<PAGE>
 
                              GA FINANCIAL, INC.
                            4750 CLAIRTON BOULEVARD
                        PITTSBURGH, PENNSYLVANIA 15236
                                (412) 882-9946

                                                                  March 26, 1999



Dear Stockholder:

     You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of GA Financial, Inc. (the "Company"), the holding company for Great
American Federal Savings and Loan Association, Pittsburgh, Pennsylvania (the
"Association"), which will be held on April 28, 1999, at 10:00 a.m., at The
Bradley House, 5239 Brownsville Road, Pittsburgh, Pennsylvania 15236.

     The attached Notice of the Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be transacted at the Meeting.
Directors and officers of the Company, as well as a representative of
PricewaterhouseCoopers LLP, the Company's independent auditors for the fiscal
year ended December 31, 1998, and a representative of KPMG LLP, the proposed
auditors of the Company for the fiscal year ending December 31, 1999, will be
present at the Meeting to respond to any questions that our stockholders may
have.

     The Board of Directors of the Company has determined that the matters to be
considered at the Meeting are in the best interests of the Company and its
stockholders.  For the reasons set forth in the Proxy Statement, the Board
unanimously recommends a vote "FOR" the nominees listed under Proposal 1, "FOR"
the ratification of the amendments to the GA Financial, Inc. 1996 Stock-Based
Incentive Plan under Proposal 2, and "FOR" the ratification of KPMG LLP as
independent auditors under Proposal 3.

     PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY.  YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.

     On behalf of the Board of Directors and all of the employees of the Company
and the Association, I wish to thank you for your past and continued support.

                                        Sincerely yours,                   
                                                                           
                                                                           
                                        /s/ John M. Kish

                                        John M. Kish                        
                                        Chairman of the Board of Directors  
<PAGE>
 
                              GA FINANCIAL, INC.
                            4750 CLAIRTON BOULEVARD
                        PITTSBURGH, PENNSYLVANIA 15236
                                (412) 882-9946

                                _______________

                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                         TO BE HELD ON APRIL 28, 1999

                                _______________


     NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of GA Financial, Inc. (the "Company") will be held on Wednesday,
April 28, 1999, at 10:00 a.m., at The Bradley House, 5239 Brownsville Road,
Pittsburgh, Pennsylvania 15236.

     The Meeting is for the purpose of considering and voting upon the following
matters:

     1. the election of two directors for terms of three years each;

     2. the ratification of the amendments to the GA Financial, Inc. 1996
        Stock-Based Incentive Plan;

     3. the ratification of KPMG LLP as independent auditors of the Company for
        the fiscal year ending December 31, 1999; and

     4. such other matters as may properly come before the Meeting or any
        adjournments thereof.

     The Board of Directors has established March 15, 1999 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting and at any adjournments thereof.  Only recordholders of the common stock
of the Company as of the close of business on that date will be entitled to vote
at the Meeting or any adjournments thereof.  In the event there are not
sufficient votes for a quorum or to approve or ratify any of the foregoing
proposals at the time of the Meeting, the Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.  A list of stockholders
entitled to vote at the Meeting will be available at GA Financial, Inc., 4750
Clairton Boulevard, Pittsburgh, Pennsylvania, for a period of ten days prior to
the Meeting and will also be available for inspection at the Meeting itself.

                              By Order of the Board of Directors



                              /s/ Lawrence A. Michael

                              Lawrence A. Michael
                              Corporate Secretary
Pittsburgh, Pennsylvania
March 26, 1999
<PAGE>
 
                              GA FINANCIAL, INC.

                               _________________

                                PROXY STATEMENT
                        ANNUAL MEETING OF STOCKHOLDERS

                               _________________

                                APRIL 28, 1999

SOLICITATION AND VOTING OF PROXIES

     This proxy statement is being furnished to stockholders of GA Financial,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors of the Company (the "Board of Directors") of proxies to be used at the
Annual Meeting of Stockholders (the "Meeting") to be held on April 28, 1999, at
10:00 a.m., at The Bradley House, 5239 Brownsville Road, Pittsburgh,
Pennsylvania, 15236, and at any adjournments thereof.  The 1998 Annual Report to
Stockholders, including the consolidated financial statements for the fiscal
year ended December 31, 1998, accompanies this proxy statement, which is first
being mailed to stockholders on or about March 26, 1999.

     Regardless of the number of shares of common stock owned, it is important
that recordholders of a majority of the shares be represented by proxy or
present in person at the Meeting.  Stockholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope.  Stockholders are urged to indicate their vote
in the spaces provided on the proxy card.  PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN
THEREIN.  WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXIES WILL BE VOTED
"FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS NAMED IN THIS PROXY
STATEMENT,"FOR" THE RATIFICATION OF THE AMENDMENTS TO THE GA FINANCIAL, INC.
1996 STOCK-BASED INCENTIVE PLAN, AND "FOR" THE RATIFICATION OF KPMG LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
1999.

     The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting.  EXECUTION OF A PROXY CARD, HOWEVER,
CONFERS ON THE DESIGNATED PROXYHOLDERS DISCRETIONARY AUTHORITY TO VOTE THE
SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF ANY,
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.

     A PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE BY THE FILING OF A
WRITTEN NOTICE OF REVOCATION WITH THE SECRETARY OF THE COMPANY, BY DELIVERING TO
THE COMPANY A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON.  HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED APPROPRIATE DOCUMENTATION
FROM YOUR RECORDHOLDER TO VOTE PERSONALLY AT THE MEETING.

     The cost of solicitation of proxies on behalf of management will be borne
by the Company.  In addition to the solicitation of proxies by mail, Kissel-
Blake, Inc., a proxy solicitation firm, will assist the Company in soliciting
proxies for the Meeting and will be paid a fee of $3,000, plus out-of-pocket
expenses.  Proxies may also be solicited personally or by telephone or telegraph
by directors, officers and regular employees of the Company and its subsidiary,
Great American Federal Savings and Loan Association (the "Association"), without
additional compensation therefor.  The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially

                                       1
<PAGE>
 
owned by others, to send proxy material to, and obtain proxies from, such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.

VOTING SECURITIES

     The securities which may be voted at the Meeting consist of shares of
common stock of the Company (the "Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Meeting except as
described below. There is no cumulative voting for the election of directors.

     The close of business on March 15, 1999 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of, and to vote at, the Meeting and
any adjournments thereof.  The total number of shares of Common Stock
outstanding on the Record Date was 6,855,154 shares.

     As provided in the Company's Certificate of Incorporation, recordholders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "Limit") are not entitled to any vote in respect of the shares
held in excess of the Limit.  A person or entity is deemed to beneficially own
shares owned by an affiliate of, as well as persons acting in concert with, such
person or entity.  The Company's Certificate of Incorporation authorizes the
Board of Directors (i) to make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in
concert, and (ii) to demand that any person who is reasonably believed to
beneficially own stock in excess of the Limit to supply information to the
Company to enable the Board of Directors to implement and apply the Limit.

     The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the
Meeting.  In the event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.

     As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one or more of the
nominees being proposed.  Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, directors are elected by a plurality of the votes
cast, without regard to either (i) broker non-votes, or (ii) proxies as to which
authority to vote for one or more of the nominees being proposed is withheld.

     As to the ratification of the amendments to the GA Financial, Inc. 1996
Stock-Based Incentive Plan, the ratification of KPMG LLP as independent auditors
of the Company, by checking the appropriate box, a shareholder may:  (i) vote
"FOR" the item; (ii) "ABSTAIN" from voting on such item; or (iii) vote "AGAINST"
the item.  Under the Company's Certificate of Incorporation and Bylaws, unless
otherwise required by law, all other matters shall be determined by a majority
of the votes cast, without regard to either (a) broker non-votes, or (b) proxies
marked "ABSTAIN" as to that matter.

     Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board of Directors, who
will not be employed by, or be directors of, the Company or any of its
affiliates.

                                       2
<PAGE>
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock on the Record Date, as disclosed in certain
reports regarding such ownership filed with the Company and with the Securities
and Exchange Commission (the "SEC"), in accordance with Section 13(d) or 13(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") by such
persons and groups.  Other than those persons listed below, the Company is not
aware of any person or group, as such term is defined in the Exchange Act, that
owns more than 5% of the Common Stock as of the Record Date.



<TABLE>
<CAPTION>
                                                                                  NUMBER             PERCENT      
                                        NAME AND ADDRESS OF                         OF                  OF        
TITLE OF CLASS                            BENEFICIAL OWNER                        SHARES              CLASS       
---------------------------   ------------------------------------------        -----------        -----------
<S>                           <C>                                               <C>                <C>                              

Common Stock..............    Great American Federal Savings and Loan            707,080(1)              10.3%    
                              Association Employee Stock Ownership Plan                                           
                              and Trust ("ESOP")                                                                  
                              4750 Clairton Boulevard                                                             
                              Pittsburgh, Pennsylvania  15236                                                     
                                                                                                                  
Common Stock..............    John Hancock Advisers, Inc.                        450,000(2)               6.6%    
                              101 Huntington Avenue                                                               
                              Boston, Massachusetts  02199                                                        
                                                                                                                  
Common Stock..............    Franklin Resources                                 349,000(3)               5.1%     
                              777 Mariners Island Boulevard                                      
                              San Mateo, California 94402                                         
</TABLE>

___________________
(1)    First Bankers' Trust, N.A. has been appointed as the corporate trustee
       for the ESOP ("ESOP Trustee").  The ESOP Trustee, subject to its
       fiduciary duty, must vote all allocated shares held in the ESOP in
       accordance with the instructions of the participants.  At December 31,
       1998, 159,960 shares had been allocated under the ESOP and 552,040 shares
       remain unallocated.  Under the ESOP, unallocated shares will be voted by
       the ESOP Trustee in a manner calculated to most accurately reflect the
       instructions received from participants regarding the allocated stock so
       long as such vote is in accordance with the provisions of the Employee
       Retirement Income Security Act of 1974, as amended ("ERISA").
(2)    Based on information disclosed in a Schedule 13G with the SEC on January
       15, 1999.
(3)    Based on information disclosed in a Schedule 13G filed with the SEC on
       January 26, 1999.

                                       3
<PAGE>
 
                    PROPOSALS TO BE VOTED ON AT THE MEETING

                      PROPOSAL 1.  ELECTION OF DIRECTORS

     Pursuant to its Bylaws, the number of directors of the Company is set at
seven (7) unless otherwise designated by the Board of Directors.  Directors are
elected for staggered terms of three years each, with a term of office of only
one of the three classes expiring each year.  Directors serve until their
successors are elected and qualified.

     The two nominees proposed for election at the Meeting are Thomas E. Bugel
and David R. Wasik.  Messrs. Bugel and Wasik are presently directors of the
Company.  No person being nominated as a director is being proposed for election
pursuant to any agreement or understanding between any person and the Company.

     In the event that any nominee is unable to serve or declines to serve for
any reason, it is intended that proxies will be voted for the election of the
balance of those nominees named and for such other persons as may be designated
by the present Board of Directors.  The Board of Directors has no reason to
believe that any of the persons named will be unable or unwilling to serve.
UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED THAT THE
SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE
VOTED "FOR" THE ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED IN THIS PROXY STATEMENT.

INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS

     The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and the Named Executive Officers, as defined
below, as well as their ages, a brief description of their recent business
experience, including present occupations and employment, certain directorships
held by each, the year in which each became a director of the Association, and
the year in which their terms (or in the case of nominees, their proposed terms)
as director of the Company expire.  This table also sets forth the amount of
Common Stock and the percent thereof beneficially owned by each director and
Named Executive Officer and all directors and executive officers as a group as
of the Record Date.

<TABLE>
<CAPTION>
       NAME AND PRINCIPAL                                             EXPIRATION     SHARES OF COMMON        OWNERSHIP
     OCCUPATION AT PRESENT                               DIRECTOR     OF TERM AS    STOCK BENEFICIALLY     AS A PERCENT
  AND FOR THE PAST FIVE YEARS                    AGE     SINCE(1)      DIRECTOR          OWNED(2)            OF CLASS
------------------------------                   ---     --------     ----------    ------------------    ---------------
<S>                                              <C>     <C>          <C>           <C>                   <C> 
NOMINEES:                                                                                              
Thomas E. Bugel.........................          54        1988          2002           40,190(5)(7)            *
  Mr. Bugel is an owner and Vice                                                                                 
  President of East Liberty Electro-                                                                             
  Plating Company.                                                                                               
David R. Wasik..........................          57        1990          2002           38,555(5)(7)            *
  Mr. Wasik is a partner and
  supervisor of Savolskis-Wasik-
  Glenn Funeral Home.
</TABLE> 

                                       4
<PAGE>
 
<TABLE> 
<CAPTION> 
       NAME AND PRINCIPAL                                             EXPIRATION     SHARES OF COMMON        OWNERSHIP
     OCCUPATION AT PRESENT                               DIRECTOR     OF TERM AS    STOCK BENEFICIALLY     AS A PERCENT
  AND FOR THE PAST FIVE YEARS                    AGE     SINCE(1)      DIRECTOR          OWNED(2)            OF CLASS
------------------------------                   ---     --------     ----------    ------------------    ---------------
<S>                                              <C>     <C>          <C>           <C>                   <C> 
CONTINUING DIRECTORS:
 
Darrell J. Hess..........................         66        1991          2000          38,000(5)(7)              *
  Mr. Hess is the owner of Dee                                            
  Jay's Hallmark Card and Gift                                            
  Shop and D.J. Hess Advertising, a                                       
  promotional product company.                                            
John M. Kish.............................         53        1983          2000          80,950(3)(4)            1.18%
  Mr. Kish is Chairman of the                                                                                        
  Boards of Directors and Chief                                                                                      
  Executive Officer of the Company                                                                                   
  and the Association.                                                                                               
John G. Micenko..........................         60        1976          2001         118,727(3)(4)            1.73% 
  Mr. Micenko is President of the                                         
  Company and has been President                                          
  of the Association since 1990.                                          
Thomas M. Stanton........................         56        1992          2001          23,000(5)(7)              *
  Mr. Stanton is a securities                                                                                     
  supervisor for Mass Mutual, an                                                                                  
  insurance and financial services                                                                                
  company.                                                                                                        
Robert J. Ventura........................         49        1998          2001           6,000(6)(8)              *
  Since October 1998,                                                                                             
  Mr. Ventura has been an                                                                                         
  independent acquisitions and                                                                                    
  disvestitures consultant.  Prior to                                                                             
  October 1998, Mr. Ventura was                                                                                   
  the director of acquisitions and                                                                                
  divestitures for Rockwell                                                                                       
  International Corporation.                                                                                      
                                                                                                                  
NAMED EXECUTIVE OFFICERS:                                                                                         
(WHO ARE NOT ALSO DIRECTORS)                                                                                      
                                                                                                                  
Andrew R. Getsy..........................         60          --            --          43,956(3)(4)              *
  Mr. Getsy has been Vice                                                                                         
  President and Treasurer of the                                                                                  
  Association since September                                                                                     
  1983.                                                                                                           
                                                                                                                  
Raymond G. Suchta........................         50          --            --          54,120(3)(4)              *
  Mr. Suchta is Treasurer and                                             
  Chief Financial Officer of the                                          
  Company and has been Vice                                               
  President and Chief Financial                                           
  Officer of the Association since                                        
  1981.                                                                   
</TABLE> 

                                       5
<PAGE>
 
<TABLE> 
<CAPTION> 
       NAME AND PRINCIPAL                                             EXPIRATION     SHARES OF COMMON        OWNERSHIP
     OCCUPATION AT PRESENT                               DIRECTOR     OF TERM AS    STOCK BENEFICIALLY     AS A PERCENT
  AND FOR THE PAST FIVE YEARS                    AGE     SINCE(1)      DIRECTOR          OWNED(2)            OF CLASS
------------------------------                   ---     --------     ----------    ------------------    ---------------
<S>                                              <C>     <C>          <C>           <C>                   <C> 
Stock ownership of all directors and              --          --            --           623,163(9)             9.09%
executive officers of the Company
and the Association as a group (15
persons).
</TABLE>

________________
*  Does not exceed 1.0% of the Company's voting securities.
(1)   Includes years of service as a director of the Association.
(2)   Each person effectively exercises sole (or shares with spouse or other
      immediate family member) voting and dispositive power as to shares
      reported.
(3)   Includes 27,000, 55,000, 18,350 and 23,050 shares awarded to Messrs. Kish,
      Micenko, Getsy and Suchta under the GA Financial, Inc. 1996 Stock-Based
      Incentive Plan (the "Incentive Plan"). Awards to officers under the
      Incentive Plan began vesting in five equal annual installments on October
      16, 1997.  Each participant presently has voting power as to the shares
      awarded.
(4)   Includes 30,000, 38,000, 10,000 and 20,000 shares subject to options
      granted to Messrs. Kish, Micenko, Getsy, and Suchta, respectively, under
      the Incentive Plan which are currently exercisable.  Does not include the
      remaining 45,000, 57,000, 15,000 and 30,000 shares subject to options
      granted to Messrs. Kish, Micenko, Getsy and Suchta, respectively, under
      the Incentive Plan, which are not currently exercisable and will continue
      to vest in equal annual installments through October 16, 2001.
(5)   Includes 10,000 shares awarded pursuant to the Incentive Plan, which began
      vesting in five equal annual installments on October 16, 1997, the voting
      of which currently can be directed by the recipient.
(6)   Includes 5,000 shares awarded pursuant to the Incentive Plan, which will
      begin vesting in five equal annual installments beginning on April 29,
      1999, the voting of which currently can be directed by the recipient.
(7)   Includes 8,000 shares subject to options granted under the Incentive Plan
      which are currently exercisable.  Does not include the remaining 12,000
      shares subject to options granted under the Incentive Plan, which  are not
      currently exercisable and will continue to vest in equal annual
      installments through October 16, 2001.
(8)   Does not include 10,000 shares subject to options granted under the
      Incentive Plan which are not currently exercisable and begin to vest on
      April 29, 1999 in five equal annual installments through April 29, 2003.
(9)   Includes a total of 237,770 shares awarded under the Incentive Plan as to
      which voting may be directed and a total of 194,000 shares which may be
      acquired through the exercise of stock options under the Incentive Plan.
      Excludes a total of 321,000 shares subject to options granted under the
      Incentive Plan which are not currently exercisable.


MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD

     The Board of Directors conducts its business through meetings of the Board
and through activities of its committees.  The Board of Directors meets at least
on a quarterly basis and may have additional meetings as needed.  During fiscal
1998, the Board of Directors of the Company held eight regular meetings.  All of
the directors of the Company attended at least 75% in the aggregate of the total
number of the Company's board meetings held and committee meetings on which such
directors served during 1998.  The Board of Directors of the Company maintains
committees, the nature and composition of which are described below:

     AUDIT AND COMPLIANCE COMMITTEE.  The Audit and Compliance Committee of the
Company and Association consists of Messrs. Bugel, Hess and Wasik.  The purpose
of the Audit and Compliance Committee is to review the Company's audit reports
and management's actions regarding the implementation of audit findings and to
review compliance with all relevant laws and regulations. This Committee is also
responsible for making recommendations to the full Board of Directors regarding
the selection of the independent auditor.  The committee met four times in 1998.

                                       6
<PAGE>
 
     PERSONNEL, COMPENSATION AND BENEFITS COMMITTEE.  The Personnel,
Compensation and Benefits Committee consists of Messrs. Hess, Stanton and Wasik.
This Committee is responsible for making recommendations to the full Board of
Directors on all matters regarding compensation and fringe benefits.  The
committee met once in 1998.

     NOMINATING COMMITTEE.  The Company's Nominating Committee for the 1999
Annual Meeting consisted of Messrs. Micenko, Stanton and Ventura.  The
Nominating Committee considers and recommends the nominees for director to stand
for election at the Company's Annual Meeting of Stockholders.  The Company's
Bylaws provide for stockholder nominations of directors.  These provisions
require such nominations to be made pursuant to timely written notice to the
Secretary of the Company.  The stockholders' notice of nominations must contain
all information relating to the nominee which is required to be disclosed by the
Company's Bylaws and by the Exchange Act.  See "Additional Information - Notice
of Business to be Conducted at an Annual Meeting."  The Nominating Committee met
on January 26, 1999.

DIRECTORS' COMPENSATION

     DIRECTORS' FEES.  Non-employee members of the Board of Directors of the
Company currently receive an annual retainer fee of $1,000 and a fee of $400 for
each Board meeting and a fee of $175 for each committee meeting attended.
However, Directors of the Company do not receive Company Board meeting fees on
dates when an Association Board of Directors meeting is held.

     Non-employee directors of the Association are currently paid an annual
retainer of $16,800.  Non-employee directors of the Association are also
currently paid a fee of $175 for committee meetings attended and a fee of $400
for each special meeting of the Board of Directors attended.  The Association
also maintains one Director Emeritus position that is currently filled by Joseph
E. Bugel, the former Chairman of the Board of Directors who served with the
Association from 1939 to 1988 and the father of Director Thomas E. Bugel.  Mr.
Bugel is paid an annual retainer of $6,000 and a fee of $400 for each Board of
Directors meeting which he attends.

     INCENTIVE PLAN.  Under the Incentive Plan maintained by the Company, each
member of the Board of Directors of the Company who is not an officer or
employee of the Company or the Association, with the exception of Mr. Ventura,
received non-statutory stock options to purchase 20,000 shares of Common Stock
at an exercise price of $12.75, the fair market value of the Common Stock on
October 16, 1996, the date the option was granted (with Dividend Equivalent
Rights attached, as discussed below), and stock awards for 10,000 shares of
Common Stock (collectively "Directors' Awards").  On April 29, 1998, Mr. Ventura
received non-statutory stock options to purchase 10,000 shares of Common Stock
at an exercise price of $19.76 per share, the fair market value of the Common
Stock on April 29, 1998.  Mr. Ventura  also received stock awards for 5,000
shares of Common Stock.  The Dividend Equivalent Rights provide a separate cash
benefit equal to 100% of the amount of any extraordinary dividend (as defined in
the Incentive Plan) declared by the Company on shares of Common Stock subject to
an option.  The Directors' Awards initially granted under the Incentive Plan
will vest over a five-year period, at a rate of 20% each year commencing on
October 16, 1997, the first anniversary of the date of the grant.  All
unexercised options granted under the Incentive Plan expire 10 years following
the date of grant.  Mr. Ventura's awards vest at a rate of 20% each year
commencing on April 29, 1999.  All Directors' Awards will immediately vest upon
death or disability.

                                       7
<PAGE>
 
EXECUTIVE COMPENSATION

     The report of the compensation committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "Securities Act") or the Exchange Act, except as to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.

     COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
chief executive officer and the other executive officers of the Company.  The
disclosure requirements for these executive officers include the use of tables
and a report explaining the rationale and considerations that led to fundamental
compensation decisions affecting those individuals.  In fulfillment of this
requirement, the Compensation Committee, at the direction of the Board of
Directors, has prepared the following report for inclusion in this proxy
statement.

     COMPENSATION POLICIES.  The policies and objectives of the Compensation
Committee are designed to assist the Company in attracting and retaining
qualified executives, to recognize individual contributions towards achieving
strategic business initiatives and reward them for their achievement and to
closely align the financial interests of the executive officers with those of
its stockholders.  In furtherance of these objectives, the Company and
Association maintain a compensation program for executives officers which
consists of both cash and equity based compensation.

     The Compensation Committee has discretion to recommend, relative to
performance and peer group comparisons, the base salaries of the executive
officers.  The Compensation Committee recommends the level of annual salary for
the Chief Executive Officer and the President, generally based upon a review of
the performance of the Chief Executive Officer and the President and the Company
during the prior year and competitive data for that position.  The Compensation
Committee is then responsible for recommending the base salaries of the
remaining executive officers.

     In addition, in order to align the interests and performance of its
executive officers with the long term interests of its stockholders, the Company
and the Association adopted plans which reward the executives for delivering
long-term value to the Company and the Association through stock ownership.

     The compensation package available to executive officers is composed of the
following components:

          (i)    Base Salary;
          (ii)   Annual Cash Incentive Awards; and
          (iii)  Long Term Incentive Compensation, including Option and Stock
                 Awards.

     Messrs. Kish and Micenko have employment agreements which specify a minimum
base salary and require an annual review of such salary.  In addition, Messrs.
Kish and Micenko and all other executive officers of the Company and the
Association participate in other benefit plans available to all employees
including the Association's Employee Stock Ownership Plan.

     BASE SALARIES.  The salary levels are intended to be consistent and
competitive with the practices of other comparable financial institutions and
each executives' level of responsibility.  The Compensation Committee has
consulted with L.R. Webber Associates, Inc., an independent consulting firm, in
determining the compensation paid to executive officers performing similar
duties for depository institutions and their

                                       8
<PAGE>
 
holding companies with particular focus on the level of compensation paid by
comparable institutions in Pennsylvania and the Mid-Atlantic region.

     Although the Compensation Committee's recommendations are discretionary and
no specific formula is used for decision making, salary increases are aimed at
reflecting the overall performance of the Company and the performance of the
individual executive officer.

     ANNUAL CASH INCENTIVE AWARDS.  As discussed under Base Salaries, cash
incentive awards are intended to be consistent with comparative practices of
other comparable financial institutions and each executive officer's level of
responsibility.  Such awards are based on the Committee's subjective
determinations of the executive officer's performance during the year in
relation to the budgeted financial performance of the Company.

     LONG TERM INCENTIVE COMPENSATION.  The Company maintains the Incentive Plan
under which executive officers may receive grants and awards of Common Stock and
options to purchase Common Stock of the Company.  The Compensation Committee
believes that stock ownership is a significant incentive in building shareholder
value and aligning the interests of employees with shareholders.  As approved by
the Company's shareholders on October 16, 1996, all of the executive officers
received grants and awards of Common Stock and options to purchase Common Stock
which have vesting periods of 20% per year beginning one year from the date of
the respective grant.  The exercise price of options granted was the market
value of the Common Stock on the date of shareholder approval.  The value of
this component of compensation increases as the Common Stock of the Company
appreciates in value.  The specific grants and awards for certain named
executive officers are reflected in the Summary Compensation Table.

     CHIEF EXECUTIVE COMPENSATION.  The base compensation of John M. Kish,
Chairman and Chief Executive Officer of the Company for fiscal 1998 was a
percentage of an annual base salary of $190,962 based upon the amount of time
expended by Mr. Kish in his role as the Chairman of the Board and Chief
Executive Officer of the Company.  During fiscal 1998, Mr. Kish's compensation
was $175,048.  See the discussion under "Employment Agreements" for further
information regarding Mr. Kish's annual base salary.

     The base compensation of John G. Micenko, President of the Company and the
Association, was $226,343, which represents a 3.0% increase over his 1997 base
salary.

                PERSONNEL, COMPENSATION AND BENEFITS COMMITTEE

                                   MR. WASIK
                                   MR. HESS
                                  MR. STANTON

                                       9
<PAGE>
 
     STOCK PERFORMANCE GRAPH.  The following graph shows a comparison of
stockholder return on the Company's Common Stock based on the market price of
Common Stock assuming the reinvestment of dividends, with the cumulative total
returns for the companies on the American Stock Exchange Index and the SNL
Thrift Index for the period beginning on March 26, 1996, the day the Company's
Common Stock began trading, through December 31, 1998.  The graph was derived
from a very limited period of time, and, as a result, may not be indicative of
possible future performance of the Company's Common Stock.  The data was
supplied by SNL Securities, Inc., a data service provider for publicly traded
financial institutions.

           COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
              AMERICAN STOCK EXCHANGE INDEX AND SNL THRIFT INDEX

                             [GRAPH APPEARS HERE]

                                    Summary
<TABLE>
<CAPTION> 
                                        Period Ending
                      -------------------------------------------------------
                      3/26/96  12/31/96  6/30/97  12/31/97  6/30/98  12/31/98
                      -------  --------  -------  --------  -------  --------
<S>                   <C>      <C>       <C>      <C>       <C>      <C>
GA Financial, Inc.     100.00   134.33    170.69   171.78    169.48   145.63
AMEX Market Index      100.00   116.34    140.29   148.74    170.52   179.20
SNL Thrift Index       100.00   129.41    167.75   220.20    227.16   193.67
</TABLE>


                                       10
<PAGE>
 
  SUMMARY COMPENSATION TABLE.   The following table shows, for the years ended
December 31, 1998, 1997 and 1996, the cash compensation paid by the Company and
Association, as well as certain other compensation paid or accrued for those
years, to the Chief Executive Officer of the Company and the Association and the
three highest paid executive officers of the Company and the Association, who
earned and/or received salary and bonus in excess of $100,000 in fiscal year
1998 ("Named Executive Officers").


<TABLE>
<CAPTION>
                                                                         LONG-TERM COMPENSATION
                                                                  -------------------------------------
                                    ANNUAL COMPENSATION(1)                AWARDS             PAYOUTS
                               ------------------------------------------------------------------------
                                                       OTHER      RESTRICTED    SECURITIES                             
                                                       ANNUAL       STOCK       UNDERLYING     LTIP         ALL OTHER  
NAME AND PRINCIPAL                                   OMPENSATION    AWARDS     OPTIONS/SARS   PAYOUTS      COMPENSATION
   POSITIONS           YEAR    SALARY($)  BONUS($)     ($)(2)       ($)(3)        (#)(4)       ($)(5)         ($)(6)   
-----------------------------------------------------------------------------------------------------------------------------
<S>                    <C>     <C>        <C>        <C>          <C>          <C>            <C>          <C>
John M. Kish           1998    $175,048         -          -               -          -         None          $36,744     
 Chairman of the       1997     111,240         -          -               -          -         None           40,849     
 Board and Chief       1996      99,000    $7,000     $4,450        $393,900     75,000         None                -     
 Executive                                                                                                                
 Officer of the                                                                                                           
 Company and the                                                                                                          
 Association                                                                                                              
                                                                                                                          
John G. Micenko        1998     226,343         -          -               -          -         None           92,028     
 Director and          1997     211,603         -          -               -          -         None           92,214     
 President of the      1996     205,670     7,000          -         722,150     95,000         None           98,066     
 Company and the                                                                                                          
 Association                                                                                                              
                                                                                                                          
Andrew R. Getsy        1998     134,826         -          -               -          -         None           39,179     
 Vice President        1997     125,291         -          -               -          -         None           49,774     
 and Treasurer         1996     121,171     5,000          -         328,250     25,000         None           34,483     
 of the Association                                                                                                       
                                                                                                                          
Raymond G. Suchta      1998     118,654         -          -               -          -         None           29,499     
 Treasurer and Chief   1997      96,246         -          -               -          -         None           42,835     
 Financial Officer of  1996      90,000     5,000          -         328,250     50,000         None           20,464     
 the Company and Chief  
 Financial Officer of
 the Association
</TABLE>

____________________
(1)    The column titled "Bonus" consists of board approved discretionary cash
       bonuses.   See "Compensation Committee Report on Executive Compensation."
(2)    For 1998, there were no (a) perquisites over the lesser of $50,000 or 10%
       of the individual's total salary and bonus for the year; (b) payments of
       above-market preferential earnings on deferred compensation; (c) payments
       of earnings with respect to long-term incentive plans prior to settlement
       or maturation; (d) tax payment reimbursements; nor (e) preferential
       discounts on stock.  For Mr. Kish, such amount represents Board of
       Directors fees paid in the first quarter of 1996.
(3)    Includes stock awards of 30,000, 55,000, 25,000 and 25,000 shares granted
       to Messrs. Kish, Micenko, Getsy and Suchta, respectively, pursuant to the
       Incentive Plan during fiscal year 1996.  The awards began vesting in five
       equal annual installments on October 16, 1997, the first anniversary of
       the effective date of the award.  When shares become vested and are
       distributed, the recipients will also receive an amount equal to
       accumulated cash and stock dividends (if any) with respect thereto plus
       earnings thereon.  All awards vest immediately upon termination of
       employment due to death or disability.  As of December 31, 1998, the
       market value of the stock awards held by Messrs. Kish, Micenko, Getsy and
       Suchta, was $418,500, $852,000, $284,425 and $361,925, respectively.
(4)    Represents stock options granted to Messrs. Kish, Micenko, Getsy and
       Suchta, respectively, pursuant to the Incentive Plan during fiscal year
       1996.
(5)    For 1998, 1997 and 1996, there were no payouts or awards under any long-
       term incentive plan.
(6)    Other compensation includes a taxable fringe benefit group life
       insurance, employer contributions to the Association's 401(k) plan,
       contributions to the Association's non-qualified Supplemental Executive
       Retirement Plan the ("SERP"), and grants of common stock pursuant to the
       Association's ESOP.  In 1998, the Board voted to terminate the SERP.
       During fiscal 1998, Messrs. Kish, Micenko, Getsy and Suchta, received
       contributions of $51, $108, $67 and $27, respectively, under the group
       life insurance.  Contributions to Messrs. Kish, Micenko, Getsy and
       Suchta, during fiscal 1998 pursuant to the 401(k) plan and the SERP were
       $5,000, $5,000, $4,044 and $3,559, respectively, and $0, $60,346, $8,360
       and $2,410, respectively.  For fiscal 1998, Messrs. Kish, Micenko, Getsy
       and Suchta were allocated 2,044, 2,044, 1,723 and 1,516 shares of Common
       Stock, respectively, pursuant to the ESOP.  Dollar amounts reflect the
       market value of $15.50 per share as of December 31, 1998.  See "Executive
       Compensation."

                                       11
<PAGE>
 
COMPENSATION ARRANGEMENTS

     EMPLOYMENT AGREEMENTS. The Association and the Company have entered into
employment agreements with Messrs. Kish and Micenko (individually, the
"Executive").  These employment agreements are intended to ensure that the
Association and the Company will be able to maintain a stable and competent
management base.  The continued success of the Association and the Company
depends to a significant degree on the skills and competence of Messrs. Kish and
Micenko.

     The employment agreements provide for a three-year term for Messrs. Kish
and Micenko.  The Association employment agreement provides that, commencing on
the first anniversary date and continuing each anniversary date thereafter, the
Board of the Association may extend the agreement for an additional year so that
the remaining term shall be three years, unless the Executive elects not to
extend the term of this Agreement by giving written notice or written notice of
non-renewal is given by the Board of the Association after conducting a
performance evaluation of the Executive.  The terms of the Company employment
agreements are also extended on an annual basis unless the Executive elects not
to extend the term of this Agreement by giving written notice or written notice
of non-renewal is given by the Board of the Company.  The agreements provide
that the Executive's base salary will be reviewed annually.  The base salary of
Mr. Kish as Chief Executive Officer of the Company and the Association is
$194,781.  The current base salary for Mr. Micenko as President of the Company
and the Association is $222,559.  In addition to the base salary, the agreements
provide for, among other things, participation in stock benefit plans and other
fringe benefits applicable to executive personnel.

     The agreements provide for termination by the Association or the Company
for cause as defined in the agreements at any time.  In the event the
Association or the Company chooses to terminate the Executive's employment for
reasons other than for cause, or in the event of the Executive's resignation
from the Association and the Company upon:  (i) failure to re-elect the
Executive to his current offices; (ii) a material change in the Executive's
functions, duties or responsibilities; (iii) a relocation of the Executive's
principal place of employment by more than 25 miles; (iv) a material reduction
in the benefits and perquisites to the Executive; (v) liquidation or dissolution
of the Association or the Company; or (vi) a breach of the agreement by the
Association or the Company, the Executive or, in the event of Executive's
subsequent death, his beneficiary, beneficiaries or estate, as the case may be,
would be entitled to receive an amount equal to the remaining base salary
payments due to the Executive and the contributions that would have been made on
the Executive's behalf to certain benefit plans of the Association or the
Company during the remaining term of the agreement.  The Association and the
Company would also continue and pay for the Executive's life, health and
disability coverage for the remaining term of the agreement.  Upon any
termination of the Executive, the Executive is subject to a one year non-
competition agreement.

     Under the agreements, if voluntary or involuntary termination follows a
change in control of the Association or the Company (as defined in the
employment agreements), the Executive or, in the event of the Executive's death,
his beneficiary, would be entitled to a severance payment equal to the greater
of:  (i) the payments due for the remaining term of the agreement; or (ii) three
times the average of the five preceding taxable years' annual compensation.  The
Association and the Company would also continue the Executive's life, health,
and disability coverage for thirty-six months.  Notwithstanding that both
agreements provide for a severance payment in the event of a change in control,
the Executive would only be entitled to receive a severance payment under one
agreement.  Based solely on the compensation reported in the Summary
Compensation Table for 1998 in the case of Messrs. Kish and Micenko and
excluding any benefits under any employee plan which may be payable, following a
change in control and termination of

                                       12
<PAGE>
 
employment Messrs. Kish and Micenko would receive severance payments in the
amount of approximately $572,886 and $679,029, respectively.

     Payments under the employment agreements in the event of a change in
control may constitute some portion of an excess parachute payment under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") for executive
officers, resulting in the imposition of an excise tax on the recipient and
denial of the deduction for such excess amounts to the Company and the
Association.

     Payments to the Executive under the Association's agreement will be
guaranteed by the Company in the event that payments or benefits are not paid by
the Association.  Payment under the Company's agreement would be made by the
Company.  All reasonable costs and legal fees paid or incurred by the Executive
pursuant to any dispute or question of interpretation relating to the agreements
shall be paid by the Association or Company, respectively, if the Executive is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.  The employment agreements also provide that the Association and
Company shall indemnify the Executive to the fullest extent allowable under
federal and Delaware law, respectively.

     CHANGE IN CONTROL AGREEMENTS. For similar reasons as with the employment
agreements, the Association and/or  the Company have entered into change in
control agreements with Messrs. Getsy and Suchta and six other executive
officers (collectively, the "Executive").  Each change in control agreement
provides for a two year term.  Commencing on the date of the execution of the
Company's change in control agreement, the term shall be extended for one day
each day until such time as the Board of Directors of the Company or the
Executive elects by written notice not to extend the term, at which time the
change in control agreement will end on the second anniversary of the date of
notice.  The Company's change in control agreement provides that at any time
following a change in control of the Association or the Company (as defined in
the agreement), if the Company terminates the Executive's employment for any
reason other than cause, or if the Executive terminates his or her employment
following demotion, loss of title, office or significant authority, a reduction
in compensation, or relocation of the principal place of employment of more than
25 miles, the Executive, or in the event of Executive's subsequent death,
Executive's beneficiary or beneficiaries or estate, as the case may be, would be
entitled to a sum equal to two (2) times the Executive's annual compensation,
including bonuses, cash and stock compensation and other benefits for the
preceding twelve months.  The Company would also continue the Executive's life,
medical and disability coverage for twenty-four (24) full calendar months from
the date of termination.  The Association's change in control agreement is
similar to that of the Company, with the exception that such agreement may be
extended on an annual basis by the Association and is subject to certain other
limitations imposed by federal regulation.   Payments to the Executive under the
Association's change in control agreement will be guaranteed by the Company in
the event that payments or benefits are not paid by the Association.  Based
solely on the Compensation reported in the Summary Compensation Table for 1998
and excluding any benefits under any employee plan which may be payable,
following a change in control and termination of employment, Messrs. Getsy,
Suchta and the other six officers covered by the agreements would receive a
severance payment in the amount of approximately $269,652, $237,308 and $1.1
million, respectively.

     Payments under the change in control agreements in the event of a change in
control may constitute some portion of an excess parachute payment under Section
280G of the Code for executive officers, resulting in the imposition of an
excise tax on the recipient and denial of the deduction for such excess amounts
to the Company and the Association.

                                       13
<PAGE>
 
     INCENTIVE PLAN.  The Company maintains the Incentive Plan, which provides
discretionary awards of options to purchase Common Stock, option-related awards
and awards of Common Stock (collectively, "Awards") to officers, directors and
key employees as determined by a committee of the Board of Directors.  Awards of
Common Stock to officers, directors and key employees is provided under
"Restricted Stock Awards" in the "Summary Compensation Table."  No options were
granted under the Incentive Plan to the Named Executive Officers in fiscal 1998.

     The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers as of December 31, 1998.  Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the Common
Stock.

                       FISCAL YEAR-END OPTION/SAR VALUE

<TABLE>
<CAPTION>
                                                                          VALUE OF
                                       NUMBER                           UNEXERCISED
                                   OF SECURITIES                        IN-THE-MONEY
                               UNDERLYING UNEXERCISED                   OPTIONS/SARS
                                    OPTIONS/SARS                      AT FISCAL YEAR-
      NAME                    AT FISCAL YEAR-END(#)(1)                  END($)(2)(3)
-----------------          -----------------------------     --------------------------------------
                        EXERCISABLE          UNEXERCISABLE     EXERCISABLE       UNEXERCISABLE
                        -----------          -------------     -----------       -------------
<S>                     <C>                  <C>               <C>               <C>
John M. Kish                30,000                 45,000        $ 82,500            $123,750
John G. Micenko             38,000                 57,000         104,500             156,750
Andrew R. Getsy             10,000                 15,000          27,500              41,250
Raymond G. Suchta           20,000                 30,000          55,000              82,500
</TABLE>

____________________________________
(1)   The options in this table have an exercise price of $12.75.
(2)   The price of the Common Stock on December 31, 1998 was $15.50.
(3)   Based on the market value of the underlying Common Stock at fiscal year
      end, minus the exercise price.

                                       14
<PAGE>
 
     RETIREMENT PLAN.  The Association participates in the Financial
Institutions Retirement Plan, administered by the Pentegra Group, which is a
defined benefit pension plan, for its employees (the "Retirement Plan"). As
discussed below, the Retirement Plan was modified as of July 1, 1996.  The
following table indicates the annual retirement benefit payable under the
current terms of the Retirement Plan upon retirement at age 65 to those
participants who were not participants in the Retirement Plan as of July 1, 1996
and who elect to receive his retirement benefit in the standard form of benefit,
assuming various specified levels of plan compensation and various specified
years of credited service expressed in the form of a ten year certain and life
annuity.  The benefits listed in the table below are based upon salary only and
are not subject to any social security adjustment.  The following table includes
benefits under the current terms of the Retirement Plan.


<TABLE>
<CAPTION>
   HIGH-5                 10 YEARS        15 YEARS      20 YEARS      25 YEARS        30 YEARS
  AVERAGE                 BENEFIT         BENEFIT       BENEFIT       BENEFIT         BENEFIT
COMPENSATION              SERVICE         SERVICE       SERVICE       SERVICE         SERVICE
------------             ---------       ---------    ----------    -----------     -----------
<S>                      <C>             <C>          <C>           <C>             <C>
    $ 20,000               $ 2,400         $ 3,600       $ 4,800       $ 6,000         $ 6,000
      30,000                 3,600           5,400         7,200         9,000           9,000
      50,000                 6,000           9,000        12,000        15,000          15,000
      75,000                 9,000          13,500        18,000        22,500          22,500
     100,000                12,000          18,000        24,000        30,000          30,000
     150,000                18,000          27,000        36,000        45,000          45,000
     200,000                24,000          36,000        48,000        60,000          60,000
     250,000                30,000          45,000        60,000        75,000          75,000
</TABLE>

________________________
(1)    The maximum amount of annual compensation which can be considered in
       computing benefits under Section 401(a)(17) of the Code is $160,000 for
       1999.


     Effective July 1, 1996, in conjunction with the Association's adoption of a
savings plan qualified under Section 401(k) of the Code (the "401(k) Plan") and
the ESOP, the Association modified the Retirement Plan from a self-administered
defined benefit plan with a 60 percent, High-3 formula and a 25 year target
service minimum to a defined benefit plan with a 30 percent, High-5 formula and
a 25 year target service minimum.  As a result, participants in the Retirement
Plan as of July 1, 1996 will effectively receive a benefit under the Retirement
Plan equal to the greater of: (i) the amount of benefit payable under the
Retirement Plan prior to modification or (ii) the amount of benefit payable
under the terms of the modified terms of the Retirement Plan.  The following
table indicates the annual retirement benefit payable to participants upon
retirement at age 65 who elect to receive their retirement benefit in the
standard form of benefit, assuming various specified levels of plan compensation
and various specified years of credited service, under the Retirement Plan prior
to its modification.  The benefits listed in the retirement tables are based
upon salary only and are not subject to any Social Security adjustment. The
table below sets forth estimated annual pension benefits for individuals at age
65 as of the June 30, 1996 accrued benefit date.

                                       15
<PAGE>
 
<TABLE>
<CAPTION>
   HIGH-3         10 YEARS    15 YEARS     20 YEARS     25 YEARS     30 YEARS
  AVERAGE         BENEFIT     BENEFIT      BENEFIT      BENEFIT      BENEFIT
COMPENSATION      SERVICE     SERVICE      SERVICE      SERVICE      SERVICE
------------    ----------   ---------    ---------    ---------   ----------
<S>             <C>          <C>          <C>          <C>         <C>
  $ 25,000        $ 6,000     $ 9,000     $ 12,000     $ 15,000     $ 15,000
    50,000         12,000      18,000       24,000       30,000       30,000
    75,000         18,000      27,000       36,000       45,000       45,000
   100,000         24,000      36,000       48,000       60,000       60,000
   125,000         30,000      45,000       60,000       75,000       75,000
   150,000         36,000      54,000       72,000       90,000       90,000
   175,000         42,000      63,000       84,000      105,000      105,000
   200,000         48,000      72,000       96,000      120,000      120,000
   250,000         60,000      90,000      120,000      150,000      150,000
</TABLE>                           

________________                   
(1)  The maximum amount of annual compensation which can be considered in
     computing benefits under Section 401(a)(17) of the Code is $160,000 for
     1999.                         
                                   

     The following table sets forth the years of credited service (i.e., benefit
service) as of December 31, 1998 for each Named Executive Officer.


<TABLE>
<CAPTION>
                                        CREDITED SERVICE
                               -------------------------------------
                                  YEARS                     MONTHS
                                  -----                     ------
        <S>                    <C>                          <C>
        John M. Kish.......          1                         9  
        John G. Micenko....         35                         6
        Andrew R. Getsy....         30                         6
        Raymond G. Suchta..         16                         6
</TABLE>

TRANSACTIONS WITH CERTAIN RELATED PERSONS

     The Association's past policy provided that all loans made by the
Association to its directors and executive officers ("insiders") be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features.  The Financial Institutions Recovery, Reform and Enforcement Act of
1989 ("FIRREA"), subjected the Association to the restrictions of Section 22(g)
and (h) of the Federal Reserve Act and Regulation O promulgated thereunder.
Prior to FIRREA, the Association made loans to executive officers with
discounted interest rates.  Recent legislation has created an exception to this
lending prohibition which allows the Association to extend the same lending
terms to insiders as are widely available to all employees within certain
limits.  In November 1998, the Association revised its policy to allow insiders
to be eligible to receive the same discounted interest rate that is available to
all employees.

                                       16
<PAGE>
 
     Set forth below is certain information as of December 31, 1998, with
respect to loans made by the Association on preferential terms to executive
officers of the Company and their affiliates which in the aggregate exceeded
$60,000 at any time since January 1, 1998 plus any additional indebtedness of
such persons to the Association.  At the time of origination of the loans as set
forth below, preferential loan rates were available for all full-time employees.
The rates on such loans are equal to the Association's cost of funds rounded to
the next quarter (but in no event less than 6.25%) and such preferential
interest rates remain in effect as long as the employee maintains full-time
status.


<TABLE>
<CAPTION>
                                                              LARGEST         BALANCE     INTEREST RATE           
                                             MATURITY         AMOUNT           AS OF           AS OF              
                                DATE          DATE       OUTSTANDING SINCE    DECEMBER       DECEMBER    TYPE OF  
NAME AND POSITION             OF LOAN        OF LOAN      JANUARY 1, 1998     31, 1998       31, 1998      LOAN   
-----------------             -------        -------      ---------------     --------       --------    -------  
<S>                           <C>             <C>        <C>                  <C>         <C>            <C>        
Raymond G. Suchta,               1/9/87        6/1/17        $ 99,141         $  91,357       6.50%      Mortgage 
 Chief Financial Officer                                                                                          
 and Treasurer of the                                                                                             
 Company and Vice                                                                                                 
 President of the                                                                                                 
 Association                                                                                                      
Wayne A. Callen,               11/18/86        6/1/17         107,180           104,437       7.00       Mortgage 
 Vice President of the                                                                                            
 Association                                                                                                      
Todd L. Cover,                  9/16/98       10/1/28         208,000           207,551       6.25       Mortgage  
 Executive Vice President
 and Chief Operating
 Officer of the
 Association
</TABLE>

     John M. Kish was previously a partner in the law firm of Kish, Kish and
Yarsky (the "firm"), which acted as local counsel to the Association during
1998.  The Company and the Association made payments to the firm for legal
services totaling $26,500.

                                       17
<PAGE>
 
                     PROPOSAL NO. 2:  RATIFICATION OF THE
                    AMENDED AND RESTATED GA FINANCIAL, INC.
                        1996 STOCK-BASED INCENTIVE PLAN

     The Board of Directors presents for stockholder ratification the Amended
and Restated GA Financial, Inc. 1996 Stock-Based Incentive Plan (the "Plan").
Stockholders originally approved the GA Financial, Inc. 1996 Stock-Based
Incentive Plan on October 16, 1996.  The Board of Directors approved certain
amendments to the Plan in January, 1999, and submits the amended and restated
Plan to stockholders for ratification.  The amended and restated Plan is
attached as Annex A.

     The Company implemented the Plan primarily to attract, keep and motivate
qualified individuals in key positions.  The Plan provides officers, employees
and non-employee directors or "outside directors" of the Company and its
affiliates, including the Association, an incentive to contribute to the success
of the Company by giving them an ownership interest in the Company  This
incentive aligns the interests of management and stockholders and rewards
employees for outstanding performance.

     The Plan allows the Company to grant awards of restricted shares of the
Company common stock and options to purchase the Company common stock, as well
as certain related rights.  All employees and all outside directors of the
Company and its affiliates, including the Association, are eligible to receive
awards under the Plan.  A committee consisting of the entire Board of Directors
administers the Plan.

     OTS regulations generally provide that restricted stock and stock option
awards granted under any stock-based benefit plan, such as the Plan, adopted by
a financial institution within the first year after conversion to stock form,
must conform to certain OTS regulatory requirements and limitations.  The Board
of Directors believes it is in the best interests of the Company and the
Association to amend the Plan to remove certain limitations contained in the
Plan that are imposed by the OTS conversion regulations.  The effect of the
amendments will be to allow the Committee the discretion to make grants of
awards which vest at a rate greater than 20% per year and allow the Committee
the discretion to accelerate the vesting of awards upon certain circumstances,
including the retirement of a grantee.  The amendments also provide for
automatic acceleration of vesting upon a Change in Control of the Company or the
Association.  The amendments did not remove the OTS requirements that the
exercise price of any stock option granted be at least equal to the fair market
value of the underling stock on the date of grant or the quantitative grant
limitations applicable to officers and directors.  The Company also amended the
Plan for conforming changes and certain minor administrative matters, including
providing committee discretion with respect to the transferability of non-
statutory stock options for valid estate planning purposes.

     As of December 31, 1998, the Company had granted options covering 656,500
shares of the Company's common stock under the Plan and 233,500 shares remained
available under the Plan for future option grants.  As of December 31, 1998, the
Company had also granted 323,650 restricted stock awards under the Plan and
32,350 shares of common stock remained available for future grants of restricted
stock awards.

     Under generally accepted accounting principles, compensation expense is
generally not recognized with respect to the award of options to directors,
officers and employees of the Company and its subsidiaries.  However, the
Financial Accounting Standards Board recently indicated that it would propose
rules during 1999 that would generally require recognition of compensation
expense with respect to awards made to

                                       18
<PAGE>
 
non-employees, including non-employee directors of the Company, and that the
proposed changes would apply to awards made after December 15, 1998.

SUMMARY OF THE PLAN

     Types of Awards. The Plan authorizes the grant of Awards to officers,
employees and outside directors in the form of: (i) options to purchase the
Company's Common Stock intended to qualify as incentive stock options under
Section 422 of the Code (options which afford tax benefits to the recipients
upon compliance with certain conditions and which do not result in tax
deductions to the Company), referred to as "Incentive Stock Options"; (ii)
options that do not so qualify (options which do not afford income tax benefits
to recipients, but which may provide tax deductions to the Company), referred to
as "Non-Statutory Stock Options"; (iii) limited rights which are exercisable
only upon a change in control of the Company or Bank (as defined in the
Incentive Plan) ("Limited Rights"); (iv) restricted shares of Common Stock
("Stock Awards"), (v) Dividend Equivalent Rights; and (vi) Equitable Adjustment
Rights.  Each type of Award granted under the Plan may be subject to vesting
requirements or other conditions imposed by the Committee.

     Number of Shares of Common Stock Available for Awards.  The Company has
reserved 890,000 shares of Common Stock for issuance under the Plan in
connection with the exercise of options and 356,000 shares of Common Stock were
acquired by the Plan trust for Stock Awards under the Plan.  Shares to be issued
under the Plan may be either authorized but unissued shares, or reacquired
shares held by the Company as treasury stock or in the case of Stock Awards,
paid from the trust.  Any shares subject to an Award which expires, terminates
unexercised (in the case of options) or forfeited will again be available for
grant under the Plan.

     Stock Option Grants. The Committee has the discretion to award Incentive
Stock Options or Non-Statutory Stock Options to employees, while only Non-
Statutory Stock Options may be awarded to outside directors.  Pursuant to the
Plan, the Committee has the authority to determine the dates and terms on which
each option will become exercisable.   The exercise price of all stock options
must be 100% of the fair market value of the underlying Common Stock at the time
of grant, except as provided below, and the term of all stock options may not
exceed ten years.  In order to qualify as Incentive Stock Options under Section
422 of the Code, no more than $100,000 of options may become exercisable for the
first time in any taxable year.  Also, Incentive Stock Options granted to any
person who is the beneficial owner of more than 10% of the outstanding voting
stock may be exercised only for a period of five years from the date of grant
and the exercise price must be at least equal to 110% of the fair market value
of the underlying Common Stock on the date of grant.

     The exercise price of an option may be paid in cash, Common Stock or a
combination of cash and Common Stock, by the surrender of all or part of the
option being exercised, by the immediate sale through a broker of the number of
shares being acquired sufficient to pay the purchase price, or a combination of
these methods as determined by the Committee.  Options may be exercised during
periods before and after an optionee terminates employment, as the case may be,
to the extent authorized by the Committee or specified in the Plan or option
agreement.

     Limited Rights.  The Plan also provides the Committee with the ability to
grant a Limited Right concurrently with any option.  Limited Rights are related
to specific options granted and become exercisable only upon a change in control
of the Association or the Company.  Upon exercise, the holder will be entitled

                                       19
<PAGE>
 
to receive, in lieu of purchasing the stock underlying the option, a lump sum
cash payment equal to the difference between the exercise price of the related
option and the fair market value of the shares of Common Stock subject to the
option on the date of exercise of the right less any applicable tax withholding.

     Dividend Equivalent Rights.  Simultaneously with the grant of any option to
any individual, the Committee may grant a Dividend Equivalent Right with respect
to all or some of the shares covered by such option.  The Dividend Equivalent
Right provides the employee with a separate cash benefit equal to 100% of the
amount of any extraordinary dividend declared by the Company on shares of Common
Stock subject to an option.  Upon the payment of an extraordinary dividend, the
holder of a Dividend Equivalent Right will receive, at the time of vesting of
the related option, an amount of cash or some other payment as determined under
the Incentive Plan, equal to 100% of the extraordinary dividend paid on shares
of Common Stock, multiplied by the number of shares subject to the underlying
option plus any earnings thereon minus any tax withholding amounts.  Payments
shall be decreased by the amount of any applicable tax withholding prior to
distribution in accordance with the Plan.  The Dividend Equivalent Right is
transferable only when the underlying option is transferable and under the same
conditions.
 
     Equitable Adjustment Right.  Simultaneously with the grant of any option,
in the alternative to a Dividend Equivalent Right, the Committee may grant an
Equitable Adjustment Right.  In such a case, upon the payment of an
extraordinary dividend, the Committee may adjust the number of shares and/or the
exercise price of the options underlying the Equitable Adjustment Right, as the
Committee deems appropriate.

     Stock Awards.  The Plan provides for the grant of Stock Awards in the form
of restricted shares of Common Stock that are subject to restrictions on
transfer and ownership.  Unless otherwise specified in the Plan, the Committee
has discretion to determine the terms and conditions of each Stock Award.  When
Stock Awards are distributed in accordance with the Plan, the recipients will
also receive amounts equal to accumulated cash and stock dividends (if any) with
respect thereto plus earnings thereon minus any required tax withholding
amounts.  Prior to vesting, recipients of Stock Awards may direct the voting of
shares of Common Stock granted to them and held in the Plan trust.  Shares of
Common Stock held by the Plan trust which have not been allocated or for which
voting has not been directed are voted by the trustee in the same proportion as
the awarded shares are voted in accordance with the directions given by all
recipients of Stock Awards.

     Effect of a Change in Control.  In the event of a Change in Control of the
Association or the Company (as defined in the Plan), each outstanding Award
granted under the Plan will become fully vested.  All option grants will remain
exercisable until the expiration of the term of the option.
 
     Nontransferability.  Unless determined otherwise by the Committee, Awards
under the Plan shall not be transferable by the recipient other than by will or
the laws of intestate succession or pursuant to a domestic relations order.
With the consent of the Committee, a recipient may permit transferability or
assignment for valid estate planning purposes of a Non-Statutory Stock Option as
permitted under the Code or Rule 16b-3 under the Exchange Act and a participant
may designate a person or his or her estate as beneficiary of any Award to which
the recipient would then be entitled, in the event of the death of the
participant.

                                       20
<PAGE>
 
CERTAIN INCOME TAX CONSEQUENCES

     The following brief description of the tax consequences of Awards granted
under the Plan is based on federal income tax laws currently in effect and does
not purport to be a complete description of such federal income tax
consequences.

     Stock Options.   There are no federal income tax consequences either to the
optionee or to the Company upon the grant of an Incentive Stock Option or a Non-
Statutory Stock Option.  On the exercise of an Incentive Stock Option during
employment or within three months thereafter, the optionee will  not recognize
any income and the Company will not be entitled to a deduction, although the
excess of the fair market value of the shares on the date of exercise over the
option price is includable in the optionee's alternative minimum taxable income,
which may give rise to alternative minimum tax liability for the optionee.
Generally, if the optionee disposes of shares acquired upon exercise of an
Incentive Stock Option within two years of the date of grant or one year of the
date of exercise, the optionee will recognize ordinary income, and the Company
will be entitled to a deduction, equal to the excess of the fair market value of
the shares on the date of exercise over the option price (limited generally to
the gain on the sale).  The balance of any gain or loss will be treated as a
capital gain or loss to the optionee.  If the shares are disposed of after the
holding periods mentioned above, the Company will not be entitled to any
deduction, and the entire gain or loss for the optionee will be treated as a
capital gain or loss.

     On exercise of a Non-Statutory Stock Option, the excess of the date-of-
exercise fair market value of the shares acquired over the option price will
generally be taxable to the optionee as ordinary income and deductible by the
Company, provided the Company properly withholds taxes in respect of the
exercise.  The disposition of shares acquired upon the exercise of a Non-
Statutory Stock Option will generally result in a capital gain or loss for the
optionee, but will have no tax consequences for the Company.

     Limited Rights, Dividend Equivalent Rights and Equitable Adjustment Rights.
In the case of Limited Rights, the holder will recognize ordinary income, and
the Company will be entitled to a deduction, equal to the amount paid to him.
Upon the exercise of a Dividend Equivalent Right, the holder will recognize
ordinary income, and the Company will be entitled to a deduction equal to the
amount of cash received under the Dividend Equivalent Right.  For tax purposes,
Equitable Adjustment Rights receive the same tax treatment as Non-statutory
Stock Options.

     Stock Awards.  A participant who has been granted Stock Awards under the
Plan and does not make an election under Section 83(b) of the Code will not
recognize taxable income at the time of the Stock Award grant.  At the time any
transfer or forfeiture restrictions applicable to the Stock Award lapse, the
recipient will recognize ordinary income, and the Company will be entitled to a
corresponding deduction, equal to the excess of the fair market value of such
Common Stock at such time over the amount, if any, paid for the award.  Any
dividend paid to the recipient on the restricted stock subject to the Stock
Award at or prior to such time will be ordinary compensation income to the
recipient and deductible as such by the Company.

     A recipient of a Stock Award who makes an election under Section 83(b) of
the Code will recognize ordinary income at the time of the Stock Award and the
Company will be entitled to a corresponding deduction equal to the fair market
value of such stock at such time over the amount, if any, paid for the award.
Any dividends subsequently paid to the recipient on the restricted stock subject
to the Stock Award will be dividend income to the recipient and not deductible
by the Company. If the recipient makes a Section 83(b) election, there are no
federal income tax consequences either to the recipient or the Company at the
time any transfer or forfeiture restrictions applicable to the restricted stock
award lapse.

                                       21
<PAGE>
 
ADJUSTMENTS

     In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder.  All Awards under the Plan shall be binding upon any successors or
assigns of the Company.

AMENDMENT OF THE PLAN

     The Plan allows the Board to amend the Plan without stockholder approval,
unless such approval is required to comply with a tax law, American Stock
Exchange requirements or regulatory requirements.

STOCKHOLDER VOTE

     Stockholders are being requested to ratify all amendments to the Plan.  If
stockholders fail to ratify Proposal 2, the Plan in the form attached hereto, is
intended to remain in full force and effect at the discretion of the Company's
Board.  The affirmative vote of a majority of the votes cast by  GA Financial.
Inc. stockholders at the Annual Meeting is required to ratify the Plan, as
amended.

     THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENTS TO THE
GA FINANCIAL, INC. 1996 STOCK-BASED INCENTIVE PLAN.

                 PROPOSAL NO. 3.  RATIFICATION OF APPOINTMENT
                            OF INDEPENDENT AUDITORS

     PricewaterhouseCoopers LLP  has been the principal accountants for GA
Financial, Inc.  On February 24, 1999, the Company engaged KPMG LLP, as its
principal accountant to audit the Company's consolidated financial statements
for the fiscal year ending December 31, 1999.  The decision to change
accountants was recommended by the audit committee and approved by the Company's
Board of Directors.

     In connection with the audits of the two fiscal years ended December 31,
1997 and the subsequent period through March 2, 1999, there were no
disagreements with PricewaterhouseCoopers LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which disagreements if not resolved to their satisfaction would have
caused them to make reference to the subject matters of the disagreements in
connection with their opinions.  In addition, such financial statements
contained no adverse opinion or a disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope, or accounting principles.

     Representatives of PricewaterhouseCoopers LLP and KPMG LLP will be present
at the Meeting.  They will be given an opportunity to make a statement if they
so desire to do so and will be available to respond to appropriate questions
from stockholders present at the Meeting.

     UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY.

     THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.

                                       22
<PAGE>
 
                            ADDITIONAL INFORMATION

STOCKHOLDER PROPOSALS

     To be considered for inclusion in the proxy statement and proxy relating to
the Annual Meeting of Stockholders to be held in 2000, a stockholder proposal
must be received by the Secretary of the Company at the address set forth in the
Notice of Annual Meeting of Stockholders, not later than November 26, 1999.  Any
such proposal will be subject to Rule 14a-8 of the Rules and Regulations under
the Exchange Act.

NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING

     The Bylaws of the Company provide an advance notice procedure for certain
business to be brought before an annual meeting.  In order for a stockholder to
properly bring business before an annual meeting, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the time originally fixed for such meeting; provided, however, that in
the event that less than one hundred (100) days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the close of
business on the tenth day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made.  In order for
the notice of a stockholder proposal for consideration at the Company's 2000
Annual Meeting of Stockholders to be timely, the Company would have to receive
such notice no later than January 26, 2000 assuming the 2000 annual meeting is
held on April 26, 2000 and that the Company provides at least 100 days notice or
public disclosure of the date of the meeting.  The notice must include the
stockholder's name and address, as it appears on the Company's record of
stockholders, a brief description of the proposed business, the reason for
conducting such business at the annual meeting, the class and number of shares
of the Company's common stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business.  In the
case of nominations to the Board, certain information regarding the nominee must
be provided.  Nothing in this paragraph shall be deemed to require the Company
to include in its proxy statement and proxy relating to an annual meeting any
stockholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.

                                       23
<PAGE>
 
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING

     The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders.  If, however, other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote the shares represented thereby on such matters in accordance with their
best judgment.

     Whether or not you intend to be present at the Meeting, you are urged to
return your proxy promptly.  If you are present at the Meeting and wish to vote
your shares in person, your proxy may be revoked by voting at the Meeting.

     A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED
WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN REQUEST TO RAYMOND G.
SUCHTA, CHIEF FINANCIAL OFFICER, GA FINANCIAL, INC., 4750 CLAIRTON BOULEVARD,
PITTSBURGH, PENNSYLVANIA 15236.


                              By Order of the Board of Directors

                              /s/ Lawrence A. Michael

                              Lawrence A. Michael
                              Corporate Secretary
 
Pittsburgh, Pennsylvania
March 26, 1999

     YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.  WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

                                       24
<PAGE>
 
                                                                      APPENDIX A

                             AMENDED AND RESTATED
                              GA FINANCIAL, INC.
                        1996 STOCK-BASED INCENTIVE PLAN


1.   DEFINITIONS.
     ----------- 

     (a)  "Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Holding company, as such terms are defined in Sections 424(e) and 424(f)
of the Code.

     (b)  "Alternate Option Payment Mechanism" refers to one of several methods
available to a Participant to fund the exercise of a stock option set out in
Section 13 hereof.  These mechanisms include: broker assisted cashless exercise
and stock for stock exchange.

     (c)  "Award" means a grant of one or some combination of one or more Non-
statutory Stock Options, Incentive Stock Options and Stock Awards under the
provisions of this Plan.

     (d)  "Association" means Great American Federal Savings and Loan
Association.

     (e)  "Board of Directors" or "Board" means the board of directors of the
Holding Company.

     (f)  "Change in Control" means a change in control of the Association or
Holding Company of a nature that; (i) would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in
a Change in Control within the meaning of the Home Owners' Loan Act of 1933, as
amended ("HOLA") and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the date
hereof (provided, that in applying the definition of change in control as set
forth under such rules and regulations the Board shall substitute its judgment
for that of the OTS); or (iii) without limitation such a Change in Control shall
be deemed to have occurred at such time as (A) any "person" (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Association or the Holding Company representing
20% or more of the Association's or the Holding Company's outstanding securities
except for any securities of the Association purchased by the Holding Company
and any securities purchased by any tax qualified employee benefit plan of the
Association; or (B) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board;  or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Association or the Holding Company or similar transaction occurs
in which the Association or Holding Company is not the resulting entity; or (D)
a solicitation of shareholders of the Holding 
<PAGE>
 
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Association or similar transaction with
one or more corporations, as a result of which the outstanding shares of the
class of securities then subject to the plan are exchanged for or converted into
cash or property or securities not issued by the Association or the Holding
Company; or (E) a tender offer is made for 20% or more of the voting securities
of the Association or the Holding Company.

     (g)  "Code" means the Internal Revenue Code of 1986, as amended.

     (h)  "Committee" means a committee consisting of the entire Board of
Directors or consisting solely of two or more members of the Board of Directors
who are defined as Non-Employee Directors as such term is defined under Rule
16b-3(b)(3)(i) under the  Exchange Act as promulgated by the Securities and
Exchange Commission.

     (i)  "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share or any stock exchanged for shares of Common Stock pursuant
to Section 17 hereof.
 
     (j)  "Date of Grant" means the effective date of an Award.

     (l)  "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Participant to perform the work
customarily assigned to him or, in the case of a Director, to serve on the
Board.  Additionally, a medical doctor selected or approved by the Board of
Directors must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Participant's
lifetime.

     (m)  "Dividend Equivalent Rights" means the right to receive an amount of
cash based upon the terms set forth in Section 10 hereof.

     (n)  "Effective Date" means October 16, 1996.

     (o)  "Employee" means any person who is currently employed by the Holding
Company or an Affiliate, including officers, but such term shall not include
Outside Directors.

     (p)  "Employee Participant" means an Employee who holds an outstanding
Award under the terms of the Plan.

     (q)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (r)  "Exercise Price" means the purchase price per share of Common Stock
deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.

      (s) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the average of the high and low bid prices of the
Common Stock as reported by the American Stock Exchange ("AMEX") or the New York
Stock Exchange ("NYSE") or the average

                                      A-2
<PAGE>
 
of the high and low sale prices of the Common Stock as reported by Nasdaq Stock
Market ("NASDAQ") each as published in the Wall Street Journal, if published, on
such date or, if the Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was traded thereon or the last previous
date on which a sale is reported. If the Common Stock is not reported on the
AMEX, NASDAQ or the NYSE, the Fair Market Value of the Common Stock is the value
so determined by the Board in good faith.

     (t)  "Holding Company" means GA Financial, Inc.

     (u)  "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated by the Committee as an Incentive Stock
Option pursuant to Section 7 hereof and is intended to be such under Section 422
of the Code.

     (v)  "Limited Right" means the right to receive an amount of cash based
upon the terms set forth in Section 8 hereof.

     (w)  "Non-statutory Stock Option" means an Option to a Participant pursuant
to Section 6 hereof, which is not designated by the Committee as an Incentive
Stock Option or which is redesignated by the Committee as a Non-statutory Stock
Option or which is designated an Incentive Stock Option under Section 7 hereof,
but does not meet the requirements of such under Section 422 of the Code.

     (x)  "Option" means the right to buy a fixed amount of Common Stock at the
Exercise Price within a limited period of time designated as the term of the
option as granted under Sections 6 or 7 hereof.

     (y)  "Outside Director" means a member of the Board of Directors of the
Holding Company or its Affiliates, who is not also an Employee.

     (z)  "Outside Director Participant" means an Outside Director who holds an
outstanding Award under the terms of the Plan.

     (aa) "Participant(s)" means collectively an Employee Participant and/or an
Outside Director Participant who hold(s) outstanding Awards under the terms of
the Plan.

     (bb) "Retirement" with respect to an Employee Participant means termination
of employment which constitutes retirement under any tax-qualified plan
maintained by the Association.  However, "Retirement" will not be deemed to have
occurred for purposes of this Plan if a Participant continues to serve as a
consultant to or on the Board of Directors of the Holding Company or its
Affiliates even if such Participant is receiving retirement benefits under any
retirement plan of the Holding Company or its Affiliates.  With respect to an
Outside Director, "Retirement" means the termination of service from the Board
of Directors of the Holding Company or its Affiliates following written notice
to the Board as a whole of such Outside Director's intention to retire, except
that an Outside Director shall not be deemed to have "retired" for purposes of
the Plan in the event he continues to serve as a consultant to the Board or as
an advisory director.

                                      A-3
<PAGE>
 
     (cc) "Stock Awards" are Awards of Common Stock which may vest immediately
or over a period of time.  Vesting of Stock Awards under Section 9 hereof may be
contingent upon the occurrence of specified events or the attainment of
specified performance goals as determined by the Committee.

     (dd) "Termination for Cause" shall mean, in the case of a Director, removal
from the Board of Directors, or, in the case of an employee, termination of
employment, in both such cases as determined by the Board of Directors, because
of a material loss to the Holding Company or one of its Affiliates caused by the
Participant's intentional failure to perform stated duties, personal dishonesty,
willful violation of any law, rule, regulation, (other than traffic violations
or similar offenses) or final cease and desist order.  No act, or the failure to
act, on Participant's part shall be "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or its Affiliates.

     (ee) "Trust" means a trust established by the Board in connection with this
Plan to hold Plan assets for the purposes set forth herein.

     (ff) "Trustee" means that person or persons and entity or entities approved
by the Board to hold legal title to any of the Trust assets for the purposes set
forth herein.

2.   ADMINISTRATION.
     -------------- 

     (a)  The Plan shall be administered by the Committee.  The Committee is
authorized, subject to the provisions of the Plan, to grant awards to Employees
and establish such rules and regulations as it deems necessary for the proper
administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable.
All determinations and interpretations made by the Committee shall be binding
and conclusive on all Employee Participants and Outside Director Participants in
the Plan and on their legal representatives and beneficiaries.

     (b)  Awards to Outside Directors of the Holding Company or its Affiliates
shall be granted by the Board of Directors or the Committee, pursuant to the
terms of this Plan.
 
     (c)  Actual transference of the Award requires no, nor allows any,
discretion by the Trustee.

3.   TYPES OF AWARDS AND RELATED RIGHTS.
     -----------------------------------

     The following Awards and related rights as described below in Paragraphs 6
through 14 hereof may be granted under the Plan:

     (a)  Non-statutory Stock Options
     (b)  Incentive Stock Options
     (c)  Limited Right
     (d)  Stock Awards
     (e)  Dividend Equivalent Right
     (f)  Equitable Adjustment Right

                                      A-4
<PAGE>
 
4.   STOCK SUBJECT TO THE PLAN.
     ------------------------- 

     Subject to adjustment as provided in Section 17 hereof, the maximum number
of shares reserved for Awards under the Plan is 1,246,000. Subject to adjustment
as provided in Section 17 hereof, the maximum number of shares reserved hereby
for purchase pursuant to the exercise of Options and Option-related Awards
granted under the Plan is 890,000. Subject to adjustment as provided in Section
17 hereof, the maximum number of the shares reserved for Stock Awards is
356,000. These shares of Common Stock may be either authorized but unissued
shares or authorized shares previously issued and reacquired by the Holding
Company. To the extent that Options and Stock Awards are granted under the Plan,
the shares underlying such Awards will be unavailable for any other use
including future grants under the Plan except that, to the extent that Stock
Awards or Options terminate, expire, or are forfeited without having been
exercised (in the case of Limited Rights, exercised for cash), new Awards may be
made with respect to these shares.

5.   ELIGIBILITY.
     ----------- 

     Subject to the terms herein, all Employees and Outside Directors shall be
eligible to receive Awards under the Plan.

6.   NON-STATUTORY STOCK OPTIONS.
     --------------------------- 

     The Committee or the Board of Directors may, subject to the limitations of
the Plan and the availability of  shares reserved but unawarded in the Plan,
from time to time, grant Non-statutory Stock Options to Employees and Outside
Directors, upon such terms and conditions as the Committee may determine in
exchange for and upon surrender of previously granted Awards under this Plan.
Non-statutory Stock Options granted under this Plan are subject to the following
terms and conditions:

     (a) Exercise Price.  The Exercise Price of each Non-statutory Stock Option
         --------------                                                        
shall be determined by the Committee on the date the option is granted.  Such
Exercise Price shall not be less than 100% of the Fair Market Value of the
Holding Company's Common Stock on the Date of Grant.  Shares of Common Stock
underlying a Non-statutory Stock Option may be purchased only upon full payment
of the Exercise Price or upon operation of an Alternate Option Payment Mechanism
set out in Section 13 hereof.

     (b) Terms of Non-statutory Stock Options.  The term during which each Non-
         ------------------------------------                                 
statutory Stock Option may be exercised shall be determined by the Committee,
but in no event shall a Non-statutory Stock Option be exercisable in whole or in
part more than 10 years from the Date of Grant.  The Committee shall determine
the date on which each Non-statutory Stock Option shall become exercisable.  The
shares of Common Stock underlying each Non-statutory Stock Option installment
may be purchased in whole or in part by the Participant at any time during the
term of such Non-statutory Stock Option after such installment becomes
exercisable.  The Committee may, in its sole discretion, accelerate the time at
which any Non-statutory Stock Option may be exercised in whole or in part.   The
acceleration of any Non-statutory Stock Option under the authority of this
paragraph shall create no right, expectation or reliance on the part of any
other Participant or that certain Participant regarding any other unaccelerated
Non-statutory Stock Options.

                                      A-5
<PAGE>
 
     (c) NSO Agreement.  The terms and conditions of any Non-statutory Stock
         --------------                                                     
Option granted shall be evidenced by an agreement (the "NSO Agreement") which
shall be subject to the terms and conditions of the Plan.

     (d) Termination of Employment or Service.   Unless otherwise determined by
         ------------------------------------                                  
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Termination for Cause, or Retirement,
the Participant's Non-statutory Stock Options shall be exercisable only as to
those shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three (3) months following termination.
Notwithstanding any provisions set forth herein or contained in any NSO
Agreement relating to an award of a Non-statutory Stock Option, in the event of
termination of the Participant's employment or service for Disability or death,
all Non-statutory Stock Options held by such Participant shall immediately vest
and be exercisable for one year after such termination of service, and, in the
event of a Termination for Cause, all rights under the Participant's Non-
statutory Stock Options shall expire immediately upon such Termination for
Cause. Further, unless otherwise determined by the Committee, in the event of a
Participant's Retirement, the Participant may exercise only those Non-statutory
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of three (3) months from the date of
Retirement.

     (e) Acceleration Upon a Change in Control.  In the event of a Change in
         -------------------------------------                              
Control all Non-statutory Stock Options held by a Participant as of the date of
the Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Non-statutory Stock Options.

     (f) Non-Transferability. Unless otherwise determined by the Committee in
         -------------------                                                 
accordance with this Section 6(f), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-statutory Stock Option.  The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act.  For purposes of this
Section 6(f), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, or (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family, (ii) any
trust solely for the benefit of members of the Participant's Immediate Family,
(iii) any partnership whose only partners are members of the Participant's
Immediate Family, and (iv) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family.  For purposes of this Section 6(f), "Immediate Family" includes, but is
not necessarily limited to, a Participant's parents, grandparents, spouse,
children, grandchildren, siblings (including half bothers and sisters), and
individuals who are family members by adoption.  Nothing contained in this
Section 6(f) shall be construed to require the Committee to give its approval to
any transfer or assignment of any Non-statutory Stock Option or portion thereof,
and approval to transfer or assign any Non-statutory Stock Option or portion
thereof does not mean that such approval will be given with respect to any other
Non-statutory Stock Option or portion thereof.  The transferee or assignee of
any Non-statutory Stock Option shall be subject to all of the terms and
conditions applicable to such Non-statutory Stock Option immediately prior 

                                      A-6
<PAGE>
 
to the transfer or assignment and shall be subject to any other conditions
proscribed by the Committee with respect to such Non-statutory Stock Option.

7.   INCENTIVE STOCK OPTIONS.
     ----------------------- 

     The Committee may, subject to the limitations of the Plan and the
availability of  shares reserved but unawarded in the Plan, from time to time,
grant Incentive Stock Options to Employees.  Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:

     (a) Exercise Price.  The Exercise Price of each Incentive Stock Option
         --------------                                                    
shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant.  However, if at the time an Incentive Stock Option is granted to
an Employee Participant, the Employee Participant owns Common Stock representing
more than 10% of the total combined voting securities of the Holding Company
(or, under Section 424(d) of the Code, is deemed to own Common Stock
representing more than 10% of the total combined voting power of all classes of
stock of the Holding Company, by reason of the ownership of such classes of
stock, directly or indirectly, by or for any brother, sister, spouse, ancestor
or lineal descendent of such Employee Participant, or by or for any corporation,
partnership, estate or trust of which such Employee Participant is a
shareholder, partner or beneficiary), ("10% Owner"), the Exercise Price per
share of Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Date of Grant.   Shares may be purchased only upon payment of the full
Exercise Price or upon operation of an Alternate Option Payment Mechanism set
out in Section 13 hereof.

     (b) Amounts of Incentive Stock Options.  Incentive Stock Options may be
         ----------------------------------                                 
granted to any Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
In the case of an Option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the Option is granted) of
the Common Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Employee Participant during any calendar
year (under all plans of the Employee Participant's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.  The provisions
of this Section 7(b) shall be construed and applied in accordance with Section
422(d) of the Code and the regulations, if any, promulgated thereunder.  To the
extent an Award of an Incentive Stock Option under this Section 7 exceeds this
$100,000 limit, the portion of the Award in excess of such limit shall be deemed
a Non-statutory Stock Option.  The Committee shall have discretion to
redesignate Options granted as Incentive Stock Options as Non-Statutory Stock
Options.  Such Non-statutory Stock Options shall be subject to Section 6 hereof.

     (c) Terms of Incentive Stock Options.  The term during which each Incentive
         --------------------------------                                       
Stock Option may be exercised shall be determined by the Committee, but in no
event shall an Incentive Stock Option be exercisable in whole or in part more
than 10 years from the Date of Grant.  If at the time an Incentive Stock Option
is granted to an Employee Participant who is a 10% Owner, the Incentive Stock
Option granted to such Employee Participant shall not be exercisable after the
expiration of five years from the Date of Grant.  No Incentive Stock Option  is
transferable except by will or the 

                                      A-7
<PAGE>
 
laws of descent and distribution and is exercisable in his lifetime only by the
Employee Participant to whom it is granted. The designation of a beneficiary
does not constitute a transfer.

     The Committee shall determine the date on which each Incentive Stock Option
shall become exercisable. The Committee may also determine as of the Date of
Grant any other specific conditions or specific performance goals which must be
satisfied prior to the Incentive Stock Option becoming exercisable. The shares
comprising each installment may be purchased in whole or in part at any time
during the term of such Incentive Stock Option after such installment becomes
exercisable. The Committee may, in its sole discretion, accelerate the time at
which any Incentive Stock Option may be exercised in whole or in part. The
acceleration of any Incentive Stock Option under the authority of this paragraph
shall not create a right, expectation or reliance on the part of any other
Participant or that certain Participant regarding any other unaccelerated
Incentive Stock Options.

     (d) ISO Agreement.  The terms and conditions of any Incentive Stock Option
         -------------                                                         
granted shall be evidenced by an agreement (the "ISO Agreement") which shall be
subject to the terms and conditions of the Plan.

     (e) Termination of Employment. Unless otherwise determined by the
         -------------------------                                    
Committee, upon the termination of an Employee Participant's employment for any
reason other than Disability, death, Termination for Cause, or Retirement, the
Employee Participant's Incentive Stock Options shall be exercisable only as to
those shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination.
Notwithstanding any provisions set forth herein or contained in any ISO
Agreement relating to an award of an Incentive Stock Option, in the event of
termination of the Employee Participant's employment for Disability or death,
all Incentive Stock Options held by such Employee Participant shall immediately
vest and be exercisable for one year after such termination, and, in the event
of Termination for Cause, all rights under the Employee Participant's Incentive
Stock Options shall expire immediately upon termination.  Further, unless
otherwise determined by the Committee, in the event of a Participant's
Retirement, the Participant may exercise only those Incentive Stock Options that
were immediately exercisable by the Participant at the date of Retirement and
only for a period of three (3) months from the date of Retirement.

     (f) Acceleration Upon a Change in Control.  In the event of a Change in
         -------------------------------------                              
Control all Incentive Stock Options held by a Participant as of the date of the
Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Incentive Stock Options.

     (g) Compliance with Code.  The Incentive Stock Options granted under this
         --------------------                                                 
Section 7 are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code, but the Holding Company makes no warranty as
to the qualification of any Option as an incentive stock option within the
meaning of Section 422 of the Code. All Options that do not so quality shall be
treated as Non-statutory Stock Options.

     (h)  Disqualifying Dispositions.  Each Participant shall notify the
          --------------------------                                    
Committee of any disposition of shares of Common Stock issued pursuant to the
exercise of such Option under the 

                                      A-8
<PAGE>
 
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.

8.   LIMITED RIGHT.
     ------------- 

     Simultaneously with the grant of any Option to an Employee, the Committee
may grant a Limited Right with respect to all or some of the shares covered by
such Option.  Limited Rights granted under this Plan are subject to the
following terms and conditions:

         (a)  Terms of Rights.  In no event shall a Limited Right be exercisable
in whole or in part before the expiration of six months from the Date of Grant
of the Limited Right.  A Limited Right may be exercised only in the event of a
Change in Control.

         The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.

         Upon exercise of a Limited Right, the underlying Option shall cease to
be exercisable.  Upon exercise or termination of an Option, any related Limited
Rights shall terminate.  The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option.  The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.

         (b)  Payment.  Upon exercise of a Limited Right, the holder shall
              -------                                                     
promptly receive from the Holding Company an amount of cash equal to the
difference between the Exercise Price of the underlying option and the Fair
Market Value of the Common Stock subject to the underlying Option on the date
the Limited Right is exercised, multiplied by the number of shares with respect
to which such Limited Right is being exercised.  Payments shall be less any
applicable tax withholding as set forth in Section 18 hereof.

9.   STOCK AWARD.
     ----------- 

     The Committee (or in the case of an Outside Director Participant, the Board
of  Directors) may, subject to the limitations of the Plan, from time to time,
make an Award of some number of shares of Common Stock to Employees and Outside
Directors.  The Awards shall be made subject to the following terms and
conditions:

     (a) Payment of the Stock Award.  The Stock Award may only be made in whole
         --------------------------                                            
shares of Common Stock.  Stock Awards may only be granted from shares reserved
under the Plan but unawarded at the time the new Stock Award is made.

     (b) Terms of the Stock Awards.  The Committee shall determine the dates on
         -------------------------                                             
which Stock Awards granted to a Participant shall vest and any specific
conditions or performance goals which must be satisfied prior to the vesting of
any installment or portion of the Stock Award.  Notwithstanding other paragraphs
in this Section 9, the Committee may, in its sole discretion, accelerate the
vesting of any Stock Award.  The acceleration of any Stock Award under the
authority 

                                      A-9
<PAGE>
 
of this paragraph shall create no right, expectation or reliance on the part of
any other Participant or that certain Participant regarding any other
unaccelerated Stock Awards.

     (c) Stock Award Agreement. The terms and conditions of any Stock Award
         ---------------------                                             
shall be evidenced by an agreement (the "Stock Award Agreement") which such
Stock Award Agreement will be subject to the terms and conditions of the Plan.
Each Stock Award Agreement shall set forth:

         (i)  the period over which the Stock Award will vest;

         (ii) the performance goals, if any, which must be satisfied prior to
         the vesting of any installment or portion of the Stock Award. The
         performance goals may be set by the Committee on an individual level,
         for all Participants, for all Awards made during a given period of
         time, or for all Awards for indefinite periods;

     (d) Certification of Attainment of the Performance Goal.  No Stock Award or
         ---------------------------------------------------                    
portion thereof that is subject to a performance goal is to be distributed to
the Participant until the Committee certifies that the underlying performance
goal has been achieved.
 
     (e) Termination of Employment or Service.  Unless otherwise determined by
         ------------------------------------                                 
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death, Termination for Cause, or Retirement,
the Participant's unvested Stock Awards as of the date of termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void.  Notwithstanding any provisions set forth herein or
contained in any NSO Agreement relating to an award of a Non-statutory Stock
Option, in the event of termination of the Participant's service due to
Disability or death, all unvested Stock Awards  held by such Participant shall
immediately vest and, in the event of the Participant's Termination for Cause,
the Participant's unvested Stock Awards as of the date of such termination shall
be forfeited and any rights the Participant had to such unvested Stock Awards
shall become null and void. Further, unless otherwise determined by the
Committee, in the event of a Participant's Retirement, any Stock Awards in which
the Participant has not become vested as of the date of Retirement shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void.

     (f) Acceleration Upon a Change in Control.  In the event of a Change in
         -------------------------------------                              
Control all unvested Stock Awards held by a Participant shall immediately vest.

     (g) Non-Transferability.  Except to the extent permitted by the Code, the
         -------------------                                                  
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:

         (i)  The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award until full
vesting of such shares has occurred.  For purposes of this section, the
separation of beneficial ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.

         (ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic relations order, a
Stock Award is not transferable and 

                                      A-10
<PAGE>
 
may be earned in his lifetime only by the Participant to whom it is granted.
Upon the death of a Participant, a Stock Award is transferable by will or the
laws of descent and distribution. The designation of a beneficiary does not
constitute a transfer.

         (iii)  If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to such Stock
Award may not, without the written consent of the Committee (which consent may
be given in the Stock Award Agreement), be sold or otherwise disposed of within
six months following the date of grant of the Stock Award.

     (h) Accrual of Dividends.  Whenever shares of Common Stock underlying a
         --------------------                                               
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out.

     (i) Voting of Stock Awards.  After a Stock Award has been granted but for
         -----------------------                                              
which the shares covered by such Stock Award have not yet been earned and
distributed to the Participant pursuant to the Plan, the Participant shall be
entitled to direct the Trustee as to the voting of such shares of Common Stock
which the Stock Award covers subject to the rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust as to
which Participants are not entitled to direct, or have not directed, the voting,
shall be voted by the Trustee in the same proportion as the Common Stock covered
by Stock Awards which have been awarded is voted.

10.  DIVIDEND EQUIVALENT RIGHT
     -------------------------

     Simultaneously with the grant of any Option to a Participant, the Committee
(or Board of Directors, if grant is to an Outside Director Participant) may
grant a Dividend Equivalent Right with respect to all or some of the shares
covered by such Option.  Dividend Equivalent Rights granted under this Plan are
subject to the following terms and conditions:

     (a) Terms of Rights.  The Dividend Equivalent Right provides the Employee
         ---------------                                                      
with a cash benefit per share for each share underlying the unexercised portion
of the related Option equal to the amount of any extraordinary dividend (as
defined in this Section 10 (c)) per share of Common Stock declared by the
Holding Company.  The Dividend Equivalent Right is transferable only when the
related Option is transferable and under the same conditions.

     (b) Payment.  Upon the payment of an extraordinary dividend, the
         -------                                                     
Participant holding a Dividend Equivalent Right with respect to Options or
portions thereof which have vested shall promptly receive from the Holding
Company the amount of cash equal to the amount of the extraordinary dividend per
share of Common Stock, multiplied by the number of shares of Common Stock
underlying the unexercised portion of the related Option.  With respect to
Options or portions thereof which have not vested, the amount that would have
been received pursuant to the Dividend 

                                      A-11
<PAGE>
 
Equivalent Right with respect to the shares underlying such unvested Option or
portion thereof shall be paid to the Participant holding such Dividend
Equivalent Right together with earnings thereon, on such date as the Option or
portion thereof becomes vested. Payments shall be decreased by the amount of any
applicable tax withholding prior to distribution to the Participant as set forth
in Section 18.

     (c) Extraordinary Dividend.  For purposes of this Section 10, an
         ----------------------                                      
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend exceeds the Association's weighted average cost of funds on
interest-bearing liabilities for the current and preceding three quarters.

     (d) The terms and conditions of any Dividend Equivalent Right shall be
evidenced in the agreement for the Option (NSO Agreement or ISO Agreement) and
shall be subject to the terms and conditions of the Plan.   The Dividend
Equivalent Right shall be transferable to the extent that the related Option is
transferable.

11.  EQUITABLE ADJUSTMENT RIGHT
     --------------------------

     Simultaneously with the grant of any Option under this Plan, in the
alternative to a Dividend Equivalent Right, the Committee (or Board of
Directors, if grant is to an Outside Director Participant) may grant an
Equitable Adjustment Right with respect to all or some of the shares covered by
such Option

     Upon the payment of an extraordinary dividend (as such term is defined in
Section 10(c)), the Committee may adjust the number of shares and/or the
Exercise Price of the related Option, as the Committee deems appropriate as
provided in  Section 17 hereof.

     The terms and conditions of any Equitable Adjustment Right shall be
evidenced in the agreement for the Option (NSO Agreement or ISO Agreement) and
shall be subject to the terms and conditions of the Plan.  The Equitable
Adjustment Right shall be transferable to the extent that the related Option is
transferable.

12.  PAYOUT ALTERNATIVES
     -------------------

     Payments due to a Participant upon the exercise or redemption of an Award,
may be made subject to the following terms and conditions:

     (a) Discretion of the Committee.  The Committee has the sole discretion to
         ---------------------------                                           
determine what form of payment (whether monetary, Common Stock, a combination of
payout alternatives or otherwise) it shall use in making distributions of
payments for all Awards.  If the Committee requests any or all Participants to
make an election as to form of distribution or payment, it shall not be
considered bound by the election.

     (b) Payment in the form of Common Stock.  Any shares of Common Stock
         -----------------------------------                             
tendered in satisfaction of an obligation arising under this Plan shall be
valued at the Fair Market Value of the Common Stock on the day preceding the
date of the issuance of such stock to the Participant.

                                      A-12
<PAGE>
 
13.  ALTERNATE OPTION PAYMENT MECHANISM
     ----------------------------------

     The Committee has sole discretion to determine what form of payment it will
accept for the exercise of an Option.  The Committee may indicate acceptable
forms in the ISO or NSO Agreement covering such Options or may reserve its
decision to the time of exercise.  No Option is to be considered exercised until
payment in full is accepted by the Committee or its agent.

     (a) Cash Payment.  The exercise price may be paid in cash or by certified
         ------------                                                         
check.

     (b) Borrowed Funds.  To the extent permitted by law, the Committee may
         --------------                                                    
permit all or a portion of the exercise price of an  Option to be paid through
borrowed funds.

     (c) Exchange of Common Stock.
         ------------------------ 

         (i)  The Committee may permit payment by the tendering of previously
acquired shares of Common Stock.  This includes the use of "pyramiding
transactions" whereby some number of Options are exercised; then the shares
gained through the exercise are tendered back to the Holding Company as payment
for a greater number of Options. This transaction may be repeated as needed to
exercise all of the Options available.

         (ii) Any shares of Common Stock tendered in payment of the exercise
price of  an  Option shall be valued at the Fair Market Value of the Common
Stock on the date prior to the date of exercise.

14.  RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY.
     ------------------------------------------- 

     No Participant or Outside Director shall have any rights as a shareholder
with respect to any shares of Common Stock covered by an Option until the date
of issuance of a stock certificate for such shares.  Nothing in this Plan or in
any Award granted confers on any person any right to continue in the employ or
service of the Holding Company or its Affiliates or interferes in any way with
the right of the Holding Company or its Affiliates to  terminate a Participant's
services as an officer or other employee at any time.

     Except as permitted by Section 6(f) hereof or as permitted under the Code
(with respect to Incentive Stock Options) and the rules promulgated pursuant to
Section 16(b) of the Exchange Act or any successor statutes or rules, no Award
under the Plan shall be transferable by the Participant or Outside Director
other than by will or the laws of intestate succession or pursuant to a
domestic relations order or unless determined otherwise by the Committee.

15.  AGREEMENT WITH GRANTEES.
     ----------------------- 

     Each Award will be evidenced by a written agreement(s) (whether
constituting an NSO Agreement, ISO Agreement, Stock Award Agreement or any
combination thereof), executed by the Participant and the Holding Company or its
Affiliates that describes the conditions for receiving the Awards including the
date of Award, the Exercise Price if any, the terms or other applicable periods,

                                      A-13
<PAGE>
 
and other terms and conditions as may be required or imposed by the Plan, the
Committee, the Board of Directors, tax law considerations or applicable
securities law considerations.

16.  DESIGNATION OF BENEFICIARY.
     -------------------------- 

     A Participant  may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any Award to which the Participant
would then be entitled.  Such designation will be made upon forms supplied by
and delivered to the Holding Company and may be revoked in writing.  If a
Participant fails effectively to designate a beneficiary, then the Participant's
estate will be deemed to be the beneficiary.

17.  DILUTION AND OTHER ADJUSTMENTS.
     ------------------------------ 

     In the event of any change in the outstanding shares of Common Stock  by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, the Committee will make such
adjustments to previously granted Awards, to prevent dilution or enlargement of
the rights of the Participant, including any or all of the following:

     (a)   adjustments in the aggregate number or kind of shares of Common Stock
           or other securities that may underlie future Awards under the Plan;

     (b)   adjustments in the aggregate number or kind of shares of Common Stock
           or other securities underlying Awards already made under the Plan;

     (c)   adjustments in the purchase price of outstanding Incentive and/or
           Non-statutory Stock Options, or any Limited Rights attached to such
           Options.

     No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award.  All awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.

18.  TAX WITHHOLDING.
     --------------- 

 
     (a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing  provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.

                                      A-14
<PAGE>
 
     (b) If any disqualifying disposition described in Section 7(g) is made with
respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(f) is
made, then the person making such disqualifying disposition, transfer, or
election shall remit to the Holding Company or its Affiliates an amount
sufficient to satisfy all federal, state, and local withholding taxes thereby
incurred; provided that, in lieu of or in addition to the foregoing, the Holding
Company or its Affiliates shall have the right to withhold such sums from
compensation otherwise due to the Participant, or, except in the case of any
transfer pursuant to Section 6(f), from any shares of Common Stock due to the
Participant under this Plan.

19.  AMENDMENT OF THE PLAN.
     --------------------- 

     The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect, prospectively or retroactively; provided however,
that provisions governing grants of Incentive Stock Options, unless permitted by
the rules and regulations or staff pronouncements promulgated under the Code
shall be submitted for shareholder approval to the extent required by such law,
regulation or interpretation.

     Failure to ratify or approve amendments or modifications  by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification.  Other provisions, sections, and subsections of this Plan
will remain in full force and effect.

     No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.

20.  EFFECTIVE DATE OF PLAN.
     ---------------------- 

   The Plan became effective on October 16, 1996.  All amendments are effective
upon approval by the Board of Directors, subject to shareholder ratification
when specifically required under the Plan or by applicable federal or state
statutes, rules or regulations.  The failure to obtain shareholder approval for
such purposes will not effect the validity of other provisions of the Plan and
any Awards made under the Plan.

21.  TERMINATION OF THE PLAN.
     ----------------------- 

     The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii)  the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of  Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4.  The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.

                                      A-15
<PAGE>
 
22.  APPLICABLE LAW.
     -------------- 

     The Plan will be administered in accordance with the laws of the State of
Delaware and applicable federal law.

23.  COMPLIANCE WITH OTS CONVERSION REGULATIONS
     ------------------------------------------

     Notwithstanding any other provision contained in this Plan:

     (a)  no Award granted prior to March 26, 1997, shall become vested or
          exercisable at a rate in excess of 20% per year; provided, however,
          that any such Award shall become fully vested or immediately
          exercisable upon a Change in Control or in the event of a
          Participant's termination of service due to death or Disability. The
          Committee may also, at its discretion, modify the vesting or
          exercisability schedule of any Award granted prior to March 26, 1997,
          in connection with a Participant's Retirement;
 
     (b)  no Award granted to any individual employee may exceed 25% of the
          total amount of Awards which may be granted under the Plan;

     (c)  no Award granted to any individual Outside Director may exceed 5% of
          the total amount of Awards which may be granted under the Plan; and
          
     (d)  the aggregate amount of Awards granted to all Outside Directors may
          not exceed 30% of the total amount of Awards which may be granted
          under the Plan.
 
24.  DELEGATION OF AUTHORITY
     -----------------------

     The Committee may delegate all authority for: the determination of forms of
payment to be made by or received by the Plan; the execution of Award
agreements; the determination of Fair Market Value; the determination of all
other aspects of administration of the plan to the executive officer(s) of the
Holding Company or the Association.  The Committee may rely on the descriptions,
representations, reports and estimate provided to it by the management of the
Holding Company or the Association for determinations to be made pursuant to the
Plan, including the attainment of performance goals.  However, only the
Committee or a portion of the Committee may certify the attainment of a
performance goal.

                                      A-16
<PAGE>
 
[X] PLEASE MARK VOTES                   REVOCABLE PROXY     
    AS IN THIS EXAMPLE                   GA FINANCIAL, INC

<TABLE> 
<S>                                                              <C>                                    <C>    <C>     <C> 
                       ANNUAL MEETING OF SHAREHOLDERS                                                                             
                               APRIL 28, 1999                    1.   The election as                          With-   For all    
                          10:00 A.M. EASTERN TIME                     directors of all nominees         For    hold    Except     
                                                                      listed (except as marked to       [_]    [_]     [_]        
The undersigned hereby appoints the official proxy                    the contrary below)                                         
committee of the Board of Directors of GA Financial, Inc.                                                                         
(the "Company"), each with full power of substitution, to             Thomas E. Bugel                     David R. Wealz          
act as proxies for the undersigned, and to vote all shares                                                                        
of Common Stock of the Company which the undersigned is          INSTRUCTION: To withhold authority to vote for any                
entitled to vote only at the Annual Meeting                      individual nominee, mark "For All Except" and write that         
of Shareholders, to be held on April 28, 1999, at                nominee's name in the space provided below.                      
10:00 a.m, Eastern time, at the Bradley House,                                                                                    
5239 Brownsville Road, Pittsburg, Pennsylvania                   ------------------------------------------------------------------
15236, and at any and all adjournments thereof, with all                                             
of the powers the undersigned would possess if                   2.   For ratification of                                         
personally present at such meeting, as follows:                       certain amendments to the      For     Against   Abstain    
                                                                      GA Financial, Inc. 1996        [_]       [_]       [_]      
                                                                      Stock-Based Incentive Plan.                         
                                                                                                                                  
                                                                 3.   The ratification at the        For     Against   Abstain     
                                                                      appointment of KPMG LLP        [_]       [_]       [_]      
                                                                      as independent auditors                                     
                                                                      of GA Financial, Inc. for                                   
                                                                      the fiscal year ending                                      
                                                                      December 31, 1999.                                          
                                                                                                                                  
                                                                      THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"              
                                                                            EACH OF THE LISTED PROPOSALS.                         
                                                                                                                                  
                                                                          THIS PROXY IS SOLICITED ON BEHALF OF THE                
                                                                                  BOARD OF DIRECTORS.                             
                                                                                                                                  
                                                                      This proxy is revocable and will be voted as directed,      
                                                                      but if no instructions are specified, this proxy           
                                                                      will be voted "FOR" each of the proposals listed. If        
                                                                      any other business is presented at the Annual Meeting, 
Please be sure and sign and date                ----------------      including whether or not to adjourn the meeting,            
     this Proxy in the box below.                Date                 this proxy will be voted by those named in this proxy      
----------------------------------------------------------------      in their best judgement. At the present time, the Board     
                                                                      of Directors knows of no other business to be presented       
----Shareholder sign above----Co-holder (if any) sign above-----      at the Annual Meeting.                                       
                                                                  
 ................................................................................
</TABLE> 

 .    Detach above card, date, sign and mail in postage envelope provided   .

                              GA FINANCIAL, INC.

-------------------------------------------------------------------------------
     The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of the Annual Meeting of Shareholders and of
a Proxy Statement dated March 26, 1999 and of the Annual Report to Shareholders.

     Please sign exactly as your name appears on this card. When signing as 
attorney, executor, administrator, trustee or guardian, please sign your full 
title. If shares are held jointly, each holder may sign but only one signature 
is required.


           PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
                     IN THE ENCLOSED POSTAGE-PAID ENVELOPE
-------------------------------------------------------------------------------