<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934

                  FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 1999

                                       OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---  EXCHANGE ACT OF 1934

                          Commission File No.: 0-27522

                         PITTSBURGH HOME FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Pennsylvania                                25-1772349
-------------------------------------      -------------------------------------
    (State or other jurisdiction                     (I.R.S. Employer
  of incorporation or organization)                Identification Number)


          225 Ross Street
     Pittsburgh, Pennsylvania                             15219
-------------------------------------      -------------------------------------
      (Address of Principal                             (Zip Code)
        Executive Offices)

       Registrant's telephone number, including area code: (412) 227-1945
           Securities registered pursuant to Section 12(b) of the Act:
                                 NOT APPLICABLE
           Securities registered pursuant to Section 12(g) of the Act:

                    COMMON STOCK (PAR VALUE $0.01 PER SHARE)
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
                                      ---  ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
          ---

As of December 17, 1999, the aggregate value of the 1,583,327 shares of Common
Stock of the Registrant issued and outstanding on such date, which excludes
187,521 shares held by all directors and executive officers of the Registrant as
a group, was approximately $20.7 million. This figure is based on the last known
trade price of $13.0625 per share of the Registrant's Common Stock on December
17, 1999.

Number of shares of Common Stock outstanding as of December 17, 1999: 1,770,848

                       DOCUMENTS INCORPORATED BY REFERENCE

         List hereunder the following documents incorporated by reference and
the Part of the Form 10-K into which the document is incorporated:

(1) Portions of the Annual Report to Stockholders for the fiscal year ended
September 30, 1999 are incorporated into Parts II and IV.

(2) Portions of the definitive proxy statement for the Annual Meeting of
Stockholders are incorporated into Part III.


<PAGE>   2

PART I.

ITEM 1.           BUSINESS
-------           --------

GENERAL

         Pittsburgh Home Financial Corp. (the "Company") is a Pennsylvania
corporation and the sole stockholder of Pittsburgh Home Savings Bank (the
"Savings Bank"), which converted to the stock form of organization in April
1996. The business of the Company consists primarily of the business of the
Savings Bank. At September 30, 1999, the Company had total consolidated assets
of $415.7 million, total consolidated deposits of $169.5 million, and total
consolidated stockholders' equity of $22.0 million.

         The Savings Bank is a Pennsylvania-chartered stock savings bank which
was founded in 1942 and has expanded its operations over the years through the
acquisition of three savings institutions, one branch acquisition, three de novo
branch offices, and increased borrowings. The Savings Bank conducts business
from its main office in Pittsburgh, Pennsylvania and eight branch offices
located in Allegheny and Butler Counties, Pennsylvania. The Savings Bank's
deposits are insured by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC") to the maximum extent permitted
by law. References herein to the Company refer to the consolidated operations of
the Company and the Savings Bank unless otherwise noted.

         The Company is a community oriented financial institution which has
traditionally offered a variety of savings products to its retail customers. The
Company has historically concentrated its lending activities on real estate
loans secured by single family residential properties and construction loans on
primarily residential properties. At September 30, 1999, the total loan
portfolio amounted to $298.5 million or 71.8% of total consolidated assets. The
growth is primarily attributable to increases in residential mortgage loans and
to a lesser extent, residential construction, commercial real estate and home
equity loans. For the year ended September 30, 1999, residential mortgages
increased $49.6 million or 29.2%; one-to-four family residential construction
loans increased by $9.7 million or 118.8%; other mortgage loans, comprised of
multi-family residential and commercial real estate loans increased by $7.5
million or 92.6%. Commercial loans increased by $1.3 million or 58.7%; home
equity loans and lines increased by $5.2 million or 38.8%; and consumer loans
increased by $290,000 or 13.9%. The Company is continuing its efforts to
diversify its loans receivable portfolio from its previous emphasis on
one-to-four family residential lending to a more broad based, full service
commercial bank-like portfolio. It should be noted that the largest individual
dollar component of its loans receivable portfolio will continue to be its
residential lending, as this has been a Company strength, and the ongoing high
level of service and commitment will also continue in this area.

         The Company also invests its funds in U.S. Government and agency
securities, as well as mortgage-backed, municipal, equity securities and short
term investments. At September 30, 1999, mortgage-backed securities were $75.9
million or 18.3% of total consolidated assets and other investment securities
were $33.8 million or 8.1% of total assets, as compared to $84.5 million or
22.6% and $57.1 million or 15.3%, respectively, at September 30, 1998.


<PAGE>   3


         The Company derives its income principally from interest earned on
loans, securities and its other investments and, to a lesser extent, from fees
received in connection with the origination of loans and for other services. The
Company's primary expenses are interest expense on deposits, borrowings, and
other operating expenses.

         The Savings Bank currently exceeds all applicable minimum regulatory
capital requirements. At September 30, 1999, the Savings Bank had Tier 1
risk-based, total risk-based and Tier 1 leverage capital levels of 16.16%,
17.11% and 7.87%, respectively, as compared to the minimum requirements of 4.0%,
8.0% and 4.0%, respectively.

         The Company, as a registered bank holding company, is subject to
examination and regulation by the Board of Governors of the Federal Reserve
System ("Federal Reserve Board") and the Pennsylvania Department of Banking (the
"Department"), and is subject to various reporting and other requirements of the
Securities and Exchange Commission ("Commission"). The Savings Bank is also
subject to examination and comprehensive regulation by the Department, which is
the Savings Bank's chartering authority, and by the FDIC, as the administrator
of the SAIF. The Savings Bank is subject to certain reserve requirements
established by the Federal Reserve Board and is a member of the Federal Home
Loan Bank ("FHLB") of Pittsburgh, which is one of the 12 regional banks
comprising the FHLB System.

LENDING ACTIVITIES

         GENERAL. At September 30, 1999, the Company's total loans receivable
portfolio ("total loan portfolio") amounted to $298.5 million, or 71.8% of total
assets at that date. The Company has traditionally concentrated its lending
activities on conventional first mortgage loans secured by single-family
residential properties. Consistent with its lending orientation, during the
fiscal year ended September 30, 1999, residential mortgages increased $49.6
million or 29.2% to $219.7 million or 73.6% of the Company's total loan
portfolio. During fiscal 1999, one-to-four family residential construction loans
increased by $9.7 million or 118.8% to $17.9 million; construction spec loans
decreased $943,000 or 4.3% to $20.8 million; multi-family residential and
commercial real estate loans increased by $7.5 million or 92.6% to $15.7
million; home equity loans and lines, consumer loans and commercial loans
increased $6.8 million or 38.3% to $24.4 million.

         Historically, the Company's lending activities have been concentrated
in its primary market area of Allegheny County and Butler County, Pennsylvania
and portions of the surrounding counties. The Company estimates that a
substantial majority of its mortgage loans are secured by properties located in
its primary market area, and that substantially all of its non-mortgage loan
portfolio consists of loans made to residents and businesses located in such
primary market area.





                                       2
<PAGE>   4


         LOAN PORTFOLIO COMPOSITION. The following table sets forth the
composition of the Company's loan portfolio by type of loan at the dates
indicated.

<TABLE>
<CAPTION>

                                                                               September 30,
                                    ----------------------------------------------------------------------------------------------
                                        1999               1998                 1997                  1996                1995
                                    -------------      -------------        -------------        -------------        ------------
                                    Amount      %      Amount      %        Amount      %        Amount      %        Amount     %
                                    ------      -      ------      -        ------      -        ------      -        ------     -
                                                                       (Dollars in Thousands)

<S>                                <C>        <C>      <C>       <C>       <C>        <C>       <C>        <C>       <C>       <C>
First mortgage loans:
  One-to-four family residential   $219,676    73.6%   $170,100   75.3%    $152,113   78.9%    $114,311    79.2%    $ 85,109   76.9%
  One-to-four family residential
   construction                      17,897     6.0       8,179    3.6        5,183    2.7        3,524     2.4        3,236    2.9
  Mortgage loans-construction
   spec                              20,827     7.0      21,770    9.6       19,918   10.3       15,741    10.9       13,350   12.0
  Multi-family residential and
   commercial                        15,679     5.2       8,140    3.6        2,596    1.4        2,592     1.8        1,527    1.3
                                    -------   -----     -------  -----      -------  -----      -------   -----      -------  -----
                                    274,079    91.8     208,189   92.1      179,810   93.3      136,168    94.3      103,222   93.2
                                    -------   -----     -------  -----      -------  -----      -------   -----      -------  -----

Other loans:
  Commercial loans                    3,509     1.2       2,211    1.0        2,539    1.3        1,974     1.4        2,491    2.2
  Home equity loans and lines        18,556     6.2      13,372    5.9        8,821    4.6        5,312     3.7        4,312    3.9
  Consumer loans                      2,373     0.8       2,083    1.0        1,547    0.8          957     0.6          782    0.7
                                    -------   -----     -------  -----      -------  -----      -------   -----      -------  -----
      Total loans receivable        298,517   100.0%    225,855  100.0%     192,717  100.0%     144,411   100.0%     110,807  100.0%
                                    -------   =====     -------  =====      -------  =====      -------   =====      -------  =====

Less:
  Allowance for loan losses          (1,957)             (1,738)             (1,419)             (1,128)                (921)
  Loans in process                  (18,997)            (12,227)            (10,003)             (7,745)              (6,926)
  Deferred loan fees                    522                  90                  42                  14                   22
                                    -------             -------             -------             -------              -------
       Loans receivable, net       $278,085            $211,980            $181,337            $135,552             $102,982
                                   ========            ========            ========            ========             ========

</TABLE>





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<PAGE>   5


         CONTRACTUAL PRINCIPAL REPAYMENTS AND INTEREST RATES. The following
table sets forth certain information at September 30, 1999 regarding the dollar
amount of loans maturing in the Company's total loan portfolio, based on the
contractual terms to maturity. Loans having no stated schedule of repayments and
no stated maturity are reported as due in one year or less.

<TABLE>
<CAPTION>

                                                         Due 1-5 years    Due more than 5 years
                                         Due 1 year           after               after
                                          or less      September 30, 1999   September 30, 1999      Total
                                          -------      ------------------   ------------------      -----
                                                                      (In Thousands)

<S>                                      <C>           <C>                <C>                      <C>
First mortgage loans:
  One-to-four family residential          $ 7,661          $ 30,935              $181,080          $219,676
  One-to-four family residential
    construction                           17,897                --                    --            17,897
  Mortgage loans-construction
    spec                                   20,827                --                    --            20,827
  Multi-family residential and
    commercial                                 63             6,434                 9,182            15,679
                                          -------          --------              --------          --------
                                           46,448            37,369               190,262           274,079
Other loans:
  Commercial loans                          3,373               136                    --             3,509
  Home equity loans and lines               2,517             4,177                11,862            18,556
  Consumer loans                              663               825                   885             2,373
                                          -------          --------              --------          --------
    Total                                 $53,001          $ 42,507              $203,009          $298,517
                                          =======          ========              ========          ========

</TABLE>


         The following table sets forth the dollar amount of total loans due
after one year from September 30, 1999, as shown in the preceding table, which
have fixed interest rates or which have floating or adjustable interest rates.

<TABLE>
<CAPTION>

                                                                       Floating or
                                                      Fixed rate     adjustable-rate       Total
                                                      ----------     ---------------       -----
                                                                     (In Thousands)

<S>                                                   <C>            <C>                  <C>
First mortgage loans:
  One-to-four family residential                       $158,500          $55,361          $213,861
  One-to-four family residential construction                --               --                --
  Mortgage loans-construction spec                           --               --                --
  Multi-family residential and commercial                15,616               --            15,616
Other loans                                              16,039               --            16,039
                                                       --------          -------          --------
    Total                                              $190,155          $55,361          $245,516
                                                       ========          =======          ========

</TABLE>



         Scheduled contractual principal repayments do not reflect the actual
maturities of loans. The average maturity of loans is substantially less than
their average contractual terms because of prepayments and, in the case of
conventional mortgage loans, due-on-sale clauses, which generally give the
Company the right to declare a loan immediately due and payable in the event,
among other things, that the borrower sells the real property subject to the
mortgage and the loan is not repaid.

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<PAGE>   6

The average life of mortgage loans tends to increase when current mortgage loan
rates are substantially higher than rates on existing mortgage loans and,
conversely, decrease when rates on existing mortgages are substantially lower
than current mortgage loan rates (due to refinancings of adjustable-rate and
fixed-rate loans at lower rates).

         ORIGINATION, PURCHASE AND SALE OF LOANS. The lending activities of the
Company are subject to the written, non-discriminatory, underwriting standards
and loan origination procedures established by the Company's Board of Directors
and management. Loan originations are obtained from a variety of sources,
including existing customers, builders, realtors, walk-in customers, loan
officers and advertising. The Company also has developed a network of mortgage
bankers who underwrite mortgage loans in accordance with the Company's loan
underwriting procedures.

         Loan applications originated by the Savings Bank are generally
processed at the Company's main office in Pittsburgh. The loan applications are
initially processed by loan officers and, once completed, are submitted to the
Savings Bank's Loan Committee, which is comprised of the senior management of
the Savings Bank. The Loan Committee may approve loans up to $300,000. Loans in
excess of $300,000 are submitted for approval to the Savings Bank's Board of
Directors with a report and recommendation from the Loan Committee. The Loan
Committee has delegated to the Assistant Vice President/Consumer Lending
authority to approve unsecured loans of up to $10,000, automobile loans up to
$20,000 and home equity loans and lines of credit up to $50,000.

         Property appraisals on the real estate and improvements securing the
Company's single-family residential loans are made by independent appraisers.
Appraisals are performed in accordance with federal regulations and policies.
The Company obtains title insurance policies on first mortgage real estate loans
originated by it. Borrowers also must obtain hazard insurance prior to closing
and, when required, flood insurance. Borrowers may be required to advance funds,
with each monthly payment of principal and interest, to a loan escrow account
from which the Company makes disbursements for items such as real estate taxes
and mortgage insurance premiums as they become due.

         During fiscal 1999, the Company sold the Small Business Administration
("SBA") guaranteed portion ($501,000) of one of its loans to the secondary
market. During fiscal 1998, the Company did not purchase or sell any whole loans
or participation interest in loans. However, during fiscal 1997, the Company
sold $618,000 in Federal Housing Administration ("FHA") and Department of
Veterans Affairs ("VA") loans.


                                       5
<PAGE>   7


   The following table shows total loan activity during the periods indicated.

<TABLE>
<CAPTION>

                                                                        Year Ended
                                                                       September 30,
                                                     -----------------------------------------------
                                                        1999               1998               1997
                                                     ---------           --------           --------
                                                                      (In Thousands)
<S>                                                  <C>                 <C>                <C>
Loan originations:
  First mortgage loans:
    One-to-four-family residential                   $  60,906           $ 42,779           $ 53,150
    Construction                                        33,934             20,393             19,391
    Multi-family residential and commercial              9,631              7,699                688
                                                     ---------           --------           --------
       Total mortgage originations                     104,471             70,871             73,229
                                                     ---------           --------           --------
  Other loans:
    Commercial loans                                        --                 28                412
    Home equity loans and lines                         10,117              8,467              5,727
    Consumer loans                                       3,329              1,614              1,250
                                                     ---------           --------           --------
    Total loans originated                             117,917             80,980             80,618
                                                     ---------           --------           --------
Loans and loan participations sold                        (501)                --               (618)
Loan principal reductions                              (44,754)           (47,843)           (31,693)
                                                     ---------           --------           --------
Net increase in loan portfolio                       $  72,662           $ 33,137           $ 48,307
                                                     =========           ========           ========

</TABLE>

         A savings institution generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. At September 30, 1999, the Saving's Bank's limit
on loans-to-one borrower was approximately $5.0 million as compared to $4.7
million at September 30, 1998. At September 30, 1999, the Company's five largest
loans or groups of loans-to-one borrower, including persons or entities related
to the borrower, ranged from an aggregate of $1.4 million to $3.3 million and
are secured primarily by real estate located in the Company's primary market
area. All loans were performing in accordance with their original terms at
September 30, 1999.

         ONE-TO-FOUR FAMILY RESIDENTIAL REAL ESTATE LOANS. The Company had an
aggregate of $219.7 million of one- to four-family residential loans in its loan
portfolio at September 30, 1999. The Company's fixed-rate loans generally have
maturities ranging from 15 to 30 years and are fully amortizing with monthly
payments sufficient to repay the total amount of the loan with interest by the
end of the loan term. Such loans are typically originated under terms,
conditions and documentation which permit them to be sold to U.S. Government
sponsored agencies such as the Federal Home Loan Mortgage Corporation ("FHLMC")
and the Federal National Mortgage Association ("FNMA"). The Company's fixed-rate
loans customarily include "due on sale" clauses, which give the Company the
right to declare a loan immediately due and payable in the event the

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<PAGE>   8

borrower sells or otherwise disposes of the real property subject to the
mortgage or the loan is not repaid.

         The Company also currently holds a limited amount of loans insured by
the FHA or partially guaranteed by the VA. The Company no longer originates
FHA/VA loans and has not originated these types of loans for over ten years. At
September 30, 1999, the Company held an aggregate of $3.9 million of FHA and VA
loans in its loan portfolio.

         In addition to conventional fixed-rate loans, the Company offers
residential loans which reprice once during the loan term at the end of the
seventh or fifteenth year, respectively. At such time, the loan's interest rate
is adjusted based on the index value of the FHLMC net yield on 30-year
fixed-rate mortgage loans plus a margin. These loans are typically based on a
30-year amortization schedule. The amount of any interest rate increase during
the repricing period is limited to 5%. At September 30, 1999 the Company held an
aggregate of $73.1 million of balloon mortgages in its loan portfolio.

         The Company also originates for its portfolio one-to-four family
residential real estate loans which provide for an interest rate which adjusts
every year or which are fixed for a three and five year period and adjust every
three and five years, respectively, after the initial period (such
adjustable-rate loans are referred to as "ARMs"). The Company's one-year ARM
adjusts every year in accordance with the one year U.S. Treasury securities with
a constant maturity ("CMT") index. The interest rate adjustment for the
Company's three and five year ARMs after the initial fixed period is based on
the three and five year CMT index, respectively. The Company's ARMs are
typically based on a 30-year amortization schedule. The amount of any increase
or decrease after the initial term is limited to 2% per year, with a limit of 6%
increase and 2% decrease over the life of the loan. The Company qualifies the
borrowers on its loans which are fixed for three or five years based on the
initial rate and qualifies its borrowers for its one-year ARM based on the fully
indexed rate. The adjustable rate loans offered by the Company may generally be
converted to a fixed-rate loan within five years from the start of the initial
adjustment period. The Company had $55.4 million and $52.7 million of ARMs in
its loan portfolio as of September 30, 1999 and 1998, respectively, which
represented 18.6% and 23.3% of the Company's total loan portfolio, respectively.

         Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
rise, the payment by the borrower rises to the extent permitted by the terms of
the loan, thereby increasing the potential for default. At the same time, the
marketability of the underlying property may be adversely affected by higher
interest rates. The Company believes that these risks, which have not had a
material adverse effect on the Company to date, generally are less than the
risks associated with holding fixed-rate loans in an increasing interest rate
environment.

         The Company's residential mortgage loans typically do not exceed 80% of
the appraised value of the security property. Pursuant to underwriting
guidelines adopted by the Board of Directors, the Company can lend up to 95% of
the appraised value of the property securing a one-to-

                                       7
<PAGE>   9

four family residential loan; however, the Company generally requires private
mortgage insurance on the portion of the principal amount that exceeds 80% of
the appraised value of the security property. At September 30, 1999, the Company
had an aggregate of $219.7 million of one-to four family residential loans in
its portfolio.

         CONSTRUCTION LOANS. The Company originates residential construction
loans to local contractors, generally with whom it has an established
relationship, and to individuals who have a contract with a contractor for the
construction of their residence. The Company's construction loans are secured by
property located primarily in the Company's primary market area. At September
30, 1999, the Company had an aggregate of $20.8 million in construction-spec
loans and $17.9 million in one-to-four family residential construction loans in
its portfolio.

         The Company's construction loans to individuals generally have fixed
interest rates during the construction period. Construction loans to individuals
are typically made in connection with the granting of the permanent loan on the
property. Such loans convert to a fully amortizing adjustable or fixed-rate loan
at the end of the construction term. The Company requires that permanent
financing with the Company be in place prior to closing any construction loan to
an individual.

         The Company's construction loans to local contractors are made on
either a pre-sold or speculative (unsold) basis. However, the Company generally
limits the number of unsold homes under construction by its contractors, with
the amount dependent on the reputation of the contractor, the present exposure
of the contractor, the location of the property and prior sales of homes in the
development. Construction loans to contractors are typically made with a maximum
loan to value ratio of 80%. The Company estimates that approximately 95% of its
construction loans to contractors are on a speculative basis.

         Prior to making a commitment to fund a construction loan, the Company
requires an appraisal of the property by an independent state-licensed and
qualified appraiser. The Savings Bank's Senior Vice President of Lending also
generally reviews and inspects each project at the commencement of construction
and throughout the term of the construction loan. Loan proceeds are disbursed
after inspections of the project by the appraiser or the Senior Vice President
of Lending based on a percentage of completion. The Company requires monthly
interest payments during the construction term. The amount of funds available
for advance under the Company's construction loans usually do not include any
amount from which the borrower can pay the stated interest due thereon until
completion of the loan term.

         Construction lending is generally considered to involve a higher level
of risk as compared to permanent one-to-four family residential lending, due to
the concentration of principal in a limited number of loans and borrowers and
the effects of general economic conditions on developers and contractors.
Moreover, a construction loan can involve additional risks because of the
inherent difficulty in estimating both a property's value at completion of the
project and the estimated cost (including interest) of the project. The nature
of these loans is such that they are generally more difficult to evaluate and
monitor. In addition, speculative construction loans to a contractor are not


                                       8
<PAGE>   10

pre-sold and thus pose a greater potential risk to the Company than construction
loans to individuals on their personal residences. Non-accruing construction
loans amounted to $1.0 million, or 20% of total non-performing assets at
September 30, 1999. At November 30, 1999, non-accruing construction loans
amounted to $722,000 or 14.5% of total non-performing assets.

         The Company has attempted to minimize the foregoing risks by, among
other things, limiting the extent of its construction lending as a proportion of
the total loan portfolio and by limiting its construction lending to primarily
residential properties. In addition, the Company has adopted underwriting
guidelines which impose stringent loan-to-value, debt service and other
requirements for loans which are believed to involve higher elements of credit
risk, by generally limiting the geographic area in which the Company will do
business to its existing market and by generally working with contractors with
whom it has established relationships. It is also the Company's general policy
to obtain personal guarantees from the principals of its corporate borrowers on
its construction loans.

         MULTI-FAMILY RESIDENTIAL AND COMMERCIAL REAL ESTATE LOANS. The Company
originates mortgage loans for the acquisition and refinancing of multi-family
residential properties and properties secured by commercial real estate. The
majority of the Company's commercial real estate loans are secured by office
buildings and warehouses, most of which are secured by property located in the
Company's market area. The Company has become more active in the origination of
commercial real estate lending primarily due to the hiring of an officer with
commercial real estate experience. Multi-family residential and commercial real
estate loans increased $7.5 million or 92.6% to $15.7 million at September 30,
1999 compared to $8.1 million at September 30, 1998. There are currently 66
loans ranging from $400 to $1.4 million with an average balance of $237,000. The
Company's commercial lending is done in its primary market area.

         The Company requires appraisals of all properties securing multi-family
residential and commercial real estate loans. Appraisals are performed by an
independent appraiser designated by the Company, all of which are reviewed by
management. The Company considers the quality and location of the real estate,
the credit of the borrower, the cash flow of the project and the quality of
management involved with the property.

         The Company originates multi-family residential and commercial real
estate loans with both fixed and adjustable interest rates which vary as to
maturity. Loan to value ratios on the Company's multi-family residential and
commercial real estate loans are generally limited to 80%. As part of the
criteria for underwriting these loans, the Company's general policy is to obtain
personal guarantees from the principals of its corporate borrowers.

         Multi-family residential and commercial real estate lending entails
significant additional risks as compared with single-family residential property
lending. The payment experience on such loans is typically dependent on the
successful operation of the real estate project. The success of such projects is
sensitive to changes in supply and demand conditions in the market for and
commercial real estate as well as regional and economic conditions generally.


                                       9
<PAGE>   11

         COMMERCIAL LOANS. The Company has continued to develop its commercial
lending expertise, and has completed the establishment of its commercial lending
department. The Company offers line of credit commitments to lend on a
short-term basis for working capital requirements of a borrower. Lines of credit
are designed to meet seasonal working capital needs and are repaid from the
liquidation of current assets. Generally, the term of a line of credit is up to
one year and the outstanding balance may fluctuate between zero and the maximum
amount of the line of credit at the borrower's request. The line of credit may
be established as secured or unsecured. Security can be in the form of real
estate (maximum loan to value of 80%) or by establishing a borrowing base for
accounts receivable and inventory (75% of accounts receivable less than 90 days
and 50% of raw and finished inventory). Additional lines of credit can be
secured using a general security filing against all assets of the business. In
this case, there is not a collateral formula established. At September 30, 1999
the Company had an aggregate of $3.4 million in commercial lines of credit.

         The Company also offers warehouse and guidance line of credits whereby
a predetermined amount of credit is committed to the customer to purchase fixed
assets. Each time the customer requests a draw to purchase a fixed asset that
amount is established in a term loan according to predetermined conditions. The
availability of the line of credit is thereby reduced by the amount of the
request and does not revolve.

         In recent years, the Company has decreased involvement in originating
office equipment and other commercial leases. At September 30, 1999, the Company
had an aggregate of $156,000 of such loans in its portfolio.

         The Company files the necessary documentation to perfect its security
interest in both the equipment and the payment of the lease obligations.
Commercial lease receivables generally have shorter terms than mortgage loans
but generally involve more credit risk since payment may be dependent on
successful operation of the business. As of September 30, 1999 and 1998,
respectively, the Company had $66,000 and $254,000 of non-performing commercial
lease receivables, which constituted 1.3% and 5.7% of total non-performing
assets at such date. At September 30, 1999 and 1998, $7,000 and $212,000,
respectively, of the non-performing commercial lease receivables were
attributable to one of the two leasing companies. As of September 30, 1995, the
Company discontinued consideration of any additional leases from this company.
As of September 30, 1999, in addition to the above-referenced non-performing
loans, the Company had an aggregate of $6,000 of performing commercial leases
attributable to such firm, which constitutes 3.8% of all commercial leases, as
compared to 3.2% on September 30, 1998. See "- Asset Quality - Non-Performing
Assets."

         OTHER LOANS. The Company also offers home equity loans and lines of
credit, deposit account secured loans, auto loans and unsecured consumer loans.

         The Company's home equity loans and lines of credit are secured by the
underlying equity in the borrower's home. Home equity loans generally have fixed
interest rates and terms of five to 15 years. The Company's home equity loans
generally require loan-to-value ratios of 80% or less

                                       10
<PAGE>   12

after taking into consideration the first mortgage loan; however, the Company in
1995 began extending fixed rate, fixed term home equity loans up to 100% of
loan-to-value. The Company prices these loans at a higher rate than those loans
originated with a lower loan-to-value ratio. Home equity lines of credit
generally have variable interest rates based on the prime rate plus a 1% margin
and terms of 5 to 15 years. Home equity lines of credit generally require
loan-to-value ratios of 80% or less after taking into consideration the first
mortgage loan; however, the Company since 1995 has also been extending home
equity lines of credit up to 100% of loan-to-value. In June 1997, the Company
opened a loan center in Butler, Pennsylvania to generate home equity loans, home
equity lines of credit and consumer lending. At September 30, 1999, the Company
had $18.6 million of aggregate home equity loans and lines in its portfolio
compared to $13.4 million at September 30, 1998. At September 30, 1999, the
Company's portfolio had 753 home equity loans with an aggregate balance of $16.1
million ranging from $300 to $123,000 with an average balance of $21,000. Home
equity lines of credit consisted of 181 loans with an aggregate balance of $2.5
million ranging from $7 to $104,000 with an average balance of $14,000.

         Consumer loans generally have shorter terms and higher interest rates
than mortgage loans but generally involve more credit risk than mortgage loans
because of the type and nature of the collateral and, in certain cases, the
absence of collateral. These risks are not as prevalent in the case of the
Company's consumer and other loans portfolio, however, because a high percentage
of the portfolio is comprised of home equity loans and lines of credit, which
are secured by real estate and underwritten in a manner such that they result in
a lending risk which is substantially similar to single-family residential
loans, as well as deposit account secured loans which are secured by the
deposits of the borrower.

         LOAN FEE INCOME. In addition to interest earned on loans, the Company
receives income from fees in connection with loan originations, loan
modifications, late payments and for miscellaneous services related to its
loans. Income from these activities varies from period to period depending upon
the volume and type of loans made and competitive conditions.

         The Company charges loan origination fees which are calculated as a
percentage of the amount borrowed. Loan origination and commitment fees in
excess of loan origination costs are deferred and recognized over the
contractual remaining lives of the related loans on a level yield basis.
Discounts and premiums on loans purchased are credited and amortized in the same
manner. The Savings Bank recognized $266,000, $242,000 and $49,000 of deferred
loan fees during fiscal 1999, 1998 and 1997, respectively, in connection with
loan refinancing, payoffs and ongoing amortization of outstanding loans.

ASSET QUALITY

         When a borrower fails to make a required payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking the
payment. Contacts are generally made 15 days after a payment is due. In most
cases, deficiencies are cured promptly. If a delinquency continues, the loan and
payment history are reviewed and efforts are made to collect the loan. While


                                       11
<PAGE>   13

the Company generally prefers to work with borrowers to resolve such problems,
the Company will institute foreclosure or other proceedings, as necessary, to
minimize any potential loss. The Company generally initiates such proceedings
when a loan becomes 90 days delinquent.

         Loans are placed on non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on non-accrual
status, previously accrued but unpaid interest is deducted from interest income.
The Company will continue to accrue interest on delinquent conventional real
estate loans if the loan has a loan-to-value ratio of less than 90%, active
collection efforts are underway and, in the opinion of management, there is a
reasonable expectation of collection of the delinquent interest. Loans may be
reinstated to accrual status when, in the opinion of management, collection of
the remaining balance can be reasonably expected.

         Real estate acquired by the Company as a result of foreclosure or by
deed-in-lieu of foreclosure is classified as other real estate owned until sold.
Such assets are held for sale and are carried at the lower of fair value minus
estimated costs to sell the property or cost (generally the balance of the loan
on the property at the date of acquisition). After the date of acquisition, all
costs incurred in maintaining the property are expensed and costs incurred for
the improvement or development of such property are capitalized up to the extent
of their net realizable value.



                                       12
<PAGE>   14


         NON-PERFORMING ASSETS. The following table sets forth the amounts and
categories of the Company's non-performing assets at the dates indicated.

<TABLE>
<CAPTION>

                                                                                        September 30,
                                                         -----------------------------------------------------------------------
                                                          1999             1998             1997             1996          1995
                                                         ------           ------           ------           ------        ------
                                                                                   (Dollars in Thousands)
<S>                                                      <C>              <C>              <C>              <C>           <C>
Non-accruing loans:
  First mortgage loans:
    One-to-four family residential                       $2,002           $2,545           $2,914           $1,447        $1,011
    Construction                                          1,004              400              449              349            --
  Other loans:
    Commercial leases                                        66              254              339              440           394
                                                         ------           ------           ------           ------        ------
      Total non-accruing loans                            3,072            3,199            3,702            2,236         1,405
                                                         ------           ------           ------           ------        ------

Accruing loans greater than 90 days delinquent:
  First mortgage loans:
    One-to-four family residential                           --               --               --               --           886
  Other loans:
    Consumer and other loans                                  0               15                3                8            29
                                                         ------           ------           ------           ------        ------
    Total accruing loans greater
      than 90 days delinquent                                 0               15                3                8           915
                                                         ------           ------           ------           ------        ------
    Total non-performing loans                            3,072            3,214            3,705            2,244         2,320
                                                         ------           ------           ------           ------        ------

Real estate owned                                         1,957            1,274              907              133            --
                                                         ------           ------           ------           ------        ------
    Total non-performing assets                          $5,029           $4,488           $4,612           $2,377        $2,320
                                                         ======           ======           ======           ======        ======
    Total non-performing loans as
      a percentage of total loans                          1.03%            1.42%            1.92%            1.55%         2.09%
                                                         ======           ======           ======           ======        ======
    Total non-performing assets as
      a percentage of total assets                         1.21%            1.20%            1.69%            1.22%         1.47%
                                                         ======           ======           ======           ======        ======

</TABLE>

         For the year ended September 30, 1999, approximately $347,000 in
interest income would have been recorded on loans accounted for on a non-accrual
basis if such loans had been current in accordance with their original terms and
had been outstanding throughout the year or since origination if held for part
of the year. For the year ended September 30, 1999, no amount was included in
net income for these same loans.

         Total nonperforming assets increased $541,000 or 12.1% between
September 30, 1998 and September 30, 1999. The increase in total non-performing
assets is primarily attributable to a $683,000 or 53.6% increase in real estate
owned, a $604,000 or 151.0% increase in construction

                                       13
<PAGE>   15

loans, which were partially offset by a $543,000 or 21.3% decrease in
one-to-four family residential loans and an $188,000 or 74.0% decrease in
commercial leases. Of the total nonperforming loans at September 30, 1999, nine
loans aggregating $183,000 were FHA and VA insured which the Bank has had
outstanding for a number of years with an average balance of $20,000.

         The total of 33 one-to-four family residential loans aggregating $2.0
million had an average balance of $60,600 and ranged from $10,600 to $289,000.
Non-accruing delinquent construction loans increased $604,000 or 151.0% between
September 30, 1998 and September 30, 1999. The total of four loans aggregating
$1.0 million had an average balance of $251,000 and range from $132,000 to
$400,000. The Company has significantly increased its originations of
single-family loans and residential construction loans during the past several
years and does not attribute its non-performing assets to any specific weakness
within the Company or in the marketplace generally.

         Non-accruing commercial leases decreased $188,000 or 74.0% from
September 30, 1998 to September 30, 1999. There are currently eight non-accruing
delinquent commercial leases which have balances ranging between $100 and
$26,000.

         The balance of the non-performing assets relates to real estate owned
("REO") properties, which increased $683,000 to $1.9 million. REO consists of 12
properties which range from $9,800 to $403,000. Each of these properties has
been written down to its estimated net realizable value. Eight of the REO
properties represent repossessed construction loans on substantially completed
properties, which were being built by five contractors. Subsequent to September
30, 1999, the Company sold one of the REO properties for the net realizable
value. The Company expects to complete the remaining projects with contractors
with whom the Bank has done previous business.

         ALLOWANCE FOR LOAN LOSSES. It is management's policy to maintain an
allowance for estimated losses based on the perceived risk of loss in the loan
portfolio and the adequacy of the allowance. Management's periodic evaluation of
the adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of the
underlying collateral and current economic conditions. The allowance for loan
losses is evaluated based on an assessment of the losses inherent in the loan
portfolio. Management classifies all delinquent assets as Special Mention,
Substandard, Doubtful or Loss. The evaluation of the adequacy of the allowance
incorporates an estimated range of required allowance based on the items noted
above. A reserve level is estimated by management for each category of
classified loans, with an estimated percentage applied to the delinquent loan
category balance. In addition, management notes that there is an inherent risk
of potential loan loss in the Company=s overall, non-classified loan portfolio.
This inherent risk is addressed by applying an estimated low and high percentage
of potential loss to the remaining unclassified loan portfolio. Management
extends out the various line item balances and estimated percentages in order to
arrive at an estimated required loan loss allowance reserve. Activity for the
period under analysis is taken into account (charge offs, recoveries, provision)
in order to challenge the Company's overall process, as well as its previous
loss history. The estimated

                                       14
<PAGE>   16

range of required reserve balance is then compared to the current allowance for
loan loss balance, and any required adjustments are made accordingly.

         Assets classified as a Loss are considered uncollectible and of such
little value that continuance, as an asset is not warranted. A Loss
classification does not mean that an asset has no recovery or salvage value, but
that it is not practical or desirable to defer writing off all or a portion of
the asset, even though partial recovery may be affected in the future. All loans
classified as loss have been written off directly or through provision in
specific allowance reserve. The allowance is increased by provisions for loan
losses which are charged against income. For fiscal years ended September 1999,
1998, and 1997, the Company recorded provisions for losses on loans of $600,000,
$610,000 and $360,000.

         The Company designates all loans that are 90 or more days past due as
non-performing. Generally, when loans are classified as non-performing, unpaid
accrued interest is a reduction of interest income on loans receivable and is
only recognized when cash payments are received. For the year ended September
30, 1999, the Company's non-performing assets increased $500,000 to $5.0 million
from $4.5 million at September 30, 1998.

         Management does not attribute the increase to any specific weakness
within the Company or in the marketplace generally. Although management utilizes
its best judgement in providing for losses with respect to its non-performing
assets, there can be no assurance that the Company will be able to dispose of
such non-performing assets without establishing additional provisions for losses
on loans or further reductions in the carrying value of its real estate owned.


                                       15
<PAGE>   17

         The following table sets forth an analysis of the Company's allowance
for loan losses during the periods indicated.

<TABLE>
<CAPTION>

                                                                                Year Ended
                                                                               September 30,
                                                 ------------------------------------------------------------------------
                                                  1999             1998             1997             1996            1995
                                                 ------           ------           ------           ------           ----
                                                                            (Dollars in Thousands)

<S>                                              <C>              <C>              <C>              <C>              <C>
Balance at beginning of period                   $1,738           $1,419           $1,128           $  921           $711
                                                 ------           ------           ------           ------           ----

Charge-offs:
  First mortgage loans:
    One-to-four family residential                  244              150               28                9            100
  Other loans:
    Commercial leases                               131              126               30               93              2
    Consumer and other loans                         24               48               18               12              1
                                                    ---              ---               --              ---            ---
                                                    399              324               76              114            103
                                                    ---              ---               --              ---            ---
Recoveries:
  First mortgage loans:
    One-to-four family residential                   --               32                3               20              7
  Other loans:
    Consumer and other loans                         18                1                4                1              2
                                                    ---              ---               --              ---            ---
Net charge-offs                                     381              291               69               93             94
                                                    ---              ---               --              ---            ---
Provision for losses on loans                       600              610              360              300            304
                                                    ---              ---               --              ---            ---
Balance at end of period                         $1,957           $1,738           $1,419           $1,128           $921
                                                 ======           ======           ======           ======           ====
Allowance for loan losses as a percent
 of total loans outstanding                        0.70%            0.77%            0.74%            0.78%          0.83%
                                                   ====             ====             ====             ====           ====
Allowance for loan losses to total non-
 performing loans                                 63.70%           54.08%           38.30%           50.27%         39.70%
                                                  =====            =====            =====            =====          =====
Ratio of net charge-offs to average
 loans outstanding                                 0.16%            0.15%            0.04%            0.08%          0.12%
                                                   ====             ====             ====             ====           ====

</TABLE>

         The following table sets forth information concerning the allocation of
the Company's allowance for loan losses by loan category at the dates indicated.

<TABLE>
<CAPTION>

                                                                    September 30,
                     ---------------------------------------------------------------------------------------------------------
                             1999                  1998                  1997                  1996                1995
                     -------------------   -------------------   -------------------   -------------------  ------------------
                              Percent of            Percent of            Percent of            Percent of          Percent of
                               Allowance             Allowance             Allowance             Allowance           Allowance
                                to Loan               to Loan               to Loan               to Loan             to Loan
                     Amount    Category    Amount    Category    Amount    Category    Amount    Category   Amount   Category
                     ------   ----------   ------   ----------   ------   ----------   ------   ----------  ------  ----------
                                                                (Dollars in Thousands)
<S>                  <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>         <C>     <C>
First mortgage
 loans               $1,780      91.0%     $1,491      85.8%     $1,129      79.6%     $  891      79.0%     $662      71.8%
Other loans             177       9.0         247      14.2         290      20.4         237      21.0       259      28.2
                     ------     -----      ------     -----      ------     -----      ------     -----      ----     -----
 Total               $1,957     100.0%     $1,738     100.0%     $1,419     100.0%     $1,128     100.0%     $921     100.0%
                     ======     =====      ======     =====      ======     =====      ======     =====      ====     =====
</TABLE>


                                       16
<PAGE>   18

INVESTMENT ACTIVITIES

         MORTGAGE-BACKED SECURITIES. The Company invests in a portfolio of
mortgage-backed securities which are insured or guaranteed by the FHLMC, the
FNMA and the Government National Mortgage Association ("GNMA"). Mortgage-backed
securities increase the quality of the Savings Bank's assets by virtue of the
guarantees that back them, are more liquid than individual mortgage loans and
may be used to collateralize borrowings or other obligations of the Company. At
September 30, 1999, the Company's mortgage-backed securities portfolio had a
book value and fair market value of $78.1 million and $75.9 million,
respectively.

          During fiscal 1997, the Company implemented a wholesale leveraging
strategy designed to take advantage of its excess capital. The Company
determined to invest in mortgage-backed securities and U.S. government and
agency obligations, at a positive interest rate spread over the funding
obligation, which has been FHLB advances. During the year ended September 30,
1999, the Company purchased an aggregate of $22.2 million of mortgage-backed
securities and collateralized mortgage obligations as compared to $65.4 million
purchased during the year ended September 30, 1998. The increase during fiscal
1998 was attributed to the continued implementation of the Company=s wholesale
leveraging strategy. During fiscal 1999, the Company has worked towards changing
its asset mix by decreasing the mortgage-backed securities portfolio and
reinvesting the proceeds in higher yielding, internally generated loans
receivable.

         The following table sets forth the composition of the Company's
mortgage-backed securities at the dates indicated.

<TABLE>
<CAPTION>

                                                               September 30,
                                             ------------------------------------------------
                                               1999                1998                1997
                                             --------            --------            --------
                                                          (Dollars in Thousands)

<S>                                           <C>                 <C>                 <C>
GNMA certificates                             $50,026             $52,111             $19,334
FNMA certificates                               7,760              21,418               8,432
FHLMC certificates                             14,202               3,741               9,559
Collateralized mortgage obligations             5,663               5,437                  --
                                              -------             -------             -------
                                               77,651              82,707              37,325

Unamortized premiums                              573                 717                 401
Unearned discounts                                111                 (15)                (25)
                                              -------             -------             -------
                                               78,113              83,409              37,701
FASB 115 adjustment                            (2,200)              1,106                 515
                                              -------             -------             -------
                                              $75,913             $84,515             $38,216
                                              =======             =======             =======
Weighted average interest rate                   6.17%               6.73%               6.70%
                                              =======             =======             =======

</TABLE>





                                       17
<PAGE>   19

         The following table sets forth the activity in the Company's
mortgage-backed securities portfolio during the periods indicated.

<TABLE>
<CAPTION>

                                                             At or For the Year Ended
                                                                   September 30,
                                                           ---------------------------
                                                             1999               1998
                                                           --------           --------

                                                                   (In Thousands)

<S>                                                        <C>                <C>
Mortgage-backed securities at beginning of period          $ 84,515           $ 38,216
Purchases                                                    22,212             65,374
Sales                                                        (9,012)            (8,860)
Repayments                                                  (18,737)           (11,167)
Accretion and amortization, net                                 241                328
Gain (loss) on mortgage-backed securities                    (3,306)               624
                                                           --------           --------
Mortgage-backed securities at end of period                $ 75,913           $ 84,515
                                                           ========           ========

</TABLE>

         In recent years, the Company's investment decisions have been directed,
in part, at increasing the interest-rate sensitivity of its assets. Accordingly,
the Company has emphasized investing in adjustable-rate mortgage-backed
securities and short-term, fixed-rate investments. Previously, the Company had
invested significantly in fixed-rate mortgage-backed securities. At September
30, 1999, $16.0 million or 20.6% of the Company's portfolio of mortgage-backed
securities were secured by ARMs.

         The following table sets forth the amount of the Company's
mortgage-backed securities which mature during each of the periods indicated and
the weighted average yields for each range of maturities at September 30, 1999.

<TABLE>
<CAPTION>

                                                    Contractually Maturing
                             ------------------------------------------------------------------
                                      Weighted        Weighted       Weighted          Weighted
                             Under 1  Average   1-5   Average  5-10  Average  Over 10   Average
                              Year     Yield   Years   Yield   Years  Yield    Years     Yield
                             -------  -------- -----  -------- ----- -------- -------  --------
                                                    (Dollars in Thousands)

<S>                          <C>      <C>      <C>    <C>      <C>   <C>      <C>      <C>
GNMA certificates              $--      --%    $406    8.08%    $--    --%    $49,620    6.15%
FNMA certificates               --      --       --      --      --    --      14,202    6.57
FHLMC certificates              --      --      154    7.87      --    --       7,606    6.18
Collateralized
 mortgage obligations           --      --       --      --      --    --       5,663    5.09
                               ---      ---     ---    ----     ---    ---     ------    ----
                               $--      --%    $560    8.02%    $--    --%    $77,091    6.15%
                               ===      ===     ===    ====     ===    ===     ======    ====

</TABLE>


Due to prepayments of the underlying loans, the actual maturities of the
securities are expected to be substantially less than the scheduled maturities.

                                       18
<PAGE>   20



         OTHER INVESTMENT SECURITIES. The investment policy of the Company, as
established by the Board of Directors, is designed primarily to provide and
maintain liquidity and to generate a favorable return on investments without
incurring undue interest rate risk, credit risk, and investment portfolio asset
concentrations. The Company's investment policy is currently implemented by the
Savings Bank's Executive Vice President and Chief Financial Officer and is
overseen by the Asset/Liability Management Committee of the Board of Directors.
The Savings Bank's Executive Vice President and Chief Financial Officer is
authorized to invest in various types of securities, and in recent years, the
emphasis has been on U.S. Treasury and agency obligations, municipal securities
and corporate debt securities. There are no aggregate limits on the investment
portfolio, however, there are certain limits on specific product types (e.g., no
limit on U.S. Government and agency obligations; municipal securities are
limited to 10% of the Savings Bank's capital). The Company's investment
portfolio decreased by $23.3 million or 40.8% between September 30, 1998 and
September 30, 1999 primarily due to the $25.2 million of U.S. Government and
agency obligations that matured. The Company's investment portfolio increased by
$20.0 million or 53.7% between September 30, 1997 and September 30, 1998,
primarily due to purchases of $25.9 million of U.S. Government and agency
obligations. The increase in the investment portfolio was in connection with the
Company's wholesale leveraging strategy.

         In April 1997, the Board authorized a trading account whereby up to
$2.5 million could be invested in trading account securities, with not more than
$1.0 million in any single issue, to be accounted for as trading securities in
accordance with SFAS No. 115. Pursuant to SFAS No. 115, unrealized gains and
losses are marked-to-market on a monthly basis and recognized on the income
statement. Under Board authorization, there is no limit on the types of
securities that the Company may invest in provided that the securities are
approved under the Company's investment policy, although to date the Company has
limited its investments to equity securities of financial institutions. The
Company implemented the trading account strategy in the quarter ended June 30,
1997 and recognized a pre-tax net gain of $310,000 for the year ended September
30, 1997 and a pre-tax net loss of $208,000 for the year ended September 30,
1998. During fiscal 1999, the Company discontinued its trading securities
strategy, recognizing a pre-tax net loss for the year of $182,000.

         The following table sets forth certain information relating to the
Company's investment portfolio at the dates indicated.

<TABLE>
<CAPTION>

                                                              September 30,
                                                -----------------------------------------
                                                 1999             1998             1997
                                                -------          -------          -------
                                                             (In Thousands)

<S>                                             <C>              <C>              <C>
U.S. Government and agency obligations          $19,780          $41,304          $34,894
Corporate obligations                                --               --              502
Trust preferred securities                       14,052           15,805            1,749
                                                -------          -------          -------
                                                $33,832          $57,109          $37,145
                                                =======          =======          =======

</TABLE>




                                       19
<PAGE>   21


         The following table sets forth the amount of the Company's investment
securities which mature during each of the periods indicated and the weighted
average yields for each range of maturities at September 30, 1999.

<TABLE>
<CAPTION>

                                                         Contractually Maturing
                               -----------------------------------------------------------------------------
                                        Weighted           Weighted            Weighted             Weighted
                               Under 1  Average     1-5    Average     5-10    Average    Over 10    Average
                                Year     Yield     Years    Yield      Years    Yield      years     Yield
                               -------  --------   -----   --------    -----   --------   -------   --------
                                                          (Dollars in Thousands)
<S>                            <C>      <C>        <C>     <C>         <C>     <C>        <C>       <C>
U.S. Government and agency
obligations                     $--       --%      $2,500    6.61%    $4,115     7.19%    $13,510     6.76%

</TABLE>

The actual maturity of the Company's investment securities may differ from
contractual maturity since certain of the Company's investment securities are
subject to call provisions which allow the issuer to accelerate the maturity
date of the security.

SOURCES OF FUNDS

         GENERAL. Deposits are the primary source of the Company's funds for
lending and other investment purposes. In addition to deposits, the Company
derives funds from loan principal repayments and prepayments and advances from
the FHLB of Pittsburgh. Loan repayments are a relatively stable source of funds,
while deposit inflows and outflows are significantly influenced by general
interest rates and money market conditions. Borrowings may be used on a
short-term basis to compensate for reductions in the availability of funds from
other sources. They may also be used on a longer term basis for general business
purposes.

         DEPOSITS. The Company's deposit products include a broad selection of
deposit instruments, including checking accounts, money market accounts, regular
savings accounts and certificates of deposit. Deposit account terms vary, with
the principal differences being the minimum balance required, the time periods
the funds must remain on deposit and the interest rate.

         The Company's deposits are obtained primarily from residents of
Allegheny County and Butler County, Pennsylvania. The Company attracts deposit
accounts by offering a wide variety of accounts, competitive interest rates, and
convenient office locations and service hours. The Company utilizes traditional
marketing methods to attract new customers and savings deposits, including print
media advertising and direct mailings. The Company does not utilize the services
of deposit brokers, and management believes that an insignificant number of
deposit accounts were held by non-residents of Pennsylvania at September 30,
1999.

         In December 1996, the Company purchased a branch office in the
Pittsburgh area with deposits totaling $10.4 million at a purchase premium of
3.13%. The branch had deposits of $14.3 million at September 30, 1999. The
deposit premium is being amortized using the straight line method over a ten
year period.


                                       20
<PAGE>   22

         The increase of $15.5 million or 10.1% in deposits is primarily the
result of the continued competitive deposit pricing throughout the Company=s
branch network, the introduction of a new money market deposit account product,
and the maturation and/or establishment of the Company's newer branches. The
Company has established de novo offices or purchased a new branch in each of the
past four fiscal years. The Company's newest de novo branch facility was opened
in March, 1999 and finished the fiscal year with total deposits of $2.8 million
which was greater than the Company's internal pro forma deposit projections. The
Company's two de novo supermarket branches, opened in 1996 and 1998, have grown
deposits to $12.0 million and $5.3 million, which represent 17.1% and 55.3%
increases, respectively, in comparison to their deposit balances as of September
30, 1998. The Company's branch office that was purchased in fiscal 1997 grew
$1.8 million or 14.6% from $12.5 million at September 30, 1998 to $14.3 million
at September 30, 1999. Lastly, the Company procured a $5.0 million certificate
of deposit from the Commonwealth of Pennsylvania in a competitive bidding
process which settled in September, 1999. Although market demand generally
dictates which deposit maturities and rates will be accepted by the public, the
Company intends to continue to promote longer term deposits to the extent
possible and consistent with its asset and liability management goals.

         The following table sets forth the dollar amount of deposits in the
various types of deposit programs offered by the Company at the dates indicated.

<TABLE>
<CAPTION>

                                                               September 30,
                                ------------------------------------------------------------------------------
                                        1999                       1998                         1997
                                -----------------------    -----------------------      -----------------------
                                Amount       Percentage    Amount       Percentage      Amount       Percentage
                                ------       ----------    ------       ----------      ------       ----------
                                                           (Dollars in Thousands)

<S>                            <C>           <C>          <C>           <C>           <C>            <C>
Passbook accounts              $ 27,999          16.5%    $ 26,267          17.1%     $ 26,065          18.8%
Money market                      6,743           4.0        3,596           2.3         5,130           3.7
Interest checking                12,178           7.2       11,126           7.2         7,234           5.2
Noninterest checking              4,854           2.9        1,624           1.1         2,372           1.7
Certificates of deposit         117,689          69.4      111,370          70.6        97,930          70.6
                                -------          ----      -------          ----        ------          ----
Total deposits                 $169,463         100.0%    $153,983         100.0%     $138,731         100.0%
                               ========         =====     ========         =====      ========         =====

</TABLE>

         The following table presents the average balance of each deposit type
and the average rate paid on each deposit type for the periods indicated.

<TABLE>
<CAPTION>

                                                                September 30,
                                  ----------------------------------------------------------------------------
                                          1999                       1998                        1997
                                  --------------------       --------------------        ---------------------
                                               Average                    Average                      Average
                                  Average       Rate         Average       Rate          Average        Rate
                                  Balance       Paid         Balance       Paid          Balance        Paid
                                  -------      -------       -------      -------        -------       -------

                                                            (Dollars in Thousands)

<S>                              <C>            <C>         <C>             <C>         <C>             <C>
Passbook accounts                $ 27,223       2.52%       $ 26,390        2.83%       $ 26,558        2.81%
Money market                        5,019       3.05           4,010        2.44           4,332        2.45
Interest checking                  11,602       1.50           9,437        2.28           7,457        2.02
Noninterest checking                4,267         --           6,646          --           2,756          --
Certificates of deposit           111,389       5.37         103,408        5.74          93,638        5.74
                                 --------       ----        --------        ----        --------        ----
  Total deposits                 $159,500       4.39%       $149,891        4.66%       $134,741        4.75%
                                 ========       ====        ========        ====        ========        ====
</TABLE>




                                       21
<PAGE>   23


         The following table sets forth the savings activities of the Company
during the periods indicated.

<TABLE>
<CAPTION>

                                                    Year Ended September 30,
                                           ------------------------------------------
                                             1999             1998             1997
                                           --------         --------         --------
                                                        (In Thousands)

<S>                                        <C>              <C>              <C>
Increase before interest credited          $ 8,441          $ 8,020          $ 8,609
Interest credited                            7,039            7,232            5,780
                                             -----            -----            -----
Net increase in deposits                   $15,480          $15,252          $14,389
                                           =======          =======          =======

</TABLE>


         The following table shows the interest rate and maturity information
for the Company's certificates of deposit at September 30, 1999.

<TABLE>
<CAPTION>

                                                      Maturity Date
                       ----------------------------------------------------------------------------
                       One Year           Over            Over               Over
                       or Less         1-2 Years        2-3 Years          3 Years           Total
                       -------         ---------        ---------          -------          -------
                                                     (In Thousands)
<S>                    <C>             <C>              <C>                <C>             <C>
   4.01 -- 6.00%       $82,668          $ 9,070          $  3,234          $ 5,346         $100,318
   6.01 -- 8.00%         2,050            1,752             2,856           10,265           16,923
   8.01 -- 10.00%          134              305                --                9              448
                       -------          -------          --------          -------         --------
   Total               $84,852          $11,127          $  6,090          $15,620         $117,689
                       =======          =======          ========          =======         ========

</TABLE>

         The following table sets forth the maturities of Company's certificates
of deposit having principal amounts of $100,000 or more at September 30, 1999.

<TABLE>
<CAPTION>

 Certificates of deposit maturing
       in quarter ending:
-----------------------------------       ---------
                                         (In Thousands)
<S>                                         <C>
December 31, 1999                           $ 3,582
March 31, 2000                                2,914
June 30, 2000                                 9,695
September 30, 2000                              509
After September 30, 2000                      6,178
                                             ------
Total certificates of deposit with
  balances of $100,000 or more              $22,878
                                            =======


</TABLE>


         BORROWINGS. The Company may obtain advances from the FHLB of Pittsburgh
upon the security of the common stock it owns in that bank and certain of its
residential mortgage loans, provided certain standards related to
creditworthiness have been met. Such advances are made pursuant to several
credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. At September
30, 1999, the Company had $184.1 million of

                                       22
<PAGE>   24

advances from the FHLB of Pittsburgh. The Company used FHLB advances to reinvest
in assets at higher yields. The Company increased its FHLB advances primarily to
aid liquidity and fund loans receivable.

         The following table sets forth information with respect to the
Company's FHLB advances during the periods indicated.

<TABLE>
<CAPTION>

                                                               At or For the Year Ended September 30,
                                                          ----------------------------------------------
                                                            1999                1998              1997
                                                          --------             --------         --------
                                                                        (Dollars in Thousands)

<S>                                                       <C>                  <C>              <C>
Maximum balance                                           $184,067             $157,267         $101,700
Average balance                                            166,145              149,759           69,268
Year end balance                                           184,067              155,267          101,700
Weighted average interest rate:
  At end of year                                              5.71%                5.84%            6.12%
  During the year                                             5.74%                5.90%            6.23%

</TABLE>

COMPETITION

         The Company faces significant competition for real estate loans,
principally from mortgage banking companies, other savings institutions,
commercial banks and credit unions. Factors which affect competition generally
include the general and local economic conditions, current interest rate levels
and volatility in the mortgage markets. The Company also faces significant
competition in attracting deposits. Its most direct competition for deposits has
historically come from commercial banks and other savings institutions located
in its market area. The Company faces additional significant competition for
investors' funds from other financial intermediaries. The Company competes for
deposits principally by offering depositors a variety of deposit programs,
convenient branch locations, hours and other services. The Company does not rely
upon any individual group or entity for a material portion of its deposits.

         Federal legislation in recent years has eliminated many of the
distinctions between commercial banks and savings institutions and holding
companies and allowed bank holding companies to acquire savings institutions.
Such legislation has generally resulted in an increase in the competition
encountered by savings institutions and has resulted in a decrease in both the
number of savings institutions and the aggregate size of the savings industry.

SUBSIDIARIES

         As of September 30, 1999, the Savings Bank was the Company's only bank
subsidiary. The Company also has a nonbank subsidiary, Pittsburgh Home Capital
Trust I.



                                       23
<PAGE>   25

REGULATION

         The Savings Bank is a Pennsylvania-chartered stock savings bank subject
to extensive regulation and supervision by the Department and by the FDIC, as
the administrator of the SAIF.

         The federal banking laws contain numerous provisions affecting various
aspects of the business and operations of savings institutions and bank holding
companies. The following description of statutory and regulatory provisions and
proposals, which is not intended to be a complete description of these
provisions or their effects on the Company or the Savings Bank, is qualified in
its entirety by reference to the particular statutory or regulatory provisions
or proposals. Certain federal banking laws have been recently amended. See
"Regulation-The Company-Financial Modernization."

THE COMPANY

         GENERAL. The Company is a registered bank holding company pursuant to
the Bank Holding Company Act of 1956, as amended (the "BHCA") and is subject to
regulation and supervision by the Federal Reserve Board and the Department. The
Company is required to file annually a report of its operations with, and is
subject to examination by, the Federal Reserve Board and the Department.

         BHCA ACTIVITIES AND OTHER LIMITATIONS. The BHCA prohibits a bank
holding company from acquiring direct or indirect ownership or control of more
than 5% of the voting shares of any bank, or increasing such ownership or
control of any bank, without prior approval of the Federal Reserve Board. The
BHCA also generally prohibits a bank holding company from acquiring any bank
located outside of the state in which the existing bank subsidiaries of the bank
holding company are located unless specifically authorized by applicable state
law. No approval under the BHCA is required, however, for a bank holding company
already owning or controlling 50% of the voting shares of a bank to acquire
additional shares of such bank.

         The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5% of the voting shares of any company that
is not a bank and from engaging in any business other than banking or managing
or controlling banks. Under the BHCA, the Federal Reserve Board is authorized to
approve the ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. In making such determinations, the Federal Reserve Board is
required to weigh the expected benefit to the public, such as greater
convenience, increased competition or gains in efficiency, against the possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.

         The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA. These
activities include operating a mortgage

                                       24
<PAGE>   26

company, finance company, credit card company, factoring company, trust company
or savings association; performing certain data processing operations; providing
limited securities brokerage services; acting as an investment or financial
advisor; acting as an insurance agent for certain types of credit-related
insurance; leasing personal property on a full-payout, non-operating basis;
providing tax planning and preparation services; operating a collection agency;
and providing certain courier services. The Federal Reserve Board also has
determined that certain other activities, including real estate brokerage and
syndication, land development, property management and underwriting of life
insurance not related to credit transactions, are not closely related to banking
and a proper incident thereto.

         LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. Transactions between
savings institutions and any affiliate are governed by Sections 23A and 23B of
the Federal Reserve Act. An affiliate of a savings institution is any company or
entity which controls, is controlled by or is under common control with the
savings institution. In a holding company context, the parent holding company of
a savings institution (such as the Company) and any companies which are
controlled by such parent holding company are affiliates of the savings
institution. Generally, Sections 23A and 23B (i) limit the extent to which the
savings institution or its subsidiaries may engage in "covered transactions"
with any one affiliate to an amount equal to 10% of such institution's capital
stock and surplus, and contain an aggregate limit on all such transactions with
all affiliates to an amount equal to 20% of such capital stock and surplus and
(ii) require that all such transactions be on terms substantially the same, or
at least as favorable, to the institution or subsidiary as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar transactions. In
addition to the restrictions imposed by Sections 23A and 23B, no savings
institution may (i) loan or otherwise extend credit to an affiliate, except for
any affiliate which engages only in activities which are permissible for bank
holding companies, or (ii) purchase or invest in any stocks, bonds, debentures,
notes or similar obligations of any affiliate, except for affiliates which are
subsidiaries of the savings institution.

         In addition, Sections 22(h) and (g) of the Federal Reserve Act places
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires that
loans to directors, executive officers and principal stockholders be made on
terms substantially the same as offered in comparable transactions to other
persons unless the loans are made pursuant to a benefit or compensation program
that (i) is widely available to employees of the institution and (ii) does not
give preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings
institution. Section 22(h) also requires prior board approval for certain loans.
In addition, the aggregate amount of extensions of credit by a savings
institution to all insiders cannot exceed the institution's unimpaired capital
and surplus. Furthermore, Section 22(g) places additional restrictions on loans
to executive officers.


                                       25
<PAGE>   27

         CAPITAL REQUIREMENTS. The Federal Reserve Board has adopted capital
adequacy guidelines pursuant to which it assesses the adequacy of capital in
examining and supervising a bank holding company and in analyzing applications
to it under the BHCA. The Federal Reserve Board capital adequacy guidelines
generally require bank holding companies to maintain total capital equal to 8%
of total risk-adjusted assets, with at least one-half of that amount consisting
of Tier I or core capital and up to one-half of that amount consisting of Tier
II or supplementary capital. Tier I capital for bank holding companies generally
consists of the sum of common stockholders' equity and perpetual preferred stock
(subject in the case of the latter to limitations on the kind and amount of such
stocks which may be included as Tier I capital), less goodwill and, with certain
exceptions, intangibles. Tier II capital generally consists of hybrid capital
instruments; perpetual preferred stock which is not eligible to be included as
Tier I capital; term subordinated debt and intermediate-term preferred stock;
and, subject to limitations, general allowances for loan losses. Assets are
adjusted under the risk-based guidelines to take into account different risk
characteristics, with the categories ranging from 0% (requiring no additional
capital) for assets such as cash to 100% for the bulk of assets which are
typically held by a bank holding company, including multi-family residential and
commercial real estate loans, commercial business loans and consumer loans.
Single-family residential first mortgage loans which are not past-due (90 days
or more) or non-performing and which have been made in accordance with prudent
underwriting standards are assigned a 50% level in the risk-weighing system, as
are certain privately-issued mortgage-backed securities representing indirect
ownership of such loans. Off-balance sheet items also are adjusted to take into
account certain risk characteristics.

         In March 1999, the federal banking agencies amended their risk-based
and leverage capital standards to make uniform their regulations. In particular,
the agencies made risk-based capital treatments for construction loans on
presold residential properties, real estate loans secured by junior liens on
1-to 4-family residential properties, and investments in mutual funds consistent
among the agencies, and simplified and made uniform the agencies' Tier I
leverage capital standards. The most highly-rated institutions must maintain a
minimum Tier I leverage ratio of 3.0 percent, with all other institutions
required to maintain a minimum leverage ratio of 4.0 percent. The Federal
Reserve Board regulations now state that higher-than-minimum capital levels may
be required if warranted, and that institutions should maintain capital levels
consistent with their risk exposures.

         At September 30, 1999, the Company was in compliance with the
above-described Federal Reserve Board regulatory capital requirements.

         FINANCIAL SUPPORT OF AFFILIATED INSTITUTIONS. Under Federal Reserve
Board policy, the Company will be expected to act as a source of financial
strength to the Savings Bank and to commit resources to support the Savings Bank
in circumstances when it might not do so absent such policy. The legality and
precise scope of this policy is unclear, however, in light of recent judicial
precedent.

         FINANCIAL MODERNIZATION. On November 12, 1999, President Clinton signed
into law the Gramm-Leach-Bliley Act which, among other things, will, effective
March 11, 2000, permit bank holding companies to become financial holding
companies and thereby affiliate with securities firms

                                       26
<PAGE>   28

and insurance companies and engage in other activities that are financial in
nature. A bank holding company may become a financial holding company if each of
its subsidiary banks is well capitalized under the Federal Deposit Insurance
Corporation Improvement Act of 1991 prompt corrective action provisions, is well
managed and has at least a satisfactory rating under the Community Reinvestment
Act by filing a declaration that the bank holding company wishes to become a
financial holding company. No regulatory approval will be required for a
financial holding company to acquire a company, other than a bank or savings
association, engaged in activities that are financial in nature or incidental to
activities that are financial in nature, as determined by the Federal Reserve
Board.

         The Gramm-Leach-Bliley Act defines "financial in nature" to include
securities underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities; and activities that the Federal Reserve Board has determined to be
closely related to banking. A national bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory Community Reinvestment Act rating. Subsidiary banks of a financial
holding company or national banks with financial subsidiaries must continue to
be well capitalized and well managed in order to continue to engage in
activities that are financial in nature without regulatory actions or
restrictions, which could include divestiture of the financial in nature
subsidiary or subsidiaries. In addition, a financial holding company or a bank
may not acquire a company that is engaged in activities that are financial in
nature unless each of the subsidiary banks of the financial holding company or
the bank has a Community Reinvestment Act rating of satisfactory or better.

         The FDIC and Federal Reserve have yet to issue implementing regulations
for this new legislation, and the effect of such regulations, when adopted,
cannot be predicted. However, the legislation is expected to increase
competition for the Company as well as present to it opportunities for
activities and acquisitions, although no such activities or acquisitions are
presently planned.

THE SAVINGS BANK

         GENERAL. The Savings Bank is incorporated under the Banking Code, is
subject to extensive regulation and examination by the Department and by the
FDIC, and, is subject to certain requirements established by the Federal Reserve
Board. The federal and state laws and regulations which are applicable to banks
regulate, among other things, the scope of their business, their investments,
their reserves against deposits, the timing of the availability of deposited
funds and the nature and amount of and collateral for certain loans. There are
periodic examinations by the Department and the FDIC to test the Savings Bank's
compliance with various regulatory requirements. This regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the insurance fund and
depositors. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities and examination policies, including policies with respect to the
classification of assets and the establishment of adequate loan loss

                                       27
<PAGE>   29

reserves for regulatory purposes. Any change in such regulation, whether by the
Department, the FDIC or the Congress could have a material adverse impact on the
Company, the Savings Bank and their operations.

         FDIC ASSESSMENTS. The deposits of the Savings Bank are insured by the
SAIF of the FDIC, up to applicable limits, and are subject to deposit premium
assessments by the SAIF. Under the FDIC's risk-based insurance system,
SAIF-assessed deposits have been subject to premiums of between 23 and 31 basis
points, depending upon the institution's capital position and other supervisory
factors.

         Under legislation enacted in 1996, SAIF-assessable deposits held as of
March 31, 1995 were subject to a tax-deductible one-time special assessment at a
rate sufficient to achieve the 1.25% designated reserve ratio of the SAIF as of
October 1, 1996. This special SAIF assessment generally was payable no later
than November 29, 1996. The special assessment amounted to 65.7 cents per $100
of SAIF-assessable deposits and was collected on November 27, 1996. The Savings
Bank's one-time special assessment amounted to $739,000 pre-tax. The payment of
such special assessment had the effect of immediately reducing the Savings
Bank's capital by $473,000 after tax.

         Under such legislation, institutions with Bank Insurance Fund ("BIF")
deposits are required to share the cost of funding debt obligations issued by
the Financing Corporation ("FICO"), a corporation established by the federal
government in 1987 to finance the recapitalization of FSLIC. However, until the
earlier of December 31, 1999 or the date of elimination of the thrift charter,
the FICO assessment rate for BIF deposits is only 1/5 of the rate applicable to
SAIF deposits. Consequently, the annual FICO assessments to be added to deposit
insurance premiums are expected to equal approximately 6.4 basis points for SAIF
deposits and 1.3 basis points for BIF deposits from January 1, 1997 through
December 31, 1999, and approximately 2.4 basis points for both BIF and SAIF
deposits thereafter. From January 1, 1997, FICO payments will be paid directly
by SAIF and BIF institutions in addition to deposit insurance assessments.

         On October 16, 1996, the FDIC lowered the rates on SAIF-assessable
deposits. The rule established SAIF rates ranging from 0 to 27 basis points as
of October 1, 1996. The Savings Bank's deposit insurance premiums, which had
amounted to 23 basis points were thus reduced to 6.4 basis points effective
January 1, 1997.

         Following the special assessment and the new FICO funding mechanism
effective January 1, 1997, future SAIF assessment rates are expected to depend
primarily on the rate of any new losses from the SAIF insurance fund. Under such
legislation, however, the FDIC is not permitted to establish SAIF assessment
rates that are lower than comparable BIF assessment rates.

         The FDIC may terminate the deposit insurance of any insured depository
institution, including the Savings Bank, if it determines after a hearing that
the institution has engaged or is engaging in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with


                                       28
<PAGE>   30

the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Savings Bank's deposit insurance.

         CAPITAL REQUIREMENTS. The FDIC has promulgated regulations and adopted
a statement of policy regarding the capital adequacy of state-chartered banks
which, like the Savings Bank, will not be members of the Federal Reserve System.
These requirements are substantially similar to those adopted by the Federal
Reserve Board regarding bank holding companies, as described above.

         As discussed under "Regulation - The Company - BHCA Activities and
Other Limitations - Capital Requirements," in March 1999, the federal banking
agencies amended their risk-based and leverage capital standards to make uniform
their regulations. The FDIC's capital regulations establish a minimum 3.0% Tier
I leverage capital requirement for strong banking institutions rated composite 1
under the Uniform Financial Institutions Rating System, with a minimum 4.0% Tier
I leverage capital requirement for all other state-chartered, non-member banks.
Leverage or core capital is defined as the sum of common stockholders' equity
(including retained earnings), noncumulative perpetual preferred stock and
related surplus, and minority interests in consolidated subsidiaries, minus all
intangible assets other than certain qualifying supervisory goodwill and certain
purchased mortgage servicing rights.

         The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard for savings banks requires the
maintenance of total capital (which is defined as Tier I capital and
supplementary (Tier 2) capital) to risk weighted assets of 8%. In determining
the amount of risk-weighted assets, all assets, plus certain off balance sheet
assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the
FDIC believes are inherent in the type of asset or item. The components of Tier
I capital are equivalent to those discussed above under the 4% leverage capital
standard. The components of supplementary capital include certain perpetual
preferred stock, certain mandatory convertible securities, certain subordinated
debt and intermediate preferred stock and general allowances for loan and lease
losses. Allowance for loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
At September 30, 1999, the Savings Bank met each of its capital requirements.

         In August 1995, the FDIC, along with the other federal banking
agencies, adopted a regulation providing that the agencies will take account of
the exposure of a bank's capital and economic value to changes in interest rate
risk in assessing a bank's capital adequacy. According to the agencies,
applicable considerations include the quality of the bank's interest rate risk
management process, the overall financial condition of the bank and the level of
other risks at the bank for which capital is needed. Institutions with
significant interest rate risk may be required to hold additional capital. The
agencies also have issued a joint policy statement providing guidance on
interest rate


                                       29
<PAGE>   31
risk management, including a discussion of the critical factors affecting the
agencies' evaluation of interest rate risk in connection with capital adequacy.
The agencies have determined not to proceed with a previously issued proposal to
develop a supervisory framework for measuring interest rate risk and an explicit
capital component for interest rate risk.

         The Savings Bank is also subject to more stringent Department capital
guidelines. Although not adopted in regulation form, the Department utilizes
capital standards requiring a minimum of 6% leverage capital and 10% risk-based
capital. The components of leverage and risk-based capital are substantially the
same as those defined by the FDIC. At September 30, 1999, the Savings Bank
exceeded the Department's capital guidelines.

         ACTIVITIES AND INVESTMENTS OF INSURED STATE-CHARTERED BANKS. The
activities and equity investments of FDIC-insured, state-chartered banks are
generally limited to those that are permissible for national banks. Under
regulations dealing with equity investments, an insured state bank generally may
not directly or indirectly acquire or retain any equity investment of a type, or
in an amount, that is not permissible for a national bank. An insured state bank
is not prohibited from, among other things, (i) acquiring or retaining a
majority interest in a subsidiary, (ii) investing as a limited partner in a
partnership the sole purpose of which is direct or indirect investment in the
acquisition, rehabilitation or new construction of a qualified housing project,
provided that such limited partnership investments may not exceed 2% of the
bank's total assets, (iii) acquiring up to 10% of the voting stock of a company
that solely provides or reinsures directors', trustees' and officers' liability
insurance coverage or bankers' blanket bond group insurance coverage for insured
depository institutions, and (iv) acquiring or retaining the voting shares of a
depository institution if certain requirements are met. In addition, an insured
state-chartered bank may not, directly, or indirectly through a subsidiary,
engage as "principal" in any activity that is not permissible for a national
bank unless the FDIC has determined that such activities would pose no risk to
the insurance fund of which it is a member and the bank is in compliance with
applicable regulatory capital requirements. Any insured state-chartered bank
directly or indirectly engaged in any activity that is not permitted for a
national bank must cease the impermissible activity.

         PENNSYLVANIA SAVINGS BANK LAW. The Banking Code contains detailed
provisions governing the organization, location of offices, rights and
responsibilities of directors, officers, employees and members, as well as
corporate powers, savings and investment operations and other aspects of the
Savings Bank and its affairs. The Banking Code delegates extensive rulemaking
power and administrative discretion to the Department so that the supervision
and regulation of state-chartered savings banks may be flexible and readily
responsive to changes in economic conditions and in savings and lending
practices.

         One of the purposes of the Banking Code is to provide savings banks
with the opportunity to be competitive with each other and with other financial
institutions existing under other Pennsylvania laws and other state, federal and
foreign laws. A Pennsylvania savings bank may locate or change the location of
its principal place of business and establish an office anywhere in the
Commonwealth, with the prior approval of the Department.



                                       30
<PAGE>   32



         The Department generally examines each savings bank not less frequently
than once every two years. Although the Department may accept the examinations
and reports of the FDIC in lieu of the Department's examination, the present
practice is for the Department to conduct individual examinations. The
Department may order any savings bank to discontinue any violation of law or
unsafe or unsound business practice and may direct any trustee, officer,
attorney or employee of a savings bank engaged in an objectionable activity,
after the Department has ordered the activity to be terminated, to show cause at
a hearing before the Department why such person should not be removed.

         REGULATORY ENFORCEMENT AUTHORITY. Applicable banking laws include
substantial enforcement powers available to federal banking regulators. This
enforcement authority includes, among other things, the ability to assess civil
money penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities.

FEDERAL AND STATE TAXATION

         GENERAL. The Company and the Savings Bank are subject to the corporate
tax provisions of the Code, as well as certain additional provisions of the Code
which apply to thrift and other types of financial institutions. The following
discussion of tax matters is intended only as a summary and does not purport to
be a comprehensive description of the tax rules applicable to the Company and
the Savings Bank.

         METHOD OF ACCOUNTING. The Savings Bank maintains its books and records
for federal income tax purposes using the accrual method of accounting. The
accrual method of accounting generally requires that items of income be
recognized when all events have occurred that establish the right to receive the
income and the amount of income can be determined with reasonable accuracy, and
that items of expense be deducted at the later of (i) the time when all events
have occurred that establish the liability to pay the expense and the amount of
such liability can be determined with reasonable accuracy or (ii) the time when
economic performance with respect to the item of expense has occurred.

         BAD DEBT RESERVES. Prior to the enactment, on August 20, 1996, of the
Small Business Job Protection Act of 1996 (the "Small Business Act"), for
federal income tax purposes, thrift institutions such as the Savings Bank, which
met certain definitional tests primarily relating to their assets and the nature
of their business, were permitted to establish tax reserves for bad debts and to
make annual additions thereto, which additions could, within specified
limitations, be deducted in arriving at their taxable income. The Savings Bank's
deduction with respect to "qualifying loans," which are generally loans secured
by certain interests in real property, could be computed using an amount based
on a six-year moving average of the Savings Bank's actual loss experience (the
"Experience Method"), or a percentage equal to 8.0% of the Savings Bank's
taxable income (the "PTI Method"),


                                       31
<PAGE>   33

computed without regard to this deduction and with additional modifications and
reduced by the amount of any permitted addition to the non-qualifying reserve.

         Under the Small Business Act, the PTI Method was repealed and the
Savings Bank will be required to use the Experience Method of computing
additions to its bad debt reserve for taxable years beginning with the Savings
Bank's taxable year beginning October 1, 1996. In addition, the Savings Bank
will be required to recapture (i.e., take into taxable income) over a six-year
period, beginning with the Savings Bank's taxable year beginning October 1,
1996, the excess of the balance of its bad debt reserves (other than the
supplemental reserve) as of September 30, 1996 over (a) the greater of the
balance of such reserves as of September 30, 1987 or (b) an amount that would
have been the balance of such reserves as of September 30, 1996 had the Savings
Bank always computed the additions to its reserves using the Experience Method.
However, under the Small Business Act such recapture requirements will be
suspended for each of the two successive taxable years beginning October 1, 1996
in which the Savings Bank originates a minimum amount of certain residential
loans during such years that is not less than the average of the principal
amounts of such loans made by the Savings Bank during its six taxable years
preceding October 1, 1996.

         At September 30, 1999, the federal income tax reserves of the Savings
Bank included $3.24 million of federal income tax bad debt reserves, of this
amount, $2.89 million and $341,000 are attributable to pre-1987 and post-1987
bad debt reserves, respectively. The Savings Bank will recapture into income
approximately $24,000 per year over the six year period which was set to begin
October 1, 1996, however, the Savings Bank was eligible to suspend until 1998
the recapture as the residential loan exemption was met as discussed above.

         DISTRIBUTIONS. If the Savings Bank were to distribute cash or property
to its sole stockholder, and the distribution was treated as being from its
pre-1987 bad debt reserves, the distribution would cause the Savings Bank to
have additional taxable income. A distribution is deemed to have been made from
pre-1987 bad debt reserves to the extent that (a) the reserves exceed the amount
that would have been accumulated on the basis of actual loss experience, and (b)
the distribution is a "non-qualified distribution." A distribution with respect
to stock is a non-qualified distribution to the extent that, for federal income
tax purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current distribution,
together with all other such distributions during the taxable year, it exceeds
the institution's current and post-1951 accumulated earnings and profits. The
amount of additional taxable income created by a non-qualified distribution is
an amount that when reduced by the tax attributable to it is equal to the amount
of the distribution.

         MINIMUM TAX. The Code imposes an alternative minimum tax at a rate of
20%. The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. The Code provides that an item of tax preference is the excess of the
bad debt deduction allowable for a taxable year pursuant to the percentage of
taxable income method over the amount allowable under the experience method.
Other items of tax




                                       32
<PAGE>   34

preference that constitute AMTI include (a) tax-exempt interest on newly issued
(generally, issued on or after August 8, 1986) private activity bonds other than
certain qualified bonds and (b) 75% of the excess (if any) of (i) adjusted
current earnings as defined in the Code, over (ii) AMTI (determined without
regard to this preference and prior to reduction by net operating losses).

         NET OPERATING LOSS CARRYOVERS. A financial institution may carry back
net operating losses ("NOLs") to the preceding two taxable years and forward to
the succeeding 20 taxable years. This provision applies to losses incurred in
taxable years beginning after August 5, 1997. At September 30, 1999, the Savings
Bank had no NOL carryforwards for federal income tax purposes.

         AUDIT BY IRS. The Savings Bank's federal income tax returns for taxable
years through September 30, 1996 have been closed for the purpose of examination
by the Internal Revenue Service.

         STATE TAXATION. The Company is subject to the Pennsylvania Corporate
Net Income Tax and Capital Stock and Franchise Tax. The Corporation Net Income
Tax rate for 1999 is 9.99% and is imposed on the Company's unconsolidated
taxable income for federal purposes with certain adjustments. In general, the
Capital Stock Tax is a property tax imposed at the rate of approximately 1.3% of
a corporation's capital stock value, which is determined in accordance with a
fixed formula based upon average net income and net worth.

         The Savings Bank is taxed under the Pennsylvania Mutual Thrift
Institutions Tax Act (the "MTIT"), as amended to include thrift institutions
having capital gain stock, pursuant to the MTIT, the Savings Bank's tax rate is
11.5%. The MTIT exempts the Savings Bank from all other taxes imposed by the
Commonwealth of Pennsylvania for state income tax purposes and from all local
taxation imposed by political subdivisions, except taxes on real estate and real
estate transfers. The MTIT is a tax upon net earnings, determined in accordance
with GAAP with certain adjustments. The MTIT, in computing GAAP income, allows
for the deduction of interest earned on state and federal securities, while
disallowing a percentage of a thrift's interest expense deduction in the
proportion of interest income on those securities to the overall interest income
of the Savings Bank. Net operating losses, if any, thereafter can be carried
forward three years for MTIT purposes.



                                       33
<PAGE>   35


ITEM 2. PROPERTIES

         The following table sets forth certain information with respect to the
Savings Bank's offices at September 30, 1999.

<TABLE>
<CAPTION>
                                                                             Net Book              Amount of
                                                                             Value of             Deposits at
       Description/Address                            Leased/Owned           Property         September 30, 1999
       -------------------                            ------------           --------         ------------------
                                                                                      (In Thousands)
Main Office:

<S>                                                   <C>                    <C>              <C>
438 Wood Street                                          Owned                $  840               $ 33,411
Pittsburgh, Pennsylvania 15222

Administrative Office:

225 Ross Street, 6th Floor                               Leased(1)                27                     --
Pittsburgh, Pennsylvania  15219

Branch Offices:

125 Brownsville Road                                     Owned                    24                 12,949
Pittsburgh, Pennsylvania  15210

274 North Craig Street                                   Owned                    26                 11,329
Pittsburgh, Pennsylvania 15213

4800 Liberty Avenue                                      Leased(2)                 8                 15,153
Pittsburgh, Pennsylvania  15224                          Owned(2)                461                     --

100 North Main Street                                    Owned                   483                 62,145
Butler, Pennsylvania  16001(3)

799 Castle Shannon Boulevard                             Leased(4)                20                 12,015
Pittsburgh, Pennsylvania  15234

2905 West Liberty Avenue                                 Owned                   511                 14,325
Pittsburgh, Pennsylvania  15216

5001 Library Road                                        Leased(5)                56                  5,335
Bethel Park, Pennsylvania 15102

550 Marketplace Drive                                    Owned(6)                721                  2,791
Oakdale, Pennsylvania 15071
                                                                              ------               --------
                                                                              $3,177               $169,453
                                                                              ======               ========
</TABLE>

                                                   (Footnotes on following page)




                                       34
<PAGE>   36


------------------

(1)      The Administrative Office opened on January 1, 1999. This property is
         subject to a lease which expires on January 1, 2001 and has two five
         year renewal options.

(2)      This property is subject to a lease which expires on May 1, 2005. In
         addition, during fiscal 1997, the Company purchased property which has
         a net book value of $461,000 at September 30, 1997 upon which a new
         branch will be built to relocate this office.

(3)      On June 1, 1997, the Savings Bank opened a loan center in the same
         building as the branch office to generate home equity loans, home
         equity lines of credit and consumer lending.

(4)      This branch office opened on October 16, 1995. This property is subject
         to a lease which expires on October 16, 2000 and has a five year
         renewal option.

(5)      This branch office opened on October 15, 1997. This property is subject
         to a lease which expires on October 19, 2002 and has a five year
         renewal option.

(6)      This branch office opened on March 15, 1999.

ITEM 3. LEGAL PROCEEDINGS.

         There are no material legal proceedings to which the Company is a party
or to which any of their property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The information required herein is incorporated by reference from page
41 of the Registrant's 1999 Annual Report.

ITEM 6. SELECTED FINANCIAL DATA.

         The information required herein is incorporated by reference from pages
six and seven of the Registrant's 1999 Annual Report.




                                       35
<PAGE>   37


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

        The information required herein is incorporated by reference from pages
eight to 15 of the Registrant's 1999 Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information required herein is incorporated by reference from pages
13 and 14 of the Registrant's 1999 Annual Report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        The information required herein is incorporated by reference from pages
two, six and seven, 17 to 38 and 41 of the Registrant's 1999 Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

        Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information required herein is incorporated by reference from pages
two to seven, ten and 11 and 19 of the Registrant's Proxy Statement dated
December 27, 1999 ("Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION.

         The information required herein is incorporated by reference from pages
11 to 22 of the Registrant's Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

        The information required herein is incorporated by reference from pages
seven to ten of the Registrant's Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The information required herein is incorporated by reference from page
19 of the Registrant's Proxy Statement.




                                       36
<PAGE>   38


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

        (a)    Document filed as part of this Report.

               (1) The following documents are filed as part of this report and
are incorporated herein by reference from the Registrant's 1999 Annual Report.

        Independent Auditors' Report.

        Consolidated Statements of Financial Condition as of September 30, 1999
        and 1998.

        Consolidated Statements of Income for the Years Ended September 30,
        1999, 1998 and 1997.

        Consolidated Statements of Changes in Shareholders' Equity for the Years
        Ended September 30, 1999, 1998 and 1997.

        Consolidated Statements of Cash Flows for the Years Ended September 30,
        1999, 1998 and 1997.

        Notes to Consolidated Financial Statements.

               (2) All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are omitted
because they are not applicable or the required information is included in the
Consolidated Financial Statements or notes thereto.




                                       37
<PAGE>   39


               (3)(a) The following exhibits are filed as part of this Form
10-K, and this list includes the Exhibit Index.

No.                                                  Description
---                                                  -----------


3.1          Amended and Restated Articles of Incorporation of Pittsburgh Home
             Financial Corp.(1)

3.2          Bylaws of Pittsburgh Home Financial Corp.(1)

4            Stock Certificate of Pittsburgh Home Financial Corp.(1)

10.1         Employment Agreement between Pittsburgh Home Financial Corp.,
             Pittsburgh Home Savings Bank and J. Ardie Dillen*/(2)

10.2         Employment Agreement between Pittsburgh Home Financial Corp.,
             Pittsburgh Home Savings Bank and Michael J. Kirk*/(2)

10.3         Employment Agreement between Pittsburgh Home Savings Bank and
             Joseph E. Archer*/(2)

10.4         Employment Agreement between Pittsburgh Home Savings Bank and
             Albert L. Winters*/(2)

10.4.1       Employment Agreement between Pittsburgh Home Financial Corp.,
             Pittsburgh Home Savings Bank and Gregory G. Maxcy*/*/

10.5         Stock Option Plan*/(2)

10.6         Recognition and Retention Plan and Trust*/(2)

13           1999 Annual Report to Stockholders specified portion (p. two, six
             to 38, and 41) of the Registrant's Annual Report to Stockholders
             for the year ended September 30, 1999.

21           Subsidiaries of the Registrant - Reference is made to Item 1.
             "Business" for the Required information

27           Financial Data Schedule

-----------------

(1)      Incorporated by reference from the Registration Statement on Form S-1
         (Registration No. 33-99658) filed by the Registrant with the Commission
         on November 21, 1995, as amended.

(2)      Incorporated by reference from the Form 10-K for the fiscal year ended
         September 30, 1996 filed by the Registrant with the Commission on
         December 27, 1996.

*/       Management contract or compensatory plan or arrangement.

*/*/     Management contract is substantially the same as those set forth in
         Exhibit 10.2.

        (3)(b)  Reports filed on Form 8-K.

        None.



                                       38
<PAGE>   40


                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.


                         PITTSBURGH HOME FINANCIAL CORP.


                         By:  /s/ J. Ardie Dillen
                              --------------------------------------------
                              J. Ardie Dillen
                              Chairman of the Board, President and
                              Chief Executive Officer


        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



/s/ J. Ardie Dillen                                          December 28, 1999
---------------------------------------
J. Ardie Dillen
Chairman of the Board,
  President and Chief Executive Officer
  (Principal Executive Officer)


/s/ Michael J. Kirk                                          December 28, 1999
---------------------------------------
Michael J. Kirk
Executive Vice President and Chief
  Financial Officer (Principal Financial
  and Accounting Officer)


/s/ Gregory G. Maxcy                                         December 28, 1999
---------------------------------------
Gregory G. Maxcy
Director and Corporate Secretary


<PAGE>   41

/s/ Joseph G. Lang                                           December 28, 1999
---------------------------------------
Joseph G. Lang
Director



/s/ Richard F. Lerach                                        December 28, 1999
---------------------------------------
Richard F. Lerach
Director


/s/ Stephen Spolar                                           December 28, 1999
---------------------------------------
Stephen Spolar
Director



/s/ Charles A. Topnick                                       December 28, 1999
---------------------------------------
Charles A. Topnick
Director



/s/ Kenneth R. Rieger                                        December 28, 1999
---------------------------------------
Kenneth R. Rieger
Director



/s/ James M. Droney, Jr.                                     December 28, 1999
--------------------------------------
James M. Droney, Jr.
Director