SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                   FORM 10-QSB

        [X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1996

                                       OR

        [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

           For the transition period from ____________to____________

                          Commission File No. 0-24330

                            Bedford Bancshares, Inc.
             (Exact name of registrant as specified in its charter)

                    Virginia                                  54-1709924
       -----------------------------------------------------------------------
       (State or other jurisdiction of                     (I.R.S. Employer
        incorporation or organization)                    Identification No.)


                 125 West Main Street, Bedford, Virginia 24523
                 ---------------------------------------------
                    (Address of principal executive offices)


                                 (540) 586-2590
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


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


State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.

        Class:  Common Stock, par value $.10 per share
                Outstanding at February 5, 1997: 1,143,669 shares
 

<PAGE>



                    BEDFORD BANCSHARES, INC. AND SUBSIDIARY

                              INDEX TO FORM 10-QSB


<TABLE>
<CAPTION>

<S>          <C>                                                                  <C>   
PART I       FINANCIAL INFORMATION                                                PAGE
------       ---------------------                                                ----

Item 1.      Financial Statements

             Consolidated Statements of Financial Condition at                    
             December 31, 1996 and September 30, 1996 (unaudited)                   1

             Consolidated Statements of Income for the three months
             ended December 31, 1996 and 1995 (unaudited)                           2

             Consolidated Statements of Cash Flows for the three months ended
             December 31, 1996 and 1995 (unaudited)                                 3

             Notes to Unaudited Interim Consolidated Financial Statements           4

Item 2.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                              5


PART II      OTHER INFORMATION
-------      -----------------

Item 1.      Legal proceedings                                                     10

Item 2.      Changes in Securities                                                 10

Item 3.      Defaults upon Senior Securities                                       10

Item 4.      Submission of Matters to a Vote of Security Holders                   10

Item 5.      Other Information                                                     10

Item 6.      Exhibits and Reports on Form 8-K                                      10

SIGNATURES

</TABLE>


<PAGE>


                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                 Consolidated Statements of Financial Condition
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                            December 31   September 30
                                                                                                1996          1996       
                                                                                            -----------   ------------
                                                                                               (Dollars in Thousands)

Assets
------
<S>                                                                                           <C>          <C>      
Cash and cash equivalents .................................................................   $   2,862    $   3,075
Investment securities held for investment (estimated market value of $5,210 and $5,161)....       5,219        5,214
Mortgage-backed securities held for investment (estimated market value of $24 and $25).....          24           25
Mortgage-backed securities available for sale, at market value ............................         474          457
Marketable equity securities available for sale, at market value ..........................       3,944        3,879
Investment securities available for sale, at market value .................................       1,872        1,860
Investment in Federal Home Loan Bank stock, at cost .......................................         932          932
Loans receivable, net .....................................................................     111,568      108,873
Foreclosed real estate, net ...............................................................          43           --
Property and equipment, net ...............................................................       1,240        1,238
Accrued interest receivable ...............................................................         609          662
Deferred income taxes .....................................................................         389          438
Other assets ..............................................................................         425          548
                                                                                              ---------    ---------
    Total assets ..........................................................................   $ 129,601    $ 127,201
                                                                                              =========    =========

Liabilities and Stockholders' Equity
------------------------------------
Liabilities
-----------
Deposits ..................................................................................   $  96,284    $  95,378
Advances from the Federal Home Loan Bank ..................................................      14,000       12,000
Advances from borrowers for taxes and insurance ...........................................         312          539
Dividends payable .........................................................................         137          126
Other liabilities .........................................................................         390          931
                                                                                              ---------    ---------
     Total liabilities ....................................................................     111,123      108,974
                                                                                              ---------    ---------

Commitments and contingent liabilities

Stockholders' equity
--------------------
Preferred stock, par value $.10 per share, authorized 250,000; issued and outstanding, none          --           --
Common stock, par value $.10 per share, authorized 2,750,000 shares; issued and outstanding
  1,143,669 at December 31, 1996 and September 30, 1996  ..................................         114          114
Additional paid in capital ................................................................      10,790       10,773
Retained earnings, substantially restricted ...............................................       8,967        8,739
Unrealized (loss) gain on securities available for sale ...................................         (35)         (33)
Less stock acquired by ESOP and RRP .......................................................      (1,358)      (1,366)
                                                                                              ---------    ---------
     Total stockholders' equity ...........................................................      18,478       18,227
                                                                                              ---------    ---------
     Total liabilities and stockholders' equity ...........................................   $ 129,601    $ 127,201
                                                                                              =========    =========

</TABLE>
See notes to consolidated financial statements 

                                       -1-



<PAGE>


                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                        Consolidated Statements of Income
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                    December 31
                                                                                   1996     1995
                                                                                 -------- --------
                                                                               (Dollars in Thousands
                                                                               Except Per Share Date)
Interest Income:
<S>                                                                               <C>      <C>   
 Loans ........................................................................   $2,218   $2,052
 U.S. Government Obligations including agencies ...............................      190      176
 Mortgage-backed securities ...................................................        8        1
 Other investments, including overnight deposits ..............................       46       23
                                                                                  ------   ------
  Total interest income .......................................................    2,462    2,252
                                                                                  ------   ------
Interest Expense:
 Deposits .....................................................................    1,053    1,037
 Borrowed funds ...............................................................      215       69
                                                                                  ------   ------
  Total interest expense ......................................................    1,268    1,106
                                                                                  ------   ------
  Net interest income .........................................................    1,194    1,146

Provision for credit losses ...................................................       25       --
                                                                                  ------   ------
  Net interest income after provision for credit losses .......................    1,169    1,146
                                                                                  ------   ------
Noninterest income:
 Service charges and fees on loans ............................................       87       74
 Other customer service fees and commissions ..................................       61       58
 Other ........................................................................        7       23
                                                                                  ------   ------
  Total noninterest income ....................................................      155      155
                                                                                  ------   ------
Noninterest expense:
 Personnel compensation and benefits ..........................................      399      367
 Occupancy and equipment ......................................................       72       84
 Data processing ..............................................................       79       79
 Federal insurance of accounts ................................................       42       50
 Advertising ..................................................................       34       22
 Professional fees ............................................................       27       39
 Net cost of (gain on) operations of foreclosed real estate ...................        2        3
 Other ........................................................................       94       84
  Total noninterest expense ...................................................      749      728
                                                                                  ------   ------
   Income before income taxes .................................................      575      573
Provision for income taxes ....................................................      218      218
                                                                                  ------   ------
  Net income ..................................................................   $  357   $  355
                                                                                  ======   ======

  Net income per share ........................................................   $ 0.33   $ 0.31
                                                                                  ======   ======
</TABLE>

See notes to consolidated financial statements.





                                       -2-


<PAGE>


                    BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                                       December 31
                                                                                      1996       1995
                                                                                     ------     ------
                                                                                   (Dollars in Thousands)
Operating activities:
<S>                                                                                 <C>        <C>    
 Net income .....................................................................   $    357   $    355
  Adjustments to reconcile net income to net cash provided by operating activities
    Provision for credit losses ..................................................        25         --
    Provision for depreciation and amortization ..................................        34         42
    Amortization of investment security premiums and accretion of discounts, net..         1          1
    (Increase) decrease in deferred income taxes .................................        49         18
    Loans originated for sale ....................................................        --        (75)
    Proceeds from sale of loans originated for sale ..............................        --         75
    (Increase) decrease in interest receivable ...................................        53        (29)
    (Increase) decrease in other assets ..........................................       123        148
    Increase (decrease) in other liabilities .....................................      (541)      (137)
                                                                                     -------    -------
      Net cash provided by (used in) operating activities ........................       101        398
                                                                                     -------    -------
Investing activities:
    Proceeds from the maturities of investments ..................................        --        400
    Purchases of investment securities ...........................................       (57)       (58)
    Net increase in loans to customers ...........................................    (2,741)      (628)
    Principal collected on mortgage-backed securities ............................        10          2
    Purchases of premises, equipment and leasehold improvements ..................       (36)       (36)
    Purchase of foreclosed real estate ...........................................       (43)        --
                                                                                     -------    -------
      Net cash provided by (used in) investing activities ........................    (2,867)      (320)
                                                                                     -------    -------
Financing activities:
    Repurchase of stock ..........................................................        --       (179)
    Proceeds - allocation of ESOP and RRP shares .................................        --         21
    Dividends paid ...............................................................      (126)      (186)
    Net increase (decrease) in customer deposits .................................       906      1,694
    Proceeds from advances and other borrowed money ..............................     2,000     (1,000)
    Purchase of stock by ESOP and RRP ............................................        --       (206)
    Net increase (decrease) in advance payments from borrowers for taxes and in ..      (227)       (71)
                                                                                     -------    -------
      Net cash provided by financing activities ..................................     2,553         73
                                                                                     -------    -------
      Increase (decrease) in cash and cash equivalents ...........................      (213)       151

Cash and cash equivalents at beginning of period .................................     3,075      3,337
                                                                                     -------    -------
Cash and cash equivalents at end of period .......................................   $ 2,862    $ 3,488
                                                                                     =======    =======
</TABLE>

See notes to consolidated financial statements.



                                       -3-



<PAGE>



          Note to Unaudited Interim Consolidated Fianancial Statements

                               December 31, 1996

NOTE 1: BASIS OF PRESENTATION

     The accompanying  unaudited interim consolidated  financial statements have
been  prepared in  accordance  with  generally  accepted  accounting  principles
("GAAP") for interim financial information. Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements.

     The  accompanying   unaudited  interim  consolidated  financial  statements
include the accounts of Bedford Bancshares, Inc. (the "Corporation") and Bedford
Federal Savings Bank (the "Bank"), a wholly owned subsidiary of the Corporation.
All significant  intercompany  balances and transactions have been eliminated in
consolidation.

     During the first quarter of fiscal 1997,  First  Financial  Corporation,  a
wholly owned subsidiary of the Bank was dissolved. The assets and liabilities of
First Financial (which were immaterial) were transferred to the Bank.

     In the  opinion  of  management,  all  adjustments  (consisting  of  normal
recurring  accruals)  considered  necessary for the fair presentations have been
included.  The results of operations for the interim  periods ended December 31,
1996 and 1995 are not  necessarily  indicative  of the results  which may may be
expected for any future period.  For futher  information,  refer to consolidated
financial  statements and footnotes thereto included in the Corporation's Annual
Report on Form 10-KSB for the year ended September 30, 1996.









                                       -4-



<PAGE>


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

FINANCIAL CONDITION
-------------------

     Total assets of the  Corporation  were $129.6 million at December 31, 1996,
an increase of $2.4 million from  September  30, 1996.  The $2.7 million rise in
loan  receivables  ($.9  million in mortgage  loans and $1.8 million in consumer
loans),  primarily  reflected the economic  health of the Bank's market area and
competitive  pricing of the Bank's loan  products.  Funding for the asset growth
was mainly provided by increases in FHLB borrowings and deposits.  Stockholders'
equity was $18.5  million on  December  31,  1996,  up  $251,000  from the $18.2
million on September 30, 1996.

     At December 31, 1996,  nonperforming  assets were $1.2 million,  or .93% of
total  assets,  compared to $684,000,  or .54% of total assets at September  30,
1996.  During the first  quarter  of fiscal  1997,  an  additional  $231,000  of
residential  real estate loans and $258,000 of consumer  loans were added to the
nonperforming  category.  These credits are primarily  secured by first liens on
the  underlying  real estate for which the Bank  believes the allowance for loan
losses  is  adequate  at  December  31,  1996.  Management  classifies  loans as
nonperforming after they have been delinquent greater than 90 days or earlier if
the Bank becomes aware that the borrower has entered bankruptcy proceedings,  or
in situations in which the loans have developed inherent problems prior to being
90 days delinquent  that indicate  payments of principal or interest will not be
made in full.  Whenever the accrual of interest is stopped,  previously  accrued
but uncollected interest income is reversed. Thereafter,  interest is recognized
only as cash is received until the loan is reinstated.

RESULTS OF OPERATIONS
---------------------

COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
-----------------------------------------------------------

     General.  Net income  for the three  months  ended  December  31,  1996 was
$357,000,  up slightly  from the  $355,000  earned in the  comparable  period of
fiscal 1996.  Net interest  income for the first quarter of fiscal 1997 was $1.2
million, compared to net interest income for the first quarter of fiscal 1996 of
$1.1 million. In addition,  $25,000 was added to the allowance for credit losses
during the first quarter of fiscal 1997.

     Interest  Income.  Total interest  income  amounted to $2.5 million for the
three  months ended  December  31, 1996 up from the $2.3  million  earned in the
comparable quarter of fiscal 1995. The increase was primarily due to an increase
in the average  balance of loans  receivable  to $110.5  million for the quarter
ended  December  31, 1996 from $98.1  million for the same period of 1995.  This
increase reflects the Corporation's  continuing success in originating  mortgage
loans and increased emphasis on expanding the consumer loan portfolio, primarily
home equity loans.

     Interest  Expense.  For the three  months ended  December  31, 1996,  total
interest expense rose to $1.3 million from the $1.1 million for the three months
ended December 31, 1995,  primarily due to an increase in the average balance of
interest  bearing  liabilities to $104.5 million for the first quarter of fiscal
1997 from $90.9 million for the same quarter of fiscal 1996. The average balance
of FHLB advances  increased  $9.9 million from $4.3 million for the three months
ended December 31, 1995 to $14.2 million for the three months ended December 31,
1996, providing the additional funding needed to support the Bank's loan growth.
In addition,  average  interest  bearing  deposits totaled $90.3 million for the
first  quarter of fiscal 1997, a $3.7 million  increase  from the $86.6  million
average for the comparable period of fiscal 1996.

                                       -5-

<PAGE>

     Net Interest  Income.  For the three months  ended  December 31, 1996,  net
interest  income was $1.2  million,  up slightly  from the net  interest  income
earned in the same period of 1995.  During the three months  ended  December 31,
1996, the Corporation's interest rate spread and net interest margin declined to
3.07% and 3.84%, respectively,  compare to 3.27% and 4.14%, respectively for the
same period of 1995. During the three months ended December 31, 1996, $37,000 of
interest  related  to  nonperforming   loans  was  placed  in  the  reserve  for
uncollected  interest  and was not  recorded  as income.  For the same period of
1995, there was $16,000 of interest on nonperforming  loans added to the reserve
for uncollected interest and not recorded as income.

     Provision for Credit Losses.  For the three months ended December 31, 1996,
the Bank, after reviewing  nonperfoming  assets and loan growth during the first
quarter of fiscal 1997, recorded a provision for credit losses of $25,000. There
was no provision for credit losses taken during the three months ended  December
31, 1995. The  determination  of the adequacy of the allowance for credit losses
involves subjective  judgements  regarding future events, and, therefore,  there
can be no assurance  that  additions to the allowance for credit losses will not
be required in future periods. Management will continue to evaluate the level of
the allowance for credit losses based on, among other things, growth of the loan
portfolio, loan delinquency rates and general market conditions. There can be no
assurance,  however,  that  additional  provisions  will be  required  in future
periods.

     Total Noninterest  Income.  Noninterest income totaled $155,000 for each of
the first  quarters  of fiscal  1997 and 1996.  Increases  of $13,000 in service
charges  and  fees on  loans  and  $3,000  in other  customer  service  fees and
commissions was offset by a decrease of $16,000 in other income.

     Total Noninterest  Expense.  Total noninterest expense was $749,000 for the
three months ended December 31, 1996, up $21,000 from the $728,000 total for the
comparable quarter of fiscal 1996.  Personnel  compensation and benefits totaled
$399,000 for the three months ended  December 31, 1996, up $32,000 from the same
quarter of 1995  primarily due to staff  increases and general merit  increases.
All other categories of noninterest  expense reflected a net decrease of $11,000
when  comparing  the first  quarter of fiscal 1997 to the same quarter of fiscal
1996.

     Provision for Income Taxes. The provision for income taxes was $218,000 for
each of the three months ended December 31, 1996 and 1995.





                                       -6-

<PAGE>

CAPITAL COMPLIANCE
------------------

The  following  table  presents  the  Bank's   compliance  with  its  regulatory
requirements of December 31, 1996. (Dollar amounts in thousands).

                                                 December 31, 1996
                                                ---------------------
                                                           Percentage
                                                            of assets  
                                                           ----------

GAAP Capital ................................   $16,131      12.39 %
                                                =======      =====  

Tangible capital ............................   $16,163      12.41 %
Tangible capital requirement ................     1,954       1.50 %
                                                -------      -----
Excess ......................................   $14,209      10.91 %
                                                =======      =====  

Core capital ................................   $16,163      12.41 %
Core capital requirement ....................     3,908       3.00 %
                                                -------      -----
Excess ......................................   $12,255       9.41 %
                                                =======      =====  

Total risk-based capital (1)  ...............   $16,776      23.07 %
Total risk-based capital requirement (1)  ...     5,817       8.00 %
                                                -------      -----
Excess ......................................   $10,959      15.07 %
                                                =======      =====  

---------------------------
(1)  Based on risk-weighted assets of $72,707

     Management believes that under current regulations,  the Bank will continue
to meet its minimum  capital  requirements  in the  foreseeable  future.  Events
beyond the control of the Bank,  such as increased  interest rates or a downturn
in the economy in areas in which the Bank operates could adversely affect future
earnings  and as a result,  the  ability of the Bank to meet its future  minimum
capital requirements.

LIQUIDITY
---------
     The Bank's liquidity is a measure of its ability to fund loans, pay deposit
withdrawals, and other cash outflows in an efficient, cost effective manner. The
Bank's  primary  source of funds are deposits  and  scheduled  amortization  and
prepayment of loans. During the past several years, the Bank has used such funds
primarily to fund maturing time deposits, pay savings withdrawals,  fund lending
commitments,  purchase new investments,  and increase liquidity.  The Bank funds
its operations internally but also borrows funds from the Federal Home Loan Bank
("FHLB") of Atlanta.  As of December 31, 1996, such borrowed funds totaled $14.0
million.  Loan  payments  and maturing  investments  are greatly  influenced  by
general interest rates, economic conditions and competition.

     The  Bank  is  required  under  Federal  regulations  to  maintain  certain
specified  levels of "liquid  investments,"  which include certain United States
government  obligations  and other  approved  investments.  Current  regulations
require  the  Bank  to  maintain  liquid  assets  of  not  less  than  5% of net
withdrawable accounts plus short term borrowings.  Short term liquid assets must
consist of not less then 1% of such  accounts  and  borrowings,  which amount is
also included within the 5%  requirement.  Those levels may be changed from time
to time by the regulators to reflect current economic  conditions.  The Bank has
generally maintained liquidity far in excess of

                                       -7-

<PAGE>

regulatory requirements. The Bank's regulatory liquidity was 7.06% and 10.01% at
December 31, 1996 and 1995, respectively, and its short term liquidity was 2.61%
and 4.77% at such dates, respectively.
     The amount of certificate accounts which are scheduled to mature during the
next twelve months ending December 31, 1997, is approximately  $34.5 million. To
the extent that these deposits do not remain at the Bank upon maturity, the Bank
believes that it can replace these funds with other deposits,  excess liquidity,
FHLB advances,  or other  borrowings.  It has been the Bank's  experience that a
substantial portion of such maturing deposits remain at the Bank.

     At December 31, 1996,  the Bank had loan  commitments  outstanding  of $4.1
million and no commitments to purchase mortgage-backed or investment securities.
Funds  required to fill these  commitments  are derived  primarily  from current
excess liquidity, deposit inflows, borrowings or loan and investment repayments.

IMPACT OF INFLATION AND CHANGING PRICES
----------------------------------------

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












                                       -8-

<PAGE>


                    BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                              Key Operating Ratios
                                  (Unaudited)

                                                            For the
                                                       Three Months Ended 
                                                           December 31
                                                        ------------------
                                                         1996(1)   1995(1)
                                                        --------   -------
                                                            (Unaudited)


Earnings per common share ..........................   $    0.33     $  0.31
                                                       =========     =======
Return on average assets ..........................         1.10 %      1.23 %
Return on average equity ..........................         7.72 %      7.57 %
Interest rate spread ..............................         3.07 %      3.27 %
Net interest margin ...............................         3.84 %      4.14 %
Noninterest expense to average assets .............         2.31 %      2.53 %
Net charge-offs to average outstanding loans ......           --          --

                                                           At           At
                                                      December 31  September 30
                                                          1996         1996 
                                                      -----------  ------------
                                                        (Dollars in Thousands)

Nonaccrual and 90 days past due loans ..............   $   1,160     $   684
Repossessed real estate ............................          43          --
                                                       ---------     -------
Total nonperforming assets .........................   $   1,203     $   684
                                                       =========     =======


Allowance for credit losses to nonperforming assets        56.11%      95.03%
Nonperforming loans to total loans .................        1.04%        .63%
Nonperforming assets to total assets ...............        0.93%        .54%

Book value per share (2)  ..........................   $    17.08    $ 16.95
                                                       ==========    =======

----------------------------
(1)  The ratios for the three-month periods are annualized
(2)  The number of shares  outstanding as of December 31, 1996 and September 30,
     1996 were 1,081,876 and 1,075,639,  respectively,  net of unallocated  ESOP
     shares..






                                       -9-

<PAGE>


                          PART II - OTHER INFORMATION
                          ---------------------------


Item 1.        Legal Proceeedings
               ------------------

               Neither  the  Corporation  nor the Bank was  engaged in any legal
               proceedings of a material  nature at December 31, 1996. From time
               to time, the  Corporation is a party to legal  proceedings in the
               ordinary  course of  business  wherein it enforces  its  security
               interest in loans.

Item 2.        Changes in Securities
               ---------------------

               Not applicable.

Item 3.        Defaults upon Senior Securities
               -------------------------------

               Not applicable.

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

               Not applicable.

Item 5.        Other Information
               -----------------

               Not applicable.

Item 6.        Exhibits and Reports on Form 8-K
               --------------------------------

               (a)  Exhibits

                    Exhibit 11: Statement regarding  computation of earnings per
                    share.
                    Exhibit 27: Financial Data Schedule (electronic filing only)

               (b)  Reports on Form 8-K

                    Not applicable.




                                      -10-

<PAGE>


                    BEDFORD BANCSHARES, INC. AND SUBSIDIARY

                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                             BEDFORD BANCSHARES, INC.


Date: February 5, 1997                   By: /s/ Harold K. Neal
                                             ------------------
                                             Harold K. Neal
                                             President and
                                             Chief Executive Officer
                                             (Principal Executive Officer)


Date: February 5, 1997                   By: /s/ James W. Smith
                                             ------------------
                                             James W. Smith
                                             Vice President and Treasurer
                                             (Principal Accounting and 
                                                  Financial officer)
















                                      -11-