Fill and Sign the Market Street Village 838 N Market St Wilmington De 19801 Form

STAR STATES CORPORATION838 Market Street Wilmington, Delaware (302) 792-6000 July 13, 1992 Dear Stockholder: I am pleased to invite you to attend the Annual Meeting of Stockholders of Star States Corporation (the "Company"), to be held at Arsht Hall, University of Delaware, Wilcastle Center, 2600 Pennsylvania Avenue, Wilmington, Delaware on Tuesday, August 18, 1992, at 4:00 p.m. In addition to the election of directors and an amendment to the stock option plan, stockholders will be asked to vote on several issues which are of vital importance to the survival of your Company. These proposals include approval of the authorization and sale of a series of convertible preferred stock, approval of amendments to the Certificate of Incorporation to restrict future transfers of ownership of stock in an effort to protect certain important tax benefits and to increase the number of authorized shares of common stock. Your Board of Directors believes that the items you are being asked to vote for are critical to the future of the Company and its subsidiary Wilmington Savings Fund Society, Federal Savings Bank ("WSFS"). YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THESE PROPOSALS AND STRONGLY URGES YOU TO VOTE IN FAVOR OF THEM. AUTHORIZATION AND SALE OF PREFERRED STOCK The Board of Directors is seeking your approval of an amendment to the Certificate of Incorporation to authorize the issuance of i series of convertible preferred stock which the Company proposes to sell in order to raise the capital it is required to infuse into WSFS under the Capital Plan approved by the Office of Thrift Supervision ("OTS"). Subject to approval by the stockholders, the preferred stock is being offered concurrently to current stockholders pursuant to transferable subscription rights which are being distributed without charge. Unsubscribed shares will be offered at the conclusion of the Rights Offering to certain accredited and institutional investors. The successful completion of the sale of preferred stock will add between $8 and $16 million of additional equity to recapitalize the Company. Success in this initiative is critical to achieving compliance with the minimum capital ratios required by the Capital Directive to which WSFS agreed in connection with the OTS' approval of WSFS' Capital Plan. Voting in favor of the amendment in no way obligates you to purchase the preferred stock. The Board of Directors is also seeking an amendment to the Certificate of Incorporation to increase the number of authorized shares of Common Stock so that sufficient shares will be available to meet the conversion requirements of the preferred stock and for other corporate purposes. STOCK TRANSFER RESTRICTION TO PROTECT CERTAIN TAX BENEFITSAt the end of 1991, the Company had approximately $39 million in tax net operating loss ("NOL") carry forwards which may be used to offset future taxable income. Without these NOL carry forwards, the Company does not believe WSH will be able to meet the minimum capital ratio requirements of the Capital Directive. The NOL carry forwards may be limited if the Company undergoes an "ownership change" as defined in the Internal Revenue Code. In an attempt to preserve these NOL carry forwards, the Board of Directors is seeking stockholder approval of an amendment to the Certificate of Incorporation which will restrict transfers of the Company's stock to persons who are or would become the beneficial owners of more than 4.5% of the Company's stock, for a period of thirty seven months from the date of issuance of the preferred stock. Your vote is important for the approval of these proposals regardless of how many shares of Star States stock you own. If you hold stock in more than one account or name, you will receive a proxy card for each account. Please sign and return each card since each represents a separate number of shares. Postage paid envelopes are provided for your convenience. Voting with the proxy card does not prevent you from voting in person at the annual meeting, but will assure that your vote will be counted if you are unable to attend. We hope that you will take the opportunity to attend the Annual Meeting. Your continued support and interest in Star States is very much appreciated. Sincerely, Marvin N. Schoenhals President and Chief Executive Officer A PROSPECTUS FOR THE COMPANYS OFFERING OF THE PREFERRED STOCK ACCOMPANIES THIS PROXY STATEMENT. IF YOU ARE A STOCKHOLDER OF RECORD, A SUBSCRIPTION RIGHTS CERTIFICATE AND INSTRUCTIONS FOR ITS USE ARE ALSO ENCLOSED. IF YOUR STOCK IS HELD IN THE NAME OF A BROKER, YOU WILL RECEIVE ANOTHER PROSPECTUS AND INSTRUCTIONS FROM YOUR BROKER SEPARATELY. IF YOU DO NOT RECEIVE ALL OF THE FOREGOING, PLEASE CONTACT THE SUBSCRIPTION AGENT AT (800) 223-6554.