortgage loan portfolio.

      During the year ended December 31, 1996, the Bank originated approximately
$4.5  million  of  mortgage  loans,  primarily  secured  by one- to  four-family
residential   real  estate.   During  the  same  period,   the  Bank  originated
approximately  500  non-mortgage  loans totalling $5.9 million.  Such loans were
primarily secured by new and used automobiles. Total loans, net of the allowance
for loan losses and deferred loan  origination  fees and costs,  increased  $4.2
million, or 26.4% during the year.

      The  following  table  sets  forth  the  composition  of the  Bank's  loan
portfolio in dollar amounts and in percent of the  respective  portfolios at the
dates indicated.
<TABLE>
<CAPTION>

                                                     At December 31,
                                        -------------------------------------------
                                              1996                     1995
                                        --------------------     -------------------
                                         $            %            $           %
Real Estate Mortgage Loans:                       (Dollars in Thousands)
---------------------------
<S>                                     <C>          <C>          <C>         <C>
Residential 1-4 Family.............     $13,102      35.74%       $12,214     36.01%
Commercial/Multi-Family............       1,409       3.84          1,237      3.65
Construction.......................          96        .26            103       .30
Commercial Business Loans..........         103        .28             25       .07
Consumer Loans:
  Savings account..................         617       1.68            617      1.82
  Automobile.......................       4,895      13.35          1,914      5.64
  Other consumer...................         284        .77            142       .42
Less:
  Deferred loan origination fees
    and costs......................        (23)       (.06)          (32)      (.09)
  Allowance for losses on loans....       (303)       (.82)         (255)      (.75)
                                        ------       -----       -------       ----
Total loans, net...................      20,180      55.04         15,965     47.07
Mortgage-Backed and related
  securities (1-4 Family)(1).......      16,484      44.96         17,954     52.93
                                         ------      -----         ------     -----
  Total loans and mortgage-backed
    and related securities, net....     $36,664     100.00%       $33,919     100.00%
                                         ======     ======         ======     ======
</TABLE>


--------------------
(1)  Reported at fair value in accordance  with SFAS 115. The amortized  cost of
     such securities at December 31, 1996 and 1995 was $17.00 million and $18.02
     million, respectively.


                                       -2-

<PAGE>



      The following  table sets forth the  contractual  maturities of the Bank's
loan  portfolio at December 31, 1996.  The table does not consider  prepayments.
Prepayments  and scheduled  principal  repayments on loans totalled $6.8 million
for the year ended December 31, 1996.
<TABLE>
<CAPTION>

                                                      At December 31, 1996
                          -----------------------------------------------------------------------
                          Mortgage-                                             Consumer
                          Backed and   1-4 Family                                 and
                           Related     Real Estate   Commercial/                Commercial
                          Securities(1) Mortgage     Multi-Family  Construction  Business   Total
                            ----------- ---------    ------------  ------------ -------     -----

                                                         (In Thousands)
<S>                         <C>            <C>         <C>         <C>          <C>         <C>
Non-performing............  $     --       $   53      $     --    $     --     $   54      $  107

Amounts Due:
Within 3 months...........        --          593            31          --        117         741
3 months to 1 Year........        --        2,425            --          --        486       2,911

After 1 year:
  1 to 3 years............        --          211           479          96        739       1,525
  3 to 5 years............       306        1,204            36          --      4,377       5,923
  5 to 10 years...........       199        2,042           230          --        126       2,597
  Over 10 years...........    15,979        6,574           633          --         --      23,186
                              ------        -----           ---       -----      -----      ------

Total due after one year..    16,484       10,031         1,378          96      5,242      33,231
                              ------       ------         -----       -----      -----      ------
Total amount due..........    16,484       13,102         1,409          96      5,899      36,990
                              ------       ------         -----       -----      -----      ------

Less:
Allowance for losses on loans     --        (130)          (14)         (1)      (158)       (303)
Deferred loan fees and other      --         (20)           (3)          --         --        (23)
                             -------      ------         -----        -----      -----     ------
  Loans receivable, net...   $16,484      $12,952        $1,392      $   95     $5,741     $36,664
                              ======       ======         =====       =====      =====      ======
</TABLE>




      The  following  table  sets  forth  the  dollar  amount  of all  loans and
mortgage-backed  and related  securities,  which have fixed  interest  rates and
which have floating or adjustable interest rates.
<TABLE>
<CAPTION>

                                                Floating or
                              Fixed Rates    Adjustable Rates       Total
                              -----------    ----------------       -----
Real estate loans:                               (In thousands)

<S>                                <C>              <C>              <C>
   One- to four-family.....        $9,037           $4,065           $13,102
   Multi-family............            --               31                31
   Commercial real estate..         1,301               45             1,346
   Construction............            --               96                96
   Land....................            32               --                32
Consumer and commercial
  business.................         5,894                5             5,899
                                   ------            -----            ------
  Total loans..............       $16,264          $ 4,242           $20,506
Mortgage-backed and related
  securities...............         1,084           15,400            16,484
                                   ------           ------            ------
  Total....................       $17,348          $19,642           $36,990
                                   ======           ======            ======
</TABLE>




                                       -3-

<PAGE>



      Residential  Mortgage Loans. The Bank's primary lending activity  consists
of the origination of one- to four-family, owner-occupied,  residential mortgage
loans  secured by  property  located  in the Bank's  primary  market  area.  The
majority of the Bank's  residential  mortgage  loans consist of loans secured by
owner-occupied, single-family residences.

      The Bank  primarily  originates  loans  secured by first deeds of trust on
real property.  The Bank's  mortgage loan portfolio  consists of both fixed-rate
and  adjustable-rate  loans  secured by various types of collateral as discussed
below.  As of December 31, 1996,  the average  remaining term to maturity of the
bank's  mortgage  portfolio  was 163  months.  Management  expects  to  continue
offering  mortgage loans at market interest rates,  with  substantially the same
terms and conditions.

      The Bank  originates  15- and 20-year  fixed-rate  mortgage loans intended
primarily for retention in the Bank's loan  portfolio.  The Bank also originates
adjustable-rate  mortgage  loans  with  terms  ranging  from 5 to 30 years.  The
majority of mortgage  loans are  amortized on a monthly  basis.  Generally,  all
loans are originated for retention in the Bank's loan portfolio.

      The Bank  originates  construction  loans to finance the  construction  of
residential property.  These loans are generally made to private individuals who
have contracted with a licensed general contractor.  The Bank closely supervises
the  construction  process  and  disburses  all funds  during  the course of the
construction  period.  These loans are  structured  to be converted to permanent
loans at the end of the construction period.

      Beckley Federal's  residential  first mortgage loans  customarily  include
due-on-sale clauses, which are provisions giving the Bank the right to declare a
loan  immediately  due and payable in the event,  among other  things,  that the
borrower  sells or otherwise  disposes of the real property  serving as security
for the loan.  Due-on-sale clauses are an important means of adjusting the rates
on the  Bank's  fixed-rate  mortgage  portfolio,  and  the  Bank  has  generally
exercised its rights under these clauses.

      Regulations  limit  the  amount  which a savings  association  may lend in
relationship  to the  appraised  value of the real estate  securing the loan, as
determined  by an appraisal at the time of loan  origination.  Such  regulations
permit  a  maximum  loan-to-value  ratio of 100% for  residential  property  and
between 65% and 85% for all other real estate  loans,  depending  on the type of
property.  The  Bank  has the  following  lending  policies:  loans  secured  by
residential  properties  must have a loan to value ratio of 80% or less,  unless
private mortgage insurance is obtained; loans for construction will generally be
originated  for  up to  80%  of  the  appraised  value  of  the  property;  and,
non-residential  mortgage  loans  are  generally  granted  for  up to 75% of the
appraised value of the securing property.

      Consumer   and   Commercial    Business    Loans.    Regulations    permit
federally-chartered  savings associations to make secured and unsecured consumer
loans  up to 35% of the  Bank's  assets.  In  addition,  the  Bank  has  lending
authority  above the 35% category  for certain  consumer  loans,  such as second
mortgage loans and loans secured by savings accounts. Beckley Federal originates
consumer and  commercial  business  loans  secured by a variety of collateral as
discussed  below.  Management has committed to increase the Bank's consumer loan
portfolio  to  provide a short term  investment  vehicle  yielding a  relatively
higher rate of return,  consistent with the Bank's underwriting policy for these
loans.

      Beckley Federal originates  consumer loans secured by savings accounts and
certificates of deposit. The Bank will generally lend up to 95% of the amount in
the deposit account that is held as collateral.  Interest payments are generally
due no less  frequently than  quarterly.  Loans secured by deposit  accounts are
made at an interest rate which is 200 basis points above the effective  interest
rate paid on the deposit account.

                                       -4-

<PAGE>




      Beckley Federal  originates both secured and unsecured consumer loans. The
Bank  accepts a variety of  collateral  as security  for these  loans  including
automobiles,  boats,  motorcycles,  and farm equipment. The Bank generally lends
between 80% and 100% of the purchase  price on new  automobiles  and between 80%
and 100% of the purchase price or the loan value on used  automobiles.  On loans
secured by  collateral  other than  automobiles,  the Bank will  generally  loan
between 80% and 100% of the purchase  price or loan value,  depending  primarily
upon the type of collateral being used to secure the loan.

      Consumer loans entail  greater  credit risk than do  residential  mortgage
loans, particularly in the case of consumer loans which are unsecured or secured
by assets that depreciate rapidly, such as automobiles,  mobile homes, boats and
recreational  vehicles.  In such cases,  repossessed  collateral for a defaulted
consumer  loan  may  not  provide  an  adequate  source  of  repayment  for  the
outstanding  loan and the remaining  deficiency  often does not warrant  further
substantial  collection  efforts  against the borrower.  In particular,  amounts
realizable on the sale of repossessed  automobiles may be significantly  reduced
based upon the condition of the  automobiles  and/or the lack of demand for used
automobiles.

      Commercial/Multi-Family Mortgage Loans. The Bank originates mortgage loans
secured by commercial and multi-family (5 or more units) real estate,  community
service facilities such as churches, or small business properties. The Bank does
not actively  promote  commercial or multi-family  lending and does not consider
them to be a primary lending activity.

      Loans secured by commercial and multi-family  properties generally involve
a greater degree of risk than  residential  mortgage loans and carry larger loan
balances.  This increased credit risk is a result of several factors,  including
the  concentration of principal in a limited number of loans and borrowers,  the
effects of general economic  conditions on income  producing  properties and the
increased  difficulty  of  evaluating  and  monitoring  these  types  of  loans.
Furthermore,  the  repayment  of loans  secured  by  commercial  real  estate is
typically  dependent  upon the  successful  operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired.

      Loan  Solicitation  and Processing.  Loan  originations are derived from a
number of sources such as real estate broker  referrals,  customers,  borrowers,
builders and walk-in customers.

      Upon  receipt  of a loan  application,  a credit  report  is  ordered  and
reviewed  to  verify  specific  information  relating  to the  loan  applicant's
creditworthiness.  In the  case of  mortgage  loans,  written  verifications  of
employment  and  deposits are sent to the  applicant's  employer and their bank,
respectively.  Also,  the Bank  requires  that an  appraisal  of the real estate
intended to secure the proposed loan is undertaken by an  independent  appraiser
approved  by the Bank.  After all of the  information  required to make a credit
decision is obtained,  two members of the Bank's Executive  Committee review the
loan  application  file and make a decision  whether to approve  the loan.  Upon
approval, the applicant is verbally notified and, in the case of mortgage loans,
a title  report is  immediately  ordered.  The  Board  ratifies  loan  decisions
monthly.

      The Bank  does not  require  mortgagor  title  insurance  policies  on its
mortgage  loans.  However,  the bank  does  require  proof of  hazard  insurance
providing coverage on the property securing the loan.


                                       -5-

<PAGE>



      If the loan is  approved,  the loan  commitment  specifies  the  terms and
conditions of the proposed loan including the amount of the loan,  interest rate
and  amortization  term.  The borrower must provide proof of fire, and flood (if
applicable)  insurance on the property  serving as collateral,  which  insurance
must be maintained  during the full term of the loan.  The Bank requires that an
acceptable title report must be issued by its attorneys on all mortgage loans.

      Loan Originations and  Mortgage-Backed  and Related Securities  Purchased.
The following  table sets forth the Bank's gross  originations,  mortgage-backed
and related  securities  purchases,  and  principal  repayments  for the periods
indicated. During the periods shown, the Bank sold no loans.
<TABLE>
<CAPTION>

                                                        Year Ended December 31,
                                                        -----------------------
                                                         1996             1995
                                                         ----             ----
                                                           (In Thousands)
<S>                                                    <C>             <C>

Total gross loans receivable at
   beginning of period.........................         $34,206          $28,545
                                                         ======           ======

Loans originated:
  1 to 4 family residential....................         $ 3,882          $ 3,227
  Consumer.....................................           5,774            3,269
  Commercial/Multi-Family......................             398              661
  Construction.................................             214              399
  Commercial business..........................             141               51
                                                         ------           ------
Total loans originated.........................         $10,409          $ 7,607
                                                         ======           ======
Total mortgage-backed and related securities
  purchased(1)                                          $    --          $ 3,933
                                                         ======           ======
Loan principal repayments......................         $ 6,764          $ 7,145
                                                         ======           ======
Other..........................................            (861)(1)        1,266(1)
                                                        -------           ------
Net loan activity..............................         $ 2,784          $ 5,661
                                                         ======           ======
Total gross loans receivable at end of period..         $36,990          $34,206
                                                         ======           ======
</TABLE>

---------------------
(1)   Includes  an   adjustment   to  reflect  the  fair  value  of  the  Bank's
      mortgage-backed and related securities in accordance with SFAS 115.

      Loan  Commitments.   Upon  loan  approval  by  members  of  the  Executive
Committee,  the Bank makes a verbal  commitment to the loan  applicant as to the
amount, term and interest rate of the loan. The commitment is generally good for
thirty  days.  Loan   commitments  at  December  31,  1996  totalled   $133,000.
Approximately  99% of the Bank's  commitments  are usually  funded  before their
expiration.
No fee is charged for this type of commitment.

      The Bank  generally  charges a  commitment  fee where the loan  commitment
period  exceeds  ninety  days.  This fee is  normally  1.0% of the amount of the
commitment.

      Loan Fees and Service  Charges.  In addition to interest  earned on loans,
the Bank generally  recognizes fees and service charges which consist  primarily
of loan origination  fees and late charges.  Interest income from loans included
approximately  $15,000 of loan origination fees and late charge fees for each of
the years ended December 31, 1996 and 1995.


                                       -6-

<PAGE>



      Loan origination and commitment fees are volatile sources of income.  Such
fees vary with the volume and type of loans and  commitments  made and purchased
and with competitive  conditions in the mortgage markets,  which in turn respond
to the demand and availability of money.

      Loans to One Borrower. Savings associations are subject to the same limits
as those  applicable to national banks,  which limit loans to one borrower in an
amount equal to 15% of unimpaired capital and unimpaired surplus on an unsecured
basis and an additional amount equal to 10% of unimpaired capital and unimpaired
surplus  if the loan is secured by  readily  marketable  collateral  (generally,
financial  instruments and bullion, but not real estate) or $500,000,  whichever
is higher.  At December 31, 1996 the Bank's loan to one borrower  limit was $1.2
million.  At December 31, 1996, the Bank's largest  exposure to one borrower was
$472,000 and was secured by an 18-hole golf course located on approximately  126
acres of land.

      Delinquencies and Asset  Classification.  The Bank's collection procedures
provide  that when a loan is more than 15 days past due, a late  charge is added
and the borrower is contacted by mail or telephone and payment is requested.  If
the delinquency continues, subsequent efforts are made to contact the delinquent
borrower.  For mortgage loans delinquent for 90 days or more, the Bank generally
initiates foreclosure  proceedings unless other repayment arrangements are made.
For secured consumer loans, the Bank generally  repossesses the collateral prior
to the  delinquency  reaching 90 days and legal  remedies are pursued to collect
deficiencies,  if any. For unsecured  consumer loans, legal action is taken when
the Bank determines that a loan is otherwise uncollectible. Each delinquent loan
is reviewed on a case by case basis.

      Delinquent  loans  are  reviewed  on a regular  basis and are  placed on a
non-accrual  status when the loan becomes 90 days delinquent and, in the opinion
of  management,  the  collection  of additional  interest is doubtful.  Interest
accrued and unpaid at the time a loan is placed on non-accrual status is charged
against  interest  income.   Subsequent  payments  are  either  applied  to  the
outstanding  principal balance or recorded as interest income,  depending on the
assessment of the ultimate collectibility of the loan.

      Real estate  acquired by the Bank as a result of foreclosure or by deed in
lieu of foreclosure  is classified as foreclosed  real estate until such time as
it is sold. When foreclosed real estate is acquired, it is recorded at the lower
of the unpaid  principal  balance of the related  loan or its fair value,  based
upon a current appraisal. Any write-down of foreclosed real estate is charged to
the  allowance  for real estate  losses.  At December 31, 1996,  the Bank had no
property acquired as the result of foreclosure or by deed in lieu of foreclosure
and classified as foreclosed real estate.

      Repossessed  assets  are  recorded  at the lower of the  unpaid  principal
balance  of the  related  loan or the  assets'  fair  value,  as  determined  by
management. Any write-down is charged to the allowance for consumer loan losses.
At December 31, 1996, the Bank held no repossessed assets.



                                       -7-

<PAGE>



      At December 31, 1996 and 1995,  delinquencies in the Bank's loan portfolio
were as follows:
<TABLE>
<CAPTION>

                                                      At December 31,
                  ---------------------------------------------------------------------------------------
                                     1996                                         1995
                                    ------                                       -----
                       60-89 Days          90 Days or More          60-89 Days          90 Days or More
                      ------------        -----------------        ------------        ----------------
                   Number   Principal    Number    Principal    Number   Principal    Number    Principal
                     of      Balance       of       Balance       of      Balance       of       Balance
                   Loans     of Loans     Loans     of Loans    Loans     of Loans     Loans     of Loans
                   -----     --------     -----     --------    -----     --------     -----     --------
                                                   (Dollars in Thousands)
<S>                  <C>       <C>           <C>      <C>          <C>       <C>          <C>       <C>

One- to four-
  family........       2        $ 74          3        $ 53         4         $63          3         $53
Multi-family....      --          --         --          --        --          --         --          --
Commercial            --          --         --          --
 real estate....                                                   --          --         --          --
Land............      --          --         --          --        --          --         --          --
Consumer and
 commercial
 business.......      --          --         --          --        --          --         --          --
                     ---         ---        ---         ---        --          --         --          --
   Total........       2        $ 74          3        $ 53         4         $63          3         $53
                     ===         ===        ===         ===        ==          ==         ==          ==
Delinquent loans
  to total loans                 .36%                   .26%                  .39%                   .33%
</TABLE>

      Uncollectible interest on loans that are contractually past due is charged
off, or an allowance is established based on management's periodic evaluation of
its portfolio. 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 that cash payments are received until,  in management's  judgment,
the borrower has the ability to make periodic interest and principal payments or
is no longer  delinquent,  and the loan is returned to accrual status.  The Bank
ceases the accrual of interest on delinquent loans upon foreclosure. At December
31, 1996, the Bank had no restructured  loans within the meaning of Statement of
Financial  Accounting  Standard  ("SFAS")  15.  The  following  table sets forth
information regarding loans which are 90 days or more delinquent.

                                               At December 31,
                                               ---------------
                                               1996       1995
                                               ----       ----
                                               (In thousands)

Loans 90 days or more delinquent(1)........      $  53      $ 53
Foreclosed real estate.....................         --        --
                                                   ---      ----
    Total non-performing assets............       $ 53      $ 53
                                                   ===       ===


----------------------
(1)   Interest on loans 90 days or more delinquent is 100% reserved. At December
      31, 1996 and 1995,  the  balance of the  reserve  for accrued  interest on
      loans delinquent 90 days or more was $1,200 and $1,800,  respectively.  At
      December  31,  1996 and  1995,  the Bank had no loans  accounted  for on a
      nonaccrual basis which were less than 90 days past due.

      Classified Assets. OTS regulations  provide for a specific  classification
system for problem  assets of insured  institutions.  Under this  classification
system,  problem assets of insured institutions are classified as "substandard,"
"doubtful,"  or  "loss."  An  asset  is  considered   "substandard"   if  it  is
inadequately  protected  by the  current  net worth and paying  capacity  of the
obligor or of the collateral pledged, if any.

                                       -8-

<PAGE>



"Substandard"  assets include those characterized by the "distinct  possibility"
that the insured  institution  will sustain "some loss" if the  deficiencies are
not  corrected.  Assets  classified  as  "doubtful"  have all of the  weaknesses
inherent in those classified  "substandard," with the added  characteristic that
the weaknesses present make "collection or liquidation in full," on the basis of
currently  existing  facts,  conditions  and values,  "highly  questionable  and
improbable."  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment  of a specific loss reserve is not  warranted.  Assets  designated
"special  mention" by  management  are assets  included  on the Bank's  internal
watchlist  because of  potential  weakness  but which do not  currently  warrant
classification in one of the aforementioned categories.

      When  an  insured   institution   classifies   problem  assets  as  either
substandard or doubtful,  it may establish general  allowances for credit losses
in an amount deemed prudent by  management.  General  allowances  represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem  assets as  "loss,"  it is  required  either  to  establish  a  specific
provision for losses equal to 100% of that portion of the asset so classified or
to  charge  off  such  amount.   An   institution's   determination  as  to  the
classification  of its  assets  and the amount of its  valuation  allowances  is
subject to review by the OTS,  which may order the  establishment  of additional
general or  specific  loss  allowances.  A portion of  general  loss  allowances
established to cover possible losses related to assets classified as substandard
or doubtful may be included in determining an institution's  regulatory capital,
while specific  valuation  allowances for credit losses generally do not qualify
as regulatory capital.

      At December 31, 1996, the Bank's problem assets were as follows:  $128,000
were designated special mention, $53,000 were classified as substandard and none
were  classified  as doubtful or loss.  At December 31, 1996,  the Bank had loss
allowances of $303,000.  Management  believes that the Bank's  current loan loss
allowance is sufficient to cover any potential losses.

      Allowance for Losses on Loans, Real Estate Owned, and Repossessed  Assets.
It is  management's  policy to provide for losses on  unidentified  loans in its
loan  portfolio as well as on classified  loans and  foreclosed  real estate.  A
provision  for loan  losses  is  charged  to  operations  based on  management's
evaluation  of the  potential  losses  that may be  incurred  in the Bank's loan
portfolio.   Management  has  established  minimum  standards  for  its  general
reserves. On mortgage loans, a minimum of 1% of the outstanding loan balances at
the end of each quarter is reserved.  On consumer  loans, a minimum of 3% of the
outstanding loan balances at the end of each quarter is reserved. In addition to
these general reserves,  the Bank reserves 10% of substandard assets and 100% of
assets classified as doubtful or loss.

      Also, when foreclosed real estate is acquired, it is recorded at the lower
of the unpaid principal balance of the related loan or its fair value based upon
a current appraisal.  Repossessed assets are recorded at the lower of the unpaid
principal balance of the related loan or the assets' fair value as determined by
management  using  information  obtained  by  valuation  guides or from  dealers
familiar with the particular  type of asset.  Management  periodically  performs
valuations of these assets and  establishes  valuation  allowances to reduce the
book value of the assets to their net realizable value when necessary.

      Management  will continue to review the entire loan portfolio to determine
the extent,  if any, to which further  additional  loan loss  provisions  may be
deemed  necessary.  There can be no assurance that the allowance for loan losses
will be adequate to cover losses which may in fact be realized in the future and
that additional provisions for losses on loans and real estate owned will not be
required.


                                       -9-

<PAGE>



     Allowance Analysis. The following table sets forth the Bank's allowance for
losses on loans.


                                                At or For the Year Ended
                                                      December 31,
                                                      ------------
                                                    1996         1995
                                                    ----         ----
                                                 (Dollars in thousands)
Allowance for credit losses:
Balance at beginning of period................      $  255       $  174
                                                     -----        -----
 Charge-offs..................................           4           --
  Recoveries..................................          --           --
  Provisions charged to income................          52           81
                                                     -----        -----
Balance at end of period......................      $  303       $  255
                                                     =====        =====
Ratio of allowance for losses to total
  loans at the end of the period..............        1.48%        1.57%



      Allowance  by Loan  Category.  The  following  table sets forth the Bank's
allocation of the allowance for losses on loans by loan category and the percent
of loans in each category to total loans receivable at the dates indicated.  The
portion of the  allowance  for losses on loans  allocated to each loan  category
does not represent the total  available for future losses which may occur within
the loan category.
<TABLE>
<CAPTION>
                                                           At December 31,
                                                           ---------------
                                                       1996                      1995
                                                       ----                      ----
                                                     Percent of
                                                     Loans in                  Percent of
                                                       Each                   Loans in Each
                                                     Category to               Category to
                                          Amount     Total Loans    Amount     Total Loans
                                          ------     -----------    ------     -----------
                                                        (Dollars in thousands)
<S>                                        <C>        <C>               <C>      <C>
Residential, Commercial and Multi-Family
  Real Estate (1)................          $ 145       71.23%           $ 145      83.40%
Consumer and Commercial Business Loans       158        28.77             110      16.60
                                            ----       ------             ---     -----
Total............................          $ 303      100.00%           $ 255     100.00%
                                            ====      ======             ====     ======
</TABLE>

--------------
(1)  The allowance is based on general  reserves  calculated on the  outstanding
     balance of the entire loan portfolio.


      Mortgage-Backed  and Related  Securities  and Investment  Activities.  The
investment  policy of the Bank,  which is established  by senior  management and
approved  by the Board of  Directors,  is based  upon its  asset  and  liability
management  goals and is  designed  primarily  to  provide a  portfolio  of high
quality,  diversified  investments while seeking to optimize net interest income
within acceptable limits of safety and liquidity. Investments generally are made
with the intent of holding them to maturity,  however, to maintain  flexibility,
the Bank  generally  classifies  such  investments as  "available-for-sale"  and
accounts for them at their fair values. The Bank's current investment goal is to
invest  available  funds in instruments  that meet specific  requirements of the
Bank's asset and liability management goals. The

                                      -10-

<PAGE>



investment   activities  of  the  Bank  consist   primarily  of  investments  in
mortgage-backed  and  related  securities,   and,  to  a  lesser  extent,  other
securities consisting primarily of securities issued or guaranteed by the United
States Government or agencies  thereof.  At December 31, 1996, the fair value of
the investment  securities  portfolio was $7.0 million and the fair value of the
mortgage-backed and related securities portfolio was $16.5 million.

      Investments.  The following table sets forth certain information regarding
the  amortized  cost and fair values of the Bank's  interest  bearing  deposits,
investment  securities,  and mortgage-backed and related securities at the dates
indicated:
<TABLE>
<CAPTION>
                                                                 At December 31,
                                                   ------------------------------------------
                                                           1996                  1995
                                                   -------------------   --------------------
                                                   Amortized     Fair    Amortized     Fair
                                                      Cost      Value       Cost       Value
                                                      ----      -----       ----       -----
                                                                 (In thousands)

<S>                                                  <C>       <C>         <C>        <C>
Interest bearing deposits........................      $916      $916       $   965    $   965
                                                        ===       ===        ======     ======

Investment securities:
  Held-to-Maturity:
    U.S. agency securities.......................      $997      $997       $ 3,993    $ 3,993
    Marketable equity securities.................                                --         --
Available-for-sale:
    U.S. agency securities.......................     4,986     4,976         4,216      4,205
    Marketable equity securities.................        36     1,022            61        816
                                                     ------     -----       -------    -------
      Total investment securities................    $6,019    $6,995       $ 8,270    $ 9,014
                                                      =====     =====        ======     ======

Mortgage-backed and Related Securities:
  Held-to-Maturity:
    Mortgage-backed participation certificates...   $    --    $   --       $    --    $    --
    Collateralized mortgage obligations..........        --        --            --         --
  Available-for-sale:
    Mortgage-backed participation certificates...     4,341     4,354         4,968      5,054
    Collateralized mortgage obligations..........    12,665    12,130        13,054     12,900
                                                     ------    ------        ------     ------
  Total mortgage-backed and related securities...    17,006    16,484        18,022     17,954
                                                     ------    ------        ------     ------
      Total investments..........................   $23,941    $24,395      $27,257    $27,933
                                                     ======     ======       ======     ======
</TABLE>


                                      -11-

<PAGE>



Investment Yields and Maturities.

      The following table sets forth certain information regarding the amortized
cost, weighted average rates and contractual maturities of the Bank's investment
securities portfolio at December 31, 1996.
<TABLE>
<CAPTION>
                                                             As of December 31, 1996
              ----------------------------------------------------------------------------------------------------------------------
                 One Year or Less     One to Five Years     Five to Ten Years    More than Ten Years   Total Investment Securities
                          Weighted              Weighted              Weighted              Weighted              Weighted
               Amortized   Average   Amortized   Average   Amortized   Average   Amortized   Average   Amortized  Average    Fair
                 Cost       Rate       Cost       Rate       Cost       Rate       Cost       Rate       Cost       Rate     Value
                ------     ------     ------     ------     ------     ------     ------     ------     ------     ------   ------
                                                              (Dollars In Thousands)

<S>             <C>        <C>        <C>       <C>         <C>       <C>         <C>       <C>         <C>       <C>       <C>
U. S.
  Agency
  Securities..  $2,492      4.7%      $2,491     5.6%       $1,000     8.0%        $   --       --%      $5,983    5.6%      $5,973
Marketable
  Equity
  Securities..      36     36.1           --      --            --      --             --       --          36    36.1        1,022
                 -----     ----       ------    ------      ------    ----         ------   ------       -----    ----        -----
  Total.......  $2,528      5.2%      $2,491     5.6%       $1,000     8.0%        $   --       --%      $6,019    5.8%      $6,995
                 =====    ====         =====    ===          =====    ===          ======   ======        =====    ====        =====

</TABLE>



                                      -12-

<PAGE>



Sources of Funds

      General. Deposits are the major source of the Bank's funds for lending and
other  investment  purposes.  In addition to deposits,  Beckley  Federal derives
funds  from  amortization  and  prepayment  of  loans,  sale  or  maturities  of
investment securities and operations.  Scheduled loan principal repayments are a
relatively  stable source of funds,  while deposit inflows and outflows and loan
prepayments are  significantly  influenced by general  interest rates and market
conditions. The Bank does not generally use borrowings.

      Deposits.  Consumer and commercial deposits are attracted principally from
within the Bank's primary market area through the offering of a broad  selection
of deposit  instruments  including NOW, regular  savings,  money market deposit,
term certificate accounts and individual  retirement  accounts.  Deposit account
terms vary according to the minimum balance required, the time periods the funds
must remain on deposit and the  interest  rate,  among other  factors.  The Bank
regularly  evaluates  the  internal  cost of funds,  surveys  rates  offered  by
competing  institutions,  reviews the Bank's cash flow  requirements for lending
and liquidity and executes rate changes when deemed  appropriate.  The Bank does
not obtain funds through brokers,  nor does it actively solicit funds outside of
the State of West Virginia.

      The  following  table sets forth  average  balances  and rates for various
deposit categories for the year ended December 31, 1996.

                                                 Average        Average
                                                 Balance         Rate
                                                 -------         ----
                                            (In Thousands)
      Savings Accounts....................         7,591        3.08%
      NOW and Money Market Deposit Accounts        5,195         2.39
      Certificate of Deposit Accounts.....        19,484         5.07



      Certificates  of Deposit of  $100,000  or More.  Although  the Bank offers
certificates  of deposit with balances of $100,000 or more,  the Bank  generally
does not offer a higher  interest rate for such  deposits.  The following  table
indicates the amount of the Bank's  certificates  of deposit of $100,000 or more
by time remaining until maturity as of December 31, 1996:


                                                           Certificates
      Maturity Period                                        of Deposit
      ---------------                                        ----------
                                                         (In Thousands)
      Within three months............................          $  848
      Three through six months..................... .           1,999
      Six through twelve months......................             200
      Over twelve months.............................             792
                                                                -----
                                                               $3,839


      Borrowings. Deposits are the primary source of funds of the Bank's lending
and  investment  activities  and for its  general  business  purposes.  The Bank
maintains a line of credit with the FHLB of  Pittsburgh.  The Bank,  if the need
arises,  may also access the Federal  Reserve Bank discount window to supplement
its supply of lendable  funds and to meet deposit  withdrawal  requirements.  At
December 31, 1996, the Bank had $2.0 million in outstanding  short term advances
from the FHLB of

                                     -13-

<PAGE>



Pittsburgh.  The  weighted-average  interest rate on such advances was 5.74% and
the weighted average remaining maturity was 46 days. The advances will be repaid
with the proceeds of maturing investment securities.

Personnel

      As of December  31,  1996,  the Bank had 13  full-time  employees  and one
part-time employee. None of the Bank's employees are represented by a collective
bargaining  group. The Bank believes that its relationship with its employees is
good.

Regulation

      Set forth below is a summary  description  of certain laws which relate to
the regulation of the Bank and the Company.  The description does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

Bank Regulation

      General.  As a federally  chartered,  Savings  Association  Insurance Fund
("SAIF")-insured   savings  association,   the  Bank  is  subject  to  extensive
regulation by the OTS and the Federal Deposit  Insurance  Corporation  ("FDIC").
Lending  activities  and other  investments  must  comply with  various  federal
statutory  and  regulatory  requirements.  The Bank is also  subject  to certain
reserve requirements promulgated by the Federal Reserve Board.

      The OTS, in  conjunction  with the FDIC,  regularly  examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that they find in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
law,  especially  in such matters as the  ownership of savings  accounts and the
form and content of the Bank's mortgage documents.

      The Bank  must  file  reports  with the OTS and the  FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.  Any change in such  regulations,  whether by the OTS, the FDIC or the
Congress could have a material adverse impact on the Company, the Bank and their
operations.

      Insurance of Deposit Accounts.  The Bank's deposit accounts are insured by
the SAIF to a maximum of $100,000 for each insured member (as defined by law and
regulation).  Insurance of deposits may be terminated by the FDIC upon a finding
that the institution has engaged in unsafe or unsound practices, is in an unsafe
or unsound condition to continue operations, or has violated any applicable law,
regulation,  rule, order or condition  imposed by the FDIC or the  institution's
primary regulator.  The FDIC may also prohibit an insured depository institution
from engaging in any activity the FDIC  determines  to pose a serious  threat to
the SAIF.


                                      -14-

<PAGE>



      The FDIC charges an annual  assessment for the insurance of deposits based
on the risk a  particular  institution  poses  to its  deposit  insurance  fund,
depending upon the institution's risk  classification.  This risk classification
is based on an institution's  capital group and supervisory subgroup assignment.
In addition,  the FDIC is authorized to increase  deposit  insurance  rates on a
semi-annual  basis if it  determines  that such action is necessary to cause the
balance  in the  SAIF  to  reach  the  designated  reserve  ratio  of  1.25%  of
SAIF-insured  deposits  within a reasonable  period of time. The FDIC may impose
special  assessments  on SAIF members to repay  amounts  borrowed  from the U.S.
Treasury  or for any  other  reason  deemed  necessary  by the  FDIC.  Prior  to
September 30, 1996, savings  associations paid within a range of .23% to .31% of
domestic  deposits and the SAIF was  substantially  underfunded.  By comparison,
prior to  September  30,  1996,  members  of the Bank  Insurance  Fund  ("BIF"),
predominantly  commercial banks,  were required to pay  substantially  lower, or
virtually no, federal deposit insurance premiums.

      Effective  September  30,  1996,  federal  law was  revised  to  mandate a
one-time  special  assessment on SAIF members such as the Bank of  approximately
 .657% of deposits held on March 31, 1995.  The Bank recorded a $212,000  pre-tax
expense for this  assessment at September 30, 1996.  Beginning  January 1, 1997,
deposit  insurance  assessments  for SAIF members were reduced to  approximately
 .064% of deposits on an annual basis;  this rate may continue through the end of
1999.  During  this  same  period,  BIF  members  are  expected  to be  assessed
approximately  .013%  of  deposits.  Thereafter,  assessments  for BIF and  SAIF
members  should be the same and the SAIF and BIF may be merged.  It is  expected
that these continuing  assessments for both SAIF and BIF members will be used to
repay outstanding Financing  Corporation bond obligations.  As a result of these
changes,  beginning January 1, 1997, the rate of deposit insurance  assessed the
Bank declined by  approximately  70% from rates in effect prior to September 30,
1996.

      Regulatory Capital Requirements.  Set forth below is the Bank's regulatory
capital requirements applicable to it as of December 31, 1996:

                                                            Percent
                                                          of Adjusted
                                                 Amount      Assets
                                                 ------      ------
                                               (Dollars in Thousands)
Tangible Capital:
Regulatory requirement............              $   685          1.5%
Actual capital....................                7,723         16.9
                                                 ------        -----
  Excess..........................              $ 7,038         15.4%
                                                 ======        =====

Core Capital:
Regulatory requirement............              $ 1,371          3.0%
Actual capital....................                7,723         16.9
                                                 ------        -----
  Excess..........................              $ 6,352         13.9%
                                                 ======        =====

Risk-Based Capital:
Regulatory requirement(1).........              $ 1,503          8.0%
Actual capital....................                7,958         42.4
                                                 ------        -----
  Excess..........................              $ 6,455         34.4%
                                                 ======        =====

--------------------
(1)   Based on risk-weighted assets of $18,790.

                                      -15-

<PAGE>




      Net Portfolio  Value. In recent years,  the Bank has measured its interest
rate sensitivity by computing the "gap" between the assets and liabilities which
were expected to mature or reprice within certain periods,  based on assumptions
regarding loan prepayment and deposit decay rates formerly  provided by the OTS.
However,  the OTS now  requires  the  computation  of  amounts  by which the net
present value of an  institution's  cash flows from assets,  liabilities and off
balance  sheet items (the  institution's  net portfolio  value,  or "NPV") would
change in the event of a range of assumed changes in market interest rates.  The
OTS also requires the  computation of estimated  changes in net interest  income
over a  four-quarter  period.  These  computations  estimate  the  effect  of an
institution's  NPV and net interest income of instantaneous  and permanent 1% to
4% increases and decreases in market interest rates. In the Bank's interest rate
sensitivity policy, the Board of Directors has established a maximum decrease in
net  interest  income and maximum  decreases  in NPV given  these  instantaneous
changes in interest rates.

      In order to encourage associations to reduce their interest rate risk, the
OTS adopted a rule in 1993 incorporating an interest rate risk ("IRR") component
into the risk-based capital rules. The rule is, however, not yet effective.  The
IRR  component is a dollar  amount that will be deducted  from total capital for
the purpose of calculating an institution's  risk-based capital  requirement and
is measured in terms of the sensitivity of its NPV to changes in interest rates.
NPV is the difference  between incoming and outgoing  discounted cash flows from
assets,  liabilities,  and off-balance sheet contracts.  An institution's IRR is
measured as the change to its NPV as a result of a hypothetical  200 basis point
change in market  interest  rates. A resulting  change in NPV of more than 2% of
the  estimated  market  value of its assets  will  require  the  institution  to
maintain additional  capital.  The rules provide that the OTS will calculate the
IRR component quarterly for each institution;  however, because the Bank's total
assets  were less than $300  million and its  tangible  capital was in excess of
12%, the Bank was exempt from the component at December 31, 1996.

     The following table sets forth the interest rate risk measures for the Bank
at  December  31,  1996 (the most  recent  date for which  such  information  is
available to the Bank from the OTS) given a hypothetical  200 basis point ("bp")
rate change in market interest rates. See "Regulatory Capital Requirements."

                                            As of December 31, 1996
                                            -----------------------
      RISK MEASURES:
      200 Basis Point Rate Shock

      Pre-Shock NPV Ratio:  NPV as %
        of Present Value of Assets.........          19.05%
      Exposure Measure:  Post-Shock
        NPV Ratio..........................          16.73%
      Sensitivity Measure:  Change in NPV
      Ratio................................           (231)bp


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

      Certain  shortcomings are inherent in the method of analysis  presented in
the computation of NPV. For example, although certain assets and liabilities may
have similar  maturities  or periods to  repricing,  they may react in differing
degrees to changes in market interest rates. The interest rates on certain types

                                      -16-

<PAGE>



of assets and liabilities may fluctuate in advance of changes in market interest
rates,  while  interest  rates on other  types may lag behind  changes in market
rates.  Additionally,  certain  assets,  such as  adjustable  rate loans,  which
represent the Bank's primary loan product,  have features which restrict changes
in  interest  rates on a  short-term  basis and over the life of the  asset.  In
addition, the proportion of adjustable rate loans in the Bank's portfolios could
decrease in future periods if market  interest rates remain at or decrease below
current levels due to refinance  activity.  Further, in the event of a change in
interest  rates,  prepayment  and early  withdrawal  levels would likely deviate
significantly  from those  assumed in the tables.  Finally,  the ability of many
borrowers to service their  adjustable rate debt may decrease in the event of an
interest rate increase.

      The  OTS  may  increase  the  minimum  capital  requirements  for  savings
associations with higher credit risks.

      Federal banking  regulators are required to take certain prompt corrective
actions  against  undercapitalized  institutions,  the severity of which depends
upon the institution's degree of capitalization.  An institution shall be deemed
to be (i) "well  capitalized"  if it has total  risk-based  capital  of 10.0% or
more,  has a Tier I  risk-based  capital  ratio  (core or  leverage  capital  to
risk-weighted  assets) of 6.0% or more,  has a leverage  capital of 5.0% or more
and is not subject to any order or final capital  directive to meet and maintain
a specific capital level for any capital measure, (ii) "adequately  capitalized"
if it  has a  total  risk-based  capital  ratio  of  8.0%  or  more,  a  Tier  I
risked-based  ratio of 4.0% or more and a leverage capital ratio of 4.0% or more
(3.0% under  certain  circumstances)  and does not meet the  definition of "well
capitalized;"  (iii)  "undercapitalized"  if it has a total  risk-based  capital
ratio that is less than 8.0%,  a Tier I  risk-based  capital  ratio that is less
than 4.0% or a  leverage  capital  ratio that is less than 4.0% (3.0% in certain
circumstances);   (iv)  "significantly  undercapitalized"  if  it  has  a  total
risk-based  capital ratio that is less than 6.0%, or a Tier I risk-based capital
ratio that is less than  3.0%,  or a  leverage  capital  ratio that is less than
3.0%; and (v) "critically undercapitalized" if it has a ratio of tangible equity
to total assets that is equal to or less than 2.0%.  In addition,  under certain
circumstances,  a federal  banking  agency  may  reclassify  a well  capitalized
institution as adequately  capitalized and may require an adequately capitalized
institution  or an  undercapitalized  institution  to  comply  with  supervisory
actions as if it were in the next lower  category  (except that the FDIC may not
reclassify  a   significantly   undercapitalized   institution   as   critically
undercapitalized).

      Dividend  and Other  Capital  Distribution  Limitations.  OTS  regulations
require  the  Bank to give  the OTS 30  days'  advance  notice  of any  proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory  powers to prohibit  the payment of  dividends  to the  Company.  In
addition,  the Bank may not declare or pay a cash  dividend on its capital stock
if the  effect  thereof  would be to reduce the  regulatory  capital of the Bank
below the amount required for the liquidation  account  established  pursuant to
the Bank's Plan of Conversion.

      Qualified  Thrift  Lender  Test.  The Home  Owners'  Loan Act,  as amended
("HOLA"),  requires  savings  institutions  to meet a  qualified  thrift  lender
("QTL") test. If the Bank  maintains an  appropriate  level of qualified  thrift
investments (primarily residential mortgages and related investments,  including
certain  mortgage-backed  securities) ("QTIs") and otherwise qualifies as a QTL,
it will continue to enjoy full borrowing privileges from the FHLB of Pittsburgh.
The  required  percentage  of QTIs is 65% of  portfolio  assets  (defined as all
assets minus intangible  assets,  property used by the institution in conducting
its business and liquid assets equal to 20% of total assets). Certain assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying QTIs. A savings  association must have the appropriate amount of QTIs
on a monthly basis in nine out of every 12 months.  As of December 31, 1996, the
Bank  was in  compliance  with its QTL  requirement  with  91.7%  of its  assets
invested in QTIs.

                                     -17-

<PAGE>




      A savings association that does not meet a QTL test must either convert to
a bank charter or comply with the following restrictions on its operations:  (i)
the  savings  association  may not  engage in any new  activity  or make any new
investment,  directly or  indirectly,  unless such  activity  or  investment  is
permissible  for a  national  bank;  (ii) the  branching  powers of the  savings
association  shall be restricted to those of a national bank;  (iii) the savings
association shall not be eligible to obtain any advances from its FHLB; and (iv)
payment of  dividends by the savings  association  shall be subject to the rules
regarding  payment of dividends by a national bank. Upon the expiration of three
years from the date the  savings  association  ceases to be a QTL, it must cease
any activity and not retain any investment not  permissible  for a national bank
and  immediately  repay any  outstanding  FHLB  advances  (subject to safety and
soundness considerations).

      Liquidity Requirements.  All savings associations are required to maintain
an average daily  balance of liquid assets equal to a certain  percentage of the
sum of its  average  daily  balance of net  withdrawable  deposit  accounts  and
borrowings payable in one year or less. The liquidity  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings  associations.  At the present  time,  the required  liquid
asset ratio is 5%. During  December  1996, the Bank's  liquidity  ratio averaged
20.1%.

      Federal  Home  Loan  Bank  System.  The  Bank is a  member  of the FHLB of
Pittsburgh,  which  is  one of 12  regional  FHLBs  that  administers  the  home
financing credit function of savings associations. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies  and  procedures  established  by the Board of Directors of the FHLB of
Pittsburgh.  At December  31,  1996,  the Bank had $2.0  million in  outstanding
advances  from the FHLB of  Pittsburgh.  See  "Business of the Bank -- Source of
Funds -- Borrowings."

      As a member,  the Bank is required to purchase and  maintain  stock in the
FHLB of  Pittsburgh  in an amount equal to at least 1% of its  aggregate  unpaid
residential mortgage loans, home purchase contracts or similar obligations.

      Federal Reserve System.  The Federal Reserve Board requires all depository
institutions  to  maintain  noninterest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW and  Super NOW
checking  accounts) and non-personal time deposits.  The balances  maintained to
meet the reserve  requirements  imposed by the Federal Reserve Board may be used
to satisfy the liquidity requirements that are imposed by the OTS.

      Savings  associations  have  authority to borrow from the Federal  Reserve
Bank "discount  window," but Federal Reserve policy  generally  requires savings
associations  to exhaust  all FHLB  sources  before  borrowing  from the Federal
Reserve System. The Bank had no such borrowings at December 31, 1996.

Company Regulation

      General. The Company is a unitary savings and loan holding company subject
to regulatory oversight by the OTS and the SEC. As such, the Company is required
to  register  and  file  reports  with  the OTS and  the SEC and is  subject  to
regulation  and  examination  by the OTS. In addition,  the OTS has  enforcement
authority over the Company and its non-savings association subsidiaries,  should
such subsidiaries be formed,  which also permits the OTS to restrict or prohibit
activities  that are determined to be a serious risk to the  subsidiary  savings
association.


                                      -18-

<PAGE>



      QTL Test.  As a unitary  savings  and loan  holding  company,  the Company
generally  will not be  subject  to  activity  restrictions,  provided  the Bank
satisfies  the QTL test.  If the  Company  acquires  control of another  savings
association  as a separate  subsidiary,  it would become a multiple  savings and
loan  holding  company,  and  the  activities  of  the  Company  and  any of its
subsidiaries (other than the Bank or any other SAIF-insured savings association)
would become subject to restrictions applicable to bank holding companies unless
such  other  associations  each also  qualify  as a QTL and were  acquired  in a
supervisory  acquisition.  See "-- Bank  Regulation  -- Qualified  Thrift Lender
Test."

      Restrictions  on  Acquisitions.  The Company must obtain approval from the
OTS  before  acquiring  control  of any  other  SAIF-insured  association.  Such
acquisitions  are generally  prohibited if they result in a multiple savings and
loan holding company  controlling  savings  associations in more than one state.
However,  such  interstate  acquisitions  are permitted  based on specific state
authorization or in a supervisory acquisition of a failing savings association.

      Federal  law  generally  provides  that no  "person,"  acting  directly or
indirectly or through or in concert with one or more other persons,  may acquire
"control," as that term is defined in OTS  regulations,  of a federally  insured
savings  institution  without giving at least 60 days' written notice to the OTS
and providing the OTS an  opportunity  to disapprove  the proposed  acquisition.
Such acquisitions of control may be disapproved if it is determined, among other
things,  that (i) the acquisition would substantially  lessen competition;  (ii)
the financial  condition of the acquiring  person might jeopardize the financial
stability  of  the  savings  institution  or  prejudice  the  interests  of  its
depositors;  or (iii) the  competency,  experience or integrity of the acquiring
person or the proposed  management  personnel  indicates that it would not be in
the  interest  of the  depositors  or the public to permit the  acquisitions  of
control by such person.

      Subject to appropriate  regulatory  approvals,  a bank holding company can
acquire  control  of a  savings  association,  and  if  it  controls  a  savings
association,  merge or  consolidate  the assets and  liabilities  of the savings
association  with, or transfer  assets and  liabilities  to, any subsidiary bank
which  is a  member  of the BIF with the  approval  of the  appropriate  federal
banking  agency  and the  Federal  Reserve  Board.  Generally,  federal  savings
associations can acquire or be acquired by any insured depository institution.

Subsidiary Activities

      Beckley  Federal  is  permitted  to invest  up to 2% of its  assets in the
capital  stock of, or secured or unsecured  loans to,  subsidiary  corporations,
with an additional investment of 1% of assets when such additional investment is
utilized primarily for community development purposes.  Under these limitations,
as of  December  31,  1996,  Beckley  Federal  was  authorized  to  invest up to
approximately $900,000 in the stock of, or loans to, service corporations (based
upon the 2%  limitation).  As of December  31,  1996,  the net book value of the
Bank's investment in stock, unsecured loans, and conforming loans in its service
corporation was approximately $6,000.

      The  Bank  has  one  subsidiary,   Two  Hundred  Corporation,   which  was
incorporated  in the State of West Virginia in 1978 for the purpose of providing
data processing  services to the Bank through the purchase of an equity interest
in an otherwise  unaffiliated  data processor.  The unaffiliated  data processor
experienced serious financial  difficulties that resulted in significant losses.
During 1989 and 1990, Two Hundred Corporation sold its investment and recorded a
net loss of $60,000. Two Hundred Corporation has been inactive since 1990.


                                      -19-

<PAGE>



Item 2.  Description of Property.
--------------------------------

      (a) The Bank conducts its business  through a main office,  located at 200
Main Street,  Beckley,  West Virginia,  and one branch  office,  located at 1723
Harper Road, Beckley,  West Virginia.  As discussed in the 1995 Form 10-KSB, the
Bank is planning on  constructing  a new office  building on a piece of property
currently  owned  which is adjacent to its branch  facility.  Due to  unexpected
delays in the architectural process and due to the winter weather,  construction
has not yet  begun.  Prior to the end of the second  quarter of 1997,  the Board
will review the plans and the  anticipated  costs  associated  with the proposed
building before giving final approval to commence construction.

      (b) Investment Policies.  See "Item 1. Business" for a general description
of the Company's  investment  policies and any regulatory or Board of Directors'
percentage  of assets  limitations  regarding  certain  investments.  All of the
Company's  investment  policies  are  reviewed  and  approved  by the  Board  of
Directors of the Company or the Bank, and such  policies,  subject to regulatory
restrictions  (if  any),  can be  changed  without a vote of  stockholders.  The
Company's  investments are primarily acquired to produce income, and to a lesser
extent, possible capital gain.

            (1)  Investments  in Real Estate or Interests  in Real  Estate.  See
"Item 1. Business -- Lending  Activities,"  "Item 1. Business -- Regulation" and
"Item 2. Description of Property."

            (2) Investments in Real Estate  Mortgages.  See "Item 1. Business --
Lending Activities" and "Item 1. Business -- Regulation."

            (3)  Investments in Securities of or Interests in Persons  Primarily
Engaged in Real Estate Activities. See "Item 1. Business -- Lending Activities,"
"Item 1. Business -- Regulation" and "Item 1. Business -- Subsidiary Activity."

      (c)  Description of Real Estate and Operating Data.

      Not Applicable.

Item 3.  Legal Proceedings
--------------------------

      At  December  31,  1996,  the Company and the Bank were not engaged in any
material legal proceedings or aware of any such pending legal proceedings, other
than routine  litigation  incidental to their  business  (including  actions for
negligence),  to which  the  Company  or the Bank is a party or to which  any of
their property is the subject.

Item 4.  Submission of Matters to a Vote of Security Holders

      Not applicable.

                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
Matters
--------------------------------------------------------------------------------

      The  information  contained  under the sections  captioned  "Stock  Market
Information" in the  Corporation's  Annual Report to Stockholders for the Fiscal
Year Ended December 31, 1996 (the "Annual  Report"),  is incorporated  herein by
reference. The Annual Report is included as Exhibit 13 to this Form 10-KSB.

                                      -20-

<PAGE>




Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
--------------------------------------------------------------------------------

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

Item 7.  Financial Statements
-----------------------------

      The Corporation's  consolidated  financial  statements required herein are
contained in the Annual Report and incorporated herein by reference.

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure
--------------------------------------------------------------------------------
      Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(b) of the Exchange Act
--------------------------------------------------------------------------------

      The following table sets forth the directors and executive officers, their
name, age, the year they first became a director of the Company or the Bank, and
the  expiration  date of their current term as a director.  Each director of the
Company is also a member of the Board of Directors of the Bank.



                                            Year First     Current
                                            Elected or     Term to
           Name                  Age(1)    Appointed(2)    Expire
           ----                  ------    ------------    ------



           Robert N. File          46          1985         1998

           Ned H. Ragland, Jr.     55          1984         1998

           Tracy L. Riffe          72          1963         1999

           James H. Perry, Jr.     65          1979         1999

           Duane K. Sellards       55          1975         1997

           T. Arnold Graybeal      62          1976         1997

           Brian K. Pate           35          N/A           N/A

---------------------------
(1)   At December 31, 1996.
(2)   Refers to the year the individual first became a director of the Bank. All
      directors  of the Bank during  March 1994 became  directors of the Company
      when it was incorporated in March 1994.



                                      -21-

<PAGE>



      The principal  occupation  of each  director and executive  officer of the
Company is set forth below. All directors and executive officers have held their
present positions for five years unless otherwise  stated.  All of the directors
and executive officers reside in the State of West Virginia.

      Tracy L. Riffe  serves as the  Chairman of the Board of  Directors  of the
Company and the Bank and was the  President of the Bank until his  retirement in
1989.  Mr. Riffe is the President and is a director and majority  stockholder of
Home Land Company,  a real estate agency located in Beckley,  West Virginia with
which he has been associated since 1961.

      James H. Perry,  Jr. has been associated with Coldwell Banker as a realtor
since November 1994.  Between 1987 and November 1994, Mr. Perry sold  automotive
diagnostic  products with Auto Test Products.  In the past, Mr. Perry has served
as the  President  of the  local  Rotary  Club and  Raleigh  County  Chamber  of
Commerce. He is also a past local Chairman of the United Fund.

      Duane K.  Sellards is the  President  and Chief  Executive  Officer of the
Company and has served as President of the Bank since 1989.  Prior to that time,
he was the Secretary-Treasurer and Chief Financial and Operations Officer of the
Bank.  Mr.  Sellards  is a director  of the  Beckley-Raleigh  County  Chamber of
Commerce and a director of the Pinecrest Development  Corporation.  Mr. Sellards
is also a member of the Economic Restructuring Committee of Beckley Main Street,
and is an  associate  member of the Estate  Planning  Council of  Southern  West
Virginia.

      T. Arnold  Graybeal has served,  since November 1996, as a Vice President,
Treasurer,  and part  owner of  Boyce,  Graybeal  & Sayre,  Inc.,  a  consulting
company.  Between April 1995 and November 1996, Mr.  Graybeal served as the Vice
President of Finance with Bulk Materials Coal Handling,  Inc. From April 1994 to
April 1995, he served as Vice President of Finance for Fairchild  International.
Between August 1992 and April 1994, Mr. Graybeal was the Secretary and Treasurer
of Oneida Coal Company,  Inc. Between 1991 and 1992, Mr. Graybeal was a business
consultant.

      Robert N. File is a partner  with the law firm of File,  Payne,  Scherer &
File.  Mr.  File is a member of the Estate  Planning  Council of  Southern  West
Virginia  and is on the  West  Virginia  University  Foundation  Planned  Giving
Advisory Committee. Mr. File is also a director of the Beckley Water Company.

      Ned H.  Ragland,  Jr.  became the  proprietor  of the Law Office of Ned H.
Ragland,  Jr.  during March 1996.  Prior to that time, he was a partner with the
law firm of Ragland & Larrick.  Mr.  Ragland has served as the  President of the
Raleigh County Board of Education and is a former member of the Rotary Club.

      Brian K. Pate is the Vice  President  and Chief  Financial  Officer of the
Company and the Bank and has served with the Bank since 1992.  Between  1991 and
1992, Mr. Pate was an accountant  with R.L.  Persinger & Company,  an accounting
firm in Beckley,  West Virginia.  Prior to that time, Mr. Pate was an accountant
with ConAgra International Fertilizer Co.

                                      -22-

<PAGE>



Item 10.  Executive Compensation
--------------------------------

      The  information  contained  under the  section  captioned  "Proposal I --
Election of Directors -- Executive  Compensation"  in the  Company's  definitive
proxy  statement  for the Company's  1996 Annual  Meeting of  Stockholders  (the
"Proxy Statement") is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

(a)   Security Ownership of Certain Beneficial Owners

            Information   required  by  this  item  is  incorporated  herein  by
            reference to the section  captioned  "Voting  Securities and Certain
            Beneficial Owners Thereof" in the Proxy Statement.

      (b)   Security Ownership of Management

            Information   required  by  this  item  is  incorporated  herein  by
            reference  to the  section  captioned  "Proposal  I --  Election  of
            Directors" in the Proxy Statement.

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

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

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

Item 13.  Exhibits, List and Reports on Form 8-K
------------------------------------------------

       a.   Exhibits

            3.1   Certificate of Incorporation of Beckley Bancorp, Inc.*

            3.2   Bylaws of Beckley Bancorp, Inc.**

            10.1  Employment Agreement with Duane K. Sellards

            10.2  Beckley Federal Savings Bank Management Stock Bonus Plan and
                  Trust Agreement

            10.3  Beckley Bancorp, Inc. 1994 Stock Option Plan

            10.4  Beckley Bancorp, Inc. 1996 Directors Stock Option Plan

            11    Statement Regarding Computation of Earnings Per Share


                                      -23-

<PAGE>



            13    Portions of the Annual Report to Stockholders for Fiscal Year
                  Ended December 31, 1996

            21    Subsidiaries of the Registrant**

            23    Consent of Mason & Bashaw, CPA's, A.C.

       b.   Reports on Form 8-K

            No  reports on Form 8-K were  filed  during the last  quarter of the
            year covered by this report.


---------------------------
*     Incorporated  by  reference  to the  registration  statement  on Form  S-1
      (33-77158) declared effective by the SEC on May 16, 1994.
**    Incorporated  by  reference  to the Form 10-KSB filed with the SEC for the
      fiscal year ended December 31, 1994.







                                      -24-

<PAGE>




                                  SIGNATURES

          In  accordance  with  Section  13 or 15(d) of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                BECKLEY BANCORP, INC.


                                By:  /s/Duane K. Sellards
                                     Duane K. Sellards, President and
                                     Chief Executive Officer
                                     (Duly Authorized Representative)

                                Date: March 27, 1997

          In accordance with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>



<S>   <C>                                            <C>  <C>
By:   /s/Duane K. Sellards                           By:  /s/Tracy L. Riffe
     ----------------------------------------------       -----------------
       Duane K. Sellards                                  Tracy L. Riffe
       President,  Chief Executive                        Chairman of the Board
       Officer and Director
       (Principal Executive Officer)

Date:  March 27, 1997                                Date: March 27, 1997


By:  /s/Ned H. Ragland, Jr.                          By:  /s/Brian K. Pate
       Ned H. Ragland, Jr.                                Brian K. Pate
       Secretary-Treasurer and Director                   Vice President and Regulatory Compliance Officer
                                                         (Principal Financial and Accounting Officer)

Date:  March 27, 1997                                Date: March 27, 1997

By:    /s/Robert N. File                             By:  /s/T. Arnold Graybeal
       Robert N. File                                     T. Arnold Graybeal
       Director                                           Director

Date:  March 27, 1997                                Date: March 27, 1997


By:  /s/James H. Perry, Jr.
       James H. Perry, Jr.
       Director

Date:  March 27, 1997
</TABLE>