ANNUAL REPORT TO STOCKHOLDERS
                                DECEMBER 31, 1999



                              EASTON BANCORP, INC.


<PAGE>
                              Easton Bancorp, Inc.


                                   March 2000

To  our  Stockholders:

     Last  year was a good year for Easton Bank & Trust and Easton Bancorp, Inc.
Major  accomplishments included improved earnings, solid and sound balance sheet
growth,  improved  asset  quality,  and  expanded  positions  in  new  markets.

     Our  entry  into  Denton,  Maryland  via Denton Bank & Trust, a division of
Easton  Bank  &  Trust,  has  significantly enhanced the value of our franchise.


     Earnings  per  share  increased  from  $.79 to  $.88, while assets grew 12%
and  deposits  grew 7%.  Operating performance was enhanced by a meaningful loan
recovery  during  1999  while  our  core  earnings  grew  nicely.

     In  the face of a rising interest rate environment during the year 2000, we
and the entire banking industry will be forced to deal with margin pressure.  We
are optimistic we can sustain our core earnings while growing our customer base.
During  the  first  quarter  of  2000, we will launch our Visa Check Card, which
gives our customers worldwide access to their checking accounts wherever Visa is
accepted.  Several technology initiatives will contribute to both future expense
control  and  an  increased  level  of  customer  service.

     As  we  begin  the  21st  Century,  Easton  Bank  & Trust is poised to form
stockholder  value  by  delivering personal, private, and professional financial
solutions  to  individuals  and  small  businesses.  We are proud of our team of
associates  who  are  making  us  the Community Bank of Choice in the markets we
serve.


/s/  R.  Michael  S.  Menzies,  Sr.               /s/  W.  David  Hill
R.  Michael  S.  Menzies,  Sr.                    Dr.  William  David  Hill
President/CEO                                     Chairman  of  the  Board


               501 Idlewild Avenue, P.O. Box 619, Easton, MD 21601
                       410-819-0300       FAX 410-819-8091


<PAGE>
                              EASTON BANCORP, INC.
                           EASTON BANK & TRUST COMPANY


                                   OUR MISSION

     Easton  Bank  & Trust Company is a community bank dedicated to the delivery
of  personal,  private,  and  professionally  designed  financial  solutions for
individual  and  small  business  needs.  Easton  Bank  &  Trust is committed to
attaining  superior  results  for  its  stockholders, customers, associates, and
community.


                                   CORE VALUES

      At  Easton Bank & Trust, we believe our success is founded upon these core
      values:

-     PROFITABILITY:  We  will  constantly  pursue  profitability  for  the
      stakeholders  of  the  Company,  including  its  stockholders,  customers,
      associates, and  community.

-     TEAMWORK:  As  a  team  we will work together to produce a happy, healthy,
      and  fun  work  environment  which  results  in  the accomplishment of our
      strategic objectives.

-     ABSOLUTE  INTEGRITY:  We  will  always  treat  customers,  prospects,  and
      associates with respect, honesty, and confidentiality regarding everything
      we say  or  do.

-     PROFESSIONALISM:  As  professionals  we  are  committed  to  continuous,
      lifelong learning,  responsive  and  reliable  quality  service,  personal
      responsibility,  and  the  courage  to  seek  ambitious  aspirations.

-     RELATIONSHIPS:  We are in the business of personal service, which is based
      upon  trusting  relationships.

-     EXCELLENCE:  Our  Core  Values  exist  in  pursuit  of  excellence and the
      practice  of  the  7 Habits:  Be Proactive, Begin with an End in Mind, Put
      First Things First, Think Win Win, Seek First to Understand, Find Synergy,
      and Keep the  Saw  Sharp.


                                        2
<PAGE>
     This Annual Report contains  statements  which  constitute  forward-looking
statements  within  the meaning of Section 27A of the Securities Act of 1933 and
Section  21E of the Securities Exchange Act of 1934.  These statements appear in
a  number  of  places in this Annual Report and include all statements regarding
the  intent, belief or current expectations of the Company, its directors or its
officers  with  respect  to,  among  other  things:  (i) the Company's financing
plans;  (ii)  trends  affecting  the Company's financial condition or results of
operations; (iii) the Company's growth strategy and operating strategy; and (iv)
the declaration and payment of dividends.  Investors are cautioned that any such
forward-looking  statements are not guarantees of future performance and involve
risks  and  uncertainties,  and  that  actual results may differ materially from
those projected in the forward-looking statements as a result of various factors
discussed  herein and those factors discussed in detail in the Company's filings
with  the  Securities  and  Exchange  Commission.

                             BUSINESS OF THE COMPANY

     Easton  Bancorp,  Inc.  (the  "Company")  was  incorporated  as  a Maryland
corporation  on July 19, 1991, to become a one-bank holding company by acquiring
all  of  the  capital stock of Easton Bank & Trust Company (the "Bank") upon its
formation.  The  Bank  commenced business on July 1, 1993, and the only activity
of the Company since then has been the ownership and operation of the Bank.  The
Bank  was  organized  as  a  nonmember state bank under the laws of the State of
Maryland.  The  Bank  is  engaged  in  a  general  commercial  banking business,
emphasizing in its marketing the Bank's local management and ownership, from its
main  office  location  in  its  primary  service area, Talbot County, Maryland.
During  1999,  the Bank opened a full-service branch office in Denton, Maryland,
which  is  in Caroline County.  The Bank offers a full range of deposit services
that  are  typically  available in most banks and savings and loan associations,
including  checking  accounts,  NOW  accounts,  savings  accounts and other time
deposits  of  various  types,  ranging  from  daily  money  market  accounts  to
longer-term  certificates  of  deposit.  In  addition,  the  Bank offers certain
retirement  account  services, such as Individual Retirement Accounts.  The Bank
offers a full range of short- to medium-term commercial and personal loans.  The
Bank  also  originates  and  holds  or sells into the secondary market fixed and
variable rate mortgage loans and real estate construction and acquisition loans.
Other  bank  services  include  cash  management  services,  safe deposit boxes,
travelers  checks,  direct  deposit  of  payroll and social security checks, and
automatic  drafts  for  various  accounts.

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

     The  following  discussion of the Company's financial condition and results
of  operations  should  be  read  in  conjunction  with  the Company's financial
statements  and  related  notes  and  other  statistical  information  included
elsewhere  herein.

OVERVIEW

     Consolidated  income of the Company is derived primarily from operations of
the Bank.  Income before income taxes increased from $46,093 in 1998 to $755,137
in  1999.  Because the Company recognized the benefits of its deferred tax asset
in  1998,  net  income  was  $494,345  for  1999, compared to $444,044 for 1998.

RESULTS  OF  OPERATIONS

     The  Company  reported  net  income of $494,345, or $.88 per share, for the
year  ended  December 31, 1999, which represents an increase of $50,301, or $.09
per  share,  from  $444,044,  or $.79 per share, for the year ended December 31,
1998.  An  increase in net interest income of $610,668 was offset by an increase
in  income  taxes  of  $658,743.

     Net  interest  income  increased $610,668, or 37.10%, to $2,256,520 in 1999
from $1,645,852 in 1998.  This increase in net interest income was the result of
a  $592,261  increase  in  interest  income accompanied by a $18,407 decrease in
interest  expense.  During  the  year, the Company experienced an increasing net
interest  spread  to  4.70% in 1999 from 3.69% in 1998.  The net interest margin
increased to 4.79% in 1999 from 3.84% in 1998.  The interest spread and interest
margin  increased  because  the 1999 level of nonperforming loans was well below
the  1998  level,  which  increased  interest  revenues.  The  reduction  in
nonperforming  loans in 1999 was the result of a $2.3 million nonperforming loan
from  1998  being  repaid  in  the  first  quarter  of  1999.


                                        3
<PAGE>
     During  1999,  the Company recorded net loan loss recoveries primarily as a
result  of  a settlement received on a fraudulent loan that had been charged-off
in  prior  years.  The  recovery  of  this  prior  charge-off  totaled $341,988.
Proceeds  of  $66,081 in excess of charge-offs related to this loan are included
in  other  noninterest  revenue.  As  a  result of these loan recoveries and the
decrease  in  nonperforming  loans,  the  Company  reversed prior provisions for
credit losses of $98,547 during 1999, compared to a provision for loan losses of
$224,281  in  1998.  The net decrease in the provision recorded in 1999 compared
to  the  provision  recorded  in  1998  was  $322,828.  During 1999, the Company
experienced  net recoveries of $178,943, compared to net charge-offs for 1998 of
$72,281.

     The  Company  had loans over ninety days delinquent on which the accrual of
interest  had  been discontinued totaling $102,407 and $1,143,251 as of December
31,  1999 and 1998, respectively.  At December 31, 1999, the accrual of interest
had  been  discontinued  on loans totaling $6,363 where the loans were less than
ninety days delinquent.  The Company's allowance for loan losses as a percentage
of  its  year-end  loans  was  1.31%  at December 31, 1999, compared to 1.57% at
December  31,  1998.  Net recoveries of $178,943 during 1999 resulted in a ratio
of  net  recoveries  to average loans of .45%.  During 1998, the Company had net
charge-offs  of  $72,281  which  was  .21%  of  average  loans.

     Noninterest  income increased $104,169, or 76.19%, to $240,889 in 1999 from
$136,720  in  1998.  Management  increased  the  return and overdraft charges by
$23,287 in 1999 as a result of an increased fee structure and an increase in the
volume  of  accounts.  During  1999, the Company recorded $66,081 as noninterest
income  from funds recovered in excess of the charge-off of a fraudulent loan in
prior  years.

     Noninterest  expense  increased  $328,621, or 21.73%, to $1,840,819 in 1999
from  $1,512,198 in 1998. The increase was the result of an increase of $204,770
in  compensation  and related expenses due to annual increases and the hiring of
four  full-time  employees,  including  an  executive  officer, to staff the new
Denton  office.  Data processing, supplies and telephone expenses also increased
as  a  result  of  the  new  branch  office.

     The  Company's  efficiency  ratio,  which  is  noninterest  expense  as  a
percentage  of  the sum of net interest income and noninterest income, decreased
to  73.71%  in 1999, compared to 84.83% in 1998.  This improvement is the result
of  faster  growth  in  net  interest  income  than  in  other  expenses.

NET  INTEREST  INCOME

     The  primary source of income for the Company is net interest income, which
is the difference between revenue on interest-earning assets, such as investment
securities  and  loans,  and  interest  incurred  on interest-bearing sources of
funds,  such  as  deposits  and borrowings.  The level of net interest income is
determined  primarily  by  the  average  balances of interest-earning assets and
funding sources and the various rate spreads between the interest-earning assets
and  the  Company's  funding  sources.  The  table "Average Balances, Income and
Expenses,  and  Rates"  which  follows  shows  the  Company's  average volume of
interest-earning  assets  and interest-bearing liabilities for 1999 and 1998 and
related interest income/expense and yields.  Changes in net interest income from
period  to  period  result  from  increases  or  decreases  in  the  volume  of
interest-earning  assets  and  interest-bearing  liabilities,  and  increases or
decreases  in  the average rates earned and paid on such assets and liabilities.
The  volume  of  interest-earning  assets  and  interest-bearing  liabilities is
affected  by  the  ability to manage the earning-asset portfolio (which includes
loans)  and the availability of particular sources of funds, such as noninterest
bearing  deposits.  The table "Analysis of Changes in Net Interest Income" shows
the  amount  of  net  interest income change from rate changes and from activity
changes.

     The  key  performance measure for net interest income is the "net margin on
interest-bearing  assets,"  or  net  interest  income  divided  by  average
interest-earning  assets.  The Company's net interest margin for 1999 was 4.79%,
compared  to  3.84%  for 1998.  The increase is due primarily to the increase in
loan  yields  while  deposit  yields  declined.  As  a result of the significant
amount of fixed rate loans, the Bank's income may increase in a falling interest
rate environment and decrease in a rising interest rate environment.  Management
of  the  Company expects to maintain this net margin on interest-earning assets.
The  net  margin  may decline, however, if competition increases, loan demand or
quality  decreases,  or the cost of funds rises faster than the return on loans.


                                        4
<PAGE>
Although  such  expectations  are based on management's judgment, actual results
will  depend on a number of factors that cannot be predicted with certainty, and
fulfillment  of  management's  expectations  cannot  be  assured.

     The  following  table depicts interest income on earning assets and related
average  yields  as well as interest expense on interest-bearing liabilities and
related  average  rates  paid  for  1999  and  1998.

<TABLE>
<CAPTION>
                                      AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES

                                                   For the Year Ended                For the Year Ended
                                                    December 31, 1999                 December 31, 1998
                                      ----------------------------------------  ---------------------------------
<S>                                   <C>                  <C>         <C>      <C>          <C>         <C>
                                      Average              Income/     Yield/     Average      Income/     Yield/
ASSETS                                Balance              Expenses    Rate       Balance      Expenses    Rate
                                      ---------------  ----------  -----------  -----------  ----------  -------
Federal funds sold                    $     2,879,881  $  143,159       4.97%   $ 5,426,336  $  292,264    5.39%
Interest-bearing deposits                           -           -          -         33,010       1,723    5.22%
Investment securities:
  U.S. Government agency                    4,514,306     256,150       5.67%     2,768,164     159,044    5.75%
  Other                                       151,407      11,456       7.57%       140,860      10,487    7.44%
                                      ---------------  ----------  ----------   -----------  ----------  -------
    Total investment securities             4,665,713     267,606       5.74%     2,909,024     169,531    5.83%
                                      ---------------  ----------  ----------   -----------  ----------  -------
Loans:
  Demand and time                           6,979,521     604,014       8.65%     3,247,262     278,469    8.58%
  Mortgage                                 30,149,874   2,802,118       9.29%    29,060,941   2,499,682    8.60%
  Installment                               3,045,187     302,008       9.92%     2,633,811     284,975   10.82%
                                    -----------------  ----------  ----------   -----------  ----------  -------
    Total loans                            40,174,582   3,708,140       9.23%    34,942,014   3,063,126    8.77%
Allowance for loan losses                     572,494           -           -       446,883           -       -
                                      ---------------  ----------  -----------  -----------  ----------  -------
    Total loans, net of allowance          39,602,088   3,708,140       9.36%    34,495,131   3,063,126    8.88%
                                      ---------------  ----------  ----------   -----------  ----------  -------
Total interest-earning assets              47,147,682   4,118,905       8.74%    42,863,501   3,526,644    8.23%
                                      ---------------  ----------  ----------   -----------  ----------  -------
Cash and due from banks                     1,039,218                               794,618
Premises and equipment                      1,709,974                             1,682,370
Other assets                                1,080,394                               446,850
                                      ---------------                           -----------
    Total assets                      $    50,977,268                           $45,787,339
                                      ===============                           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
  Savings and NOW deposits            $     9,600,988  $  247,963       2.58%   $ 8,498,077  $  260,562    3.07%
  Money market                              5,304,801     189,752       3.58%     4,600,749     164,972    3.59%
  Other time deposits                      25,392,048   1,320,764       5.20%    24,713,617   1,404,089    5.68%
                                      ---------------  ----------  ----------   -----------  ----------  -------
    Total interest-bearing deposits        40,297,837   1,758,479       4.36%    37,812,443   1,829,623    4.84%
Noninterest-bearing deposits                3,823,863           -          -      2,649,700           -       -
                                      ---------------  ----------  ----------   -----------  ----------  -------
    Total deposits                         44,121,700   1,758,479       3.99%    40,462,143   1,829,623    4.52%
Borrowed funds                              1,943,786     103,906       5.35%       952,924      49,249    5.17%
                                      ---------------  ----------  ----------   -----------  ----------  -------
                                           46,065,486   1,862,385       4.04%    41,415,067   1,878,872    4.54%
                                                       ----------  ----------                 ---------   ------
Other liabilities                             181,083                               161,931
Stockholders' equity                        4,730,699                             4,210,341
                                      ---------------                           -----------
    Total liabilities and
    stockholders equity               $    50,977,268                           $45,787,339
                                      ===============                           ===========

Net interest spread                                                     4.70%                              3.69%
                                                                   ==========                             ======
Net interest income                                    $2,256,520                            $1,647,772
                                                       ==========                            ==========
Net interest income/margin                                              4.79%                              3.84%
                                                                   ==========                             ======
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                           ANALYSIS OF CHANGES IN NET INTEREST INCOME

                                   Year Ended December 31, 1999      Year Ended December 31, 1998
                                       Compared with 1998                Compared with 1997
                                       Variance  Due  To                 Variance  Due  To
                              ----------------------------------  -------------------------------
                               Total       Rate(1)     Volume      Total      Rate(1)     Volume
                              ----------  ----------  ----------  ---------  ----------  --------
<S>                           <C>         <C>         <C>         <C>        <C>         <C>
EARNING ASSETS
  Interest-bearing deposits   $  (1,723)  $       -   $  (1,723)  $  1,512   $    (102)  $  1,614
  Federal funds sold           (149,105)    (11,851)   (137,254)    68,983      (6,075)    75,058
  Investment Securities:
    U.S. Government Agency       97,106      (3,297)    100,403     81,137      (6,536)    87,673
    Other                           969         184         785      1,505         275      1,230
  Loans:
    Demand and time             325,545       5,317     320,228    (35,722)    (40,510)     4,788
    Mortgage                    302,436     208,788      93,648     62,089    (167,608)   229,697
    Installment                  17,033     (27,478)     44,511     69,157      18,364     50,793
                              ----------  ----------  ----------  ---------  ----------  --------
     Total interest income      592,261     171,663     420,598    248,661    (202,192)   450,853
                              ----------  ----------  ----------  ---------  ----------  --------

INTEREST-BEARING LIABILITIES
Savings and NOW deposits        (12,599)    (46,458)     33,859     17,026      (4,547)    21,573
Money-market deposits            24,780        (495)     25,275      6,173     (14,746)    20,919
Time deposits                   (83,325)   (121,860)     38,535    179,630      (9,451)   189,081
Borrowed funds                   54,657       3,429      51,228     27,507       5,898     21,609
                              ----------  ----------  ----------  ---------  ----------  --------
    Total interest expense      (16,487)   (165,384)    148,897    230,336     (22,846)   253,182
                              ----------  ----------  ----------  ---------  ----------  --------

Net interest income           $ 608,748   $ 337,047   $ 271,701   $ 18,325   $(179,346)  $197,671
                              ==========  ==========  ==========  =========  ==========  ========
<FN>
______________________________________________
(1)  The  variance  that  is  both  rate/volume  related  is  included  in  the  rate  variance.
</TABLE>


COMPOSITION  OF  LOAN  PORTFOLIO

     Because  loans  are  expected  to  produce  higher  yields  than investment
securities  and other interest-earning assets (assuming that loan losses are not
excessive), the absolute volume of loans and the volume as a percentage of total
earning  assets  is  an  important  determinant of net interest margin.  Average
loans,  net  of  the allowance for loan losses, were $39,602,088 and $34,495,131
during  1999  and  1998,  respectively,  which  constituted  84.00%  and 80.48%,
respectively,  of  average interest-earning assets for the periods.  At December
31,  1999, the Company's loan to deposit ratio was 97.47%, compared to 75.38% at
December 31, 1998.  The Bank extends loans primarily to customers located in and
near  Talbot and Caroline Counties.  There are no industry concentrations in the
Bank's  loan  portfolio.  The  Bank does, however, have a substantial portion of
its  loans  in  real  estate  and  its performance may be influenced by the real
estate  market  in  the  region.


                                        6
<PAGE>
     The  following  table  sets  forth  the  composition  of the Company's loan
portfolio  as  of  December  31,  1999  and  1998,  respectively.

<TABLE>
<CAPTION>
                            COMPOSITION OF LOAN PORTFOLIO

                                                        December 31,
                                     ------------------------------------------------
                                               1999                       1998
                                     ------------------------  ----------------------
                                                     Percent                  Percent
                                       Amount        of Total     Amount     of Total
-----------------------------------  -----------  ------------  -----------  --------
<S>                                  <C>          <C>           <C>          <C>
Commercial                           $ 7,476,729        16.05%  $ 3,626,829   10.72%
Real estate                           29,441,565        63.22%   22,544,807   66.64%
Construction                           3,177,267         6.82%    2,459,321    7.27%
Home equity                            2,421,584         5.20%    2,067,068    6.11%
Consumer                               4,054,684         8.71%    3,133,773    9.26%
                                     -----------  ------------  -----------  -------
    Total loans                       46,571,829       100.00%   33,831,798  100.00%
                                                  ============               =======
Less deferred loan origination fees       25,135                     46,990
Less allowance for credit losses         610,396                    530,000
                                     -----------                -----------
    Net loans                        $45,936,298                $33,254,808
                                     ===========               ============
</TABLE>

     The  following  table  sets  forth  the  maturity  distribution, classified
according  to  sensitivity to changes in interest rates, for selected components
of  the  Company's  loan  portfolio  as  of  December  31,  1999.

<TABLE>
<CAPTION>
       LOAN MATURITY SCHEDULE AND SENSITIVITY TO CHANGES IN INTEREST RATES


                        December 31, 1999
                        ------------------
                                             Over One
                               One Year       Through    Over Five
                               Or Less      Five Years      Years      Total
                        ------------------  -----------  ----------  -----------
<S>                     <C>                 <C>          <C>         <C>
Commercial              $        4,212,852  $ 3,138,708  $  125,169  $ 7,476,729
Real estate                      7,193,593   18,949,413   3,298,561   29,441,567
Construction                     3,177,265            -           -    3,177,265
Home equity                      2,421,584            -           -    2,421,584
Consumer                         1,022,238    2,648,420     384,026    4,054,684
                        ------------------  -----------  ----------  -----------
    Total               $       18,027,532  $24,736,541  $3,807,756  $46,571,829
                        ==================  ===========  ==========  ===========

Fixed interest rate             10,900,158   24,246,737   3,749,881   38,896,776
Variable interest rate           7,127,374      489,804      57,875    7,675,053
                        ------------------  -----------  ----------  -----------
    Total               $       18,027,532  $24,736,541  $3,807,756  $46,571,829
                        ==================  ===========  ==========  ===========
</TABLE>

     As  of  December  31, 1999, $38,896,776, or 83.52%, of the total loans were
fixed  rate loans.  The significant amount of fixed rate loans was the result of
the  market  demand  of  the  Bank. With such a significant amount of fixed rate
loans,  the  Bank's  income will decrease in a rising interest rate environment,
but  will  increase  in  a  falling  interest  rate  environment.


                                        7
<PAGE>
     The  Company has the following commitments, lines of credit, and letters of
credit  outstanding  as  of  December  31,  1999  and  1998,  respectively.
<TABLE>
<CAPTION>
                                  1999        1998
                            ----------  ----------
<S>                         <C>         <C>
Construction loans          $1,561,318  $1,639,393
Lines of credit              3,456,452   2,012,998
Overdraft protection lines     275,035     186,670
Standby letters of credit       86,244     535,166
                            ----------  ----------
Total                       $5,379,049  $4,374,227
                            ==========  ==========
</TABLE>


     Loan  commitments  and lines of credit are agreements to lend to a customer
as  long  as  there  is  no  violation  of  any condition to the contract.  Loan
commitments  may  have  interest fixed at current rates, fixed expiration dates,
and  may  require the payment of a fee.  Lines of credit generally have variable
interest rates.  Such lines do not represent future cash requirements because it
is  unlikely  that all customers will draw upon their lines in full at any time.
Letters  of  credit  are  commitments  issued  to guarantee the performance of a
customer to a third party.  Loan commitments and lines and letters of credit are
made  on  the  same  terms,  including  collateral,  as  outstanding loans.  The
Company's exposure to credit loss in the event of nonperformance by the borrower
is  represented  by  the  contract  amount of the commitment.  Management is not
aware  of  any  accounting  loss  the Company will incur by the funding of these
commitments  but has included in the allowance for credit losses a provision for
losses.

LOAN  QUALITY

     The  allowance for loan losses represents a reserve for potential losses in
the  loan portfolio.  The adequacy of the allowance for loan losses is evaluated
periodically  based  on  a  review  of  all significant loans, with a particular
emphasis  on  non-accruing,  past  due, and other loans that management believes
require  attention.  The  determination  of  the  reserve  level  rests  upon
management's judgment about factors affecting loan quality and assumptions about
the  economy.  Management  considers  the  year-end  allowance  appropriate  and
adequate  to  cover possible losses in the loan portfolio; however, management's
judgment  is  based  upon a number of assumptions about future events, which are
believed  to  be  reasonable, but which may or may not prove valid.  Thus, there
can  be  no  assurance  that  charge-offs  in future periods will not exceed the
allowance  for loan loss or that additional increases in the loan loss allowance
will  not  be  required.

     For  significant  problem  loans,  management's  review  consists  of  an
evaluation  of  the  financial  strengths  of  the borrowers and guarantors, the
related  collateral,  and  the  effects of economic conditions.  The Bank uses a
loan  grading system where all loans are graded based on management's evaluation
of  the  risk associated with each loan.  Based on the loan grading, a factor is
applied  to  the  loan  balance  to  reserve  for  potential losses. The overall
evaluation of the adequacy of the total allowance for loan losses is based on an
analysis  of  historical loan loss ratios, loan charge-offs, delinquency trends,
and  previous  collection experience, along with an assessment of the effects of
external  economic conditions.  The Bank is a relatively new institution without
a  long  history.  Its  current  policy is to maintain an allowance equal to the
greater  of one percent of gross loans or the results of management's evaluation
of the risk associated with each loan.  This allowance is increased for reserves
for  specific  loans  identified as substandard during management's loan review.

     The table "Allocation of Allowance for Loan Losses" which follows shows the
specific  reserves  applied by loan type and also the general allowance included
in  the  December  31,  1999  and  1998,  allowance  for  loan  losses.

     The provision for loan losses is a charge to earnings in the current period
to  replenish the allowance and maintain it at a level management has determined
to  be  adequate.  At  year-end 1999, the allowance for loan losses was 1.31% of
outstanding  loans,  compared  to  1.57%  at  year-end  1998.


                                        8
<PAGE>
<TABLE>
<CAPTION>
                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

                     1999              1998
               ----------------  -----------------
               Amount   Percent   Amount  Percent
              --------  -------  -------  --------
<S>           <C>       <C>      <C>       <C>
Commercial    $ 94,209   15.43%  $ 59,183   11.17%
Real estate    230,382   37.74%   348,660   65.78%
Construction    15,886    2.60%    12,297    2.32%
Home equity     61,608   10.09%    12,842    2.42%
Consumer        82,013   13.44%    57,340   10.82%
Commitments     55,268    9.06%    39,678    7.49%
General         71,030   11.64%         -    0.00%
              --------  -------  --------  -------
    Total     $610,396  100.00%  $530,000  100.00%
              ========  =======  ========  =======
</TABLE>

<TABLE>
<CAPTION>
                            ALLOWANCE FOR LOAN LOSSES

                                                     1999          1998
                                                 ------------  ------------
<S>                                              <C>           <C>
Balance at beginning of year                     $   530,000   $   378,000

Loan losses:
 Commercial                                           41,536        44,331
 Real Estate                                          80,942             -
 Consumer                                            128,647        53,450
                                                 ------------  ------------
   Total loan losses                                 251,125        97,781
                                                 ------------  ------------

Recoveries on loans previously charged off
 Commercial                                          362,751        16,453
 Real Estate                                               -             -
 Consumer                                             67,317         9,047
                                                 ------------  ------------
   Total loan recoveries                             430,068        25,500
                                                 ------------  ------------

Net loan losses/(recoveries)                        (178,943)       72,281
Provision for loan losses charged to expense         (98,547)      224,281
                                                 ------------  ------------
Balance at end of year                           $   610,396   $   530,000
                                                 ============  ============

Total loans outstanding at end of year           $46,571,829   $33,831,798

Allowance for loan losses to loans outstanding
 at end of year                                        1.31%         1.57%

Net charge-offs/(recoveries) to average loans         (.45)%          .21%
</TABLE>

     As a result of management's ongoing review of the loan portfolio, loans are
classified  as  nonaccrual  when  it  is  not reasonable to expect collection of
interest  under  the  original  terms.  These loans are classified as nonaccrual
even  though the presence of collateral or the borrower's financial strength may
be  sufficient  to provide for ultimate repayment.  Interest on nonaccrual loans
is  recognized  only  when  received.  A  delinquent loan is generally placed in
nonaccrual  status  when  it  becomes  90 days or more past due.  When a loan is
placed in nonaccrual status, all interest which has been accrued on the loan but
remains unpaid is reversed and deducted from earnings as a reduction of reported
interest  income.  No  additional  interest is accrued on the loan balance until
the  collection of both principal and interest becomes reasonably certain.  When
a  problem loan is finally resolved, there ultimately may be an actual writedown
or  charge-off  of  the  principal  balance  of the loan which would necessitate
additional  charges  to  earnings.


                                        9
<PAGE>
     The  Company had nonperforming loans totaling $108,770 and $1,250,408 as of
December  31,  1999  and  1998,  respectively.   Where  real  estate acquired by
foreclosure  and  held for sale is included with nonperforming loans, the result
comprises  nonperforming  assets.  Loans  are  classified  as  impaired when the
collection  of  contractual  obligations,  including  principal and interest, is
doubtful.  Management  has  identified  no  significant  impaired  loans  as  of
December  31,  1999.

     A  potential  problem  loan  is  one in which management has serious doubts
about  the  borrower's  future performance under the terms of the loan contract.
These  loans are current as to principal and interest and, accordingly, they are
not  included in the nonperforming assets categories.  Management monitors these
loans closely in order to ensure that the Company's interests are protected.  At
December  31, 1999, the Company had forty-two borrowers with loans considered by
management to be potential problem loans totaling approximately $1,673,556.  The
level  of  potential  problem  loans  is  factored into the determination of the
adequacy  of  the  allowance  for  loan  losses.

LIQUIDITY  AND  INTEREST  RATE  SENSITIVITY

     The primary objective of asset/liability management is to ensure the steady
growth  of  the  Company's primary source of earnings, net interest income.  Net
interest  income  can  fluctuate  with  significant interest rate movements.  To
lessen the impact of these margin swings, the balance sheet should be structured
so that repricing opportunities exist for both assets and liabilities in roughly
equivalent  amounts  at  approximately  the  same time intervals.  Imbalances in
these  repricing  opportunities  at  any  point in time constitute interest rate
sensitivity.

     Liquidity  represents  the  ability  to provide steady sources of funds for
loan  commitments  and  investment  activities, as well as to provide sufficient
funds  to  cover  deposit  withdrawals  and  payment  of  debt  and  operating
obligations.  These  funds  can  be  obtained by converting assets to cash or by
attracting  new  deposits.

     Average  liquid  assets  (cash and amounts due from banks, interest-bearing
deposits  in  other  banks,  federal  funds sold and investment securities) were
19.46%  of average deposits for 1999, compared to 22.65% of average deposits for
1998.  The  Company  considers  its  loan  portfolio  as  an alternate source of
liquidity  since  it  has available third parties who will buy participations in
loans.

     Interest  rate  sensitivity may be controlled on either side of the balance
sheet.  On  the  asset side, management can exercise some control on maturities.
Also,  loans  may  be  structured with rate floors and ceilings on variable rate
notes  and  by  providing  for repricing opportunities on fixed rate notes.  The
Company's  investment portfolio, including federal funds sold, probably provides
the  most  flexible and fastest control over rate sensitivity since it generally
can  be  restructured  more  quickly  than  the  loan  portfolio.

     On  the liability side, deposit products can be restructured so as to offer
incentives  to  attain  the  maturity distribution desired.  Competitive factors
sometimes  make  control  over  deposits  more  difficult  and  less  effective.

     Interest  rate sensitivity refers to the responsiveness of interest-bearing
assets  and liabilities to changes in market interest rates.  The rate-sensitive
position,  or  gap, is the difference in the volume of rate-sensitive assets and
liabilities  at  a given time interval.  The general objective of gap management
is to actively manage rate-sensitive assets and liabilities to reduce the impact
of  interest rate fluctuations on the net interest margin.  Management generally
attempts  to maintain a balance between rate-sensitive assets and liabilities as
the  exposure period is lengthened to minimize the overall interest rate risk to
the  Company.

     The  asset  mix  of  the balance sheet is continually evaluated in terms of
several  variables;  yield,  credit  quality,  appropriate  funding sources, and
liquidity.  Management  of  the  liability  mix  of the balance sheet focuses on
expanding  the  various  funding  sources.

     The  interest  rate sensitivity position at December 31, 1999, is presented
in  the  table  "Interest  Sensitivity  Analysis."  The  difference  between
rate-sensitive  assets  and  rate-sensitive  liabilities,  or  the interest rate
sensitivity  gap,  is  shown  at  the  bottom  of  the  table.  The  Company was


                                       10
<PAGE>
liability-sensitive  through  the one-year period but asset-sensitive for longer
time  horizons.  For  liability-sensitive institutions, if interest rates should
increase, the net interest margins should decline.  Since all interest rates and
yields  do  not adjust at the same velocity, the gap is only a general indicator
of  rate  sensitivity.

<TABLE>
<CAPTION>
                                           INTEREST SENSITIVITY ANALYSIS

                                                                   December 31, 1999
                                    -------------------------------------------------------------------------------
                                                         After Three
                                          Within           but Within    After One but
                                          Three              Twelve       Within Five    After Five
                                          Months             Months          Years          Years         Total
                                    -------------------  -------------  ---------------  ------------  ------------
<S>                                 <C>                  <C>            <C>              <C>           <C>
ASSETS
Earning assets:
    Federal funds sold              $          824,727   $          -   $            -   $         -   $   824,727
    Investment securities
    available for sale                               -              -        4,203,828             -     4,203,828
    Loans                                   10,882,052      7,145,480       24,736,541     3,807,756    46,571,829
                                    -------------------  -------------  ---------------  ------------  ------------
Total earning assets                $       11,706,779   $  7,145,480   $   28,940,369   $ 3,807,756   $51,600,384
                                    ===================  =============  ===============  ============  ============

LIABILITIES
Interest-bearing liabilities:
    Money market and NOW            $       11,673,854   $          -   $            -   $         -   $11,673,854
    Savings deposits                         3,885,348              -                -             -     3,885,348
    Club accounts                                    -         30,432                -             -        30,432
    Certificates $100,000 and over           4,224,208      1,814,162        1,888,262             -     7,926,632
    Certificates under $100,000              4,735,032      6,929,690        8,202,987        64,225    19,931,934
    Note payable                             1,000,000              -                -     1,578,493     3,578,493
    Securities sold under
    agreements to repurchase                   280,667      1,000,000                -             -       280,667
                                    -------------------  -------------  ---------------  ------------  ------------
Total interest-bearing liabilities  $       25,799,109   $  9,774,284   $   10,091,249   $ 1,642,718   $47,307,360
                                    ===================  =============  ===============  ============  ============

Period gap                          $      (14,092,330)  $ (2,628,804)  $   18,849,120   $ 2,165,038   $ 4,293,024

Cumulative gap                      $      (14,092,330)  $(16,721,134)  $    2,127,986   $ 4,293,024   $ 4,293,024

Ratio of cumulative gap to total
earning assets                                 (27.31)%       (32.41)%            4.12%         8.32%         8.32%
</TABLE>

     As  noted  in the table "Composition of Loan Portfolio," as of December 31,
1999  approximately  $10,653,996,  or 22.88%, of the loan portfolio consisted of
commercial  loans  and  real  estate  construction  loans.  Of  this  amount,
$7,390,117,  or  69.36%,  matures  within  one  year.

     The  table  "Investment  Securities Maturity Distribution and Yields" shows
that  as  of  December 31, 1999, all of the investment portfolio matures in more
than  one  year  but within five years.  All debt securities of the Company have
been classified as "available-for-sale."  The equity securities are comprised of
Federal  Home  Loan  Bank stock which is also classified as "available-for-sale"
even  though  the  Company  must hold this stock to borrow from the Federal Home
Loan  Bank.  Another  source  of liquidity is the $6,750,000 lines of credit the
Company  has  from a correspondent bank. The Company may borrow up to $8,773,000
from  the  Federal  Home  Loan  Bank.


                                       11
<PAGE>
<TABLE>
<CAPTION>
                        INVESTMENT SECURITIES MATURITY DISTRIBUTION AND YIELDS

                                                    December 31, 1999              December 31, 1998
                                         ----------------------------------     ---------------------
                                                                  Year-end                   Year-end
                                             Book Value            Yields        Book Value   Yields
                                         ------------------  --------------     -----------  -------
<S>                                      <C>                 <C>                 <C>          <C>
U.S. Government Agency securities
  One year or less                       $                -              -       $   451,673     5.7%
  Over one through five years                     4,203,828           5.6%         4,137,728     5.5%
  Over five years                                         -             -            250,625     5.8%
                                         ------------------  -------------       -----------  -------
Total U.S. Government Agency securities  $        4,203,828           5.6%       $ 4,840,026     5.6%
                                         ==================  =============       ===========  =======
</TABLE>

DEPOSITS  AND  OTHER  INTEREST-BEARING  LIABILITIES

     Average  interest-bearing  liabilities  increased  $3,476,256, or 8.97%, to
$42,241,623  in  1999,  from  $38,765,367  in  1998.  Average  interest-bearing
deposits  increased  $2,485,394,  or  6.57%,  to  $40,297,837  in  1999,  from
$37,812,443  in 1998.  These increases resulted from increases in all categories
of  interest-bearing  deposits, except money market accounts, resulting from the
continued  promotional  efforts of management to increase the deposits and loans
of the Bank.  At December 31, 1999, total deposits were $47,126,446, compared to
$44,118,960  at  December  31,  1998,  an  increase  of  6.82%.

     The  following  table sets forth the deposits of the Company by category as
of  December  31,  1999  and  1998,  respectively.

<TABLE>
<CAPTION>
                                DEPOSITS

                                              December  31,
                            --------------------------------------------------
                                        1999                     1998
                           -------------------------  ------------------------
                                          Percent of                Percent of
                              Amount      Deposits      Amount       Deposits
                           -----------   -----------  -----------   ----------
<S>                        <C>          <C>          <C>           <C>
Demand deposit accounts    $ 3,678,246        7.81%  $ 4,682,618        10.61%
NOW accounts                 5,116,224       10.86%    4,886,335        11.08%
Money market accounts        6,557,630       13.91%    4,121,981         9.34%
Savings accounts             3,915,780        8.31%    4,523,794        10.25%
Time deposits less than
    $100,000                19,931,934       42.29%   20,825,842        47.21%
Time deposits of $100,000
    or over                  7,926,632       16.82%    5,078,390        11.51%
                           -----------  -----------  ------------  -----------
    Total deposits         $47,126,446      100.00%  $44,118,960       100.00%
                           ===========  ===========  ============  ===========
</TABLE>

     Core  deposits,  which exclude certificates of deposit of $100,000 or more,
provide  a relatively stable funding source for the Company's loan portfolio and
other  earning  assets.  The  Company's  core deposits increased $159,244 during
1999.  Deposits, and particularly core deposits, have been the Company's primary
source  of  funding and have enabled the Company to meet both its short-term and
long-term  liquidity  needs.  Management  anticipates  that  such  deposits will
continue  to  be  the  Company's  primary  source of funding in the future.  The
Company's  loan-to-deposit  ratio was 97.47% at December 31, 1999, and 75.38% at
the  end  of  1998,  with  a  1999 ratio of average loans to average deposits of
89.76%.  The  maturity distribution of the Company's time deposits over $100,000
at  December  31,  1999,  is  shown  in  the  following  table.


                                       12
<PAGE>
<TABLE>
<CAPTION>
                             MATURITIES OF CERTIFICATES OF DEPOSIT
                          AND OTHER TIME DEPOSITS OF $100,000 OR MORE

                                                  December 31, 1999
                           -------------------------------------------------------------------
                                             After Three     After Six
                                Within         Through        Through       After
                                Three           Six           Twelve        Twelve
                                Months         Months         Months        Months      Total
                         ------------------  -----------  --------------  ----------  ----------
<S>                      <C>                 <C>          <C>             <C>         <C>
Certificates of deposit
 of $100,000 or more           $4,224,208    $1,356,513     $457,649      $1,888,262  $7,926,632
</TABLE>


     Large  certificate  of  deposit customers tend to be extremely sensitive to
interest rate levels, making these deposits less reliable sources of funding for
liquidity  planning  purposes  than  core deposits.  Some financial institutions
partially fund their balance sheets using large certificates of deposit obtained
through  brokers.  These  brokered  deposits  are  generally  expensive  and are
unreliable  as  long-term  funding  sources.  Accordingly,  the Company does not
accept  brokered  deposits.

     Borrowed  funds  consist  primarily of short-term borrowings in the form of
securities  sold  under agreements to repurchase and notes from the Federal Home
Loan  Bank.  Average  borrowings  were  $1,943,786  and $952,924 during 1999 and
1998, respectively. As previously noted, the Company's primary funding source is
core  deposits, and it does not depend heavily on purchased funds to support its
earning  asset  base.

NONINTEREST  INCOME

     Noninterest income for 1999 was $240,889, compared to noninterest income in
1998 of $136,720, an increase of $104,169, or 76.19%.  Return item and overdraft
charges  increased $23,287 in 1999 as a result of an increased fee structure and
an  increase  in  the  volume  of  accounts.  During  1999, the Company recorded
$66,081  as  noninterest income from funds recovered in excess of the charge-off
of  a  fraudulent  loan  in  prior  years.

     The following table presents the principal components of noninterest income
for  the  years  ended  December  31,  1999  and  1998,  respectively.

<TABLE>
<CAPTION>
                               NONINTEREST INCOME

                                                                1999       1998
                                                            ---------  ---------
<S>                                                         <C>        <C>
Service charges on deposit accounts                         $128,705   $ 99,654
Other noninterest revenue                                    112,184     37,066
                                                            ---------  ---------
Total noninterest income                                    $240,889   $136,720
                                                            =========  =========

Noninterest income as a percentage of average total assets      0.47%      0.30%
                                                            =========  =========
</TABLE>


                                       13
<PAGE>
NONINTEREST  EXPENSE

     Noninterest  expense  increased  $328,621, or 21.73%, to $1,840,819 in 1999
from  $1,512,198 in 1998. The increase was the result of an increase of $204,770
of  compensation  and related expenses due to annual increases and the hiring of
four  full-time  employees,  including  an  executive  officer, to staff the new
Denton  office.  Data processing, supplies and telephone expenses also increased
as  a  result  of  the  new  branch  office.

     The  following  table  presents  the  principal  components  of noninterest
expense  for  the  years  ended  December  31,  1999  and  1998,  respectively.

<TABLE>
<CAPTION>
                                 NONINTEREST EXPENSE

                                                                   1999         1998
                                                             -----------  -----------
<S>                                                          <C>          <C>
Compensation and related expenses                            $1,113,979   $  909,209
Occupancy expense                                                75,793       70,782
Furniture and equipment expense                                  80,626       87,647
Advertising                                                      47,446       41,667
Professional fees                                               109,104       72,110
Data processing                                                 103,784       84,332
Training                                                         22,103       13,024
Travel and entertainment                                         33,358       13,658
Loan reports and collection costs                                10,095        6,598
Organizational expense amortization                                   -       23,482
Stationery and supplies                                          72,800       46,339
Telephone and postage                                            59,458       44,353
Other                                                           112,273       98,997
                                                             -----------  -----------
    Total noninterest expense                                $1,840,819   $1,512,198
                                                             ===========  ===========

Noninterest expense as a percentage of average total assets        3.61%        3.30%
                                                             ===========  ===========
</TABLE>

CAPITAL

     Under the capital guidelines of the Federal Reserve Board and the FDIC, the
Company  and  the  Bank  are currently required to maintain a minimum risk-based
total  capital  ratio  of  8%,  with  at  least 4% being Tier 1 capital.  Tier 1
capital  consists of common stockholders' equity, qualifying perpetual preferred
stock,  and  minority interests in equity accounts of consolidated subsidiaries,
less certain intangibles.  In addition, the Company and the Bank must maintain a
minimum  Tier  1 leverage ratio (Tier 1 capital to total assets) of at least 3%,
but  this  minimum  ratio is increased by 100 to 200 basis points for other than
the  highest-rated  institutions.

     At  December  31,  1999, the Company and the Bank exceeded their regulatory
capital  ratios,  as  set  forth  in  the  following  table.

<TABLE>
<CAPTION>
                     ANALYSIS  OF  CAPITAL

                                                  Required
                                 Company   Bank   Minimums
                                 --------  -----  ---------
<S>                              <C>       <C>    <C>
Tier 1 risk-based capital ratio     11.4%  11.2%       4.0%
Total risk-based capital ratio      12.6%  12.4%       8.0%
Tier 1 leverage ratio                9.0%   8.9%       3.0%
</TABLE>

ACCOUNTING  RULE  CHANGES

     FASB  Statement  No. 137, Accounting for Derivative Instruments and Hedging


                                       14
<PAGE>
Activities  -  Deferral  of the Effective Date of FASB Statement No. 133, delays
the  effective  date  of  FASB  Statement  No.  133 for one year to fiscal years
beginning  after  June  15,  2000.  The  Company  elected early adoption of FASB
Statement  No.  133  in  1998.

IMPACT  OF  INFLATION

     Unlike  most  industrial companies, the assets and liabilities of financial
institutions,  such  as  the  Company  and  the  Bank, are primarily monetary in
nature.  Therefore,  interest  rates  have  a  more  significant  affect  on the
Company's  performance  than  do  the  effects of changes in the general rate of
inflation and changes in prices.  In addition, interest rates do not necessarily
move  in  the same direction or in the same magnitude as the prices of goods and
services.  As discussed previously, management seeks to manage the relationships
between  interest  sensitive  assets and liabilities in order to protect against
wide  interest rate fluctuations, including those resulting from inflation.  See
"Liquidity  and  Interest  Rate  Sensitivity"  above.

INDUSTRY  DEVELOPMENTS

     Certain  recently  enacted and proposed legislation could have an effect on
both  the  costs  of  doing  business  and  the  competitive  factors facing the
financial  institutions  industry.  The Company is unable at this time to assess
the  impact  of  this  legislation  on  its  financial  condition  or results of
operations.

YEAR  2000  ISSUES

     The  Year  2000 issue relates to computer programs that use only two digits
to  identify  a  year in the date field.  Unless corrected, these programs could
read the year 2000 as the year 1900 and likely would adversely affect any number
of  calculations that are made using the date field.  Financial institutions are
highly  computerized  organizations  and  the  Year  2000  issue  represents  a
significant  risk  to  the  industry.  The  Company  faces the same risks as the
industry.  The  failure  of  a major loan or deposit system due to the Year 2000
issue could result in interest and balances being calculated inaccurately.  Such
failures could have a significant impact on a financial institution's operations
and  liquidity.  Management  has  a  Year  2000  Committee, which reports to the
Board, responsible for assessing progress in the Company's plans to minimize the
effects  of  the  Year  2000 issue, which include a continuing effort to educate
employees,  customers,  business  partners and vendors of the impact of the Year
2000  issue  and  testing  all  critical  hardware  and  software  for Year 2000
readiness.

     As  of March 15, 2000, the Company has not experienced any significant Year
2000  issues  relating  to the Company's internal systems, interfaces with third
parties or products or services.  In addition, as of March 15, 2000, information
and products from third parties provided to the Company have not had any adverse
effects  on  the Company's operations as a result of Year 2000 issues.  To date,
the  costs  incurred  in  connection with Year 2000 compliance projects have not
been material to the Company's results of operations or liquidity.  In addition,
the  Company  does  not anticipate incurring any additional significant costs to
remain  compliant.

     The  Company's  total  costs  to  date  associated with the Year 2000 issue
primarily  include  the costs incurred to upgrade the software and hardware that
was not Year 2000 compliant.  The Company has incurred these costs in the normal
course  of business as software and hardware has been upgraded to keep pace with
technological  advances.  The  Company  estimates  that $1,000 has been spent to
date  which could be related to the Year 2000 issue.  The Company does not track
internal  costs  for  personnel  devoted  to  the  Year 2000 issue; however, one
individual  has  spent significant time on the project and many individuals have
spent  numerous  hours  working  on  the  Year  2000  issue.


                                       15
<PAGE>
                      MARKET FOR COMPANY'S COMMON EQUITY
                       AND RELATED STOCKHOLDER MATTERS

     The  Company's  Articles  of  Incorporation  authorize  it  to  issue up to
5,000,000  shares  of  its  common stock, par value $0.10 per share (the "Common
Stock").  The  Company  closed  its  initial  public  offering  (the  "Initial
Offering")  of  Common  Stock on December 31, 1992, in which the Company offered
for  sale  a  minimum  of  535,000  shares  and a maximum of 700,000 shares at a
purchase  price  of  $10.00  per  share.  As  a  result of the Initial Offering,
559,328  shares  of  the  Common  Stock  were  issued.

     As of March 15, 2000, there were approximately 475 holders of record of the
Common  Stock  and  560,318  shares  of Common Stock issued and outstanding.  In
addition,  there  were  approximately  242,157  shares  of Common Stock issuable
pursuant to options and warrants which may be issued in the next 60 days.  There
is no established public trading market in the stock, and there is no likelihood
that  a  trading  market  will develop in the near future.  The development of a
trading  market may be inhibited because a large portion of the Company's shares
is  held  by  insiders.  Transactions in the Common Stock are infrequent and are
negotiated  privately  between  the  persons  involved  in  those  transactions.

     All outstanding shares of Common Stock of the Company are entitled to share
equally  in dividends from funds legally available, when, as, and if declared by
the  Board  of  Directors.  No  dividends  have  been paid to date on the Common
Stock,  and it is anticipated that earnings will be retained for the foreseeable
future  in  order  to  expand the Bank's capital base to support deposit growth.
The  Company  currently  has  no source of income other than dividends and other
payments received from the Bank.  It is unlikely that any cash dividends will be
paid  in  the  near  future.


                                       16
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS


The  Board  of  Directors  and  Stockholders
Easton  Bancorp,  Inc.  and  Subsidiary
Easton,  Maryland


     We have audited the consolidated balance sheets of Easton Bancorp, Inc. and
Subsidiary as of December 31, 1999, 1998, and 1997, and the related consolidated
statements  of  income,  changes in stockholders' equity, and cash flows for the
years  then  ended.  These  consolidated  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

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

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the financial position of Easton
Bancorp,  Inc.  and  Subsidiary as of December 31, 1999, 1998, and 1997, and the
results  of  their  operations and their cash flows for the years then ended, in
conformity  with  generally  accepted  accounting  principles.


/s/ Rowles & Company, LLP
Salisbury,  Maryland
January  21,  2000


                                       17
<PAGE>
<TABLE>
<CAPTION>
                                     Easton Bancorp, Inc. and Subsidiary

                                         Consolidated Balance Sheets

                                                                December 31,
                                                                    1999         1998       1997
                                                               --------------  --------  -----------
<S>                                                                 <C>        <C>          <C>
Assets
Cash and due from banks                                              2576335     976682       642726
Federal funds sold                                                    824727    7269903      3739622
Investment in Federal Home Loan Bank stock                            179000     145600       124500
Investment securities available for sale                             4203828    4840026            0
Investment securities held to maturity (market value of
  $1,502,794)                                                              0          0      1500000
Loans held for sale                                                    70000          0            0
Loans, less allowance for credit losses of
  $610,396, $530,000, and $378,000                                  45936298   33254808     34682279
Premises and equipment                                               1694652    1662127      1713683
Intangible assets                                                      15691       1853     30261.32
Accrued interest receivable                                           300536     246470       248303
Loan payment held in escrow                                                0    1175000            0
Other assets                                                           46004      92924        58323
Deferred income taxes                                                 177017     401551            0
                                                                   ----------  --------  -----------
        Total assets                                                56024088   50066944  42739697.32
                                                                   ==========  ========  ===========

Liabilities and Stockholders' Equity
Deposits
  Noninterest-bearing                                                3678246    4682618      2060848
  Interest-bearing                                                  43448200   39436342     36027304
                                                                   ----------  --------  -----------
        Total deposits                                              47126446   44118960     38088152
Accrued interest payable                                              108888      95611        99980
Securities sold under agreements to repurchase                        280667     281019       481490
Notes payable                                                        3578493    1000000            0
Other liabilities                                                      45964     111685        57363
                                                                   ----------  --------  -----------
        Total liabilities                                           51140458   45607275     38726985
                                                                   ----------  --------  -----------
Stockholders' equity
  Common stock, par value $.10 per share; authorized
    5,000,000 shares, issued and outstanding 560,318 in 1999
    and 1998, and 559,328 in 1997                                      56032      56032        55933
  Additional paid-in capital                                         5227487    5227487      5217686
  Retained earnings (deficit)                                        -322518    -816863     -1260907
                                                                    ---------  --------  -----------
                                                                     4961001    4466656      4012712
  Accumulated other comprehensive income                              -77371      -6987            0
                                                                   ----------  --------  -----------
        Total stockholders' equity                                   4883630    4459669      4012712
                                                                   ----------  --------  -----------
        Total liabilities and stockholders' equity                  56024088   50066944     42739697
                                                                   ==========  ========  ===========
</TABLE>

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


                                       18
<PAGE>
<TABLE>
<CAPTION>
                                      Easton Bancorp, Inc. and Subsidiary

                                       Consolidated Statements of Income

                                                                      Years Ended December 31,
                                                                    1999          1998       1997
                                                               ------------    ---------  --------
<S>                                                            <C>              <C>         <C>
Interest revenue
  Loans, including fees                                        3708140          3063126     2967602
  Deposits in banks                                                  0             1723         211
  U.S. Government agency securities                             256150           159044       77907
  Federal funds sold                                            143159           292264      223281
  Other                                                          11456            10487        8982
                                                               --------        ----------   -------
    Total interest revenue                                     4118905          3526644     3277983
                                                               --------        ----------   -------

Interest expense
  Interest on deposits                                         1758479          1831543     1626794
  Interest on borrowed funds                                    103906            49249       21742
                                                               --------        ----------   -------
    Total interest expense                                     1862385          1880792     1648536
                                                               --------        ----------   -------

    Net interest income                                        2256520          1645852     1629447

Provision for credit losses                                     -98547           224281       81807
                                                               --------        ----------   -------
    Net interest income after provision for credit losses      2355067          1421571     1547640
                                                               --------        ----------   -------

Other operating revenue
  Service charges on deposit accounts                           128705         99653.67       62588
  Other noninterest revenue                                     112184         37066.33       32827
                                                               --------        ----------   -------
    Total other operating revenue                               240889           136720       95415
                                                               --------        ----------   -------

Other expenses
  Compensation and related expenses                            1113979           909209      744538
  Occupancy                                                      75793            70782       71871
  Furniture and equipment                                        80626            87647       99050
  Other operating                                               570421           444560      437675
                                                               --------        ----------   -------
    Total other expenses                                       1840819          1512198     1353134
                                                               --------        ----------   -------

Income before income taxes                                      755137            46093      289921
Income tax expense (benefit)                                    260792          -397951           0
                                                               --------        ----------   -------
Net income                                                      494345           444044      289921
                                                               ========        ==========   =======

Earnings per common share
  Basic                                                         $ 0.88          $ 0.79       $ 0.52
  Diluted                                                       $ 0.88          $ 0.74       $ 0.48
</TABLE>

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


                                       19
<PAGE>
<TABLE>
<CAPTION>

                                     Easton Bancorp, Inc. and Subsidiary

                          Consolidated Statements of Changes in Stockholders' Equity


                                                                                        Accumulated
                                                             Additional    Retained        other
                                          Common stock        paid-in      earnings     comprehensive   Comprehensive
                                        Shares     Par value  capital     (deficit)        income          income
<S>                                    <C>         <C>        <C>         <C>           <C>             <C>
Balance, December 31, 1996                 559328      55933   5217686        -1550828            0

Net income                                      0          0         0          289921            0      289921
                                           ------      -----  --------        --------      --------     ======

Balance, December 31, 1997                 559328      55933   5217686        -1260907            0

Net income                                      0          0         0          444044            0      444044
Unrealized loss on investment
  securities available for sale net
  of income taxes                               0          0         0               0        -6987       -6987
                                                                                                         ------
Comprehensive income                                                                                     437057
                                                                                                        =======
Stock options exercised                       990         99      9801               0            0
                                           ------      -----  --------        --------       ------

Balance, December 31, 1998                 560318      56032   5227487         -816863        -6987

Net income                                      0          0         0          494345            0      494345
Unrealized loss on investment
  securities available for sale net
  of income taxes                               0          0         0               0       -70384      -70384
                                           ------      -----  --------        --------       ------      ------
Comprehensive income                                                                                     423961
                                                                                                        =======
Balance, December 31, 1999                 560318      56032   5227487         -322518       -77371
                                           ======      =====  ========         =======       ======
</TABLE>

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


                                       20
<PAGE>
<TABLE>
<CAPTION>
                        Easton Bancorp, Inc. and Subsidiary

                       Consolidated Statements of Cash Flows

                                                         Years Ended December 31,
                                                        1999       1998      1997
                                                      ---------  --------  --------
<S>                                                   <C>        <C>       <C>
Cash flows from operating activities
  Interest received                                     4059452   3506575   3224496
  Fees, commissions, and rent received                   290292    145640     37312
  Loans originated for sale                              -70000         0         0
  Interest paid                                        -1849108  -1885161  -1642240
  Payments to suppliers and employees                  -1812384  -1376221  -1240368
                                                      ---------  --------  --------
                                                         618252    390833    379200
                                                      ---------  --------  --------

Cash flows from investing activities
  Loans originated, net of principal repayments       -12575193     50677  -4715462
  Receipt of funds held in escrow                       1175000         0         0
  Purchase of investment securities
    Available for sale                                 -1502035  -5772279         0
  Held to maturity                                            0   -250100  -1502900
  Proceeds from maturities of investment securities
    Available for sale                                  1995828   1400081         0
  Held to maturity                                            0   1250000   1250000
  Proceeds from sale of other real estate                 61699         0         0
  Purchase of premises, equipment, and software         -144251    -44234   -298893
  Purchase of other real estate                          -60450      -978     -2261
                                                      ---------  --------  --------
                                                      -11049402  -3366833  -5269516
                                                      ---------  --------  --------

Cash flows from financing activities
  Increase (decrease) in
  Time deposits                                         1954334   2786249   2994134
  Other deposits                                        1053152   3244559   2335459
  Securities sold under agreements to repurchase           -352   -200471    -92838
  Advance under note payable                            2578493   1000000         0
  Proceeds from stock options exercised                       0      9900         0
                                                      ---------  --------  --------
                                                        5585627   6840237   5236755
                                                      ---------  --------  --------

Net increase (decrease) in cash and cash equivalents   -4845523   3864237    346439

Cash and cash equivalents at beginning of year          8246585   4382348   4035909
                                                      ---------  --------  --------
Cash and cash equivalents at end of year                3401062   8246585   4382348
                                                      =========  ========  ========
</TABLE>

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


                                       21
<PAGE>
<TABLE>
<CAPTION>
                       Easton Bancorp, Inc. and Subsidiary

                      Consolidated Statements of Cash Flows
                                   (Continued)

                                                     Years Ended December 31,
                                                       1999       1998      1997
                                                      ------     -------   ------
<S>                                                   <C>        <C>        <C>
Reconciliation of net income to net cash provided by
   operating activities
     Net income                                       494345     444044     289921

Adjustments to reconcile net income to net cash
  provided by operating activities
   Provision for credit losses                        -98547     224281      81807
   Depreciation                                        94890      95790     100564
   Amortization of intangibles                          2998      29386      56503
   Securities amortization, net of accretion            2363       2812          0
   Deferred income taxes                              260792    -397951          0
   Gain on sale of other real estate owned             -1249          0          0
   Gain on calls of securities                             0      -2227          0
   Net loans originated for sale                      -70000          0          0
   Decrease (increase) in
     Accrued interest receivable                      -54066       1833     -67294
     Other assets                                      46920     -34601     -14189
   Increase (decrease) in
     Deferred loan origination fees                    -7750     -22487      13807
     Accrued interest payable                          13277      -4369       6296
     Other liabilities                                -65721      54322     -88215
                                                      ------    -------     ------
                                                      618252     390833     379200
                                                      ======    =======     ======
</TABLE>

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


                                       22
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

          The  accounting  and  reporting  policies  in the financial statements
conform  to  generally  accepted  accounting principles and to general practices
within  the  banking  industry.  Management makes estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  and  disclosure of
contingent  assets  and  liabilities  at  the  date of the financial statements.
These  estimates and assumptions may affect the reported amounts of revenues and
expenses  during  the  reporting period.  Actual results could differ from these
estimates.

     Business
     --------
          Easton  Bancorp,  Inc.  is  a one-bank holding company.  Easton Bank &
Trust  Company  is  a  financial  institution  operating primarily in Talbot and
Caroline  Counties.  The  Bank offers deposit services and loans to individuals,
small businesses, associations, and government entities.  Other services include
direct  deposit  of  payroll  and  social security checks, automatic drafts from
accounts,  automated  teller  machine  services,  cash management services, safe
deposit  boxes, money orders, and travelers cheques. The Bank also offers credit
card  services  and  discount  brokerage  services  through  a  correspondent.

     Principles  of  consolidation
     -----------------------------
          The  consolidated financial statements of Easton Bancorp, Inc. include
the  accounts  of  its  wholly  owned  subsidiary,  Easton Bank & Trust Company.
Intercompany  accounts  and  transactions  have  been  eliminated.

     Cash  equivalents
     -----------------
          For  purposes  of  reporting  cash  flows,  cash  and cash equivalents
include  cash  on  hand,  amounts  due  from  banks,  and  federal  funds  sold.

     Investment  securities
     ----------------------
          As  securities  are purchased, management determines if the securities
should  be  classified  as  held  to maturity or available for sale.  Securities
which  management has the intent and ability to hold to maturity are recorded at
amortized cost which is cost adjusted for amortization of premiums and accretion
of  discounts  to  maturity.  Securities  which  may be sold before maturity are
classified as available for sale and carried at fair value with unrealized gains
and  losses  included  in  stockholders'  equity  on  an  after  tax  basis.

          During  1998,  the  Company  adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities,
which established accounting and reporting standards for derivative instruments.
The  Statement  also  provided  an  opportunity,  at  adoption only, to transfer
securities  from  the  held  to maturity portfolio with no adverse consequences.

     Loan  payment  held  in  escrow
     -------------------------------
          Loan  payment  held  in escrow represents funds due the Company from a
loan settlement occurring in December, 1998.  The funds were placed in an escrow
account  pending  approval  of the transaction by the bankruptcy court.  Most of
the  funds  held in escrow were placed in a noninterest-bearing account with the
Company.


                                       23
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (Continued)

     Loans  and  allowance  for  credit  losses
     ------------------------------------------
          Loans  are stated at face value less deferred origination fees and the
allowance  for  credit  losses.

          Interest on loans is credited to income based on the principal amounts
outstanding.  Origination  fees are recorded as income over the contractual life
of  the  related  loans  as  an  adjustment  of  yield.

          The  accrual  of  interest  is  discontinued  when  any portion of the
principal  or interest is ninety days past due and collateral is insufficient to
discharge  the  debt  in  full.

          The  allowance  for  credit  losses  represents  an  amount  which, in
management's  judgment,  will  be adequate to absorb possible losses on existing
loans  that  may  become  uncollectible.  If  the current economy or real estate
market were to suffer a severe downturn, the estimate for uncollectible accounts
would  need  to be increased.  Management's judgment in determining the adequacy
of  the allowance is based on evaluations of the collectibility of loans.  These
evaluations  take  into  consideration such factors as changes in the nature and
volume  of  the  loan  portfolio,  overall portfolio quality, review of specific
problem  loans,  and  current economic conditions that may affect the borrowers'
ability  to  pay.

          Loans  are  considered  impaired  when,  based on current information,
management  considers  it unlikely that the collection of principal and interest
payments  will be made according to contractual terms.  Generally, loans are not
reviewed  for  impairment  until  the accrual of interest has been discontinued.

     Loans  held  for  sale
     ----------------------
          The  Company  originates loans which are sold to an investor.  Because
of the short holding period, these loans are carried at cost, which approximates
market  value.

     Premises  and  equipment
     ------------------------
          Premises  and  equipment  are  recorded  at  cost  less  accumulated
depreciation  and amortization.  Depreciation and amortization are computed over
the  estimated  useful  lives  using  the  straight-line  method.  Leasehold
improvements  are  amortized over the terms of the lease or the estimated useful
lives  of  the  improvements,  whichever  is  shorter.

     Earnings  per  share
     --------------------
          Basic  earnings per common share are determined by dividing net income
by  the  weighted average number of shares of common stock outstanding.  Diluted
earnings  per  share  are calculated including the average dilutive common stock
equivalents  outstanding  during  the  period.

          Dilutive  common  equivalent  shares  consist  of  stock  options  and
warrants, calculated using the treasury stock method.  In loss periods, dilutive
common  equivalent  shares  are excluded since the effect would be antidilutive.

     Stock  options
     --------------
          The  Company  accounts  for  stock options under Accounting Principles
Board  Opinion  No. 25, Accounting for Stock Issued to Employees ("APB No. 25").


                                       24
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

2.   CASH  AND  DUE  FROM  BANKS

          The  Bank  normally  carries balances with other banks that exceed the
federally  insured  limit.  The average balances carried in excess of the limit,
including  unsecured  federal  funds  sold to the same banks, were approximately
$1,736,947,  $5,244,225,  and $4,069,486 for 1999, 1998, and 1997, respectively.

          Banks  are  required  to  carry  noninterest-bearing  cash reserves at
specified  percentages of deposit balances.  The Bank's normal amount of cash on
hand  and  on  deposit  with  other  banks  is sufficient to satisfy the reserve
requirements.

3.   INVESTMENT  SECURITIES

          Investment  securities  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                            Amortized     Unrealized  Unrealized    Market
                                               cost         gains       losses      value
                                            ---------     ----------  ----------   -------
<S>                                       <C>             <C>         <C>          <C>
December 31, 1999 - Available for sale
   U.S. Government agencies                  4321057             0      117229     4203828
                                            =========     =========   =========    =======

December 31, 1998 - Available for sale
  U.S. Government agencies                   4850613          7311       17898     4840026
                                            =========     =========   =========    =======

December 31, 1997 - Held to maturity
  U.S. Government agencies                   1500000          2794           0     1502794
                                            =========     =========   =========    =======
</TABLE>

          During  1998,  securities  with an amortized cost of $500,000 and fair
value  of  $501,953  were transferred from the held to maturity portfolio to the
available  for  sale  portfolio.

          The  amortized  cost  and  estimated  market  value  of  investment
securities,  by  contractual  maturity,  are shown below.  Actual maturities may
differ  from contractual maturities because borrowers may have the right to call
or  prepay  obligations.  Mortgage  pass-through  securities  are due in monthly
installments.

<TABLE>
<CAPTION>
                               December 31,
                            1999                 1998                  1997
                          Amortized   Market   Amortized   Market    Amortized   Market
                            cost      value      cost      value       cost       value
                         ---------  ---------  ---------  ---------  ----------  ------
<S>                       <C>       <C>        <C>        <C>        <C>         <C>
Due
  One year or less              0         0     449898     451673     500000     500771
  After one year
   through five years     4106822   3997034    4150155    4137728    1000000    1002023
  After five years              0         0     250560     250625          0          0
Mortgage pass-through
  securities               214235    206794         0           0          0          0
                          -------  ---------   -------  ---------    -------    -------
                          4321057   4203828    4850613    4840026    1500000    1502794
                          =======  =========   =======  =========    =======    =======
</TABLE>

          Securities  were  pledged  as  collateral  for  repurchase agreements.


                                       25
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

4.   LOANS  AND  ALLOWANCE  FOR  CREDIT  LOSSES
<TABLE>
<CAPTION>

          Major  classifications  of  loans  are  as  follows:

                                         1999      1998      1997
                                       --------  --------  --------
<S>                                    <C>       <C>       <C>
  Commercial                            7476729   4405479   2270375
  Real estate                          29441565  22174739  24273513
  Construction                          3177267   2459322   3658528
  Home equity                           2421584   2067068   2067995
  Consumer                              4054684   2725190   2859345
                                       --------  --------  --------
                                       46571829  33831798  35129756
  Less deferred loan origination fees     25135     46990     69477
  Less allowance for credit losses       610396    530000    378000
                                       --------  --------  --------
  Loans, net                           45936298  33254808  34682279
                                       ========  ========  ========
</TABLE>

          The  residential  mortgage  portfolio  is  pledged as collateral under
lines  of  credit  from  correspondents  and  the  Federal  Home  Loan  Bank.

          The  rate  repricing  distribution  of  the  loan  portfolio  follows:

<TABLE>
<CAPTION>
<S>                                    <C>       <C>       <C>
  Immediately                          7113209   3558109   4110743
  Within one year                      10914323  14121270  12664592
  Over one to five years               24736541  15728660  18346404
  Over five years                      3807756    423759      8017
                                       --------  --------  --------
                                       46571829  33831798  35129756
                                       ========  ========  ========
</TABLE>

          Transactions  in  the  allowance  for  credit  losses  are as follows:

<TABLE>
<CAPTION>
<S>                                    <C>       <C>       <C>
  Beginning balance                    530000    378000    332253
  Provision charged to operation       -98547    224281     81807
  Recoveries                           430068     25500     13752
                                       ------    ------    ------
                                       861521    627781    427812
  Charge-offs                          251125     97781     49812
                                       ------    ------    ------
  Ending balance                       610396    530000    378000
                                       ======    ======    ======
</TABLE>

          Management  has  identified  no  significant  impaired  loans.


                                       26
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

4.   LOANS  AND  ALLOWANCE  FOR  CREDIT  LOSSES  (Continued)

          Nonaccrual  loans  and  loans past due 90 days or more are as follows:

<TABLE>
<CAPTION>
                                        1999    1998     1997
                                       ------  -------  ------
<S>                                    <C>     <C>      <C>
  Nonaccrual
    Commercial                              0    64707   13785
    Mortgage                           100000  2184971       0
    Installment                          8770    68574   28661
                                       ------  -------  ------
                                       108770  2318252   42446
                                       ======  =======  ======

  Interest not accrued                   4658   237114    1388
                                       ======  =======  ======
  Loans past due ninety days or more,
    still accruing interest              4942    25022  218055
                                       ======  =======  ======
</TABLE>

          The  interest  not  accrued in 1998 includes $113,226 of interest from
the  nonaccrual  loan  which  was paid off from the loan payment held in escrow.

          The  following commitments, lines of credit, and letters of credit are
outstanding  as  of  December  31:

<TABLE>
<CAPTION>
<S>                                         <C>      <C>      <C>
  Construction loans                        1561318  1639393  1319956
  Lines of credit, including home equities  3456452  2012998  1472709
  Overdraft protection lines                 275035   186670   144026
  Standby letters of credit                   86244   535166   382767
                                            -------  -------  -------
                                            5379049  4374227  3319458
                                            =======  =======  =======
</TABLE>

          Loan  commitments  and  lines  of  credit  are agreements to lend to a
customer  as  long  as  there  is no violation of any condition to the contract.
Loan  commitments  may  have  rates  fixed  at  current  market  interest, fixed
expiration  dates,  and may require payment of a fee.  Lines of credit generally
have  variable  interest  rates.  Such  lines  do  not  represent  future  cash
requirements  because  it  is  unlikely  that all customers will draw upon their
lines  in  full  at  any  time.

          Letters  of credit are commitments issued to guarantee the performance
of  a  customer  to  a  third  party.

          Loan  commitments,  lines  of credit and letters of credit are made on
the  same  terms,  including  collateral,  as  outstanding loans.  The Company's
exposure  to  credit  loss  in  the  event  of nonperformance by the borrower is
represented  by  the  contract amount of the commitment.  Management includes an
assessment of potential loss from funding these commitments in its allowance for
credit  losses.


                                       27
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

5.     PREMISES  AND  EQUIPMENT

          A  summary  of  premises  and  equipment  and the related depreciation
expense  is  as  follows:

<TABLE>
<CAPTION>
                                        Estimated
                                       useful lives   1999       1998     1997
                                      -------------  -------  -------  -------
<S>                                   <C>            <C>      <C>      <C>
  Land                                          -     295211   295211   295211
  Land improvements                      20 years      40512    40512    40512
  Building                            10-40 years    1304503  1298872  1298872
  Furniture, fixtures, and equipment   5-10 years     663715   542701   518624
                                                     -------  -------  -------
                                                     2303941  2177296  2153219
  Accumulated depreciation                            609289   515169   439536

                                                 -----------  -------  -------
  Net premises and equipment                         1694652  1662127  1713683
                                                 ===========  =======  =======

  Depreciation expense                                 94890    95790   100564
                                                 ===========  =======  =======
</TABLE>

6.   INTANGIBLE  ASSETS

          A  summary  of intangible assets and the related amortization follows:

<TABLE>
<CAPTION>
                            1999   1998    1997
                            -----  -----  ------
<S>                         <C>    <C>    <C>
  Organization costs            0      0  234820
  Computer software         60007  44340   44032
                            -----  -----  ------
                            60007  44340  278852
  Accumulated amortization  44316  42487  248591
                            -----  -----  ------
  Net intangible assets     15691   1853   30261
                            =====  =====  ======

  Amortization expense       2998  29386   56503
                            =====  =====  ======
</TABLE>

7.   DEPOSITS

          Major  classifications  of  interest-bearing  deposits are as follows:

<TABLE>
<CAPTION>
                          1999      1998      1997
                        --------  --------  --------
<S>                     <C>       <C>       <C>
  Money market and NOW  11673854   9008316   9328273
  Savings                3915780   4523794   3581048
  Other time            27858566  25904232  23117983
                        --------  --------  --------
                        43448200  39436342  36027304
                        ========  ========  ========
</TABLE>


                                       28
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

7.   DEPOSITS  (Continued)

          Included  in other time deposits are certificates of deposit issued in
denominations  of $100,000 or more.  The maturities and related interest expense
of  these  deposits  follow:

<TABLE>
<CAPTION>
                           1999     1998     1997
                          -------  -------  -------
<S>                       <C>      <C>      <C>
  Three months or less    4224208  1890405  1116056
  Three to twelve months  1814162  1949654  1452974
  One to five years       1888262  1238331  1579570
                          -------  -------  -------
                          7926632  5078390  4148600
                          =======  =======  =======

  Interest expense         291479   265607   234217
                          =======  =======  =======
</TABLE>

8.   SECURITIES  SOLD  UNDER  AGREEMENTS  TO  REPURCHASE

          The  Bank  has  repurchase  agreements  that  are  collateralized  by
Government agency  securities owned by the Bank.  During the year ended December
31, 1999, 1998 and 1997, the following applied  to  these repurchase agreements:

<TABLE>
<CAPTION>
                                                                1999     1998     1997
                                                               -------  -------  ------
<S>                                                            <C>      <C>      <C>
  Maximum amount outstanding                                   387868   540941   594632
  Average amount outstanding                                   139200   466466   478005
  Average rate paid during the year                             3.79%    4.81%    4.55%
  Investment securities underlying the agreements at year end
    Carrying value                                             317212   426649   675000
    Estimated fair value                                       317212   426649   676095
</TABLE>

9.   NOTES  PAYABLE  AND  LINES  OF  CREDIT

          The  Company  may  borrow  up to $8,773,000 from the Federal Home Loan
Bank  (FHLB)  through  any combination of notes or line of credit advances.  The
line  of  credit interest rate is a variable rate set daily by the lender.  Both
the  notes  payable and the line of credit are secured by a floating lien on all
of  the  Company's  residential  first  mortgage loans.          The Company was
required  to  purchase  shares  of  capital  stock in the FHLB as a condition to
obtaining  the  line  of  credit.


                                       29
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

9.   NOTES  PAYABLE  AND  LINES  OF  CREDIT  (Continued)

          Maturities of the Company's borrowings from the Federal Home Loan Bank
are  summarized:

<TABLE>
<CAPTION>
    Maturity                                 Interest
     date             Balance      Rate      frequency
                     --------    ---------  -----------
<S>                  <C>         <C>        <C>
  January 14, 2000    1000000      6.03%    At maturity
  May 4, 2000         1000000      5.30%    Monthly
  June 23, 2008       1000000      5.51%    Quarterly
  February 11, 2019    578493      5.00%    Monthly
                     --------
                      3578493
                     ========
</TABLE>

          In addition to the line of credit available from the FHLB, the Company
has  federal  funds  lines  and  other  lines of credit from correspondent banks
totaling  $6,750,000.

10.  INCOME  TAXES

          The  Company  has  not  incurred  any  income  tax liability since its
inception.  The  Company  had  net  operating  loss  carryforwards  of $389,317,
$931,128,  and  $1,147,924  available  to  offset  future  taxable  income as of
December  31,  1999,  1998,  and  1997,  respectively.

          The  statutory  federal  income  tax  rate was 34% for 1999, 1998, and
1997.  The  provision  (benefit)  for  income  taxes  is  reconciled as follows:

<TABLE>
<CAPTION>
                                                     1999    1998     1997
                                                    ------  -------  -------
<S>                                                 <C>     <C>      <C>
  Income before income taxes                        755137    46093   289921
                                                    ======  =======  =======

  Tax provision at statutory rates                  256747    15671    98573
  Increase (decrease) resulting from
    State income taxes, less federal benefit             0        0    13377
    Nondeductible expenses                            4045     2313     3346
    Net operating loss carryover and adjustment of
      valuation allowance                                0  -415935  -115296
                                                    ------  -------  -------
  Provision (benefit) for income taxes              260792  -397951        0
                                                    ======  =======  =======
</TABLE>


                                       30
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

10.  INCOME  TAXES  (Continued)

          The  components  of  the  deferred  tax  assets  and liabilities as of
December  31,  are  as  follows:

<TABLE>
<CAPTION>
                                                       1999    1998    1997
                                                      ------  ------  -------
<S>                                                   <C>     <C>     <C>
  Deferred tax assets
    Allowance for credit losses                       128851  162357   124849
    Deferred loan origination fees                         0       0      992
    Net operating loss carryforward                   132368  316584   435721
    Start-up costs                                         0       0     8238
    Unrealized loss on securities available for sale   39858    3600        0
                                                      ------  ------  -------
                                                      301077  482541   569800
                                                      ------  ------  -------
  Deferred tax liabilities
    Depreciation                                       51356   44281    45537
    Cash method of accounting                          72704   36709    59417
                                                      ------  ------  -------
                                                      124060   80990   104954
                                                      ------  ------  -------
  Net deferred tax asset before valuation allowance   177017  401551   464846
  Valuation allowance                                      0       0  -464846
                                                      ------  ------  -------
  Net deferred tax asset                              177017  401551        0
                                                      ======  ======  =======
</TABLE>

11.  OTHER  OPERATING  EXPENSES

          Other  operating  expenses  are  comprised  as  follows:

<TABLE>
<CAPTION>
                                        1999    1998    1997
                                       ------  ------  ------
<S>                                    <C>     <C>     <C>
  Advertising                           47446   41667   47417
  Professional fees                    109104   72110   58421
  Data processing                      103784   84332   77487
  Deposit assessment                     4896    4620    3712
  Insurance                             13042   13023   14830
  Loan reports and collection costs     10095    6598    8086
  Organizational expense amortization       0   23482   46964
  Postage                               30677   27128   21813
  Proxy and transfer agent costs        16911   16762   15141
  Software amortization                  2998    5904    9539
  Stationery and supplies               72800   46339   44833
  Telephone                             28781   17225   13938
  Training                              22103   13024    5286
  Travel and entertainment              33358   13658   10283
  Other                                 74426   58688   59925
                                       ------  ------  ------
                                       570421  444560  437675
                                       ======  ======  ======
</TABLE>


                                       31
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

12.  STOCK  OPTION  AND  STOCK  WARRANT  PLANS

          The Company had an employment agreement with an executive officer that
provided  for options to purchase, for $10 per share, 2,797 shares each year for
four  years and, at the end of year five, to receive an option for 5,593 shares.
The  officer  had  to  meet  performance  criteria  established  by the Board of
Directors.  Each  option  was  exercisable for a period of seven years following
the  date  of  grant,  but  the options were forfeited when the officer left the
employment  of  the  Company.

          During 1999, the Company granted 56,000 non-qualified stock options to
the  chief  executive  officer  of  the Bank.  The options vest at 10% per year.
These  options,  with  an  exercise  price  of  $10,  expire  December 31, 2009.

          The Company has adopted a stock option plan, covering 35,000 shares of
common  stock,  intended to qualify as incentive stock options under Section 422
of  the  Internal  Revenue  Code.  The  plan  provides  for  granting options to
purchase  shares  of the common stock to the officers and other key employees of
the  Company  and  the  Bank.  No  options  have  been  granted.

          The  organizers  of the Company and certain partnerships controlled by
the organizers have purchased 272,574 shares of common stock sold in the initial
offering and hold warrants to purchase up to 207,800 additional shares of common
stock.  The warrants are exercisable at a price of $10 per share for a period of
10  years,  expiring  June  30,  2003.

          A  summary  of  the  status  of  the Company's performance-based stock
option  plans  follows:

<TABLE>
<CAPTION>
  Shares                          1999   1998   1997
--------------------------------  -----  -----  ----
<S>                               <C>    <C>    <C>
  Outstanding, beginning of year      0   8390  5593
  Granted                         56000      0  2797
  Exercised                           0   -990     0
  Forfeited                           0  -7400     0
                                  -----  -----  ----

  Outstanding, end of year        56000      0  8390
                                  =====  =====  ====

  Total vested                     5600      0  8390
                                  =====  =====  ====
</TABLE>

          The  Bank  applies APB No. 25 in accounting for the stock option plan.
Accordingly,  no  compensation expense has been recognized for the stock options
granted.  Statement  of  Financial  Accounting Standards No. 123, Accounting for
Stock-Based  Compensation  (SFAS  No.  123),  was  issued  in  October,  1995 to
establish  accounting  and  reporting  standards  for  stock-based  employee
compensation  plans.  SFAS  No. 123 requires measurement of compensation expense
provided by stock-based plans using a fair value based method of accounting, and
recognition of the compensation expense in the statement of income or disclosure
in  the  notes  to  the  financial  statements.


                                       32
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

12.  STOCK  OPTION  AND  STOCK  WARRANT  PLANS  (Continued)

          The  weighted  average  fair  value of options granted during 1999 and
1997  has  been  estimated using the Black-Scholes option-pricing model with the
following  assumptions:

<TABLE>
<CAPTION>
                            1999   1997
                           ------  -----
<S>                        <C>     <C>
  Dividend yield            0.00%  0.00%
  Risk-free interest rate   5.75%  5.75%
  Expected volatility      33.01%  4.50%
  Expected life in years     10.5    7.0
</TABLE>

          Had  compensation been determined in accordance with the provisions of
SFAS  No.  123,  the  Company's net income and earning per share during 1999 and
1997  would  have  been  reduced  to  the  following  pro  forma  amounts:

<TABLE>
<CAPTION>
                               1999    1997
                              ------  ------
<S>                           <C>     <C>
  Net income
      As reported             494345  289921
      Pro forma               443614  282955
  Basic earnings per share
      As reported               0.88    0.52
      Pro forma                 0.79    0.51
  Diluted earnings per share
      As reported               0.88    0.48
      Pro forma                 0.79    0.47
</TABLE>

13.  PROFIT  SHARING  PLAN

          In  1996,  the Bank adopted a defined contribution profit sharing plan
under  Section  401(k)  of  the  Internal  Revenue  Code.  The  plan  covers
substantially  all of the employees and allows discretionary Bank contributions.
During 1999 and 1998, the Board of Directors approved contributions matching 25%
of  employee  contributions  that  totaled  $6,583 and $4,794, respectively.  In
1997,  the approved contributions matched 10% of employee contributions totaling
$1,913.

14.  LEASE  COMMITMENTS

          The  Bank is currently leasing branch facilities from a related party.
The  initial  two  year  term of the lease began July 1, 1993.  The second lease
term, for a period of five years, began July 1, 1995.  Rent is fixed at $300 per
month.  There  are  options  to  extend beyond the initial lease terms with rent
increases  that  are  contingent on the performance of the Bank and based on the
consumer  price  index  of  Easton.

          The  Company  leases  retail  property  in  which the Denton branch is
located.  The lease, dated June 4, 1999, expires August 31, 2004.  The lease has
three 5-year renewal options with rent increases of 10% for each renewal period.
The  Company  is  responsible for real estate taxes.  If the landlord decides to
sell  the  building in which the Company's branch is located, the lease provides
the  Company  the  right  to  purchase the building at terms comparable to third
party  offers.


                                       33
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

14.     LEASE  COMMITMENTS  (Continued)

          Lease  obligations  will  require  payments  as  follows:

<TABLE>
<CAPTION>
<S>         <C>
            Minimum
   Period   rentals
---------   -------
      2000    25995
      2001    25995
      2002    25995
      2003    25995
      2004    17330
            -------
             121310
            =======
</TABLE>

          Rent  expense  was  $16,221  for 1999 and $3,600 for each of the years
ended  December  31,  1998  and  1997.

15.  RELATED  PARTY  TRANSACTIONS

          The  executive  officers  and  directors of the Corporation enter into
loan  transactions  with the Bank in the ordinary course of business.  The terms
of  these  transactions  are  similar  to  the terms provided to other borrowers
entering  into similar loan transactions.  A summary of the activity of loans to
officers  and  directors  follows:

<TABLE>
<CAPTION>
                      1999     1998     1997
                     -------  -------  -------
<S>                  <C>      <C>      <C>
  Beginning balance  2018872  2052138  2441843
  Advances            267372   412312   465854
  Repayments         -581341  -393577  -855559
  Other changes       -18675   -52001        0
                     -------  -------  -------
  Ending balance     1686228  2018872  2052138
                     =======  =======  =======
</TABLE>

          The  Corporation  engaged  a  firm  owned  by one of the organizers to
construct  the  Bank's  main  office  and remodel the second floor.  The general
contractor  was  paid  $5,631  in  1999,  $457  in  1998,  and $240,028 in 1997.

          The  Bank  paid rent to a company that is owned by a director.  Annual
rental  payments  of $3,600 were paid for each of the three years ended December
31,  1999.

          During  1999,  1998,  and  1997,  the  Bank  leased  office space to a
director  for  $7,938  each  year.

          A  director  is  a  partner  in  a law firm that periodically provides
services  to  the  Company or Bank.  During 1997, the Bank paid $897 to this law
firm.

          Deposits  of  directors  and  officers  with  account relationships in
excess  of  $200,000  total $3,369,825 or 7.15% of total deposits as of December
31,  1999.


                                       34
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

16.  CAPITAL  STANDARDS

          The  Federal  Reserve  Board  and  the  Federal  Deposit  Insurance
Corporation have adopted risk-based capital standards for banking organizations.
These standards require ratios of capital to assets for minimum capital adequacy
and  to  be  classified  as  well  capitalized  under  prompt  corrective action
provisions.  The capital ratios and minimum capital requirements of the Bank are
as  follows:

<TABLE>
<CAPTION>
                                                              Minimum             To be
                                         Actual           capital adequacy    well capitalized
  (in thousands)                       Amount   Ratio      Amount   Ratio      Amount   Ratio
                                      -------  -------     -------  ------     -------  -----
<S>                                  <C>       <C>         <C>      <C>        <C>      <C>
      December 31, 1999
-------------------------------
    Total capital
      (to risk-weighted assets)          5363   12.44%       3450    8.00%       4312   10.00%
    Tier 1 capital
      (to risk-weighted assets)          4822   11.18%       1725    4.00%       2587    6.00%
    Tier 1 capital
      (to average fourth
        quarter assets)                  4822    8.90%       2167    4.00%       2709    5.00%

        December 31, 1998
-------------------------------
    Total capital
      (to risk-weighted assets)          4691   13.73%       2733    8.00%       3417   10.00%
    Tier 1 capital
      (to risk-weighted assets)          4263   12.48%       1367    4.00%       2050    6.00%
    Tier 1 capital
      (to average fourth
        quarter assets)                  4263    8.78%       1943    4.00%       2429    5.00%

        December 31, 1997
-------------------------------
    Total capital
      (to risk-weighted assets)          4303   13.15%       2619    8.00%       3273   10.00%
    Tier 1 capital
      (to risk-weighted assets)          3925   11.99%       1309    4.00%       1964    6.00%
    Tier 1 capital
      (to average fourth
        quarter assets)                  3925    9.18%       1710    4.00%       2137    5.00%
</TABLE>

          Tier  1  capital  consists  of  capital  stock, surplus, and undivided
profits.  Total  capital  includes  a limited amount of the allowance for credit
losses.  In  calculating  risk-weighted  assets,  specified risk percentages are
applied  to  each  category  of  asset  and  off-balance  sheet  items.

          Failure  to  meet  the  capital  requirements  could affect the Bank's
ability  to  pay  dividends and accept deposits and may significantly affect the
operations  of  the  Bank.


                                       35
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

17.     FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

          The  estimated  fair values of the Company's financial instruments are
summarized  below.  The  fair values of a significant portion of these financial
instruments  are estimates derived using present value techniques and may not be
indicative  of  the net realizable or liquidation values.  Also, the calculation
of  estimated  fair  values is based on market conditions at a specific point in
time  and  may  not  reflect  current  or  future  fair  values.

<TABLE>
<CAPTION>
                                 December 31,
                                        1999               1998               1997
                                ------------------  -----------------  ------------------
<S>                             <C>       <C>       <C>       <C>       <C>       <C>
                                Carrying  Fair      Carrying  Fair      Carrying  Fair
                                amount    value     amount    value     amount    value
                                -------  --------  --------  --------  --------  --------

  Financial assets
    Cash and due from
      banks                      2576335   2576335    976682    976682    642726    642726
    Federal funds sold            824727    824727   7269903   7269903   3739622   3739622
    Investment securities        4382828   4382828   4985626   4985626   1624500   1627294
    Loans, net                  45936298  45962204  33254808  33271318  34682279  34599709
    Accrued interest
      receivable                  300536    300536    246470    246470    248303    248303
    Loan payment held
     in escrow                         0         0   1175000   1175000         0         0

  Financial liabilities
    Noninterest-bearing
     deposits                    3678246   3678246   4682618   4682618   2060848   2060848
    Interest-bearing deposits
     and securities sold under
     agreements to
       repurchase               43728867  44018746  39717361  41076792  36508794  36779633
    Accrued interest
       payable                    108888    108888     95611     95611     99980     99980
    Note payable                 3578493   3342217   1000000   1000000         0         0
</TABLE>

          The  fair  values  of U.S. Government agency securities are determined
using  market  quotations.

          The  fair  value  of  fixed-rate  loans is estimated to be the present
value of scheduled payments discounted using interest rates currently in effect.
The fair value of variable-rate loans, including loans with a demand feature, is
estimated  to equal the carrying amount.  The valuation of loans is adjusted for
possible  loan  losses.

          The fair value of interest-bearing checking, savings, and money market
deposit  accounts  is  equal  to  the  carrying  amount.  The  fair  value  of
fixed-maturity  time  deposits  is  estimated  based on interest rates currently
offered  for  deposits  of  similar  remaining  maturities.

          It  is  not practicable to estimate the fair value of outstanding loan
commitments,  unused  lines,  and  letters  of  credit.


                                       36
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

18.     PARENT  COMPANY  FINANCIAL  INFORMATION

          The  balance sheets and statements of income and cash flows for Easton
Bancorp,  Inc.  (Parent  Only)  follow:

<TABLE>
<CAPTION>
                                                        December 31,
Balance Sheets                                            1999     1998      1997
                                                         -------  -------  --------
                          Assets
<S>                                                      <C>      <C>      <C>
  Cash                                                      5988    40648     64491
  Investment in subsidiary                               4797526  4350689   3945641
  Organization costs                                           0        0      2580
  Deferred income taxes                                    80116    68332         0
                                                         -------  -------  --------
            Total assets                                 4883630  4459669   4012712
                                                         =======  =======  ========

  Liabilities and Stockholders' Equity

  Stockholders' equity
    Common stock                                           56032    56032     55933
    Additional paid-in capital                           5227487  5227487   5217686
    Retained earnings (deficit)                          -322518  -816863  -1260907
                                                         -------  -------  --------
                                                         4961001  4466656   4012712
    Accumulated other comprehensive income                -77371    -6987         0
                                                         -------  -------  --------
            Total stockholders' equity                   4883630  4459669   4012712
                                                         -------  -------  --------
            Total liabilities and stockholders' equity   4883630  4459669   4012712
                                                         =======  =======  ========


                                                          Years Ended December 31,
  Statements of Income                                      1999     1998      1997
                                                         -------  -------  --------

  Interest revenue                                           556     1921      3002
  Equity in undistributed income of subsidiary            517221   412035    321742
                                                         -------  -------  --------
                                                          517777   413956    324744
                                                         -------  -------  --------
  Expenses
    Furniture and equipment                                   49       68        49
    Other                                                  35167    38176     34774
                                                         -------  -------  --------
                                                           35216    38244     34823
                                                         -------  -------  --------
  Income before income taxes                              482561   375712    289921
  Income taxes                                             11784    68332         0
                                                         -------  -------  --------
  Net income                                              494345   444044    289921
                                                         =======  =======  ========
</TABLE>


                                       37
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

18.     PARENT  COMPANY  FINANCIAL  INFORMATION  (Continued)

<TABLE>
<CAPTION>
                                                 Years Ended December 31,

Statements of Cash Flows                          1999     1998     1997
                                                 -------  -------  -------
<S>                                              <C>      <C>      <C>
  Cash flows from operating activities
    Interest received                                556     1921     3002
    Cash paid for operating expenses              -35216   -35664   -29664
                                                 -------  -------  -------
                                                  -34660   -33743   -26662
                                                 -------  -------  -------
  Cash flows from financing activities
    Proceeds from options exercised                    0     9900        0
                                                 -------  -------  -------
  Net (decrease) in cash                          -34660   -23843   -26662
                                                 -------  -------  -------

  Cash and equivalents at beginning of year        40648    64491    91153
                                                 -------  -------  -------
  Cash and equivalents at end of year               5988    40648    64491
                                                 =======  =======  =======

  Reconciliation of net income to net cash
    provided by operating activities
     Net income                                   494345   444044   289921
     Adjustments to reconcile net income to net
       cash used in operating activities
       Undistributed net income of subsidiary    -517221  -412035  -321742
       Deferred income taxes                      -11784   -68332        0
       Amortization                                    0     2580     5159
                                                 -------  -------  -------
                                                  -34660   -33743   -26662
                                                 =======  =======  =======
</TABLE>


                                       38
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

20.  EARNINGS  PER  SHARE

          Diluted  earnings  per  share  are  calculated  as  follows:

<TABLE>
<CAPTION>
                                     1999      1998       1997
                                    -------  --------  ----------
<S>                                 <C>      <C>       <C>
  NET INCOME                         494345    444044      289921
                                    =======  ========  ==========

  Average shares outstanding         560318    560071      559328
                                    -------  --------  ----------

  Dilutive average shares
     outstanding under options
     and warrants                    245236    209832      215490

  Exercise price                      10.00     10.00       10.00

  Assumed proceeds on exercise      2452360   2098320     2154900

  Average market value                10.16     12.50       12.49

  Less:   Treasury stock purchased
             with assumed proceeds
             from exercise           241374  167865.6  172530.024

  Average shares and common
     stock equivalents               564180    602037      602288

  DILUTED EARNINGS PER SHARE           0.88      0.74        0.48
                                    =======  ========  ==========
</TABLE>

          The  stock  of  the Company is not traded on any public exchange.  The
market  values  are  derived from trades known to management.  Private sales may
occur  where  management  of  the  Company  is  unaware  of  the  sales  price.


THE  FOLLOWING COMMENT IS REQUIRED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION:

"This  statement has not been reviewed or confirmed for accuracy or relevance by
the  Federal  Deposit  Insurance  Corporation."


                                       39
<PAGE>
                       EASTON BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

19.  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED)

          The  following  is  a  summary  of  the unaudited quarterly results of
operations:

<TABLE>
<CAPTION>
                                                 Three months ended
                                ------------------------------------------------
                                December 31,  September 30,  June 30,  March 31,
                                ------------  -------------  --------  ---------
<S>                             <C>           <C>            <C>       <C>
  1999
  ----
  Interest revenue                   1131539        1140479    944892     901995
  Interest expense                    508370         483768    423570     446677
  Net interest income                 623169         656711    521322     455318
  Provision for loan losses                0        -134547     18000      18000
  Net income                           95477         284872     69568      44428
  Comprehensive income                 76891         280154     37194      29722
  Earnings per share - basic            0.17           0.51      0.12       0.08
  Earnings per share - diluted          0.17           0.51      0.12       0.08

  1998
  ----
  Interest revenue                    918254         920983    857747     829660
  Interest expense                    482515         488958    461264     448055
  Net interest income                 435739         432025    396483     381605
  Provision for loan losses            61724          91212     34812      36533
  Net income                           63880         343547      9018      27599
  Comprehensive income                 54198         347835      7425      27599
  Earnings per share - basic            0.11           0.61      0.02       0.05
  Earnings per share - diluted           0.1           0.57      0.02       0.05

  1997
  ----
  Interest revenue                    892249         830754    800830     754150
  Interest expense                    449961         417765    401518     379292
  Net interest income                 442288         412989    399312     374858
  Provision for loan losses            32056           8285     19608      21858
  Net income                           89475          73323     63367      63756
  Comprehensive income                 89475          73323     63367      63756
  Earnings per share - basic            0.17           0.13      0.11       0.11
  Earnings per share - diluted          0.15           0.12       0.1       0.11
</TABLE>


                                       40
<PAGE>
                       DIRECTORS AND EXECUTIVE OFFICERS OF
                              EASTON BANCORP, INC.

W.  DAVID  HILL,  DDS                    PRESIDENT,  WILLIAM  HILL  MANOR,  INC.
CHAIRMAN/CHIEF  EXECUTIVE  OFFICER

R.  MICHAEL  S.  MENZIES,  SR.           PRESIDENT  AND  CHIEF EXECUTIVE OFFICER
PRESIDENT                                EASTON  BANK  &  TRUST  COMPANY

SHEILA  W.  BATEMAN                      CHIEF  ADMINISTRATIVE  OFFICER
SECRETARY                                CAULK  MANAGEMENT  COMPANY

JERRY  L.  WILCOXON,  CPA                CHIEF  FINANCIAL  OFFICER
TREASURER                                BLACK  OAK  COMPUTER  SERVICE,  INC.

JACK  H.  BISHOP,  DDS                   DENTIST,  JACK  H.  BISHOP,  DDS

J.  PARKER  CALLAHAN,  JR.               FARMER

J.  FREDRICK  HEATON,  DMD               ENDODONTIST,  J.  FREDRICK  HEATON,
                                         DMDPA

WILLIAM  C.  HILL,  P.D.                 PRESIDENT,  HILL'S  DRUG  STORE,  INC.

DAVID  F.  LESPERANCE                    PRESIDENT,
                                         LESPERANCE  CONSTRUCTION,  INC.

VINODRAI  MEHTA,  MD                     PHYSICIAN,  VINODRAI  MEHTA,  MD

ROGER  A.  ORSINI,  MD                   PLASTIC  &  RECONSTRUCTIVE  SURGEON
                                         PRESIDENT  OF  SHORE  AESTHETIC
                                         &  RECONSTRUCTIVE  ASSOCIATES

MAHMOOD  S.  SHARIFF,  MD                CARDIOLOGIST,  MAHMOOD  S.  SHARIFF, MD

MYRON  J.  SZCZUKOWSKI,  JR.,  MD        ORTHOPAEDIC  SURGEON
                                         DELMARVA  ORTHOPAEDIC  CLINIC


ALL  OF  THE  PERSONS  NOTED  ABOVE  ARE  DIRECTORS  OF  EASTON  BANCORP,  INC.


                                       41
<PAGE>
                      DIRECTORS, OFFICERS AND ASSOCIATES OF
                           EASTON BANK & TRUST COMPANY

                                    DIRECTORS
                                    ---------

                               W. DAVID HILL, DDS
                              CHAIRMAN OF THE BOARD

    SHEILA W. BATEMAN, CPS - SECRETARY      JERRY L. WILCOXON, CPA - TREASURER

     JACK  H.  BISHOP,  DDS                 WILLIAM  R.  HOUCK,  DDS
     J.  PARKER  CALLAHAN,  JR.             M.  LINDA  KILDEA
     CHARLES  T.  CAPUTE                    PAMELA  H.  LAPPEN
     WALTER  E.  CHASE,  SR.                DAVID  F.  LESPERANCE
     STEPHEN  W.  CHITTY                    VINODRAI  MEHTA,  MD
     DELIA  B.  DENNY                       R.  MICHAEL  S.  MENZIES,  SR.
     J.  FREDRICK  HEATON,  DMD             ROGER  A.  ORSINI,  MD
     JEFFREY  N.  HEFLEBOWER                MARIAN  H.  SHANNAHAN
     THOMAS  E.  HILL                       MAHMOOD  S.  SHARIFF,  MD
     WILLIAM  C.  HILL                      JAMES  B.  SPEAR,  SR.

                                    OFFICERS
                                    --------

     R.  MICHAEL  S.  MENZIES,  SR.          JEFFREY  N.  HEFLEBOWER
     PRESIDENT/CHIEF  EXECUTIVE  OFFICER     EXECUTIVE  VICE  PRESIDENT

     DELIA  B.  DENNY                        PAMELA  A.  MUSSENDEN
     EXECUTIVE  VICE  PRESIDENT              SENIOR  VICE  PRESIDENT/TREASURER

     BARBARA  M.  OSTRANDER                  ROSE  K.  KLECKNER
     VICE  PRESIDENT                         ASSISTANT  TREASURER

     SUSAN  D.  HASCHEN                      KATHLEEN  A.  KURTZ
     ASSISTANT  TREASURER                    ASSISTANT  TREASURER

     BETH  A.  SANDERSON
     SENIOR  MORTGAGE  OFFICER


                                   ASSOCIATES
                                   ----------

                    ROXANNE M. ATWATER, OPERATIONS ASSISTANT
               MARCY L. BLAZEJAK, CUSTOMER SERVICE REPRESENTATIVE
                        TERRI L. BRANNOCK, BRANCH MANAGER
                WENDY A. BUCKLER, CREDIT ADMINISTRATIVE ASSISTANT
                   BRENDA L. FORBES, ADMINISTRATIVE ASSISTANT
                   LESTA R. GUNTHER, OPERATIONS ADMINISTRATOR
                 ERIC L. HONTZ, FINANCIAL SERVICE REPRESENTATIVE
                 ANNE H. HUGHES, CREDIT ADMINISTRATIVE ASSISTANT
                 LAURA M. KING, CUSTOMER SERVICE REPRESENTATIVE
           TRACY T. LEDNUM, CUSTOMER SERVICE REPRESENTATIVE SUPERVISOR
                  AMY C. LYNCH, CREDIT ADMINISTRATIVE ASSISTANT
                KERRI A. MORRIS, CUSTOMER SERVICE REPRESENTATIVE
                        CAROL S. NOTTINGHAM, RECEPTIONIST
            KIMBERLY D. RADA, SENIOR CUSTOMER SERVICE REPRESENTATIVE
                 KELLY A. REED, FINANCIAL SERVICE REPRESENTATIVE
               AVONDA N.F. ROUNDS, CUSTOMER SERVICE REPRESENTATIVE
              BRIDGET A. SCHETTINI, CUSTOMER SERVICE REPRESENTATIVE
                    JACQUELINE D. WILSON, LENDING SPECIALIST


                                       42
<PAGE>