EXHIBIT 13

                 Annual Report to Stockholders for Fiscal Year
                            Ended December 31, 1996

<PAGE>
                             BECKLEY BANCORP, INC.

                                  [EAGLE LOGO]

                                 ANNUAL REPORT

                                      1996
<PAGE>
                   SELECTED FIVE YEAR FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
                                               Year Ended December 31,
                               ---------------------------------------------------
                                 1996(1)     1995       1994(2)    1993       1992
                                 ----        ----       ----       ----       ----
                                              (In Thousands)
Selected financial
  condition data:
<S>                            <C>        <C>        <C>        <C>        <C>
  Total assets                 $ 45,964   $ 45,213   $ 42,372   $ 37,883   $ 36,680
  Loans receivable, net          16,484     15,966     13,792     12,086     10,917
  Investment securities(3)        6,995      9,014     11,412      1,061      5,545
  Collateralized mortgage-
    backed obligations
    and other mortgage-
    backed securities(3)         16,484     17,954     14,546     17,189     12,489
  Deposit accounts               32,246     33,427     32,191     32,790     31,727
  Shareholders' equity           11,282     11,268      9,843      4,868      4,653

Selected operations data:
Interest income                   3,097     3,109       2,417      2,245      2,355
Interest expense                  1,382     1,312       1,067      1,136      1,413
-----------------------------------------------------------------------------------
  Net interest income             1,715     1,707       1,350      1,109        942
Provision for loan losses            52        81          30         15          3
-----------------------------------------------------------------------------------
Net interest income after
  provision for loan losses       1,663     1,626       1,320      1,094        942
Non-interest income                  61        60          50         51         39
Gain on sale of securities           26        35           -          -          -
Non-interest expense              1,306     1,101         961        819        759
-----------------------------------------------------------------------------------
Income before income taxes          444       620         409        326        219
Income tax expense                  168       224         144        111         79
-----------------------------------------------------------------------------------
   Net income                       276       396         265        215        140
-----------------------------------------------------------------------------------

Earnings per share(4)           $   .47   $   .69    $    .29        N/A        N/A
===================================================================================

Selected Operating Ratios:
Return on average assets           0.62%     0.90%       0.65%      0.57%      0.39%

Return on average equity           2.47%     3.72%       3.57%      4.52%      3.07%

Average equity to
  average assets                  24.94%    24.27%      18.27%     12.70%     12.78%

Net interest rate spread           2.88%     3.03%       2.84%      2.68%      2.24%

Non-performing assets to
  total assets                     0.12%     0.12%       0.10%      0.36%      0.34%

Dividend payout ratio             70.21%    34.78%          0%        N/A        N/A

Number of:
  Real estate loans
    outstanding                     445       442         439        458        476
  Deposit accounts                4,370     4,479       4,355      4,494      4,426
  Full service offices                2         2           2          2          2

(1)   During the third  quarter  of 1996,  the FDIC  issued a  one-time  special
      assessment on all SAIF insured  institutions.  This assessment of $212,000
      reduced income before taxes by $212,000.  If this  assessment had not been
      made,  net income  would have been  $409,000  and earnings per share would
      have been $0.69. See Note 12 to the Consolidated Financial Statements.

(2)   One July 7, 1994 the  Corporation  issued  595,125 shares of common stock.
      Net proceeds from the stock issuance  totalled  $5,599,272.  See Note 2 to
      the Consolidated Financial Statements.

(3)   On January 1, 1994,  the  Corporation  adopted  the  Financial  Accounting
      Standards  Board's ("FASB")  Statement of Accounting  Standards Number 115
      ("SFAS" 115). As a result of adopting SFAS 115, the  securities  which are
      classified  as  "available-for-sale"  are  reported  at  fair  value.  See
      "Management's   Discussion   and  Analysis  -  Impact  of  New  Accounting
      Standards" for detailed information.

(4)   Earnings per share are based on the weighted  average number of common and
      common equivalent  shares  outstanding.  For 1994,  earnings per share was
      based on net income  subsequent  to the  Corporation's  issuance of common
      stock  on  July  7,  1994.  See  Note  1  to  the  Consolidated  Financial
      Statements.
</TABLE>
                                       2
<PAGE>


BECKLEY BANCORP, INC. AND SUBSIDIARY

Management's Discussion and Analysis of Financial Condition and
Results of Operations

Business of the Corporation and Beckley Federal Savings Bank

      Beckley  Bancorp,   Inc.  (the  "Corporation")  is  a  Delaware  chartered
corporation  with its  headquarters  located  in  Beckley,  West  Virginia.  The
Corporation  was  organized in March 1994 at the  direction  of Beckley  Federal
Savings  Bank (the  "Savings  Bank")  for the  purpose of  acquiring  all of the
capital stock that the Savings Bank issued upon its  conversion  from the mutual
to stock  form of  ownership.  The  Corporation  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 Savings
Bank retains a specified amount of its assets in housing-related investments. At
the present time,  because the Corporation does not conduct any active business,
the Corporation does not intend to employ any persons other than officers of the
Savings  Bank.  The  Corporation  utilizes the support staff of the Savings Bank
from time to time.

      Beckley  Federal is a federally  chartered  stock  savings bank located in
Beckley,  West  Virginia.  The Savings Bank was initially  chartered in December
1939  under  the  name of  Beckley  Federal  Savings  and Loan  Association  and
commenced operations in early 1940. In 1990, the Savings Bank changed its mutual
charter from that of a federal savings and loan association to that of a federal
savings bank and concurrently  changed its name to Beckley Federal Savings Bank.
The  Savings  Bank's  deposits  are  federally  insured by the  Federal  Deposit
Insurance  Corporation  ("FDIC").   Beckley  Federal  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 Savings Bank also
originates consumer loans,  construction loans and  non-residential  real estate
loans.

      The largest  component  of the  Corporation's  net income is net  interest
income,  which is the difference  between interest income and interest  expense.
Consequently,  the  Corporation's  earnings  are  primarily  dependent on it net
interest  income,  which is determined  by (i) the  difference  ("interest  rate
spread") between rates of interest earned on  interest-earning  assets and rates
paid  on  interest-bearing   liabilities,  and  (ii)  the  relative  amounts  of
interest-earning assets and interest-bearing liabilities.  Because most deposits
react  more  quickly  to market  interest  rate  movements  than do  traditional
mortgage loans and long term investment securities due to their shorter terms to
maturity,  sharp increases in interest rates will generally adversely affect the
Corporation's  earnings.  The  Corporation's  net income is also affected by its
provision  for loan  losses,  as well as the amount of  non-interest  income and
non-interest expenses, such as salaries and employee benefits, deposit insurance
premiums,  occupancy  and  equipment  costs  and  income  taxes.  Each of  these
components is discussed under "Results of Operations".

      Currently,  the Federal Deposit Insurance Corporation ("FDIC") administers
two separate insurance funds, the Bank Insurance Fund ("BIF"), whose members are
primarily commercial banks, and the Savings Association Insurance Fund ("SAIF"),
whose members are primarily  savings  associations  such as the Savings Bank. In
September 1995, the FDIC lowered the insurance premium for members of the BIF to
a range of between 0.04% and 0.31% of deposits. Additionally,  effective January
1996,  the total  annual  premium for most BIF members was further  reduced to a
flat fee of $2,000.  During this  period,  the Savings Bank was paying an annual
insurance premium to the SAIF equal to 0.23% of deposits.  This disparity placed
all  SAIF  members,  including  the  Savings  Bank,  at a  material  competitive
disadvantage.

      On  September  30,  1996,  a bill was  signed  into  law by the  President
mandating a one-time  special  premium  assessment  on the  deposits of all SAIF
members of  approximately  .657% based on the March 31, 1995  assessment base to
fully capitalize the SAIF. This resulted in the Bank incurring a one-time charge
of $212,000 on September 30, 1996. As a result of this new law, the Savings Bank
expects to pay a premium  equal to .065% of insured  deposits for the years 1997
through  1999.  During these years,  most BIF  institutions  are expected to pay
premiums equal to .013% of deposits.  Thereafter,  assessments  for BIF and SAIF
members should be equal.

                                                                              3

<PAGE>

      The new law  also  contained  additional  provisions  which  are of  great
importance to the Savings Bank. The U.S.  Department of the Treasury is required
to  provide  Congress  with a  report,  due in early  1997,  on the  effects  of
re-chartering thrifts to bank charters. Depending on the report, the possibility
exists that all thrifts  will be required to obtain a bank  charter.  If this is
done on or before  January 1, 1999, the BIF and SAIF will be merged at that time
and assessments for both BIF and SAIF insured  institutions will become equal on
that date.

      An additional bill was signed into law during 1996 addressing the bad debt
reserves of thrift  institutions.  Under prior law, if the Savings  Bank were to
change to a commercial bank charter, fail to maintain at least 60% of its assets
as "qualifying  assets",  as defined in the Internal  Revenue Code, or be merged
into a  commercial  bank,  it would be required  to, in effect,  reverse the tax
deductions  previously taken for additions to its bad debt reserves.  The amount
of pre-1988  reserves on the books of the Savings Bank at December 31, 1996, for
which no current or deferred  provision  for income taxes had been  established,
was approximately $1.4 million. As a result of the enactment of the new law, the
Savings Bank will now be able to change to a commercial bank charter,  diversify
its asset  structure  or be merged  into a  commercial  bank  without  having to
recapture any of its pre-1988 reserve additions.  Any reserves accumulated above
the December 31, 1987 level will be subject to  recapture.  The Savings Bank has
not added to its bad debt reserve since the December 1987 level.

      As  discussed  in detail in the  Corporation's  1995  Annual  Report,  the
Savings  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 the winter weather season,
construction has not yet begun.  Prior to the end of the second quarter of 1997,
the Board will again review the plans and anticipated  costs associated with the
proposed building before giving final approval to commence construction.

      As of December  31,  1996,  the Savings  Bank has  incurred  approximately
$112,000 in  architectural  and  engineering  fees  associated with the proposed
building.  Such fees are expected to be  capitalized  as part of the cost of the
project.  Should the project be  terminated  for any  reason,  such fees will be
charged to non-interest  expense in the period in which  termination  occurs and
net income will likely be reduced by a material amount.

Financial Condition

      At December 31, 1996, the Corporation's  total assets were $45.96 million,
increasing $0.75 million, or 1.7% from $45.21 million at December 31, 1995. This
increase was  primarily  due to an increase in loans  receivable  and  partially
offset  by  decreases  in  investment  securities  and  collateralized  mortgage
obligations and other mortgage-backed securities.

      Cash and cash equivalents  decreased slightly during the year. At December
31, 1996,  cash and cash  equivalents  totalled $1.25 million  compared to $1.37
million one year earlier.  This decrease is equal to $0.12 million,  or 8.8% and
is primarily attributable to a $0.05 million decrease in the balance in interest
bearing deposits and a $.07 million decrease in cash and due from banks.

      The Corporation's  investment securities decreased $2.02 million, or 22.4%
from $9.01  million at December 31, 1995 to $6.99  million at December 31, 1996.
This decrease is the result of a $3.00 million decrease in the amortized cost of
securities  classified  as  held-to-maturity  and  partially  offset  by a $0.75
million   increase  in  the   amortized   cost  of   securities   classified  as
available-for-sale,  a $0.23 million  increase in the gross  unrealized gains on
securities classified as available-for-sale.

      Collateralized  mortgage obligations and other mortgage-backed  securities
decreased  $1.47  million,  or 8.2% to $16.48  million at December 31, 1996 from
$17.95  million one year earlier.  This  decrease  resulted from a $0.45 million
decrease in the unrealized gains on securities  classified as available-for-sale
and principal repayments and prepayments of $1.02 million.

      Net loans  increased  $4.21  million,  or 26.4%  from  $15.97  million  at
December  31, 1995 to $20.18  million at December  31,  1996.  This  increase is
primarily   attributable   to  a  net  increase  in  loans  made  to  customers.
Approximately  500 non-mortgage  loans were originated during the year totalling
$5.91 million net of principal  repayments of $2.71 million.  This represents an
increase of 118.6% to $5.90  million

4
<PAGE>

at December 31, 1996 from $2.70  million at December  31, 1995.  The increase in
the non-mortgage loan portfolio  primarily  consists of loans secured by new and
used automobiles.  Mortgage loan  originations  totalled $4.49 million which was
offset by principal  repayments of $3.44 million. As a result of the substantial
increase in the non-mortgage  loan portfolio,  the allowance for loan losses was
increased by $0.05 million.

      Bank premises and equipment  increased $0.11 million,  or 24.9% from $0.44
million at  December  31,  1995 to $0.55  million at  December  31,  1996.  This
increase is primarily  due to  expenditures  relating to the proposed new office
building and partially offset by depreciation  expense. See the previous section
entitled  "Business of the  Corporation  and Beckley  Federal  Savings Bank" for
details of such expenditures and the proposed office building.

      Total liabilities  increased $0.73 million, or 2.2% from $33.95 million at
December  31, 1995 to $34.68  million at December  31,  1996.  This  increase is
primarily  attributable  to an increase in advances  from the Federal  Home Loan
Bank and partially offset by a decrease in deposit accounts.

      Deposit accounts  decreased $1.18 million,  or 3.5% from $33.43 million at
December 31, 1995 to $32.25 million at December 31, 1996.  This is the result of
decreases in the balances in passbook savings and NOW/Super NOW and money market
checking  accounts  which is partially  offset by an increase in the balances in
certificate of deposit accounts.

      Income taxes payable  decreased $0.01 million,  or 100% from $0.01 million
at December 31, 1995 to $0 at December 31, 1996. This is the result of decreased
taxable  income in 1996 resulting in a small prepaid income tax balance which is
included in other assets.

      Federal Home Loan Bank advances  increased from $0 at December 31, 1995 to
$2.00 million at December 31, 1996. The Bank has used these funds for investment
in short-term government agency securities. Details of the advances can be found
in Note 9 to the Consolidated Financial Statements.

      Deferred income taxes decreased $0.1 million, or 43.7% to $0.12 million at
December 31, 1996 from $0.22 million one year earlier.  This is primarily due to
a decrease in the fair values of securities classified as available-for-sale.

      Shareholders'  equity increased $0.01 million, or 0.1% from $11.27 million
at December 31, 1995 to $11.28  million at December 31, 1996.  This  increase is
primarily  attributable  to net income of $0.28  million.  Several other factors
affected the separate  components of  stockholders'  equity  including  dividend
payments,  Employee  Stock  Ownership  Plan  allocations  and  the  issuance  of
additional  shares  of common  stock to the  Management  Stock  Bonus  Plan.  In
addition,  the  Corporation  experienced  a $0.14  million  decrease  in the net
unrealized gain on securities classified as available-for-sale.  Please refer to
the Consolidated  Statements of Changes in Stockholders' Equity, which is a part
of the Consolidated Financial Statements, for specific details.

Results of Operation

      Net income for the year ended  December  31,  1996  decreased  $120,000 or
30.4% to $276,000  from  $396,000 for the year ended  December  31,  1995.  This
decrease  was  primarily  due to a one-time  special  assessment  by the Savings
Association  Insurance  Fund.  This  assessment  resulted in a pre-tax charge to
income of $212,000.  See the section  entitled  "Business of the Corporation and
Beckley Federal Savings Bank for specific  information on this  assessment.  Had
this  assessment  not been made  during the year,  net income for the year ended
December 31, 1996 would have  increased  approximately  $11,000 to $407,000,  or
2.8% over the previous year.

      Interest income  increased  $78,000,  or 2.6% from $3,019,000 for the year
ended  December  31, 1995 to  $3,097,000  for the year ended  December 31, 1996.
Increased  interest  income on loans  and  collateralized  mortgage  obligations
partially  offset by  decreased  interest  income on  investments  and  interest
bearing deposits represents a majority of the increase. The Rate/Volume Analysis
Table included herein provides  additional detail on the separate  components of
interest income.

      Interest  expense for the year ended December 31, 1996 increased  $69,000,
or 5.3% to $1,382,000 from $1,313,000 for the year ended December 31, 1995.

                                                                              5
<PAGE>
Average Balance Sheet
---------------------

      The following table sets forth certain information  relating to the Bank's
average  balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid.  Such yields and costs are  derived by  dividing  income or expense by the
average balance of assets or liabilities,  respectively, for the periods shown.
Average  balances  are  derived  from month end  balances.  Management  does not
believe that the use of month end balances instead of average daily balances has
caused  any  material  difference  in the  information  presented.
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                  -------------------------------------------------------------------------------------------------
                                                1996                             1995                            1994
                                  --------------------------------   ------------------------------   -----------------------------
                                  Average                Average     Average               Average    Average             Average
                                  Balance     Interest  Yield/Cost   Balance   Interest  Yield/Cost   Balance  Interest  Yield/Cost
                                  -------     --------  ----------   --------  --------  ----------   -------  --------  ----------
<S>                               <C>          <C>           <C>     <C>       <C>          <C>      <C>        <C>        <C>
Interest-earning assets:
  Loans receivable(1)             $ 18,523     $ 1,539       8.31%   $ 14,933  $ 1,244      8.33%    $ 12,909   $ 1,065    8.25%
  Collateralized mortgage-
    obligations and other
    mortgage-backed securities      17,136       1,120       6.54      16,792    1,146      6.82       16,624       916    5.51
  Investment securities(2)           7,976         427       5.35      10,848      617      5.69        9,933       426    4.29
  Other interest-earning
    assets(3)                          173          11       6.36         174       12      6.90          172        10    5.81
                                  --------     -------      -----    --------  -------     -----     --------   -------    ----
    Total interest-earning
       assets                     $ 43,808     $ 3,097       7.07%   $ 42,747  $ 3,019      7.06%    $ 39,638   $ 2,417    6.10%
                                  ========     =======       ====    ========  =======      ====     ========   =======    ====
Noninterest-earning assets             968                              1,091                             987
                                  --------                           --------                        --------
      Total assets                $ 44,776                           $ 43,838                        $ 40,625
                                  ========                           ========                        ========
 Interest-bearing liabilities:
   Deposit accounts               $ 32,270       1,345        4.17   $ 32,580    1,312      4.03     $ 32,775   $ 1,067       3.26
   Other interest bearing
     liabilities                       692          37        5.85          -        -         -            -         -          -
                                  --------     -------       -----   --------  -------      ----     --------   -------       ----
      Total interest-bearing
       liabilities                $ 32,962     $ 1,382        4.19%  $ 32,580  $ 1,312      4.03%    $ 32,775   $ 1,067       4.86%
                                  ========     =======        ====   ========  =======      ====     ========   =======       ====
Non-interest-bearing liabilities.      648                                620                             427
                                  --------                            -------                        --------
      Total liabilities           $ 33,610                           $ 32,200                        $ 33,202
                                  ========                           ========                        ========
Retained earnings'                  11,166                             10,638                           7,423
                                  --------                            --------                       --------
      Total liabilities and
       retained earnings          $ 44,776                           $ 43,838                        $ 40,625
                                  ========                           ========                        ========
Net interest income                           $  1,715                         $ 1,707                          $ 1,350
                                              ========                         =======                          =======

Interest rate spread (4)                                      2.88%                         3.03%                            2.84%
                                                            ======                        ======                           ======
Net yield on interest earning
  assets(5)                                                   3.91%                         3.99%                            3.41%
                                                            ======                        ======                           ======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                              135.75%                        131.21%                         120.94%
                                                            ======                        =======                          ======
</TABLE>
-----------------------------------
(1)  Average balances include non accrual loans.
(2)  Includes interest bearing deposits in other financial institutions.
(3)  Consists primarily of FHLB stock.
(4)  Interest-rate  spread represents the difference between the average yield
     on interest-earning   assets  and  the   average   cost  of   interest-
     bearing liabilities.
(5)  Net yield on interest earning assets represents net interest income as a
     percentage of average interest-earning assets.

                                       6
<PAGE>



Rate\Volume Analysis
---------------------

      The table  below  sets  forth  certain  information  regarding  changes in
interest income and interest expense of the Bank for the periods indicated.  For
each  category of interest  earning  assets and  interest  bearing  liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes in average  volume  multiplied  by prior  rate),  (ii)  changes in rate
(changes in rate  multiplied by prior volume),  and (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                      ------------------------------------------------------------------------------------
                                                      1996 vs. 1995                          1995 vs. 1994
                                      ----------------------------------------     ---------------------------------------
                                                 Increase (Decrease)                       Increase (Decrease)
                                                         Due to                                  Due to
                                      ----------------------------------------     ---------------------------------------
                                                             Rate/                                      Rate/
                                       Volume      Rate      Volume       Net      Volume       Rate    Volume       Net
                                      --------   --------  --------     ------    ---------   -------  ---------   -------
                                                              (In Thousands)
<S>                                   <C>        <C>        <C>        <C>        <C>        <C>       <C>        <C>
Interest-income:
  Loans receivable                    $   299    $    (3)   $    (1)   $   295    $   167     $   10    $    2    $   179
  Collateralized mortgage
    obligations and other
    mortgage-backed securities             22        (47)        (1)       (26)         9        219         2        230
  Investment securities                  (163)       (37)        10       (190)        39        139        13        191
  Other interest earning assets             -         (1)         -        (1)          -          2         -          2
                                      -------    -------    -------    -------    -------    -------   -------    -------
     Total interest-earning assets    $   158    $   (88)   $     8    $    78    $   215    $   370   $    17    $   602
                                      =======    =======    =======    =======    =======    =======   =======    =======

Interest-expense:
  Savings accounts                    $   (12)   $    45    $     0    $    33    $    (6)   $   253   $    (2)   $   245
  Other interest-bearing
    liabilities                             -          -         37         37          -          -         -          -

      Total interest-bearing
        liabilities                   $   (12)   $    45    $    37    $    70    $    (6)   $   253   $    (2)   $   245
                                      =======    =======    =======    =======    =======    =======   =======    =======
  Net change in net interest income   $   170    $   133    $   (29)   $     8    $   221    $   117   $    19    $   357
                                      =======    =======    =======    =======    =======    =======   =======    =======

</TABLE>


This  increase  was mainly due to an  increase  in the  average  yields  paid on
deposit  accounts  and interest  expense on advances  from the Federal Home Loan
Bank.  For the year ended  December 31, 1996,  the average yield paid on deposit
accounts was 4.17% compared to 4.03% for the year ended December 31, 1995.

      Net interest income increased  $8,000, or 0.5% for the year ended December
31, 1996 to $1,715,000  from  $1,707,000  for the year ended  December 31, 1995.
This slight  increase  was the result of  increased  interest  income  which was
partially offset by increased interest expense. The average interest rate spread
decreased  to 2.88%  from  3.03% and the net yield on  interest  earning  assets
decreased to 3.91% from 3.99%.

      The  allowance for loan losses was increased by $52,000 for the year ended
December 31, 1996 compared to an increase of $81,000 for the year ended December
31, 1995. The increase in this  allowance is charged  against income through the
provision for loan losses.  The provision for loan losses is adjusted to reflect
the  results  of  management's  periodic  evaluation  of  the  adequacy  of  the
Corporation's  allowance  for such  losses.  The  adequacy of the  allowance  is
determined  by an evaluation  of the loan  portfolio  including an evaluation of
each delinquent  loan, past loan loss experience,  current economic  conditions,
volume,  growth and the  composition of the loan  portfolio,  and other relevant
factors.  The adequacy of the allowance is reviewed on a quarterly basis.  While
the  Corporation  maintains  its  allowance  for  losses  on loans at a level it
considers  to be  adequate  to provide  for  potential  losses,  there can be no
assurance  that further  additions  will not be made to the  allowance  and that
losses,  if any,  will not exceed  the amount  provided  by the  allowance.  The
increase in the provision for the year ended December 31, 1996 was primarily

                                                                             7
<PAGE>

due to an increase in the size of the Corporation's non-mortgage loan portfolio,
which  generally  has a higher  level of credit risk than loans  secured by real
property.

      Non-interest  income decreased by $8,000,  or 8.5% to $87,000 for the year
ended  December 31, 1996 from $95,000 for the year ended  December 31, 1995. The
primary  contributor  to  this  decrease  was a  $35,000  gain on the  sales  of
collateralized mortgage obligations and investment securities for the year ended
December 31, 1995 versus a $26,000 gain on the sale of investment securities for
the year ended December 31, 1996.

      Non-interest  expenses increased by $205,000, or 18.7% from $1,101,000 for
the year ended  December 31, 1995 to $1,306,000  for the year ended December 31,
1996. This increase is the direct result of a one-time special assessment of the
Savings  Association  Insurance  Fund  of  $212,000.  See the  section  entitled
"Business  of the  Corporation  and Beckley  Federal  Savings  Bank for specific
information on this assessment.  Excluding the effect of the special assessment,
non-interest  expenses  decreased by $6,000,  or 0.6%.  Occupancy  and equipment
expense  increased  by $10,000  and other  non-interest  expenses  decreased  by
$4,000. Data processing expenses decreased by $8,000.

      Income tax expense decreased $56,000, or 24.9% from $224,000 (an effective
tax rate of 35.9% on taxable  income for federal and state income taxes) for the
year ended  December  31, 1995 to $168,000  (an  effective  tax rate of 36.2% on
taxable  income for federal and state income taxes) for the year ended  December
31, 1996. The primary reason for this decrease was a decrease in pre-tax income.

Asset and Liability Management / Management Strategy

      The Savings Bank's investment  strategy remains focused on the origination
of one-to-four  family  mortgage loans and  relatively  short term  non-mortgage
loans combined with investments in  mortgage-backed  and other securities issued
and  guaranteed  by agencies of the U.S.  Government  and  government  sponsored
enterprises.  The Savings Bank's mortgage lending programs allow it to serve the
housing needs of its local community by offering  long-term fixed and adjustable
rate loans.  Although the long-term fixed rate loans increase the Savings Bank's
interest rate risk,  the Savings Bank uses  adjustable  rate mortgage  loans and
adjustable rate mortgage-backed securities to minimize this risk. Investments in
agency  securities  are  generally  directed into  instruments  having either an
adjustable interest rate or a maturity of three years or less.

      To  provide  for a  stable  source  of  funding  for  the  Savings  Bank's
investment  objectives,  the Savings Bank continually manages the interest rates
it pays on its deposits.  Through its deposit management strategies, the Savings
Bank has historically been able to control its cost of funds while maintaining a
stable  deposit  base and  providing  convenient  and  quality  services  to its
customers.  These  strategies  have also  allowed the  Savings  Bank to maintain
profitability  and a strong capital  position through growth at a rate that does
not exceed its ability to generate earnings.

Liquidity and Capital Resources

      The Savings Bank is required to maintain  minimum levels of liquid assets,
as defined by the Office of Thrift  Supervision  (the "OTS).  This  requirement,
which may be varied from time to time,  depending  upon economic  conditions and
deposit flows, is based upon a percentage of deposits and short-term borrowings.
The required  minimum ratio is currently  5%. The Savings Bank has  historically
maintained a level of liquid  assets in excess of regulatory  requirements,  and
the  Savings  Bank's  liquidity  ratio  averaged  20.12%  during the month ended
December 31, 1996.  The Savings  Bank  manages its  liquidity  ratio to meet its
funding needs including"  deposit outflows;  disbursement of payments  collected
from borrowers for taxes and insurance;  and loan principal  disbursements.  The
Savings Bank also manages its  liquidity  ratio to meet its asset and  liability
management objectives.

      The Savings Bank's primary sources of funds are deposits, amortization and
prepayment of loans, maturities of investment securities and funds provided from
operations.  While scheduled loan repayments are a relatively predictable source
of funds,  deposit flows and loan prepayments are greatly  influenced by general
interest rates, economic

8
<PAGE>

 conditions and competition. The Savings Bank strives to
manage the pricing of its  deposits to maintain a balanced  stream of cash flows
commensurate with its loan commitments and other predictable  funding needs. The
Savings Bank also has other sources of liquidity if a need for additional  funds
arises.  Additional sources of funds include advances from the Federal Home Loan
Bank of  Pittsburgh  along with readily  marketable  investment  securities  and
mortgage-backed and related securities.

      The Savings Bank  anticipates that it will have sufficient funds available
to meet  its  current  loan  commitments,  normal  savings  withdrawals  and the
proposed  construction  project.  At December  31,  1996,  the Savings  Bank had
outstanding  loan commitments of $133,000.  In addition,  it had certificates of
deposit scheduled to mature within one year of $15,722,000.  Management believes
that a substantial portion of such deposits will remain with the Savings Bank.

      As required by the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA"),  the OTS prescribed three separate  standards of capital
adequacy.  The  regulations  require  financial  institutions  to  have  minimum
tangible capital equal to 1.50% of tangible  assets;  minimum core capital equal
to 3.00% of adjusted tangible assets;  and minimum  risk-based  capital equal to
8.00% of risk-adjusted  assets. At December 31, 1996, the Savings Bank's capital
was well in excess of regulatory  requirements as follows:  Tangible Capital was
equal to 16.9% of tangible  assets;  Core Capital was equal to 16.9% of adjusted
tangible  assets;  and  Risk-based  Capital was equal to 42.4% of  risk-adjusted
assets.  For additional detail on the Savings Bank's capital position,  see Note
12 to the Consolidated Financial Statements.

      In August  1993,  the OTS adopted a final rule  incorporating  an interest
rate risk component into the risk-based capital  regulation.  Under the rule, an
institution  with a greater than  "normal"  level of interest  rate risk will be
subject  to a  deduction  of its  interest  rate risk  component  from its total
capital for purposes of calculating the risk-based capital requirement.  Because
the Savings  Bank's  asset size was less than $300  million  and its  risk-based
capital  ratio was in excess of 12% at December  31, 1996,  it is not  currently
subject to the interest rate risk component.

Impact of New Accounting Standards

      In October 1995,  the Financial  Accounting  Standards  Board (the "FASB")
issued  Statement of Financial  Accounting  Standards  Number 123 ("SFAS  123"),
"Accounting  for  Stock-Based  Compensation,"  which  became  effective  for the
Corporation beginning January 1, 1996. SFAS 123 requires increased disclosure of
compensation  expense  arising  from  both  fixed  and  performance-based  stock
compensation plans. Such expense will be measured as the fair value of the award
at the date it is granted using an option  pricing model.  SFAS 123  encourages,
rather than  requires,  companies to adopt a new method that  accounts for stock
compensation awards based on their estimated fair value. Companies are permitted
to continue accounting for stock-based  compensation under Accounting Principles
Board ("APB")  Opinion No. 25,  however,  certain items must be disclosed in the
notes to the financial statements. The Corporation has continued its application
of APB 25 in the consolidated  financial  statements and has disclosed pro forma
net income and  earnings  per share in a Note 11 to the  Consolidated  Financial
Statements, determined as if the Corporation had applied the new method.

Impact of Inflation and Changing Prices

      The  consolidated  financial  statements  of  the  Corporation  and  notes
thereto,  presented  elsewhere  herein,  have been prepared in  accordance  with
generally accepted accounting principles ("GAAP"). GAAP requires the measurement
of  financial  position and  operating  results in terms of  historical  dollars
without  considering the change in the relative  purchasing  power of money over
time and due to inflation. The impact of inflation is reflected in the increased
cost of the Corporation's operations.  Unlike most industrial companies,  nearly
all of the assets and liabilities of the Corporation are monetary in nature.  As
a result, interest rates have a greater impact on the Corporation's  performance
than does the  effects of general  levels of  inflation.  Interest  rates do not
necessarily  move in the same  direction  or to the same  extent as the price of
goods and services.

                                       9







<PAGE>





                          INDEPENDENT AUDITOR'S REPORT




To The Board of Directors and Stockholders of
Beckley Bancorp, Inc. and Subsidiary
Beckley, West Virginia


   We  have  audited  the  accompanying  consolidated  statements  of  financial
condition of Beckley  Bancorp,  Inc. and  Subsidiary as of December 31, 1996 and
1995,   and  the  related   consolidated   statements  of  income,   changes  in
stockholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1996. These financial  statements are the  responsibility  of
the  Bank's  management.  Our  responsibility  is to express an opinion on these
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 audits 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 consolidated financial position of
Beckley  Bancorp,  Inc. and Subsidiary as of December 31, 1996 and 1995, and the
results of their consolidated operations and cash flows for each of the years in
the  three-year  period ended  December 31, 1996, in conformity  with  generally
accepted accounting principles.




/s/ Mason & Bashaw
Certified Public Accountants






Beckley, West Virginia
January 27, 1997


                                       10
<PAGE>


                      BECKLEY BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>


                                                                                 December 31,
                                                                              1996            1995
-----------------------------------------------------------------------------------------------------
ASSETS
<S>                                                                      <C>             <C>
Cash and Cash Equivalents (Note 1)                                       $  1,249,750    $  1,370,888
Investment Securities (Notes 1 and 3)
  Available-for-sale (at fair value)                                        5,997,247       5,021,058
  Held-to-maturity (fair values of $997,500 and
   $3,993,000, respectively)                                                  997,417       3,992,627

Collateralized Mortgage Obligations and Other
  Mortgage-backed Securities (Notes 1 and 4)
  Available-for-sale (at fair value)                                       16,483,878      17,953,830

Loans receivable, net (Notes 1 and 5)                                      20,180,072      15,965,582
Bank premises and equipment (Notes 1 and 6)                                   550,853         440,929
Federal Home Loan Bank stock - at cost                                        171,900         175,900
Accrued interest receivable (Note 7)                                          268,456         252,892
Other assets                                                                   64,501          39,626
------------------------------------------------------------------------------------------------------
  TOTAL ASSETS                                                           $ 45,964,074    $ 45,213,332
======================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Deposit accounts (Note 8)                                              $ 32,246,179    $ 33,426,976
  Income taxes payable (Note 10)                                                   xx          98,609
  Federal Home Loan Bank advances (Note 9)                                  2,000,000              xx
  Deferred income tax (Notes 1 and 10)                                        121,470         215,579
  Other liabilities                                                           314,466         203,914
------------------------------------------------------------------------------------------------------
   Total Liabilities                                                       34,682,115      33,945,078
======================================================================================================

Commitments (Note 13)

Stockholders' Equity (Note 2)
  Preferred stock (par value of $.01 per share,
   250,000 shares authorized; no shares issued
   and outstanding)                                                                xx              xx
  Common stock (par value of $.10 per share,
   1,250,000 shares authorized; 601,465 shares
   issued and outstanding)                                                     60,146          60,146
  Additional paid-in capital                                                5,674,043       5,659,403
  Retained earnings, substantially restricted (Notes 2 and 10)            105,474,077       5,390,944
  Net unrealized gain on securities available-for-sale                        285,649         425,522
  Unearned compensation - ESOP (Note 11)                                     (153,289)       (184,818)
  Unearned compensation - Management Stock Bonus Plan (Note 11)               (58,667)        (82,943)
------------------------------------------------------------------------------------------------------
   Total Stockholders' Equity                                              11,281,959      11,268,254
======================================================================================================
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $ 45,964,074    $ 45,213,332
======================================================================================================
</TABLE>


The accompanying notes are an integral part of these statements.



                                                                           11
<PAGE>


BECKLEY BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

<TABLE>
<CAPTION>


                                                       Years Ended December 31,
                                                    1996         1995        1994
------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME:
<S>                                              <C>          <C>         <C>
  Loans, including certain fees                  $1,539,467   $1,244,361  $1,064,541
  Investment securities                             340,773      422,872     120,508
  Mortgage-backed securities                        313,440      364,835     347,732
  Collateralized mortgage obligations               806,347      781,501     567,971
  Interest bearing deposit accounts                  72,462      182,170     295,885
  Dividends, FHLB and other                          24,580       23,508      20,594
------------------------------------------------------------------------------------
   Total Interest Income                          3,097,069    3,019,247   2,417,231
------------------------------------------------------------------------------------

INTEREST EXPENSE:
  Deposits                                        1,344,909    1,312,569   1,061,352
  Other                                              37,107           xx       6,334
------------------------------------------------------------------------------------
   Total Interest Expense                         1,382,016    1,312,569   1,067,686
------------------------------------------------------------------------------------

Net Interest Income                               1,715,053    1,706,678   1,349,545
Provision for losses on loans (Notes 1 and 5)        52,000       81,000      30,000
------------------------------------------------------------------------------------
Net Interest Income After Provision For
  Losses On Loans                                 1,663,053    1,625,678   1,319,545
------------------------------------------------------------------------------------

NONINTEREST INCOME:
  Service charges on deposit accounts                48,418       46,657      40,865
  Gain on sale of investments available-for-
   sale (Note 3)                                     25,688        4,901          xx
  Gain on sale of collateralized mortgage
   obligations available-for-sale (Note 4)               xx       30,010          xx
  Other income                                       13,097       13,692       9,561
------------------------------------------------------------------------------------
   Total Noninterest Income                          87,203       95,260      50,426
------------------------------------------------------------------------------------

NONINTEREST EXPENSES:
  Salaries and employee benefits (Note 11)          515,203      515,233     469,603
  Occupancy and equipment expense                    79,916       70,508      66,022
  Savings Association Insurance Fund assessment
   (Note 12)                                        211,647           xx          xx
  Federal insurance premiums                         71,425       74,393      77,864
  Data processing expenses                          112,564      120,730     112,744
  Other (Note 14)                                   315,567      319,876     235,260
------------------------------------------------------------------------------------
   Total Noninterest Expenses                     1,306,322    1,100,740     961,493
------------------------------------------------------------------------------------

Income Before Income Taxes                          443,934      620,198     408,478
Provision for income taxes (Note 10)                168,416      224,404     143,667
------------------------------------------------------------------------------------

Net Income                                       $  275,518   $  395,794  $  264,811
====================================================================================


Earnings Per Common Share (For Period
  Subsequent to Initial Issuance of Common
  Stock on July 7, 1994)                         $      .47   $      .69  $      .29
====================================================================================

</TABLE>


The accompanying notes are an integral part of these statements.


12

<PAGE>

                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                               Years Ended December 31, 1996, 1995 and 1994

                                                                          Additional
                                                                Common     Paid-In
                                                                Stock      Capital
------------------------------------------------------------------------------------

<S>                                                             <C>       <C>
Balance at January 1, 1994                                      $    xx   $       xx

Net unrealized gain upon adoption of FASB 115,
  net of income taxes (Note 1)                                       xx           xx

Sale and issuance of 595,125 shares of common stock
  (Note 2)                                                       59,512    5,539,760

Change in unrealized gain (loss) on securities
  available-for-sale, net of tax (Note 1)                            xx           xx

Common stock committed to be released for allocation -
  ESOP (Note 10)                                                     xx           xx

Increase in fair market value over cost of ESOP shares
  committed to be released (Note 10)                                 xx        2,232

Net income for year ended December 31, 1994                          xx           xx
------------------------------------------------------------------------------------

Balance at December 31, 1994                                     59,512    5,541,992

Dividends on common stock                                            xx           xx

Additional shares issued (6,340)/purchased (800) for
  Management Stock Bonus Plan - at market value (Note 10)           634      107,146

Common stock committed to be released for allocation - ESOP          xx           xx

Increase in fair market value over cost of ESOP shares
  committed to be released                                           xx       10,265

Amortization of unearned compensation - Management Stock
  Bonus Plan                                                         xx           xx

Change in unrealized gain (loss) on securities available-
  for-sale, net of tax (Notes 3 and 4)                               xx           xx

Net income for year ended December 31, 1995                          xx           xx
                                                               --------   ----------

Balance at December 31, 1995                                     60,146    5,659,403

Dividends on common stock                                            xx           xx

Common stock committed to be released for allocation - ESOP          xx           xx

Increase in fair market value over cost of ESOP shares
  committed to be released                                           xx       14,640

Amortization of unearned compensation - Management
  Stock Bonus Plan                                                   xx           xx

Change in unrealized gain on securities available-for-sale,
  net of tax (Notes 3 and 4)                                         xx           xx

Net income for year ended December 31, 1996                          xx           xx
------------------------------------------------------------------------------------

Balance at December 31, 1996                                    $60,146   $5,674,043
====================================================================================

</TABLE>










<TABLE>
<CAPTION>
                                                                  Years Ended December 31, 1996, 1995 and 1994

                                                              Unrealized                    Unearned
                                                               Retained       Gain (Loss)                 Compensation
                                                               Earnings -     on Securities    Unearned     Management
                                                              Substantially    Available-     Compensa-       Stock
                                                               Restricted       for-Sale      tion - ESOP   Bonus Plan      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>             <C>          <C>           <C>
Balance at January 1, 1994                                  $   4,868,027   $          xx   $       xx   $         xx  $ 4,868,027

Net unrealized gain upon adoption of FASB 115,
  net of income taxes (Note 1)                                         xx         395,248           xx             xx      395,248

Sale and issuance of 595,125 shares of common stock
  (Note 2)                                                             xx              xx     (238,050)            xx    5,361,222

Change in unrealized gain (loss) on securities
  available-for-sale, net of tax (Note 1)                              xx      (1,072,218)          xx             xx   (1,072,218)

Common stock committed to be released for allocation -
  ESOP (Note 10)                                                       xx              xx       23,805             xx       23,805

Increase in fair market value over cost of ESOP shares
  committed to be released (Note 10)                                   xx              xx           xx             xx        2,232

Net income for year ended December 31, 1994                       264,811              xx           xx             xx      264,811
------------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1994                                    5,132,838        (676,970)    (214,245)            xx    9,843,127

Dividends on common stock                                        (137,688)             xx           xx             xx     (137,688)

Additional shares issued (6,340)/purchased (800) for
  Management Stock Bonus Plan - at market value (Note 10)              xx              xx           xx       (121,380)     (13,600)

Common stock committed to be released for allocation - ESOP            xx              xx       29,427             xx       29,427

Increase in fair market value over cost of ESOP shares
  committed to be released                                             xx              xx           xx             xx       10,265

Amortization of unearned compensation - Management Stock
  Bonus Plan                                                           xx              xx           xx         38,437       38,437

Change in unrealized gain (loss) on securities available-
  for-sale, net of tax (Notes 3 and 4)                                 xx       1,102,492           xx             xx    1,102,492

Net income for year ended December 31, 1995                       395,794              xx           xx             xx      395,794
-----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1995                                    5,390,944         425,522     (184,818)       (82,943)  11,268,254

Dividends on common stock                                        (192,385)             xx           xx             xx     (192,385)

Common stock committed to be released for allocation - ESOP            xx              xx       31,529             xx       31,529

Increase in fair market value over cost of ESOP shares
  committed to be released                                             xx              xx           xx             xx       14,640

Amortization of unearned compensation - Management
  Stock Bonus Plan                                                     xx              xx           xx         24,276       24,276

Change in unrealized gain on securities available-for-sale,
  net of tax (Notes 3 and 4)                                           xx        (139,873)          xx             xx     (139,873)

Net income for year ended December 31, 1996                       275,518              xx           xx             xx      275,518
----------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1996                                $   5,474,077   $     285,649   $  (153,28)  $    (58,667) $11,281,959
===================================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.
                                                                             13

<PAGE>


BECKLEY BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                            Years Ended December 31,
                                                                      1996            1995            1994
---------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED BY OPERATING
   ACTIVITIES:
<S>                                                               <C>             <C>             <C>
  Interest and dividends received                                 $  3,041,730    $  3,026,274    $  2,300,986
  Service charges and other income                                      61,515          60,349          50,426
  Interest paid                                                     (1,344,939)     (1,312,566)     (1,067,631)
  Cash paid to employees and suppliers                              (1,239,677)     (1,007,379)       (903,142)
  Income taxes paid                                                   (294,814)       (187,266)       (148,257)
---------------------------------------------------------------------------------------------------------------
   Net Cash Provided By Operating Activities                           223,815         579,412         232,382
---------------------------------------------------------------------------------------------------------------

CASH FLOWS PROVIDED (USED) BY INVESTING
  ACTIVITIES:
  Proceeds from sale of securities available for sale:
   Investment security                                                  50,688         960,938              xx
   Collateralized mortgage obligation                                       xx         993,589              xx
  Purchases of investment securities:
   Available-for-sale                                               (3,000,000)     (4,201,663)     (3,417,570)
   Held-to-maturity                                                 (3,492,054)    (48,898,192)     (6,700,000)
  Purchases of CMO and mortgage-backed securities:
   Available-for-sale                                                       xx      (3,920,001)     (4,555,114)
  Proceeds from maturities or calls of
   investment securities:
    Available-for-sale                                               2,250,000       3,500,000              xx
    Held-to-maturity                                                 6,500,000      51,580,082              xx
  Principal repayments on CMO's and mortgage-backed securities:
    Available-for-sale                                               1,015,981         812,151       5,874,397
  Net increase in loans to customers                                (4,258,689)     (2,251,727)     (1,744,870)
  Redemption (purchase) of FHLB stock                                    4,000          (6,500)         10,700
  Purchases of equipment                                               (19,656)        (21,655)        (21,540)
  Payments for architectural fees                                     (110,337)             xx              xx
---------------------------------------------------------------------------------------------------------------
   Net Cash Used By Investing Activities                            (1,060,067)     (1,452,978)    (10,553,99)
---------------------------------------------------------------------------------------------------------------

CASH FLOWS PROVIDED BY FINANCING
  ACTIVITIES:
  Net decrease in customers' deposit accounts                       (1,180,797)     (1,235,743)       (599,131)
  Advances from FHLB                                                 2,000,000              xx              xx
  Changes in other liabilities                                          88,296         (93,473)         94,737
  Acquisition of common stock for MSBP plan                                 xx         (13,600)             xx
  Net proceeds from sale of stock                                           xx              xx       5,599,272
  Dividends paid                                                      (192,385)       (137,688)             xx
  Purchase of stock by ESOP                                                 xx              xx        (238,050)
---------------------------------------------------------------------------------------------------------------
   Net Cash Provided By Financing Activities                           715,114         990,982       4,856,828
---------------------------------------------------------------------------------------------------------------

(Decrease) Increase in Cash and Cash Equivalents                      (121,138)        117,416      (5,464,787)
Cash and cash equivalents, beginning of year                         1,370,888       1,253,472       6,718,259
---------------------------------------------------------------------------------------------------------------

Cash and Cash Equivalents, End of Year (Note 1)                    $ 1,249,750    $  1,370,888    $  1,253,472
===============================================================================================================

</TABLE>

The accompanying notes are an integral part of these statements.

14


<PAGE>


                                            BECKLEY BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>

                                                        Years Ended December 31,
                                                    1996         1995         1994
--------------------------------------------------------------------------------------

RECONCILEMENT OF NET INCOME TO NET CASH
  PROVIDED BY OPERATING ACTIVITIES:

<S>                                               <C>          <C>          <C>
Net income                                        $ 275,518    $ 395,794    $ 264,811
Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation                                      20,069       15,079       13,038
   (Accretion) and amortization - net               (31,974)     (16,302)     (19,062)
   Provision for loan losses                         52,000       81,000       30,000
   Deferred income tax credit                       (11,962)     (24,996)      (7,646)
   Gain on sale of securities                       (25,688)     (34,911)          xx
   Deferred loan fees                                (7,801)      (2,807)       8,878
   ESOP benefits amortized                           31,529       29,427       23,805
   Amortization of unearned compensation - MSBP      24,276       38,437           xx
   Increase in fair value of ESOP plan shares
     committed to be released for allocation         14,640       10,265        2,232
   (Increase) decrease in accrued interest
     receivable and other assets                    (24,612)      30,458     (102,563)
   Increase in prepaid income taxes                 (15,827)          xx           xx
   Increase (decrease) in accrued interest
     payable and other liabilities                   22,256       (4,166)      15,833
   (Decrease) increase in income taxes payable      (98,609)      62,134        3,056
---------------------------------------------------------------------------------------
   Net Cash Provided By Operating Activities      $ 223,815    $ 579,412    $ 232,382
=======================================================================================

</TABLE>

The accompanying notes are an integral part of these statements.




                                                                             15

<PAGE>


BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies

   Beckley  Bancorp,  Inc.'s  (the  "Parent  Company")  principal  asset  is its
wholly-owned subsidiary,  Beckley Federal Savings Bank (the "Savings Bank"). The
Savings Bank is a federally  chartered stock savings bank organized and existing
under the laws of the United  States Home  Owner's  Loan Act.  The Savings  Bank
provides a variety of financial  services to individual  and business  customers
through its two locations in Beckley, West Virginia. This Southern West Virginia
area has been  historically  dependent on the coal mining  industry.  The Bank's
primary deposit products are interest-bearing  checking, savings and certificate
accounts. Its primary lending product is single-family residential loans.

    BASIS OF  ACCOUNTING:  The  accounting  and  reporting  practices of Beckley
Bancorp,  Inc. and Subsidiary  conform,  in all material respects,  to generally
accepted accounting principles ("GAAP") and to practices within the savings bank
industry. The following is a summary of the significant policies.

    PRINCIPLES OF CONSOLIDATION:  The consolidated  financial statements include
the accounts of Beckley  Bancorp,  Inc. and Beckley  Federal  Savings Bank,  its
wholly owned  subsidiary.  All material  intercompany  accounts and transactions
have been eliminated in the consolidation.

   CASH AND CASH  EQUIVALENTS:  For purposes of reporting  cash flows,  cash and
cash equivalents include cash on hand, demand deposits with banks and short-term
interest  bearing  deposits  at the  Federal  Home Loan  Bank  with an  original
maturity of three  months or less.  Cash and cash  equivalents  at December  31,
1996, 1995 and 1994 are detailed as follows:

                                      1996         1995          1994
                                   ----------   -----------   ----------
Cash and due from banks            $  333,952    $  405,754   $  576,772
FHLB demand deposit                   915,798       965,134      676,700
                                   ----------   -----------   ----------
                                   $1,249,750    $1,370,888   $1,253,472
                                   ==========   ===========   ==========

   INVESTMENT,  CMO'S AND OTHER MORTGAGE-BACKED  SECURITIES:  FASB Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities" requires
that debt  securities  that the Company has both the positive intent and ability
to hold to maturity  be carried at  amortized  cost.  Debt  securities  that the
Company does not have the positive intent or ability to hold to maturity and all
marketable equity securities are classified as available-for-sale and carried at
estimated  fair  value.  Unrealized  holding  gains  and  losses  on  securities
classified  as  available-  for-sale  are  carried  as a separate  component  of
shareholders' equity, net of taxes.

   The Bank's  mortgage-backed and related securities consist of mortgage-backed
participation   certificates  (PC's)  and  collateralized  mortgage  obligations
(CMO's).  All of these  securities  have  been  issued by the  Federal  National
Mortgage Association ("FNMA"),  Federal Home Loan Mortgage Corporation ("FHLMC")
and Government National Mortgage Association  ("GNMA").  The Bank's PC portfolio
consists of both fixed-rate and adjustable-rate instruments while the Bank's CMO
portfolio  consists  entirely  of  adjustable-rate   instruments.   All  of  the
adjustable-rate  instruments  have interest  rates that reset monthly based on a
widely-used  cost of funds index. At December 31, 1996, none of the Bank's CMO's
were classified as high risk under the Federal Financial Institution Examination
Council's  guidelines,  as  adopted by the  Office of Thrift  Supervision  under
thrift bulletin 52, for this type of investment.

   Prior to January 1, 1994,  the Bank  classified  all  investments  in equity,
debt, CMO and mortgage-backed securities as held for investment.  Because of the
issuance of Statement 115, the Bank reevaluated its investment policies and as a
result  concluded  that  all of its  investment  securities  (equity,  debt  and
mortgage-backed) should be classified as available-for-sale upon adoption of the
Statement.  Application  of the new rules resulted in an increase of $395,248 in
equity,  net of a $252,699 tax effect,  as of January 1, 1994,  representing the
recognition in equity of the unrealized appreciation at January 1, 1994.

   Effective November 15, 1995, the FASB offered entities a one-time opportunity
to reclassify their accounting securities among Statement 115's three categories
(trading,  available-for-sale  and  held-to-maturity).  The  Bank  has  made  no
reclassifications under the provisions which expired December 31, 1995.

   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. Such amortization is included in interest income
from   investments.   Interest  and   dividends

16

<PAGE>

                                            BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to the Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies

are included in income from  investments,  while principal  payments received on
mortgage-backed   securities  reduce  the  original  investment.   The  cost  of
securities sold is based on the specific identification method.

   LOANS:  Loans are stated at the unpaid principal amount  outstanding,  net of
unearned income,  deferred fees and the allowance for losses.  Interest on loans
is credited to income as earned and  accrued,  only if deemed  collectible.  The
Bank  discontinues  recognizing  accrued  interest  when a loan is  specifically
determined  to be impaired or when payment of interest  becomes past due by more
than ninety days. Unpaid interest  previously accrued on those loans is reversed
from income. Non- accrual loans may be restored to accrual status when principal
and  interest  become  current and full  payment of  principal  and  interest is
expected.

    Loan  origination fees and certain costs of originating and closing mortgage
loans are deferred and recognized over the life of the loans as an adjustment of
yield. These amounts are not considered material to operations.

   ALLOWANCE FOR LOSSES ON LOANS: The allowance for loan losses is maintained at
a level believed  adequate by management to absorb  potential losses in the loan
portfolio.  The amount of the allowance is based upon management's evaluation of
the  collectibility  of the  loan  portfolio,  including  historical  loan  loss
experience,  growth and  composition of the loan  portfolio,  known and inherent
risks in the portfolio,  current economic  conditions,  adverse situations which
may  affect the  borrower's  ability to repay,  and the  estimated  value of any
underlying collateral.  The allowance is increased by provisions for loan losses
charged against income, and reduced by charge-offs, net of recoveries.

   Additions  to the  allowance  for  loan  losses  on  mortgage  loans  are not
deductible  for Federal  income tax purposes.  A separate bad debt deduction for
income  tax  purposes  has been  established  (see  Note 10).  Additions  to the
allowance  for losses on consumer  loans are  generally  tax  deductible  to the
extent that charge-offs are made during the tax year.

   REAL  ESTATE  ACQUIRED  IN  SETTLEMENT  OF LOANS:  Real  estate  acquired  in
settlement  of loans is  recorded,  on the date  acquired,  at the  lower of the
Bank's  cost or  management's  estimate  of its fair  market  value.  Subsequent
adjustments  made to reflect any decline in value  below  management's  original
estimates are charged to current  operations through the provision for losses on
real estate owned.  Operating  expenses of such properties,  related income, and
gains and losses on their disposition are included in operations.  The Bank held
no real estate acquired in the settlement of loans at December 31, 1996 or 1995.

   BANK PREMISES AND EQUIPMENT:  Office  properties and equipment are carried at
cost less accumulated  depreciation.  Depreciation is computed  primarily on the
straight-line  method  over  the  estimated  useful  lives  of the  assets.  The
estimated  useful  lives  used  to  compute   depreciation  are:  buildings  and
improvements, ten to forty years; and furniture, fixtures and equipment, five to
ten years.

   INCOME  TAXES:  The Bank has  adopted  SFAS No. 109,  "Accounting  for Income
Taxes," which requires an asset and liability  approach to financial  accounting
and  reporting  for  income  taxes (see Note 10).  The  difference  between  the
financial  statement  and tax  bases of assets  and  liabilities  is  determined
annually.  Deferred  income tax assets and  liabilities  are  computed for those
differences  that have future tax consequences  using the currently  enacted tax
rates.  Valuation  allowances  are  established,  if  necessary,  to reduce  the
deferred  tax asset to the amount that will more  likely  than not be  realized.
Income tax expense is the current tax payable or refundable  for the period plus
or minus the net change in the  deferred  tax assets and  liabilities.  The Bank
files a  consolidated  return with its  subsidiary  and allocates tax provisions
based upon the entities separate taxable income.

    EARNINGS PER SHARE: The Company completed its initial stock offering on July
7, 1994,  and,  accordingly,  earnings  per share for 1994 was  computed  on net
income  subsequent to July 7, 1994 and the weighted average number of common and
common  equivalent shares  outstanding.  Common equivalent shares include shares
issuable  upon exercise of dilutive  options  outstanding  determined  under the
treasury stock method.  The Company accounts for the shares acquired by its ESOP
in accordance  with  Statement of Position 93-6 and the shares  acquired for its
Management  Stock Bonus Plan  ("MSBP") in a manner  similar to the ESOP  shares;
shares  acquired by the ESOP are not  considered in the weighted  average shares
outstanding  until the shares are  committed  for  allocation  to an  employee's
individual account.  The weighted average number of common and common equivalent
shares outstanding for the periods indicated below are:

                                                                             17

<PAGE>
BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies (Continued)

   July 27, 1994 through December 31, 1994             571,320 shares
   January 1, 1995 through December 31, 1995           574,050 shares
   January 1, 1996 through December 31, 1996           584,965 shares
===============================================================================

   USE OF ESTIMATES:  The preparation of the financial  statements in conformity
with GAAP requires  management to make estimates and assumptions that affect the
reported amounts in the financial  statements.  Actual results could differ from
those estimates.  Two such material  estimates are the allowance for loan losses
and fair value of  financial  instruments  (Note 15).  Management  uses  current
available  information to determine the allowance amount each reporting  period.
Changes in local  economic  conditions,  requirements  of  regulators  and other
factors may require the bank to make further additions to the allowance for loan
losses.  Therefore,  it is reasonably possible that these estimates could change
materially in the future.

   NEW ACCOUNTING PRONOUNCEMENTS:  The Financial Accounting Standards Board
(FASB) has issued the following pronouncements.

   The FASB has issued SFAS No. 122,  "Accounting  for Mortgage  Service Rights"
and SFAS No. 125,  "Accounting  for Transfers and Servicing of Financial  Assets
and  Extinguishments  of  Liabilities."  SFAS No.  122  deals  with  selling  or
securitizing of loans when mortgage servicing rights are retained. SFAS No. 125,
which is effective  after December 31, 1996,  provides  accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities.

    During 1996, Beckley Bancorp, Inc. and Subsidiary did not sell or securitize
loans and retain the mortgage  servicing rights.  Management does not anticipate
that  SFAS  No.  122 and No.  125  will  have any  impact  upon its  prospective
financial statements.

   RECLASSIFICATIONS:  Certain amounts in the 1994 and 1995 financial statements
have been reclassified to conform with the 1996 presentation.

   OTHER POLICIES:  Accounting policies regarding benefit plans and the fair
values of financial instruments are disclosed in Notes 11 and 15, respectively.

Note 2 - Conversion to Stock Ownership

   At a special  meeting  on June 27,  1994,  the  members of the  Savings  Bank
approved  management's  plan  to  convert  the  Savings  Bank  from a  federally
chartered mutual savings bank to a federally chartered stock savings bank. Under
the plan, the Parent Company  acquired 100% of the stock of the Savings Bank for
$2,799,636.  As part of the conversion to stock form, the Savings Bank formed an
Employee  Stock  Ownership  Plan("ESOP")  for eligible  employees (see Note 11).
Shares of the Parent Company were offered for  subscription to eligible  members
of the Savings Bank,  the Savings  Bank's  Employee  Stock  Ownership  Plan (the
"ESOP") and certain other  persons,  as of specified  dates,  subject to various
subscription  priorities.  All stock was purchased in the subscription offering.
The transaction was in the form of a pooling of interests.

   On July 7, 1994,  Beckley  Bancorp,  Inc. (a Delaware  Corporation)  sold and
issued 595,125 shares of $.10 par value common stock at $10 per share (inclusive
of 23,805  shares  acquired  by the ESOP) and became  the parent  company of the
Savings Bank.  Net proceeds of  $5,599,272,  representing  gross proceeds net of
accumulated  conversion  and  underwriting  cost of $351,978,  were reflected as
common stock and additional  paid-in  capital in the  accompanying  statement of
financial condition.

   In accordance with OTS  Regulations,  at the time of conversion,  the Savings
Bank segregated and restricted  $4,868,027 of retained earnings in a liquidation
account for the  benefit of eligible  deposit  account  holders who  continue to
maintain their accounts at the Savings Bank after the  conversion.  In the event
of a complete liquidation of the Savings Bank subsequent to the conversion, each
eligible  account  holder will be entitled  to receive a  distribution  from the
liquidation account in an amount  proportionate to the current adjusted balances
of all qualifying  deposits then held. The  liquidation  account will be reduced
annually  at December  31st to the extent that  eligible  account  holders  have
reduced  their  qualifying   deposits.   The  liquidation  account  approximated
$1,812,000 at December 31, 1996.

   Subsequent to the conversion,  the Parent Company or the Savings Bank may not
declare  or pay a cash  dividend  on any of its  shares of  common  stock if the
effect would reduce  stockholders'  equity below either the amount  required for
the liquidation  account  discussed above or the applicable  regulatory  capital
requirements  or  if  such  declaration  and  payment  would  otherwise  violate
regulatory requirements.

18

<PAGE>

                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 3 - Investment Securities

   The  following  is  a  summary  of  available-for-sale  and  held-to-maturity
securities:

<TABLE>
<CAPTION>


                                              Available-for-Sale Securities
------------------------------------------------------------------------------------
                                                    Gross       Gross      Estimated
                                     Amortized    Unrealized  Unrealized     Fair
                                        Cost        Gains       Losses       Value
====================================================================================
December 31, 1996
FHLB - Floating rate
  (Weighted average interest rate
<S>                                  <C>          <C>         <C>          <C>
  of 4.31%)                          $1,985,878   $    2,820  $    (928)   $1,987,770
FHLB callable bonds - Fixed rate
  (Weighted average interest rate
  of 5.87%)                           2,000,000           xx    (20,211)    1,979,789
FHLMC callable bond - Fixed rate
  (Weighted average interest rate
  of 8%)                              1,000,000        8,167         xx     1,008,167
FHLMC stock                              36,249      985,272         xx     1,021,521
------------------------------------------------------------------------------------
                                     $5,022,127   $ 996,259   $ (21,139)   $5,997,247
====================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                               Held-to-Maturity Security
-------------------------------------------------------------------------------------
                                                    Gross       Gross      Estimated
                                     Amortized    Unrealized  Unrealized     Fair
                                        Cost        Gains       Losses       Value
-------------------------------------------------------------------------------------
December 31, 1996
<S>                                  <C>          <C>         <C>          <C>
FHLB - Discount note                 $  997,417   $       83  $       xx   $  997,500
=====================================================================================

Weighted average interest rate             5.47%
=====================================================================================
</TABLE>


<TABLE>
<CAPTION>


                                              Available-for-Sale Securities
--------------------------------------------------------------------------------------
                                                    Gross       Gross      Estimated
                                     Amortized    Unrealized  Unrealized     Fair
                                        Cost        Gains       Losses       Value
--------------------------------------------------------------------------------------
December 31, 1995
FHLB - Floating rate
  (Weighted average interest rate
<S>                                  <C>          <C>         <C>         <C>
  of 4.59%)                          $1,969,502   $    7,347  $  (20,000) $1,956,849
FHLB callable bonds - Fixed rate
  (Weighted average interest rate
  of 6.88%)                           2,003,750         933           xx   2,004,683
U.S. Treasury Bill (interest rate
  of 5.39%)                             243,244         589           xx     243,833
FHLMC stock and other marketable
  securities                             61,249     754,444           xx     815,693
------------------------------------------------------------------------------------
                                     $4,277,745   $  763,313  $  (20,000) $5,021,058
====================================================================================
</TABLE>


<TABLE>
<CAPTION>


                                               Held-to-Maturity Security
--------------------------------------------------------------------------------------
                                                    Gross       Gross      Estimated
                                     Amortized    Unrealized  Unrealized     Fair
                                        Cost        Gains       Losses       Value
--------------------------------------------------------------------------------------
December 31, 1995
<S>                                  <C>          <C>         <C>          <C>
FHLB - Discount note                 $3,992,627   $      373  $       xx   $3,993,000
======================================================================================
Weighted average interest rate             5.53%
======================================================================================
</TABLE>

                                                                             19
<PAGE>
BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 3 - Investment Securities (continued)

   The  gross  realized  gain on sales  proceeds  of  $50,688  and  $960,938  on
available-  for-sale  securities  totaled $25,688 and $4,901 for the years ended
December 31, 1996 and 1995. There were no realized  losses.  There were no sales
of investments  securities  during 1994. The  adjustment,  net of income tax, to
unrealized gains (losses) on  available-for-sale  investment securities included
as a separate component of shareholders'  equity totaled $146,039,  $332,165 and
($118,427) in 1996, 1995 and 1994, respectively.

   The  amortized  cost and  estimated  fair value of  investment  securities at
December 31, 1996, by contractual maturity, are shown below. Expected maturities
will differ from  contractual  maturities  because the issuers of the securities
may have the right to prepay obligations without prepayment penalties.

                                                               Estimated
                                                  Amortized       Fair
                                                    Cost         Value
============================================================================
   Available-for-Sale:
     Due in one year or less                      $1,495,017   $1,494,878
     Due after one year through five years         2,490,861    2,472,681
     Due after five years through ten years        1,000,000    1,008,167
----------------------------------------------------------------------------
                                                   4,985,878    4,975,726
     Equity securities                                36,249    1,021,521
----------------------------------------------------------------------------
                                                  $5,022,127   $5,997,247
============================================================================

   Held-to-Maturity:
     Due in one year or less                      $  997,417   $  997,500
============================================================================

   Investment  securities  with a carrying value of $495,806 had been pledged to
secure public deposits at December 31, 1996. There were no pledged securities at
December 31, 1995.

Note  4  -  Collateralized   Mortgage  Obligations  and  Other   Mortgage-Backed
Securities

   The following is a summary of collateralized  mortgage  obligations and other
mortgage-backed securities:
<TABLE>
<CAPTION>
                                             Available-for-Sale Securities
-------------------------------------------------------------------------------------
                                                  Gross        Gross      Estimated
                                   Amortized    Unrealized  Unrealized       Fair
                                      Cost        Gains       Losses        Value
=====================================================================================
<S>                               <C>          <C>         <C>           <C>
December 31, 1996
Floating rate collateralized
 mortgage obligations:
   FNMA issues                    $ 9,636,540  $   11,682  $  (459,549)  $ 9,188,673
   FHLMC issues                     3,028,047      21,887      (109,055)   2,940,879
(Weighted average interest
  rate of 6.15%)

Mortgage-backed P.C.'s:
  GNMA fixed rate                     471,942      47,711            xx      519,653
  FHLMC fixed rate                    529,346      25,226            xx      554,572
  FNMA fixed rate                       7,132         905            xx        8,037
  FHLMC adj. rate                      89,033          xx        (1,933)      87,100
  FNMA adj. rate                    3,243,548         528       (59,112)   3,184,964
--------------------------------------------------------------------------------------
(Weighted average interest
  rate of 6.88%)                  $17,005,588  $  107,939  $  (629,649)  $16,483,878
======================================================================================
</TABLE>

20

<PAGE>

                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note  4  -  Collateralized   Mortgage  Obligations  and  Other   Mortgage-Backed
Securities (Continued)

<TABLE>
<CAPTION>
                                             Available-for-Sale Securities
------------------------------------------------------------------------------------
                                                  Gross        Gross      Estimated
                                   Amortized    Unrealized  Unrealized       Fair
                                      Cost        Gains       Losses        Value
====================================================================================
December 31, 1995
Floating rate collateralized
 mortgage obligations:
<S>                               <C>          <C>         <C>           <C>
   FNMA issues                    $10,025,926  $   15,784  $  (144,678)  $ 9,897,032
   FHLMC issues                     3,027,816      26,796       (52,043)   3,002,569
(Weighted average interest
  rate of 6.44%)

Mortgage-backed P.C.'s:
  GNMA fixed rate                     616,790      62,226            xx      679,016
  FHLMC fixed rate                    611,621      32,394            xx      644,015
  FNMA fixed rate                       7,322         858            xx        8,180
  FHLMC adj. rate                     102,107          xx        (1,072)     101,035
  FNMA adj. rate                    3,630,133      13,714       (21,864)   3,621,983
------------------------------------------------------------------------------------
(Weighted average interest
  rate of 7.15%)
                                  $18,021,715  $  151,772  $  (219,657)  $17,953,830
====================================================================================
</TABLE>

    The Bank has no principal only,  interest only, or residual  tranches in its
collateralized mortgage obligation portfolio.

   The gross realized gain on sales  proceeds of $993,589 on  available-for-sale
collateralized  mortgage obligations totaled $30,010 for the year ended December
31,  1995.  There were no sales of these  securities  during 1996 and 1995.  The
adjustment,   net   of   income   tax,   to   unrealized   gains   (losses)   on
available-for-sale collateralized mortgage obligations and other mortgage-backed
securities  included as a separate  component of  shareholders'  equity  totaled
($285,912), $770,327 and ($953,791) in 1996, 1995 and 1994, respectively.

   There  were  no  pledged   collateralized   mortgage  obligations  and  other
mortgage-backed securities at December 31, 1996 and 1995.

Note 5 - Loans Receivable

   Loans receivable at December 31, 1996 and 1995, consisted of the following:

                                                      1996          1995
==============================================================================
   First mortgage loans:
     One to four family dwellings                  $13,101,985   $12,213,937
     Commercial                                      1,408,898     1,237,487
     Construction                                       96,231       102,650
   Loans secured by deposits                           616,719       616,829
   Consumer installment loans:
     Auto and other personal                         5,179,214     2,056,542
     Commercial                                        103,538        24,907
-----------------------------------------------------------------------------
      Total Loans                                   20,506,585    16,252,352

   Less:   Allowance for losses                       (303,183)     (255,000)
           Net deferred loan fees and reserve for
           uncollected interest.                       (23,330)      (31,770)
-----------------------------------------------------------------------------
                                                   $20,180,072   $15,965,582
=============================================================================
   Weighted average interest rate                         8.14%         8.34%
=============================================================================

                                                                             21

<PAGE>
BECKLEY BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 5 - Loans Receivable (continued)

   Nonaccruing loans at December 31 were as follows:

                                               1996          1995
=====================================================================

   Accumulated nonaccruing loans            $    53,176   $    52,978
=====================================================================

   Interest and fees on loans would have  increased  $1,166,  $1,805 and $288 in
1996,  1995 and 1994,  respectively,  if  nonaccruing  loans  had been  accruing
interest at contract rates.  Interest income recorded on such loans during 1996,
1995 and 1994 totaled $7,142, $2,923 and $2,998, respectively.

   Activity in the allowance for loan losses is summarized as follows:

                                         1996        1995       1994
-----------------------------------------------------------------------

   Balance, beginning of year           $255,000   $174,000   $144,000
   Provision for loan losses              52,000     81,000     30,000
   Loans charged-off                      (3,817)        xx         xx
-----------------------------------------------------------------------
   Balance, end of year                 $303,183   $255,000   $174,000
=======================================================================

   The Bank primarily originates single-family residential mortgage loans within
the Raleigh County,  West Virginia area.  General policy is to lend up to 80% of
the appraised  value of the property  securing the loan.  Historically,  Raleigh
County  has been  subject  to  economic  fluctuations  within  the  coal  mining
industry.

   Loans   delinquent   over  90  days  for  principal  and  interest   payments
approximated  .26% of the total loan  balances at December 31, 1996.  Management
anticipates  no loss on these loans due to the  collateral  value  exceeding the
loan principal outstanding.

   The Bank was  required to adopt the  provisions  of FASB 114  "Accounting  by
Creditors for  Impairment of a Loan" and FASB 118  "Accounting  by Creditors for
Impairment of a Loan - Income  Recognition  and  Disclosures"  during 1995.  The
statements  require that impaired  loans that are within their scope be measured
on the present  value of expected  future  cash flows  discounted  at the loan's
effective interest rate, or as a practical  expedient,  at the loan's observable
market  price  or the  fair  market  value  of the  collateral  if the  loan  is
collateral  dependent.  Management  has evaluated the loan portfolio at December
31, 1996 and 1995 and have determined that no impaired loans existed.

   The Bank has granted  loans to certain  directors and officers of the Savings
Bank.  Related party loans are made on substantially  the same terms,  including
interest rates and  collateral,  as those  prevailing at the time for comparable
transactions  with unrelated persons and do not involve more than normal risk of
collectibility.  The  aggregate  dollar  amount of these loans was  $289,154 and
$196,946 at December 31, 1996 and 1995,  respectively.  During  1996,  new loans
were $149,384 and repayments totaled $57,176.

Note 6 - Bank Premises and Equipment

   The following is a detail of office  properties and equipment at December 31,
1996 and 1995:
                                                      1996       1995
=========================================================================

   Land and land improvements                       $379,953   $379,953
   Office building - main                             74,332     74,332
   Office building - branch                           86,570     86,570
   Architectural fees, survey and other costs -
     1729 Harper Road                                112,492      2,155
   Equipment, furniture and fixtures                 317,064    299,566
-------------------------------------------------------------------------
                                                     970,411    842,576
   Accumulated depreciation                          419,558    401,647
-------------------------------------------------------------------------
                                                    $550,853   $440,929
=========================================================================

   Architectural  fees,  survey  and  other  costs  are  related  to the  future
construction of a new main office at 1729 Harper Road,  Beckley,  West Virginia.
The most recent proposal to construct the facility, as designed, totalled $1.513
million.  Management is evaluating the construction  costs and  consideration is
being given to reducing the size of the currently  designed  facility.  The Bank
has not entered into any formal contracts to construct the new main office.

22

<PAGE>
                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 7 - Accrued Interest Receivable

   Accrued interest receivable at December 31 is summarized as follows:


                                                          1996      1995
===========================================================================

   Interest bearing deposits                           $  4,473   $ 14,291
   Investment securities                                 55,835     39,977
   Collateralized mortgage obligations                   61,186     66,144
   Mortgage-backed securities                            28,950     34,367
   Loans                                                118,012     98,113
----------------------------------------------------------------------------
                                                       $268,456   $252,892
============================================================================

Note 8 - Deposit Accounts

   Deposit accounts at December 31 are comprised of:

<TABLE>
<CAPTION>
                                             December 31,
                                                 1996
               Account Type                  Interest Rate     1996          1995
========================================================================================
<S>                                          <C>           <C>             <C>
   Commercial NOW and business checking       0.00 - 1.0%   $   105,267   $   256,046
   Passbook, including 90 day and club
     accounts                                3.06 - 3.94%     7,368,380    8,140,105
   NOW/SuperNOW accounts                     2.00 - 2.47%     3,377,686    4,141,468
   Money market checking                     2.00 - 2.90%     1,366,923    1,584,198
   Savings certificates                       3.00 - 4.0%       312,653    5,802,065
                                              4.01 - 5.0%     4,760,677    1,487,940
                                              5.01 - 6.0%    13,829,657    8,497,439
                                              6.01 - 7.0%     1,032,581    3,416,416
                                              7.01 - 8.0%        92,355      101,299
----------------------------------------------------------------------------------------
                                                            $32,246,179   $33,426,976
=========================================================================================
</TABLE>

   The  weighted  average  interest  rate of all  deposits  for the years  ended
December 31, 1996 and 1995 was 4.25% and 4.03%, respectively.

   The  aggregate  amount of  certificates  of deposit of  $100,000  or more was
$3,839,000 at December 31, 1996 and $3,537,000 at December 31, 1995.

   Scheduled  maturities  of savings  certificates  at December  31, 1996 are as
follows:

                                                        Weighted
                                                        Average
                                                        Interest
                                            Balance       Rate
===================================================================

   Under 3 months                         $ 5,438,402    4.93%
   4 to 12 months                          10,283,477    5.15%
   13 to 36 months                          4,257,356    5.51%
   37 to 48 months                             48,688    5.29%
-------------------------------------------------------------------
                                          $20,027,923    5.17%

===================================================================

   Interest  expense by deposit  category for the years ended  December 31 is as
follows:

                                          1996         1995          1994
===============================================================================

   Passbook savings, including 90-day
     and club accounts                    234,410    $  271,436   $  369,379
   NOW and money market accounts          123,473       145,326      150,429
   Savings certificates                   987,026       895,807      541,544
-------------------------------------------------------------------------------
                                        1,344,909    $1,312,569   $1,061,352
===============================================================================


                                                                            23

<PAGE>
BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 9 - Advances from Federal Home Loan Bank

   Advances from the Federal Home Loan Bank at December 31, 1996 are as follows:


Short-term fixed rate - 5.93%,
   due 1/15/97                                   $1,000,000
Repo plus - 5.55%, due 3/18/97                    1,000,000
------------------------------------------------------------
                                                 $2,000,000
============================================================
The advances are unsecured with principal and interest  payable at maturity.  At
December 31, 1996, the Bank had a remaining  unsecured credit line of $1,473,000
with the  Federal  Home Loan Bank  ("FHLB").  The Bank also has the  capacity to
borrow up to $13.5  million in  additional  funds  from the FHLB  using  certain
assets as collateral.

Note 10 - Income Taxes

   The Bank has previously  qualified under  provisions of the Internal  Revenue
Code that allowed a special bad debt deduction limited generally to a percentage
of otherwise taxable income  ("percentage of taxable income method") and subject
to certain  limitations  based upon  aggregate  loans and  deposits.  Under such
provisions, the Bank had established a bad debt reserve, for income tax purposes
only,  of  approximately  $1,464,000.  As a result of the Small  Business Act of
1996, the  "percentage  of taxable  income  method" has been  eliminated for tax
years  beginning  after  December 31, 1995.  The Bank is now required to use the
"experience  method" for establishing bad debt reserves for income tax purposes.
The reserve  previously  established will become the Bank's beginning balance of
its experience reserve.  Such reserves will be used to absorb losses on mortgage
loans for income tax purposes.

   All or a portion of the  $1,464,000  may be  subject to income tax  recapture
only if the  Bank  should  liquidate  or if the  balance  in its  mortgage  loan
portfolio  at the end of any year falls below the balance in such  portfolio  at
December 31, 1987.  Under these  circumstances,  all or a portion of the reserve
would be subject to Federal income tax at the then applicable rates.  Management
does not  anticipate the occurrence of any event that would cause any portion of
this reserve to be subject to recapture.

   Income tax expense for the years ending December 31 is summarized as follows:


                                1996       1995        1994
================================================================
   Federal:
     Current                  $166,830    $236,121   $140,140
     Deferred                  (10,933)    (23,240)    (7,066)

   State:
     Current                    13,548      13,279     11,173
     Deferred                   (1,029)     (1,756)      (580)
----------------------------------------------------------------
                              $168,416    $224,404   $143,667
================================================================
   A reconciliation of the differences between the tax provision and tax expense
computed by applying the federal statutory income tax rate is as follows:


                                                  1996       1995        1994
================================================================================
   Statutory Federal income tax rate                  34%         34%        34%
--------------------------------------------------------------------------------
   Expected income tax expense at federal rate  $150,900    $210,800   $138,900
     Increase (decrease) in provision
      resulting from:
        State income taxes, net of
         federal benefit                           8,942       9,065      7,400
        Dividends received deduction              (3,275)     (2,810)    (2,475)
        Other                                     11,849       7,349       (158)
-------------------------------------------------------------------------------
                                                $168,416    $224,404   $143,667
===============================================================================
Income tax expense applicable to securities transactions approximated $9,200 and
$13,000 for the years ended December 31, 1996 and 1995, respectively.

   The net deferred tax liability in the accompanying balance sheet includes the
following amounts of deferred tax assets and liabilities:

24

<PAGE>
                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 10 - Income Taxes (continued)

                                                          1996        1995
==============================================================================
   Deferred tax asset:
     Deferred loan fees                                 $   4,275   $   5,992
     Consumer loan loss reserve                            56,601      41,382
     Accrued health insurance                               7,156       7,524
     Unearned management stock bonus plan                   5,103       5,326
------------------------------------------------------------------------------
                                                           73,135      60,224
     Less valuation allowance                              (7,156)     (7,524)
------------------------------------------------------------------------------
                                                           65,979      52,700
------------------------------------------------------------------------------
   Deferred tax liability:
     Post 1987 tax loan loss reserve                         (295)       (295)
     Accelerated depreciation for tax purposes            (19,392)    (18,075)
     Unrealized gain on securities available-for-sale
      (Note 1)                                           (167,762)   (249,909)
------------------------------------------------------------------------------
                                                         (187,449)   (268,279)
------------------------------------------------------------------------------
   Net Deferred Tax Liability                           $(121,470)  $(215,579)
==============================================================================
    The valuation  allowance was established to reduce the deferred tax asset to
the amount that will more likely than not be realized.

Note 11 - Benefit Plans

   Employee Retirement Plan:

   Beckley  Federal  Savings Bank  participates  in the  Financial  Institutions
Retirement  Fund  multi-employer  pension  plan.  This  noncontributory  defined
benefit  plan covers all  eligible  employees  meeting  certain  service and age
requirements.  The plan  operates  on a fiscal year ending on June 30, and it is
the policy of the Bank to fund the normal cost of the plan.  Plan  contributions
for the years  ending  June 30,  1997,  1996 and 1995 were  $4,647,  $17,398 and
$38,709,  respectively.  Due to the fully  funded  status of the plan,  the 1996
contribution  was  reduced  below  previous  levels  due  to a  future  employee
contribution  offset of $25,011.  Pension plan expense was $10,958,  $29,017 and
$35,270 for the years ended  December 31, 1996,  1995 and 1994. If the plan ever
became  underfunded and the Bank withdrew from the plan, it would be responsible
for its  share  of any  unfunded  benefit  obligations.  The data  available  at
December  31,  1996 from the  administrators  of the plan is not  sufficient  to
develop or determine the Bank's share of the pension plan's accumulated  benefit
obligation,  or the  net  assets  attributable  to the  plan.  The  Bank  has no
intention of withdrawing from the plan.

   Employee Stock Ownership Plan:

   At the time of the stock conversion, the Savings Bank established an employer
leveraged  Employee  Stock  Ownership  Plan  ("ESOP")  that covers all full-time
employees,  age 21 and with one year of service. The ESOP borrowed $238,050 from
the Parent Company to purchase 23,805 shares of the Company's  common stock, the
loan being  collateralized  by the common  stock.  The Savings Bank makes annual
contributions  of $23,805 to the ESOP,  which is equal to the ESOP debt  service
requirement. As shares are committed to be released from collateral, the Savings
Bank  reports  compensation  expense  equal to the current  market  price of the
shares, and the shares become  outstanding for earnings per share  computations.
Dividends  on  allocated  ESOP shares are  recorded  as a reduction  in retained
earnings;  dividends  on  unallocated  ESOP  shares are  retained to service the
ESOP's loan from the Company. ESOP compensation expense was $48,121, $41,596 and
$26,037 for the years ended December 31, 1996, 1995 and 1994. The ESOP shares as
of December 31, 1996 were as follows:


Allocated shares                                          4,787
Shares committed to be released                           3,153
Unreleased shares                                        15,329
----------------------------------------------------------------
             Total ESOP Shares                           23,269
================================================================
Fair value of unreleased shares at
             December 31, 1996                         $264,425
================================================================

                                                                             25
<PAGE>

BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 11 - Benefit Plans (continued)

   Management Stock Bonus Plan:

   Upon  approval  by the  Stockholders  on  May  23,  1995,  the  Savings  Bank
established a Management Stock Bonus Plan ("MSBP"), the objective of which is to
reward and retain  personnel  of  experience  and  ability in key  positions  of
responsibility  with the  Savings  Bank.  A  maximum  of  23,805  shares  can be
purchased  by the  Plan.  Upon  the  adoption  of the  Plan,  five  non-employee
Directors and one employee Director were awarded 1,190  non-forfeitable,  except
for cause,  plan shares each to be  allocated at the rate of one-fifth as of the
Effective  Date and an  additional  one-fifth  following  each of the next  four
successive years. The total plan shares to be awarded to non-employee  directors
shall not  exceed  5,950 in the  aggregate  under the Plan.  All  employees  are
eligible  to  receive  benefits  under  the  MSBP at the  sole  discretion  of a
committee of not less than three non-employee members of the Savings Bank Board.
The MSBP is managed by trustees  who are  non-employee  directors of the Savings
Bank.

    The MSBP purchased  7,140 shares of the Parent  Company's stock for $121,380
during  1995.  Of the  shares  purchased,  6,340  were  newly  issued by Beckley
Bancorp,  Inc. These shares were granted in the form of restricted stock payable
20% upon date of award (May 23, 1995) and the remaining  shares issuable equally
over a four-year  period  beginning  May 23, 1996.  Compensation  expense in the
amount of the fair market  value of the common stock at the date of grant to the
individual,  will be  recognized  over the  period  during  which the shares are
payable.  A  recipient  of such  restricted  stock is entitled to all voting and
other stockholder rights (including the right to receive dividends on issued and
non-issued shares),  except that the shares, while restricted,  may not be sold,
pledged or otherwise  disposed of. If a recipient of such restricted stock grant
terminates  employment  for reasons other than death,  disability or retirement,
the recipient forfeits all rights to the unissued shares under  restriction.  If
the  participant's  service  terminates  as  a  result  of  death,   disability,
retirement or a change in control of the Savings Bank, all  restrictions  expire
and all  shares  unissued  become  unrestricted.  The  Board  of  Directors  can
terminate the MSBP at any time, and if it does so, any shares not allocated will
revert to the Company.

   Compensation  expense  under the plan was  $20,751  and $36,914 for the years
ending December 31, 1996 and 1995, respectively.

   Stock Option Plan:

   Upon approval of the  Stockholders,  on May 23, 1995,  Beckley Bancorp,  Inc.
adopted the 1994 Stock Option Plan. The aggregate  number of shares with respect
to which awards may be made pursuant to the Plan was limited to 59,512.  On June
11,  1996,  the Board of Directors  of the Company  adopted the 1996  Directors'
Stock Option Plan. A total of 30,000 shares were  transferred from the 1994 Plan
into the 1996 Plan. The purpose of the Plans is to provide additional  incentive
to certain officers,  directors and key employees by facilitating their purchase
of a stock  interest in the Company.  The Option Plans provide for a term of ten
years,  after  which no  awards  may be made,  unless  such  Plans  are  earlier
terminated by the Board of Directors.

   The  Option  Plans  are  administered  by  a  committee   consisting  of  the
non-employee  members of the Board of Directors  (the "Option  Committee").  The
Option Committee selects the employees to whom options are to be granted and the
number of shares to be  granted.  The option  price may not be less than 100% of
the fair  market  value of the  shares on the date of the  grant,  and no option
shall be  exercisable  after the expiration of ten years from the grant date. In
the case of any director or employee  who owns more than 10% of the  outstanding
common stock at the time the option is granted, the option price may not be less
than 110% of the fair market  value of the shares on the date of the grant,  and
the option shall not be exercisable  after the expiration of five years from the
grant date. The exercise price may be paid in cash,  shares of the common stock,
or a combination of both.

   The following table provides  details of the activity within the Option Plans
during the twelve-month period ended December 31, 1996:

                                                                  Weighted-
                                                                   Average
                                                                  Exercise
                                                       Options      Price
=============================================================================

   Outstanding, January 1                                17,250      $15.63

     Granted                                             42,262      $18.25
     Exercised                                               xx
     Forfeited                                             (123)     $18.25

-----------------------------------------------------------------------------
   Outstanding, December 31                              59,389      $17.49
=============================================================================
   Exercisable at end of year                            58,868      $17.48
=============================================================================
   Weighted-average fair value of options granted
     during the year                                      $5.46
=============================================================================

26

<PAGE>

                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 11 - Benefit Plans (continued)

   No options have expired under the Plans.  The exercise  prices on the options
outstanding  range  from  $15.625  to $18.25 per  share.  The  weighted  average
remaining life of the options outstanding is 9.2 years.

   Financial  Accounting  Standard  No. 123,  which became  effective  for 1996,
requires pro forma  disclosures  for companies  that do not adopt its fair value
accounting method for stock-based compensation.  Accordingly,  the following pro
forma information  presents net income and earnings per share had the Standard's
fair value method been used to measure compensation cost for stock option plans.
Compensation  cost  actually  recognized  for stock  options was $0 for 1996 and
1995.

                                                1996       1995
==================================================================

   Net income as reported                     $275,518   $395,794
   Pro forma net income                       $ 97,606   $337,830

   Earnings per share as reported             $    .47   $    .69
   Pro forma earnings per share               $    .17   $    .59
==================================================================
   In future  years,  the pro forma effect of not applying  this standard is not
expected  to  increase as  additional  options  are not  expected to be granted.
However, if additional options are granted in future years, the granting of such
options will likely increase the pro forma effect of not applying this standard.

   The value of the  options  granted  were  estimated  using the  Black-Scholes
Option Value Model. For the options granted in 1995, the significant assumptions
used were (1) a risk-free interest rate of 6.50%, (2) a volatility factor on the
stock price of  .066542,  (3) an expected  dividend  yield of 2.00%,  and (4) an
estimated life of ten years.  For the options granted in 1996,  assumptions used
were  (1)  a   weighted-average   risk-free   interest  rate  of  6.84%,  (2)  a
weighted-average volatility factor of .090948, (3) an expected dividend yield of
2.00%, and (4) a weighted-average estimated life of ten years.

Note 12 - Regulatory Requirements and Restrictions

   Beckley  Federal  Savings Bank is subject to  requirements  and  restrictions
imposed by various federal regulators.  These requirements,  among other things,
establish  minimum  levels of capital  and require  that  minimum  cash  reserve
balances be maintained.

   The  Savings  Bank  currently  exceeds  the  following   regulatory   capital
requirements issued by the Office of Thrift Supervision pursuant to FIRREA: 1.5%
tangible capital  requirement,  3% core capital  requirement and 8% risked-based
capital requirement.  The following schedule shows the Savings Bank's compliance
with regulatory capital standards at December 31, 1996:

<TABLE>
<CAPTION>
                                                              (In Thousands)
                                                                             Risk-
                                                       Tangible    Core      Based
                                                       Capital    Capital   Capital
=====================================================================================

<S>                                                    <C>        <C>       <C>
   Total stockholder's equity of Savings Bank          $  8,009   $ 8,009   $ 8,009

   Adjustments:
     Net unrealized gain on securities available
       for sale                                            (286)     (286)     (286)
     Allowance for loan losses (limited to 1.25% of
      risk-weighted assets)                                  xx        xx       235

   Regulatory capital - computed                          7,723     7,723     7,958
   Minimum capital requirement                              685     1,371     1,503
-------------------------------------------------------------------------------------
   Regulatory capital - excess                         $  7,038   $ 6,352   $ 6,455
=====================================================================================
   Regulatory capital - requirement                         1.5%      3.0%      8.0%
   Regulatory capital - computed                           16.9%     16.9%     42.4%

</TABLE>

   At December 31, 1996,  regulatory assets used in computing  tangible and core
capital  requirements were $45,690,000.  Total risk weighted assets at this date
were $18,790,000.

   There were no  material  differences  between  the net  income  and  retained
earnings  presented  in  these  financial  statements  and  those  reported  for
regulatory  purposes for each of the years ended  December  31,  1996,  1995 and
1994.

                                                                           27

<PAGE>

BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 12 - Regulatory Requirements and Restrictions (continued)

   The Federal Deposit Insurance  Corporation ("FDIC") currently administers two
separate  deposit  insurance  funds,  the Bank  Insurance  Fund  ("BIF") and the
Savings Association  Insurance Fund ("SAIF").  Due to the BIF being fully funded
and SAIF being underfunded, effective September 30, 1995, the FDIC substantially
lowered the insurance  premium of the BIF members while  maintaining  the higher
rate for all SAIF  members.  Additionally,  effective  January  1996,  the total
annual  premium for most BIF  members  was lowered  further to a flat $2,000 per
year.  These  reductions  in  insurance  premiums  for BIF  members  placed SAIF
members,  such  as the  bank,  at a  material  competitive  disadvantage  to BIF
members.

   Effective  September 30, 1996,  federal law was revised to mandate a one-time
special premium  assessment on SAIF members,  such as the Bank, of approximately
65.7%  per  $100 of  insured  deposits  held on  March  31,  1995.  The  special
assessment was made to fully  capitalize the SAIF to be at par with the BIF. The
Bank  recorded a $211,647  pre-tax  expense  for this  assessment  during  1996.
Beginning January 1, 1997,  deposit insurance  assessments for SAIF members were
reduced to  approximately  6.4% per $100 of insured  deposits on an annual basis
through the end of 1999. During this same period, BIF members are expected to be
assessed  approximately 1.3% per $100 of insured deposits.  Beginning January 1,
2000,  assessments  for the BIF and SAIF  members  should be the same rate.  The
higher  premiums paid by SAIF members during this period will be used to pay the
obligations of the Financing  Corporations  debt obligation.  Assuming the above
reduction,  beginning  January 1, 1997,  the rate of deposit  insurance  premium
assessed the Bank will decline by approximately 70%.

Note 13 - Commitments

   Loan  commitments at December 31, 1996 were $133,000 for fixed and adjustable
rate real  estate  loans.  The  weighted  average  interest  rate on these  loan
commitments  was 7.30% and they were  approved  under  normal loan  underwriting
standards established by the Bank.

   Effective  March  1,  1993,  Beckley  Federal  Savings  Bank  entered  into a
five-year  agreement  with  FiServ,  Inc.  for  the use of its  data  processing
services.  The contract calls for annual increases over the prior year price not
to exceed 4%. The Bank may  terminate  the agreement by giving 180 days' written
notice.  Total expense relating to the agreement was $49,789 in 1996, $52,818 in
1995 and $51,126 in 1994.

   Effective January 1, 1997, the Bank entered into an employment agreement with
President Duane K. Sellards.  The agreement is for a term of three years and has
a base salary of  $116,000.  The  agreement is  terminable  by the Bank for just
cause,  as defined by the agreement.  Termination  without just cause requires a
continuation of the agreement while an involuntary  termination  requires a lump
sum payment.

   On January 22, 1997, the Board of Directors of Beckley  Federal  Savings Bank
received approval from the Office of Thrift Supervision to declare,  at its next
regular  meeting,  a cash dividend to the Parent equal to 100% of the net income
for the year  ended  December  31,  1996.  On  January  14,  1997,  the Board of
Directors of Beckley Bancorp,  Inc. declared a $0.14 per share cash dividend and
$.08  special  dividend  payable  on  February  18,  1997  to the  Corporation's
shareholder's of record as of January 31, 1997.

Note 14 - Other Expenses

   Other operating expenses for the years ended 1996, 1995 and 1994 include:

<TABLE>
<CAPTION>
                                                       1996        1995       1994
=====================================================================================

<S>                                                   <C>        <C>        <C>
   Director's fees                                    $ 39,600   $ 39,000   $ 39,000
   Management stock bonus plan - Non-employee
     directors                                          17,292     30,762         xx
   Payroll taxes                                        32,926     32,152     30,219
   Personal property, franchise and other taxes         39,166     27,052     23,128
   Legal, auditing and examinations                     70,145     82,676     47,593
   Other                                               116,438    108,234     95,320
--------------------------------------------------------------------------------------
                                                      $315,567   $319,876   $235,260
======================================================================================
</TABLE>

28
<PAGE>

                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 15 - Fair Value of Financial Instruments

   The  following   disclosures   of  the  estimated  fair  value  of  financial
instruments  are made in  accordance  with  the  requirements  of SFAS No.  107,
"Disclosures  about Fair Value of Financial  Instruments."  The Bank adopted the
provisions  of SFAS No.  107  during  the year  ended  December  31,  1995.  The
estimated fair value amounts have been determined by Beckley  Bancorp,  Inc. and
Subsidiary  using  available  market   information  and  appropriate   valuation
methodologies. However, considerable judgment is required in interpreting market
data  to  develop  the  estimates  of fair  value.  Accordingly,  the  estimates
presented  herein are not  necessarily  indicative of the amounts the Bank could
realize in a current market exchange.  The use of different  market  assumptions
and/or estimation methodologies may have a material effect on the estimated fair
value amounts.

   The Bank's  estimated  fair value of financial  instruments as of December 31
are as follows (in thousands):
<TABLE>
<CAPTION>

                                                   1996                  1995
---------------------------------------------------------------------------------------
                                            Carrying  Estimated   Carrying Estimated
                                            Amount    Fair Value  Amount   Fair Value
=======================================================================================
   Assets:
<S>                                         <C>       <C>        <C>       <C>
     Cash and cash equivalents              $ 1,250   $   1,250  $  1,371  $   1,371
     Investment securities:
      Available-for-sale                      5,997       5,997     5,021      5,021
      Held-to-maturity                          997         997     3,993      3,993
     CMO's and other mortgage-backed
      securities - available-for-sale        16,484      16,484    17,954     17,954
     Loans receivable, net                   20,180      20,283    15,966     16,337
     Federal Home Loan Bank stock               172         172       176        176

   Liabilities:
     Demand and savings deposits             12,218      12,218    14,122     14,122
     Certificates of deposit                 20,028      20,038    19,305     19,336
     Federal Home Loan Bank advances          2,000       2,000        xx         xx

</TABLE>

<TABLE>
<CAPTION>

                                                   1996                  1995
--------------------------------------------------------------------------------------
                                            Contract  Estimated   Contract Estimated
                                              or      Unrealized    or     Unrealized
                                            Notional    Gain      Notional   Gain
                                            Amount     (Loss)     Amount    (Loss)
======================================================================================
   Off-balance sheet financial instruments:
<S>                                         <C>       <C>         <C>      <C>
     Lending commitments, fixed rate        $    133  $       xx  $     69 $        2
======================================================================================
</TABLE>
   The following  methods and assumptions  were used to determine the fair value
of financial instruments:

      Cash and Cash  Equivalents - For cash and cash  equivalents,  the carrying
      amount is a reasonable estimate of fair value.

      Investment  Securities  - Fair  values are based on quotes  provided  by a
      recognized pricing service.

      Collateralized  and Other  Mortgage-Backed  Securities  - Fair  values are
      based on quotes provided by a recognized pricing service.

      Loans  Receivable - Fair values are estimated for portfolios  with similar
      financial  characteristics.  Loans are segregated by type,  such as single
      family  residential   mortgages,   multi-family   residential   mortgages,
      non-residential  and  installment  loans.  Each loan  category  is further
      segmented into fixed and variable  interest rate  categories.  Future cash
      flows of these  loans  are  discounted  using the  current  rates at which
      similar loans would be made to borrowers  with similar  credit ratings and
      for the same remaining maturities.

                                                                           29

<PAGE>
                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 15 - Fair Value of Financial Instruments (continued)

      Federal Home Loan Bank Stock - The carrying  value of capital stock of the
      Federal Home Loan Bank approximates its fair value.

      Demand Deposits - The fair value of NOW accounts and savings  accounts was
      the amount payable on demand at the reporting date.

      Time  Certificates  - The fair value was  determined  using the discounted
      cash flow method. The discount rate used was the rate currently offered on
      similar products.

      Federal Home Loan Bank advance - The fair value was  determined  using the
      discounted cash flow method. The discount rate used was the rate currently
      offered on similar products.

      Loan Commitments - Fixed Rate - The estimated fair value of commitments to
      originate  fixed-rate loans is determined based on the difference  between
      current levels of interest rates and the committed rates.

   The fair value estimates presented herein are based on pertinent  information
available to management as of December 31, 1996 and 1995. Although management is
not aware of any factors  that would  significantly  affect the  estimated  fair
value amounts, such amounts have not been comprehensively  revalued for purposes
of these financial statements since that date.  Therefore,  current estimates of
fair value may differ significantly from the amounts presented herein.

Note 16 - Parent Company Only Condensed Financial Information

   Beckley  Bancorp,  Inc.  was  organized  to serve as the holding  company for
Beckley Federal Savings Bank and began operations on July 7, 1994 in conjunction
with the Savings Bank's  mutual-to-stock  conversion  and the Company's  initial
public  offering of common stock.  The Company's  (Parent  company only) balance
sheets as of December  31, 1996 and 1995 and  related  statements  of income and
cash flows for  December  31,  1996 and 1995 and for the period  from  inception
(July 7, 1994) to December 31, 1994 are as follows:


BECKLEY BANCORP, INC.
BALANCE SHEETS
December 31, 1996 and 1995                            1996          1995
=============================================================================
Assets
  Cash and cash equivalents                        $   120,341   $  288,036
  Investment in Beckley Federal Savings Bank         8,008,569    8,196,801
  Loan to Beckley Federal Savings Bank               3,010,000    2,617,000
  Loan to Savings Bank ESOP                            153,289      184,818
  Other                                                    942        1,192
-----------------------------------------------------------------------------
   Total Assets                                    $11,293,141   $11,287,847
=============================================================================

Liabilities and Stockholders' Equity
  Other liabilities                                $     3,945   $     8,420
  Income taxes payable                                   7,237        11,173
  Stockholders' Equity                              11,281,959    11,268,254
-----------------------------------------------------------------------------
   Total Liabilities and Stockholders' Equity      $11,293,141   $11,287,847
=============================================================================


30
<PAGE>
                                           BECKLEY BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

Note 16 - Parent Company Only Condensed Financial Information (continued)

STATEMENTS OF INCOME

<TABLE>
<CAPTION>

Years Ended December 31, 1996, 1995 and
Period From Inception (July 7, 1994) to
December 31, 1994                                1996         1995          1994
====================================================================================
Income:
<S>                                           <C>          <C>           <C>
  Interest on loans                           $  140,112   $   139,626   $   65,352
  Dividends from subsidiary                      358,880       241,778           xx
-------------------------------------------------------------------------------------
                                                 498,992       381,404       65,352
-------------------------------------------------------------------------------------
Professional fees and other expenses              62,259        75,518       28,828
-------------------------------------------------------------------------------------
Income before income taxes and (excess
  dividends) equity in undistributed earnings
  of subsidiary                                  436,733       305,886       36,524
Provision for income taxes                        31,171        27,194       13,491
-------------------------------------------------------------------------------------
                                                 405,562       278,692       23,033

(Excess dividends) equity in undistributed
  net income of subsidiary                      (130,044)      117,102      241,778
-------------------------------------------------------------------------------------
Net Income                                    $   275,518  $   395,794   $   264,811
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and
Period From Inception (July 7, 1994) to
December 31, 1994                                1996         1995          1994
=====================================================================================
<S>                                            <C>          <C>          <C>
Cash Flows From Operating Activities:
  Net income                                   $  275,518   $  395,794   $  264,811
  Adjustments to reconcile net income to net
  cash provided by operating activities:
   Excess dividends (equity) in undistributed
     net income of subsidiary                    130,044      (117,102)    (241,778)
   Decrease (increase) in other assets               250        (1,192)          xx
   Increase in other liabilities                  (8,411)        4,318       15,275
   Other                                         (11,240)           xx           xx
-------------------------------------------------------------------------------------
     Net Cash Provided by Operations             386,161       281,818       38,308
-------------------------------------------------------------------------------------
Cash Flows From (Used by) Investing Activities:
  Payments received on loans                      31,529        29,427           xx
  Loans originated, net of payments             (393,000)           xx   (2,617,000)
  Purchase of Savings Bank subsidiary stock           xx            xx   (2,799,636)
-------------------------------------------------------------------------------------
   Net Cash (Used) Provided by Investing
     Activities                                 (361,471)       29,427   (5,416,636)
--------------------------------------------------------------------------------------
Cash Flows (Used by) From Financing Activities:
  Proceeds from issuance of common stock for
   Management Stock Bonus Plan                        xx       107,780           xx
  Cash dividends paid                           (192,385)     (137,688)          xx
  Proceeds from sale of stock - net                   xx            xx    5,599,272
  Purchase of stock by ESOP less payments             xx            xx     (214,245)
--------------------------------------------------------------------------------------
   Net Cash (Used) Provided by Financing
     Activities                                 (192,385)      (29,908)   5,385,027
--------------------------------------------------------------------------------------
(Decrease) increase in cash and cash
  equivalents                                   (167,695)      281,337        6,699
Cash and cash equivalents, beginning of year     288,036         6,699           xx
======================================================================================
Cash and Cash Equivalents, End of Year        $   120,341  $   288,036   $     6,699
======================================================================================
Supplemental Disclosures:
  Interest Paid                               $        xx  $        xx   $     6,334
======================================================================================
  Income Taxes Paid                           $    34,857  $    20,942   $        xx
======================================================================================
</TABLE>

                                                                         31
<PAGE>
Quarterly Stock and Dividend Information

      Since its issuance in July 1994, the  Corporation's  common stock has been
traded in the over-the-counter market. The following table reflects high and low
bids  information  as  published  by the  National  Quotation  Bureau,  Inc. The
quotations reflect inter-dealer prices,  without retail mark-up,  mark-down,  or
commission, and may not represent actual transactions.

                                 HIGH        LOW

Jan. 1. 1995 - March 31, 1995      13 5/8    11
April 1, 1995 - June 30, 1995      14 1/2    12 1/2
July 1, 1995 - Sept. 30, 1995      14 1/2    12 1/2
Oct. 1, 1995 - Dec. 31, 1995       16        13 5/8
Jan. 1, 1996 - March 31, 1996      16 1/2    16
April 1, 1996 - June 30, 1996      16 1/2    16 1/2
July 1, 1996 - Sept, 30, 1996      17        16 1/2
Oct. 1, 1996 - Dec. 31, 1996       16 1/2    16 1/2

      The number of stockholders of record of common stock as of March 15, 1997,
was  approximately  259. This does not reflect the number of persons or entities
who held stock in nominee or "street" name through various  brokerage  firms. At
March 15, 1997, there were 601, 465 shares of common stock outstanding.

      On January 14, 1997, the Board of Directors of the Corporation  declared a
$0.14 per share regular  semi-annual cash dividend and a $0.08 per share special
cash dividend  payable on February 18th to  stockholders of record as of January
31st.  The  Corporation  expects to continue  its policy of paying  regular cash
dividends;  however,  further  declarations  of dividends by the  Corporation's
Board of  Directors  will  depend on a number of factors,  including  investment
opportunities  available  to  the  Corporation  or  the  Savings  Bank,  capital
requirements,  regulatory limitations,  the Corporation's and the Savings Bank's
results of operations and financial condition, tax considerations,  and general
economic conditions.

      Because the Savings Bank meets its fully phased-in  capital  requirements,
it is permitted to pay  dividends to the  Corporation  during any calendar  year
equal to the greater of (1) 100% of its net income,  plus an amount  that would
reduce by one-half its "surplus capital ratio" (defined as the amount of capital
in excess of the fully  phased-in  requirement) at the beginning of the calendar
year,  or (2) 75% of its net income  over the most recent  four-quarter  period.
Under Delaware law, the Corporation may pay dividends to its  stockholders in an
amount of its  surplus  (the amount of capital in excess of the par value of its
surplus.)
<PAGE>















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BECKLEY BANCORP, INC.
200 Main Street, P.O. Box 1069
Beckley, West Virginia 25802-1069
Telephone (304) 252-6201