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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

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

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 2000

                         Commission File No.: 1-14154

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

                              GA FINANCIAL, INC.
            (Exact name of registrant as specified in its charter)

               Delaware                              25-1780835
                                           (I.R.S. Employer Identification
    (State or other jurisdictionof                     Number)
    incorporation or organization)

                           4750 Clairton Boulevard,
                        Pittsburgh, Pennsylvania 15236
                   (Address of principal executive offices)

      Registrant's telephone number, including area code: (412) 882-9946

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                             (Name of exchange
              (Title of class)                              on which registered)
              ----------------                              --------------------
<S>                                            <C>
   Common Stock, par value $0.01 per share              The American Stock Exchange
</TABLE>

       Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

  The aggregate market value of the voting stock held by non-affiliates of the
registrant, i.e., persons other than the directors and executive officers of
the registrant, was $72,186,102 based upon the last sales price as listed on
The American Stock Exchange for March 12, 2001.

  The number of shares of Common Stock outstanding as of March 12, 2001 is:
5,466,549.

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of the Annual Report to Stockholders for the year ended December
31, 2000, are incorporated by reference into Part II of this Form 10-K.

  Portions of the Proxy Statement for the 2001 Annual Meeting of Stockholders
are incorporated by reference into Part III of this Form 10-K.

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<PAGE>

                                     INDEX

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----

                                     PART I

 <C>      <S>                                                             <C>
 Item 1.  Business......................................................    1
 Item 2.  Properties....................................................   22
 Item 3.  Legal Proceedings.............................................   22
 Item 4.  Submission of Matters to a Vote of Security Holders...........   23

                                    PART II

 Item 5.  Market for Registrant's Common Equity and Related Stockholder
          Matters.......................................................   23
 Item 6.  Selected Financial Data.......................................   23
 Item 7.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations.....................................   23
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk....   23
 Item 8.  Financial Statements and Supplementary Data...................   23
 Item 9.  Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure......................................   23

                                    PART III

 Item 10. Directors and Executive Officers of the Registrant............   23
 Item 11. Executive Compensation........................................   23
 Item 12. Security Ownership of Certain Beneficial Owners and
          Management....................................................   24
 Item 13. Certain Relationships and Related Transactions................   24

                                    PART IV

 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
          8-K...........................................................   24

 SIGNATURES..............................................................  26
</TABLE>
<PAGE>

ITEM 1. BUSINESS.

General

  GA Financial, Inc. (the "Company") was incorporated under Delaware law in
December 1995. The Company completed its initial public offering of 8,900,000
shares of common stock on March 26, 1996 in connection with the conversion of
Great American Federal (the "Association") from the mutual to stock form of
ownership. GA Financial, Inc. is the parent company of the Association and New
Eagle Capital, Inc. The Association is a federally chartered savings and loan
association and is wholly-owned by the Company. The Company is a savings and
loan holding company and is subject to regulation by the Office of Thrift
Supervision ("OTS"), the Federal Deposit Insurance Corporation ("FDIC") and
the Securities and Exchange Commission ("SEC"). Currently, other than
investing in various securities, the Company does not directly transact any
material business other than through the Association and New Eagle Capital,
Inc. Accordingly, the discussion herein addresses the consolidated operations
of the Company as they are conducted through the Association and New Eagle
Capital, Inc. New Eagle Capital, Inc. is a Delaware investment holding company
which holds investment securities in the state of Delaware. Income from these
types of investments is taxed at more favorable rates in Delaware compared to
other states.

  The Association was originally chartered in 1914. The Association's
principal business is to operate a customer oriented savings and loan
association. The Association attracts retail deposits from the general public
in its primary market area and invests those funds primarily in fixed-rate
one- to four-family owner-occupied mortgage loans, consumer loans and
investment, mortgage-backed and mortgage-related securities. To a lesser
extent, the Association invests in construction and development loans, multi-
family loans and commercial real estate loans. The Association's revenues are
derived principally from interest on mortgage loans and interest and dividends
on investment, mortgage-backed and mortgage-related securities and, to a much
lesser extent, short-term investments and other fees and services charges. The
Association's primary sources of funds is retail deposits, loan repayments and
borrowed funds from the Federal Home Loan Bank. The Company has 214 full-time
equivalent employees as of December 31, 2000.

Market Area and Competition

  The Association has been, and continues to be, a community-oriented savings
institution offering a variety of financial services to meet the needs of the
communities which it serves. Its primary market area is the areas surrounding
its branch offices while its lending activities include areas throughout
Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland Counties,
Pennsylvania. In addition to its principal office in Whitehall, the
Association operates fourteen other retail offices, all of which are located
in the southern and eastern suburbs of the Pittsburgh greater metropolitan
area in Allegheny and Westmoreland Counties. The earnings of the Association
are affected by the competitive, economic and regulatory environment in which
the savings industry operates. The Association competes actively with national
and local banks, brokerage firms, mutual fund companies and other financial
service entities.

Lending Activities

  Loan Portfolio Composition. The Association's loan portfolio primarily
consists of first mortgage loans secured by one- to four-family residences and
consumer loans (consisting of home equity loans and education loans) and, to a
much lesser extent, multi-family loans, residential construction and
development loans, commercial real estate loans and other loans. The
Association has attempted to offset the decline in demand for one- to four-
family mortgage loans secured by properties located in the Association's
market area by purchasing such loans secured by properties outside of its
primary market area. During the year ended December 31, 2000, the Association
purchased $55.1 million of such loans.

  The types of loans that the Association may originate are subject to federal
and state laws and regulations. Interest rates charged by the Association on
loans are affected by the demand for such loans and the supply of money
available for lending purposes and the rates offered by competitors. These
factors are, in turn, affected

                                       1
<PAGE>

by, among other things, economic conditions, monetary policies of the federal
government, including the Federal Reserve Board, and legislative tax policies.

  Loan Maturity. The following table shows the remaining contractual maturity
of the Association's loans as of December 31, 2000. As of December 31, 2000,
all of the Association's loans, except for education loans, were categorized
as held for investment. The table does not include the effect of future
principal prepayments.

<TABLE>
<CAPTION>
                                               As of December 31, 2000
                          ------------------------------------------------------------------
                          One- to                    Construction                   Total
                           Four-   Multi-                and                        Loans
                           Family  Family Commercial Development  Consumer Other  Receivable
                          -------- ------ ---------- ------------ -------- ------ ----------
                                                (Dollars in thousands)
<S>                       <C>      <C>    <C>        <C>          <C>      <C>    <C>
Amounts due:
 One year or less.......  $     75 $   21  $    --     $23,730    $19,423  $4,204  $ 47,453
 After one year:
 More than one year to
  five years............     2,116    337       21       1,672     28,677     610    33,433
 More than five years...   274,420  5,217   23,474          --     29,727   2,430   335,268
                          -------- ------  -------     -------    -------  ------  --------
Total amount due........  $276,611 $5,575  $23,495     $25,402    $77,827  $7,244  $416,154
Less:
 Undisbursed loan funds..........................................................    13,589
 Deferred loan fees, net.........................................................       464
 Allowance for loan losses.......................................................     2,268
                                                                                   --------
Total loans, net.................................................................  $399,833
                                                                                   ========
</TABLE>

  The following table sets forth as of December 31, 2000 the dollar amount of
construction and commercial real estate loans contractually due after December
31, 2001, and whether such loans have fixed interest rates or adjustable
interest rates.

<TABLE>
<CAPTION>
                                                       Due After December 31,
                                                                2001
                                                     --------------------------
                                                      Fixed  Adjustable  Total
                                                     ------- ---------- -------
                                                           (In thousands)
<S>                                                  <C>     <C>        <C>
Mortgage loans:
Construction and development........................ $    --   $1,672   $ 1,672
Commercial..........................................  14,945    8,550    23,495
</TABLE>

  Origination, Sale, Servicing and Purchase of Loans. The Association's
mortgage origination lending activities are conducted by loan personnel at its
fifteen full service branch offices. Although the Association offers both
adjustable-rate and fixed-rate mortgage loans, the substantial majority of the
Association's loan originations have been fixed-rate mortgage loans. The
Association's ability to originate loans is dependent upon the relative
customer demand for fixed-rate or adjustable-rate mortgage loans, which is
affected by the current and expected future level of interest rates. The
Association has not emphasized the origination of adjustable-rate mortgage
loans due to the relatively low demand for such loans in the Association's
primary market area and aggressive pricing by competitors offering such loans.
While the Association generally retains for its portfolio all of the mortgage
loans that it originates, the Association may, in the future, sell mortgage
loans that it originates depending on market conditions and the financial
condition of the Association. As of December 31, 2000, there were no mortgage
loans categorized as held for sale. The Association intends to continue
purchasing single-family owner-occupied loans to supplement loan demand as
needed. Loans purchased by the Association generally must meet the same
underwriting criteria as loans originated by the Association. Loans purchased
by the Association are generally funded by the Association, closed in the name
of the correspondent financial institution and immediately assigned to the
Association, and are generally purchased by the Association on a servicing
released basis. At December 31, 2000, the Association had $242.5 million of
loans serviced by others, including education loans.


                                       2
<PAGE>

  One- to Four-Family Residential Mortgage Lending. The Association offers
residential mortgage loans primarily secured by owner-occupied one- to four-
family residences. Loan originations are generally obtained from existing or
past customers, members of the local communities served, or referrals from
local real estate agents, attorneys and builders. The Association primarily
originates fixed-rate loans, but also offers adjustable-rate mortgage ("ARM")
loans. As of December 31, 2000, one- to four-family mortgage loans totaled
$276.6 million, or 66.5% of total gross loans. Of the Association's mortgage
loans secured by one- to four-family residences, $235.7 million, or 56.6%, of
total gross loans were fixed rate loans.

  The Association originates and purchases mortgage loans for its own
portfolio. Originated mortgage loans are secured by properties located within
the Association's primary market area of Allegheny, Beaver, Butler, Fayette,
Washington and Westmoreland Counties, Pennsylvania. The Association's total
one- to four-family mortgage loan portfolio has increased 8.2% from $255.6
million, or 29.0% of total assets and 71.3% of total gross loans, as of
December 31, 1999 to $276.6 million, or 31.1% of total assets and 66.5% of
total gross loans, as of December 31, 2000 as a result of loan purchases to
offset the decrease in one- to four-family mortgages originated within the
Association's branches.

  The Association also presently offers one-year ARM loans. One-year ARM loans
have interest rates that adjust annually based on a spread of 275 basis points
above the weekly average yield of the one year CMT Index, subject to a
limitation on interest rate increases and decreases of 2.0% per year, a
lifetime ceiling on interest rate increases of 6.0% above the origination
rate, and a floor on interest rate decreases of 4.0% below the origination
rate. The Association offers these loans with conversion features whereby the
loan may be converted to a fixed-rate loan during the first five years of the
loan. The Association's ARM loans are offered with terms of up to 30 years.

  The volume and types of ARM loans originated by the Association have been
affected by such market factors as the level of interest rates, competition,
consumer preferences and the availability of funds. In recent years, demand
for ARM loans has been weak due to the low interest rate environment and
consumer preference for fixed-rate loans.

  The Association has not sold one- to four-family mortgage loans in the
secondary market. Mortgage loans that are originated by the Association are
underwritten in conformity with Fannie Mae secondary market requirements. The
Association has been approved by the Fannie Mae to sell mortgage loans in the
secondary market, and may sell loans to Fannie Mae in the future.

  Generally, with the exception of its community loan programs, the
Association's maximum loan-to-value ("LTV") ratio on one- to four-family
mortgage loans is 95%. However, loans with LTV ratios in excess of 80% require
the borrower to obtain private mortgage insurance ("PMI"). The Association's
one- to four-family residential mortgage loans do not provide for negative
amortization. Mortgage loans in the Association's portfolio generally include
due-on-sales clauses, which provide the Association with the contractual right
to demand the loan immediately due and payable in the event the borrower
transfers ownership of the property that is subject to the mortgage.

  In an effort to provide financing for low and moderate income home buyers,
the Association participates in various Community Loan Programs. These
programs offer single-family residential mortgage loans to residents of the
CRA delineated lending areas. These loans are offered with terms of up to 30
years. Such loans must be secured by a single-family owner-occupied unit.
These loans are originated using modified underwriting guidelines with reduced
down payments and loan fees. Such loans are originated in amounts up to 97% of
the lower of the property's appraised value or the sale price. Because the
Association typically charges a lower rate of interest, lower mortgage
origination fees and a discount on closing costs on its Community Loan
Programs, the Association expects to achieve a lower rate of return on such
loans, as compared to other residential mortgage loans. During 2000 the
Association originated 28 community loans totaling $1.6 million.


                                       3
<PAGE>

  The Association offers full-time employees of the Association, who satisfy
certain criteria and the general underwriting standards of the Association
fixed and adjustable-rate mortgage loans with interest rates which are
currently below the rates offered to the Association's other customers, the
Employee Mortgage Rate ("EMR"). The EMR is limited for the purchase,
construction or refinance of an employee's single-family owner-occupied
primary residence. When the LTV ratio does not exceed 95% (80% in the case of
refinance loans), the EMR is generally no less than the Association's overall
cost of funds rounded up to the next quarter percentage point, with a minimum
EMR of 6.25%. Additionally, loan origination fees are waived for all EMR
loans. The EMR normally ceases upon termination of employment or if the
property no longer is the employee's primary residence. Upon termination of
the employee, the interest rate reverts to the contract rate in effect at the
time that the loan was extended. All other terms and conditions contained in
the original mortgage and note continue to remain in effect. As of December
31, 2000, the Association had $2.5 million of total EMR loans, or 0.60% of
total gross loans.

  Construction and Development Lending. The Association originates three types
of construction and development loans for the construction and development of
one- to four-family properties: (1) acquisition and development loans to
qualified developers; (2) loans and lines of credit to qualified builders; and
(3) construction/permanent financing for other individuals. As of December 31,
2000, the Association had $25.4 million of construction and development loans
which constituted 6.1% of the Association's total gross loan portfolio.

  The Association originates loans for the acquisition and development of one-
to four-family properties located in its primary market area. The
Association's acquisition and development loans primarily have been made to
finance the construction of single-family, owner-occupied residential
properties. These loans are offered with adjustable-rates and maturities of
four years or less. Acquisition and development mortgage loans are originated
with maximum LTV ratios of 65% for the acquisition of the raw land and 75% for
the development of the property. Generally, the maximum loan amount for the
acquisition of the land is $350,000 and the maximum loan amount for
construction and development is $1.0 million. Proceeds of such loans are
dispersed as phases of the construction are completed. Generally, if the
borrower is a corporation, partnership or other business entity, personal
guarantees by the principal borrowers are required. However, personal
guarantees may not be required on such loans depending on the creditworthiness
of the borrower and amount of the down payment.

  The Association also offers loans and lines of credit to qualified builders
for the construction of single-family detached residences located in the
Association's primary market area. Such loans and lines of credit are only
available to certain local contractors on the Association's approved list of
contractors, and require that the Association be in a first lien position and
limit each loan and line of credit to the construction of one single-family
residence. Such builder's loans are originated with a maximum LTV ratio of
80%. The maximum borrowing limit for such lines of credit is the lesser of
$185,000 or 80% of the proposed selling price of the property as completed.
Upon the completion and sale of the property, the outstanding balance of such
loan or line of credit is required to be repaid. Prior to that time, the
borrower is required to remit monthly payments of interest only. The
Association generally requires personal and/or corporate guarantees on such
loans and lines of credit.

  The Association also originates construction/permanent loans to individual
borrowers for the construction of single-family owner-occupied residential
properties. The Association's underwriting standards and procedures for
residential construction/permanent financing are similar to those applicable
for one- to four-family residential mortgage lending. Proceeds of these loans
are dispersed as phases of the construction are completed. All such loans are
converted to a one- to four-family mortgage loan upon completion of the
construction.

  Construction and development financing is generally considered to involve a
higher degree of credit risk than long-term financing on improved, owner-
occupied real estate. Risk of loss on a construction loan is dependent largely
upon the accuracy of the initial estimate of the property's value at
completion of construction or development and market demand for similar
properties. Moreover, because of the uncertainties inherent in estimating
construction costs, delays resulting from labor problems, material shortages
or weather conditions and

                                       4
<PAGE>

other unpredictable contingencies, it is relatively difficult to evaluate
accurately the total funds required and to establish the related LTV ratio. If
the estimate of value proves to be inaccurate, the Association may be
confronted with a project, if not completed, having a value which is
insufficient to assure full repayment.

  Multi-Family Lending. The Association originates multi-family mortgage loans
generally secured by five or more unit apartment buildings located in the
Association's primary market area. Pursuant to the Association's current
underwriting policies, a multi-family mortgage loan may only be made in an
amount up to 85% of the appraised value of the underlying property. In
addition, the Association generally requires a debt service coverage of 120%.
Properties securing these loans are appraised by an independent appraiser and
title insurance is required on all such loans. As of December 31, 2000, multi-
family loans totaled $5.6 million, or 1.3% of the Association's total gross
loan portfolio.

  When determining whether to originate a multi-family loan, the Association
considers many factors including: the net operating income of the mortgaged
premises before debt service and depreciation; the debt service coverage (the
ratio of net operating income to debt service); and the ratio of the loan
amount to the appraised value. When evaluating the qualifications of the
borrower for a multi-family loan, the Association considers the financial
resources, the borrower's experience in owning and managing similar property,
and the Association's lending experience with the borrower. The Association's
underwriting policies require that the borrower be able to demonstrate strong
management skills and the ability to maintain the property from current rental
income. In addition, the borrower is required to present evidence of the
ability to repay the mortgage and a history of making mortgage payments on a
timely basis. In making its assessment of the creditworthiness of the
borrower, the Association generally reviews the financial statements,
employment and credit history of the borrower, as well as other related
documentation.

  Loans secured by apartment buildings and other multi-family residential
properties are generally larger and involve a greater degree of risk than one-
to four-family residential mortgage loans. Because payments on loans secured
by multi-family properties are often dependent on successful operation or
management of the properties, repayment of such loans may be subject to a
greater extent to adverse conditions in the real estate market or the economy.
The Association seeks to minimize these risks through its underwriting
policies, which require such loans to be qualified at origination on the basis
of the property's income and debt coverage ratio.

  Commercial Real Estate Lending. The Association also offers commercial real
estate loans that are secured by properties generally used for business
purposes such as small office buildings, retail facilities, shopping centers,
motels and hotels and industrial properties located in the Association's
primary market area. The Association's underwriting standards and procedures
are similar to those applicable to multi-family loans, whereby the Association
considers the net operating income of the property and the borrower's
expertise, credit history and profitability. Generally, all commercial real
estate loans made to corporations, partnerships and other business entities
require personal guarantees by the principal borrowers. The Association may
not require a personal guarantee on such loans depending on the
creditworthiness of the borrowers and the amount of the down payment. The
Association's commercial real estate loan portfolio as of December 31, 2000
was $23.5 million, or 5.6% of total gross loans. The Association, from time to
time, purchases loan participations in commercial real estate loans. Loan
participation interests are subject to the same underwriting criteria as loans
originated by the Association.

  Loans secured by commercial real estate properties, like multi-family loans,
are generally larger and involve a greater degree of risk than one- to four-
family residential mortgage loans. Because payments on loans secured by
commercial real estate properties are often dependent on successful operation
or management of the properties, repayment of such loans may be subject to a
great extent of the then prevailing conditions in the real estate market or
the economy. The Association seeks to minimize these risks through its
underwriting standards.

  Consumer Lending. The Association also offers both secured and unsecured
consumer loans. Consumer loans consist of home equity lines of credit and
installment loans and education loans. As of December 31, 2000, the
Association's consumer loans amounted to $77.8 million, or 18.7% of the
Association's total gross loan

                                       5
<PAGE>

portfolio. Home equity loans originated are generally only available to the
residents of Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland
Counties, Pennsylvania.

  The Association's home equity lines of credit are offered as revolving lines
of credit with interest rates that range from .24% to 2.49% above the prime
rate of interest as published by The Wall Street Journal and adjust monthly
but which are capped at 17.99%. The Association's home equity installment
loans are offered on a fixed-rate basis only with terms of one to fifteen
years. Both types of home equity loans are offered in minimum amounts of
$5,000. The home equity lines of credit are offered to a maximum amount of the
lesser of $250,000 or 90% of the appraised value of the property. Home equity
installment loans are offered to a maximum amount of the lesser of $185,000 or
90% of the appraised value of the property. Certain "Class B" home equity
installment loans are offered to a maximum amount of 90% of the appraised
value of the property, with an overall maximum of $100,000. A "Class B" home
equity installment loan is one in which the borrower uses the equity in his or
her existing residence to finance the acquisition of improved land and the
construction of a new primary residence. As of December 31, 2000, home equity
loans totaled $54.5 million, or 13.1% of the Association's total gross loans.

  With respect to education lending, the Association participates in the
United States Department of Education (the "DOE") Title IV loan programs
commonly referred to as the Federal Family Education Loan Programs ("FFELP").
The loans in this program that the Association participates in include the
Federal Subsidized Stafford Loan, the Federal Un-Subsidized Stafford Loan and
the Federal Parent Loan to Undergraduate Students (PLUS) Loan. All FFELP loans
that were disbursed prior to October 1, 1993 are 100% guaranteed as to
principal and interest by the full faith of the United States Government if
serviced properly. Loans disbursed after October 1, 1993 are guaranteed to at
least 98% of principal plus eligible interest by the full faith of the United
States Government if serviced properly. Under certain circumstances loans
guaranteed at the 98% level will be insured to the 100% level.

  Education loans held by the Association are administrated and guaranteed by
one of two agencies: the Pennsylvania Higher Education Assistance Agency
("PHEAA") or the USA Group. Federal regulations as established by DOE apply to
both agencies equally. The Association underwrites, operates and administrates
participation in the FFELP under the policies and procedures outlined in the
common manual of unified student loan policy for loans guaranteed by each
agency. As of December 31, 2000, education loans totaled $19.4 million, or
4.7% of the Association's total gross loans. The Association has decided to
sell educational loans when those loans reach repayment status.

  The Association also originates other types of loans primarily consisting of
unsecured personal lines of credit and installment loans, and loans on savings
accounts. These loans have a maximum borrowing limitation of $25,000 for
unsecured personal loans and 90% of the account value for loans on savings
accounts. Unsecured personal loans require a debt ratio (the ratio of debt
service to net earnings) of 36%. Secured personal lines of credit and
installment loans are generally secured by certificates of deposit and
passbook savings accounts. The Association offers credit card loans to its
customers in its own name. Credit card loans may require a debt ratio of 36%
and are offered to a maximum credit limit of $10,000. As of December 31, 2000,
personal loans totaled $4.0 million, or 1.0% of total gross loans of which
$1.5 million were secured by savings accounts.

  Business Loans. The company also offers secured and unsecured business
loans. Business loans are generally defined as those loans for business and/or
investment purposes. Such loans may be made to individuals, partnerships,
proprietorships, or corporations, and may be secured, unsecured, or partially
secured. Typical forms of lending will include, but are not limited to:
demand, time, and term notes; first and second mortgages; and various formal
and informal commitments such as lines of credit and construction loans. As of
December 31, 2000, business loans totaled $7.2 million or 1.7% of total gross
loans of which $6.4 million were secured and $813,000 were unsecured.


                                       6
<PAGE>

  Loan Servicing. The Association generally services mortgage loans in its own
portfolio but relies upon third party loan servicers for the servicing of
purchased loans as such loans are purchased on a servicing released basis.
Loan servicing includes collecting and remitting loan payments, accounting for
principal and interest, making inspections as required of mortgage premises,
contacting delinquent mortgagors, supervising foreclosures and property
dispositions in the event of un-remedied defaults, making certain insurance
and tax payments on behalf of the borrowers and generally administering the
loans. The Association currently does not purchase servicing rights related to
mortgage loans originated by other institutions. To date, the substantial
majority of loans purchased by the Association have been purchased on a
servicing released basis. As of December 31, 2000, the Association had $242.5
million of loans serviced by others and $173.7 million of loans serviced by
the Association.

  Delinquencies and Classified Assets. Management performs a quarterly review
of all delinquent loans ninety days or more past due with principal balances
of $100,000 or more and reviews a summary of the aggregate level of non-
performing loans 90 days or more past due. In addition, management reviews on
an ongoing basis all loans 30 or more days delinquent. The procedures taken by
the Association with respect to delinquencies vary depending on the nature of
the loan and period of delinquency. In the case of real estate loans, the
Association takes legal action and will commence foreclosure proceedings
against any real property that secures the loan. If a foreclosure action is
instituted and the loan is not brought current, paid in full, or refinanced
before the foreclosure sale, the real property securing the loan is generally
acquired at foreclosure.

  Federal regulations and the Association's Classification of Assets Policy
require that the Association utilize an internal asset classification system
as a means of reporting problem and potential problem assets. The Association
has incorporated the OTS internal asset classifications as part of its credit
monitoring system. The Association currently classifies problem and potential
problem assets as "Substandard," "Doubtful" or "Loss" assets. An asset is
considered "Substandard" if it is inadequately protected by the current net
worth and paying capacity of the obligor or of the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as "Doubtful" have all of the weaknesses
inherent in those classified "Substandard" with the added characteristic that
the weaknesses present make "collection or liquidation in full," on the basis
of currently existing facts, conditions, and values, "highly questionable and
improbable." Assets classified as "Loss" are those considered "uncollectible"
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted. Assets which do not
currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are required to be designated "Special Mention."

  For regulatory purposes, when an insured institution classifies one or more
assets, or portions thereof, as Substandard or Doubtful, it is required to
establish a general valuation allowance for loan losses in an amount deemed
prudent by management. The general valuation allowance, which is a regulatory
term, represents a loss allowance which has been established to recognize the
inherent risk associated with lending activities, but which, unlike specific
allowances, has not been allocated to particular problem assets. When an
insured institution classifies one or more assets, or portions thereof, as
"Loss," it is required either to establish a specific allowance for losses
equal to 100% of the amount of the asset so classified or to charge off such
amount. For financial reporting purposes, the Company follows the guidelines
of Statement of Financial Accounting Standards ("SFAS") No. 114 "Accounting by
Creditors for Impairment of a Loan" and SFAS 118 "Accounting by Creditors for
Impairment of a Loan--Income Recognition and Disclosures," an amendment of
SFAS 114. SFAS 114 addresses the accounting by creditors for impairment of
loans by specifying how reserves for credit losses related to certain loans
should be measured. SFAS 118 rescinded SFAS 114 rules to permit a creditor to
use existing methods for recognizing interest income on impaired loans and
eliminated the income recognition provisions of SFAS 114.

  A savings institution's determination as to the classification of its assets
and the amount of its valuation allowances is subject to review by the OTS
which can order the establishment of additional general or specific

                                       7
<PAGE>

loss allowances. The OTS, in conjunction with the other federal banking
agencies, recently adopted an interagency policy statement on the allowance
for loan and lease losses. The policy statement provides guidance for
financial institutions on both the responsibilities of management for the
assessment and establishment of adequate allowances and guidance for banking
agency examiners to use in determining the adequacy of general valuation
guidelines. Generally, the policy statement recommends that institutions have
effective systems and controls to identify, monitor and address asset quality
problems; that management has analyzed all significant factors that affect the
collectibility of the portfolio in a reasonable manner; and that management
has established acceptable allowance evaluation processes that meet the
objectives set forth in the policy statement. As a result of the declines in
local and regional real estate market value and the significant losses
experienced by many financial institutions, there has been a greater level of
scrutiny by regulatory authorities of the loan portfolios of financial
institutions undertaken as part of the examination of institutions by the OTS
and the FDIC. While the Association believes that it has established an
appropriate allowance for loan losses, there can be no assurance that
regulators, in reviewing the Association's loan portfolio, will not request
the Association to materially increase its allowance for loan losses, thereby
negatively affecting the Association's financial condition and earnings at
that time. Although management believes that adequate specific and general
loan loss allowances have been established, actual losses are dependent upon
future events and, as such, further additions to the level of specific and
general loan loss allowances may become necessary.

  The Association's Loan Servicing Department reviews the Association's loans
on a monthly basis and provides delinquency reports to the Board of Directors.
The Association's Asset Classification Committee meets on a quarterly basis
and classifies assets in accordance with the management guidelines described
above. As of December 31, 2000, the Association had $1.2 million of assets
classified as Substandard, $39,000 of assets classified as Doubtful and no
assets classified as Loss. Also, $2.1 million was classified as special
mention.

  The Association generally requires appraisals on an annual basis on
foreclosed properties and at other times as deemed necessary by management.
The Association also conducts external inspections on commercial real estate
properties, foreclosed properties and other properties as deemed necessary. As
of December 31, 2000, the Association had $154,000 of foreclosed real estate
in its portfolio. The balance consisted of properties for which the
Association held first or second liens.


<PAGE>

  Non-Performing Assets. General. The following table sets forth information
regarding non-accrual loans and real estate owned ("REO"). As of December 31,
2000, the Association held four REO properties totaling $154,000. It is the
policy of the Association to cease accruing interest on loans 90 days or more
past due and charge off all accrued interest upon foreclosure or deed-in-lieu
of foreclosure. For the years ended December 31, 2000, 1999, 1998, 1997 and
1996, the amount of additional interest income that should have been
recognized on non-accrual loans if such loans had continued to perform in
accordance with their contractual terms was $61,000, $138,000, $147,000,
$72,000 and $37,000, respectively.

<TABLE>
<CAPTION>
                                                 As of December 31,
                                          ------------------------------------
                                           2000    1999    1998    1997   1996
                                          ------  ------  ------  ------  ----
                                               (Dollars in thousands)
<S>                                       <C>     <C>     <C>     <C>     <C>
Non-accrual loans:
Mortgage loans:
  One- to four-family...................  $  636  $  856  $  462  $  720  $537
  Multi-family..........................      --      --      --      --    97
  Construction and development..........      --      --      --      --    --
  Commercial............................      --      --      --      --    --
Consumer loans:
  Home equity...........................     558     584     574     930    73
  Education.............................       1      13      59      69   163
Other unsecured loans...................      25      23      21      14    26
                                          ------  ------  ------  ------  ----
    Total non-accrual loans.............   1,220   1,476   1,116   1,733   896
                                          ------  ------  ------  ------  ----
Real estate owned, net(1)...............     154     345     758      --    --
                                          ------  ------  ------  ------  ----
    Total non-performing assets.........  $1,374  $1,821  $1,874  $1,733  $896
                                          ======  ======  ======  ======  ====
<CAPTION>
                                           2000    1999    1998    1997   1996
                                          ------  ------  ------  ------  ----
<S>                                       <C>     <C>     <C>     <C>     <C>
Allowance for loan losses as a percentof
 gross loans receivable.................    0.55%   0.48%   0.48%   0.43% 0.44%
Allowance for loan losses as a percent
 of non-performing assets...............     165%     95%     86%     76%  115%
Non-performing assets as a percent of
 gross loans............................    0.33%   0.51%   0.56%   0.56% 0.38%
Non-performing assets as a percent of
 total assets...........................    0.15%   0.21%   0.23%   0.22% 0.14%
</TABLE>
--------
(1)  REO balances are carried at the lower of cost or market value less
     estimated costs to sell.

  Allowance for Loan Losses. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the
risks inherent in its loan portfolio and the general economy. The allowance
for loan losses is maintained at an amount management considers appropriate to
cover estimated losses in loans receivable which are deemed probable and
estimable based on information currently known to management. The Board of
Directors' Asset Classification Committee reviews and approves the loan loss
reserve on a quarterly basis. The allowance is based upon a number of factors,
including current regional and national economic conditions, actual loss
experience and industry trends. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review the
Association's allowance for loan losses. Such agencies may require the
Association to make additional provisions for estimated loan losses based upon
judgments different from those of management. As of December 31, 2000 and
December 31, 1999, the Association's allowance for loan losses was 0.55% and
0.48% of total gross loans, respectively. The Association had non-performing
loans of $1.2 million and $1.5 million as of December 31, 2000 and December
31, 1999, respectively. The Association will continue to monitor and modify
its allowances for loan losses as conditions dictate. While management
believes the Association's allowance for loan losses is sufficient to cover
losses inherent in its loan portfolio at this time, no assurances can be given
that the Association's level of allowance for loan losses will be sufficient
to cover future loan losses incurred by the Association or that future
adjustments to the allowance for loan losses will not be necessary if economic
and other conditions differ substantially from the economic and other
conditions used by management to determine the current level of the allowance
for loan losses.


                                       9
<PAGE>

  The following table sets forth activity in the Association's allowance for
loan losses for the periods indicated.

<TABLE>
<CAPTION>
                                        At or For the Years Ended December
                                                       31,
                                        --------------------------------------
                                         2000    1999    1998    1997    1996
                                        ------  ------  ------  ------  ------
                                              (Dollars in thousands)
<S>                                     <C>     <C>     <C>     <C>     <C>
Balance at beginning of period......... $1,731  $1,604  $1,322  $1,031  $  822
Provision for loan losses..............    630     390     360     300     210
Charge-offs:
  Mortgage loans:
    One-to-four-family.................    (40)    (19)    ( 5)    ( 9)     --
    Multi-family.......................     --      --      --      --      --
    Commercial.........................     --      --      --      --      --
  Consumer loans:
    Home equity........................     (9)   (164)   ( 44)     --      --
    Education..........................     (2)   ( 71)   ( 37)   ( 31)    ( 5)
  Other loans..........................    (60)    (15)    (30)    (38)    (15)
                                        ------  ------  ------  ------  ------
    Total..............................   (111)  ( 269)   (116)   ( 78)   ( 20)
Recoveries.............................     18       6      38      69      19
                                        ------  ------  ------  ------  ------
Net chargeoffs.........................    (93)   (263)    (78)     (9)     (1)
                                        ------  ------  ------  ------  ------
Balance at end of period............... $2,268  $1,731  $1,604  $1,322  $1,031
                                        ======  ======  ======  ======  ======
Ratio of net charge-offs during the
 period to average loans outstanding
 during the period.....................   0.03%   0.08%   0.02%   0.00%   0.00%
                                        ======  ======  ======  ======  ======
</TABLE>

  The following table sets forth the Association's allowance for loan losses
by categories listed and the percent of loans in each category to gross loans
as of the dates indicated.

<TABLE>
<CAPTION>
                                            As of December 31,
                              -----------------------------------------------
                                   2000            1999            1998
                              --------------- --------------- ---------------
                                     Percent         Percent         Percent
                                     of Loans        of Loans        of Loans
                                     in Each         in Each         in Each
                                     Category        Category        Category
                                     to Gross        to Gross        to Gross
                              Amount Loans(1) Amount Loans(1) Amount Loans(1)
                              ------ -------- ------ -------- ------ --------
                                          (Dollars in thousands)
<S>                           <C>    <C>      <C>    <C>      <C>    <C>
Mortgage loans:
  One-to four-family........  $1,079    66%   $  773    71%   $  933    72%
  Multi-family..............     111     1        87     1       127     2
  Commercial................     470     6       349     5        --     2
  Construction and
   development..............     118     6         7     1        10     1
Consumer and business loans:
  Installment / line of
   credit...................     490    16       515    17       534    17
  Education.................      --     5        --     5        --     6
                              ------   ---    ------   ---    ------   ---
    Total valuation
     allowance..............  $2,268   100%   $1,731   100%   $1,604   100%
                              ======   ===    ======   ===    ======   ===
</TABLE>

                                      10
<PAGE>

<TABLE>
<CAPTION>
                                                       As of December 31,
                                                 -------------------------------
                                                      1997            1996
                                                 --------------- ---------------
                                                        Percent         Percent
                                                        of Loans        of Loans
                                                        in Each         in Each
                                                        Category        Category
                                                        to Gross        to Gross
                                                 Amount Loans(1) Amount Loans(1)
                                                 ------ -------- ------ --------
                                                     (Dollars in thousands)
<S>                                              <C>    <C>      <C>    <C>
Mortgage loans:
  One--to four-family........................... $  624    69%   $  706    76%
  Multi-family..................................    100     2       117     3
  Commercial....................................     14     1        15     2
  Construction and development..................     23     1        27     2
Consumer and business loans:
  Installment / Line of credit..................    561    21       166    10
  Education.....................................     --     6        --     7
                                                 ------   ---    ------   ---
    Total valuation allowance................... $1,322   100%   $1,031   100%
                                                 ======   ===    ======   ===
</TABLE>
--------
(1)  Gross loans include loans receivable held for investment and education
     loans held for sale.

  Real Estate Owned. As of December 31, 2000, the Association held four
properties totaling $154,000. When the Association acquires property through
foreclosure or deed-in-lieu of foreclosure, it is initially recorded at the
lower of the recorded investment in the corresponding loan or the fair value
of the related assets at the date of foreclosure, less estimated costs to sell
the property. Thereafter, if there is a further deterioration in value, the
Association provides for a specific valuation allowance and charges operations
for the diminution in value. It is the policy of the Association to have
obtained an appraisal on all real estate subject to foreclosure proceedings
prior to the time of foreclosure. It is the Association's policy to require
appraisals on foreclosed properties and conduct inspections on foreclosed
properties.

Investment Activities

  The Company can invest in common and preferred stocks, limited partnerships
and all investments the Association is permitted to invest in. Anything other
than that requires Board of Directors approval. Federally-chartered savings
institutions have the authority to invest in various types of liquid assets,
including United States Treasury obligations, securities of various federal
agencies, certificates of deposit of insured banks and savings institutions,
bankers' acceptances, repurchase agreements and federal funds. Subject to
various restrictions, federally-chartered savings institutions may also invest
their assets in commercial paper, investment-grade corporate debt securities
and mutual funds whose assets conform to the investments that a federally-
chartered savings institution is otherwise authorized to make directly.
Additionally, the Association must maintain minimum levels of investments that
qualify as liquid assets under OTS regulations. Historically, the Association
has maintained liquid assets above the minimum OTS requirements to meet its
normal daily activities.

  The investment policy of the Association, as approved by the Board of
Directors, requires management to maintain adequate liquidity, generate a
favorable return on investments without incurring undue interest rate and
credit risk as a complement to the Association's lending activities. The
Association's current investment policy provides that the Association may
invest in the following types of securities: U.S. Government agency debt
securities, short-term money market instruments, mutual funds that primarily
invest in mortgage-backed securities and that also qualify as liquid assets
under the OTS regulations, federal funds and federal government-sponsored
agency-issued mortgage-backed and mortgage-related securities, investment
grade corporate debt obligations and other investments as authorized by the
OTS and as may be approved by the Board of Directors. As of December 31, 2000,
the Association's investment securities generally consisted of federal
government-sponsored agency debt securities (primarily issued by FHLB, Fannie
Mae and Freddie Mac), investment grade corporate debt obligations, commercial
paper, municipal obligations and mutual fund securities. As of such date

                                      11
<PAGE>

its mortgage-backed securities portfolio generally consisted of fixed- and
adjustable-rate mortgage-backed securities issued by the Fannie Mae, Ginnie
Mae and Freddie Mac and its mortgage-related securities portfolio consisted of
fixed- and adjustable-rate Collateralized Mortgage Obligations ("CMO") backed
by Fannie Mae and Freddie Mac.

  The Board of Directors monitors and ratifies the investment decisions of the
Association's officers that have been authorized to manage the investment
portfolio (the President, Chief Financial Officer and Chief Lending Officer).
On at least a quarterly basis, the Asset/Liability Management Committee also
reviews the Association's securities portfolio and, in connection therewith,
reviews the market value of each security held. The Association's current
investment policy generally limits investment securities (consisting of agency
and corporate debt obligations and commercial paper) to 25% of total assets
and limits the weighted average life of such portfolio to twenty years or
less. The Association's policies also provide that investments in any one CMO,
Real Estate Mortgage Investment Conduit ("REMIC") and other asset-backed
obligation may not, exceed 5% of total assets and limits the weighted average
life of such investments to less than seven years. The Association's policies
also limit the aggregate investment in such securities to 20% of total assets.

  As required by SFAS 115, the Association has established an investment
portfolio of securities that may be categorized as held to maturity, available
for sale or held for trading.

  Mortgage-Backed Securities. As of December 31, 2000, the Association had
$198.9 million in mortgage-backed securities, or 22.4% of total assets, which
generally consisted of mortgage-backed securities guaranteed by Ginnie Mae or
insured by either Fannie Mae or Freddie Mac. Mortgage-backed securities
generally yield less than the mortgage loans that underlie such securities
because of the cost of payment guaranties or credit enhancement that result in
nominal credit risk. In addition, mortgage-backed securities are more liquid
than individual mortgage loans and may be used to collateralize obligations of
the Association. In general, mortgage-backed securities issued or guaranteed
by Fannie Mae and Freddie Mac and certain AA-rated and AAA-rated mortgage-
backed pass through securities are weighted at no more than 20% for risk-based
capital purposes, and mortgage-backed securities issued or guaranteed by
Ginnie Mae are weighted at 0% for risk-based capital purposes, compared to an
assigned risk weighting of 50% to 100% for whole residential mortgage loans.
These types of securities allow the Association to optimize regulatory capital
to a greater extent than non-securitized whole loans. See "Regulation and
Supervision--Federal Savings Institution Regulation--Capital Requirements" for
a discussion of the OTS risk-based capital requirement.

  While mortgage-backed securities carry a reduced credit risk as compared to
whole mortgage loans, such securities remain subject to the risk that a
fluctuating interest rate environment, along with other factors such as the
geographic distribution of the underlying mortgage loans, may alter the
prepayment rate of such mortgage loans and so affect both the prepayment
speed, and value, of such securities. Specifically, investments in mortgage-
backed and CMOs, discussed below, involve risks that in a declining interest
rate environment actual prepayments may exceed prepayments estimated over the
life of the security which, in turn, may result in a loss of any premiums paid
for such instrument thereby reducing the net yield on such securities.
Conversely, if interest rates increase, the market value of such securities
may be adversely affected.

  Mortgage-Related Securities. As of December 31, 2000, the Association had
$66.8 million of mortgage-related securities, or 7.5% of total assets,
consisting of CMOs issued by Freddie Mac and Fannie Mae. CMOs are a type of
debt security issued by a special purpose entity that aggregates pools of
underlying fixed- and adjustable-rate mortgages or mortgage-backed securities
and creates different classes of CMO securities with different maturities and,
in some cases, amortization schedules as well as residual interest with each
such class possessing different risk characteristics. The cash flows from the
underlying collateral is generally divided into tranches or classes whereby
such tranches have descending priorities with respect to the distribution of
principal repayments from the underlying mortgages or mortgage-backed
securities. In contrast to mortgage-backed securities in which cash flow is
received (and, accordingly, prepayment risk is shared) pro rata by all
securities holders, the cash flows from the mortgages or mortgage-backed
securities underlying CMOs are segmented and paid in accordance with a
predetermined priority to investors holding various tranches of such
securities or

                                      12
<PAGE>

obligations. Accordingly, CMOs attempt to moderate the reinvestment risk
associated with conventional mortgage-backed securities when prepayments of
the mortgages underlying such securities prepay faster than anticipated. CMOs
are issued by special purpose entities formed by government-sponsored
agencies, such as Fannie Mae or Freddie Mac, and private issuers; however, the
Association generally only invests in CMOs issued by government-sponsored
agencies which are collateralized by mortgage-backed securities.

  While CMOs issued by government-sponsored agencies involve reduced credit
risk, they involve prepayment risk (i.e., the risk that actual prepayments of
the mortgage loans or mortgage backed securities underlying the CMOs will be
greater than estimated prepayments over the life of the security upon which
the price of the security CMO is based). In the event actual prepayments
exceed estimated prepayments, it may require adjustments to the amortization
of any premium or accretion of any discount relating to such instruments
thereby reducing the net yield on such securities. There is also reinvestment
risk associated with CMOs if the cash flows from such securities are at rate
greater than the estimated cash flow or in the event such securities are
redeemed by the issuer. In addition, the market value of such securities may
be adversely affected by changes in interest rates.

  Corporate Obligations. As of December 31, 2000, the Association had $9.2
million of corporate obligations available for sale, or 1.0% of total assets
and $12.8 million held to maturity or 1.4% of total assets. The Association's
investments in corporate debt obligations, as of December 31, 2000, generally
consisted of short term debt obligations issued by large and medium sized U.S.
and multinational corporate issuers. The Association's policies require all
corporate debt obligations purchased by the Association to be denominated in
dollars and be rated in one of the four highest categories by a nationally
recognized rating agency and the average maturity of such securities may not
exceed six years.

  Investments in corporate debt obligations and commercial paper involve
credit risk as they are not insured or guaranteed by the U.S. government or
any agency thereof, generally are not secured by collateral and generally rely
upon future income from the operations of the issuer for repayment of
principal and interest.

  Ginnie Mae Forward Commitments. The Company had only limited involvement
with derivative financial instruments. Periodically, the Company entered into
unconditional forward commitments to purchase mortgage-backed securities, such
as those issued by Ginnie Mae, at a fixed price and coupon rate to be
delivered, typically, no longer than six months in the future. In addition,
the Company also entered into 50-50 flexible commitments to purchase mortgage-
backed securities issued by Ginnie Mae's whereby the broker delivered at least
50% of the commitment amount or up to 150% of the total commitment amount on
the settlement date. In effect, 50% of the commitment represented an
unconditional forward commitment and the remaining portion of the commitment
represented standby commitments (put options) with certain brokers approved by
the Board of Directors. The Company only entered into these commitments when
it had available liquidity to meet the full amount of the commitment. Certain
purchase commitments were "paired off" against sale commitments for the same
type of security bearing the same contract amount, rate and settlement date.

  Risks associated with these commitments arose from the possible inability of
counterparties to meet the terms of their contracts and from movements in
securities values and interest rates. Under standby commitments, the Company
bore the risk of an unfavorable change in the price of the mortgage-backed
securities underlying the options. The Company reviewed the creditworthiness
of the parties to these commitments.

  No such forward commitments were entered into subsequent to June 1999. The
last purchase commitment settled in September 1999. Accordingly, the Company
had no forward or standby commitments outstanding as of December 31, 2000.

  U.S. Government Agency Debt Securities. As of December 31, 2000, the Company
had $37.4 million of U.S. Government agency debt securities, or 4.2% of total
assets. All government debt securities are issued directly by the U.S.
government, either through the Treasury Department or through one of the many
federal agencies created by Congress. U.S. Treasury Securities are issued by
the Treasury Department and are backed by the full faith and credit of the
U.S. government.

                                      13
<PAGE>

  Marketable Equity Securities. As of December 31, 2000 the Company had $37.7
million of marketable equity securities, or 4.2% of total assets. The Company
also had $798,000 in trading securities. The trading securities are all equity
securities. Marketable equity securities consisted primarily of mutual funds
containing government securities and prime rate loans, bank industry related
common and preferred stocks, bank industry related trust preferred securities
and, to a lesser extent, other various equities.

  Municipal Obligations. As of December 31, 2000, the Company had $61.0
million of municipal obligations, or 6.9% of total assets. The Company's
investment policy requires all municipal obligations to be rated in one of the
four highest categories by a nationally recognized rating agency. The Company
purchases primarily Pennsylvania municipal bonds that are issued by school
districts and municipalities.

  The table below sets forth certain information regarding the carrying value,
weighted average yields and contractual maturities of the Association's
available for sale investment securities and mortgage-backed and mortgage-
related securities as of December 31, 2000.

<TABLE>
<CAPTION>
                                             As of December 31, 2000
                         ---------------------------------------------------------------
                                    More than    More than
                         One Year   One Year     Five Years  More than
                         or Less  to Five Years to Ten Years Ten Years       Total
                         -------- ------------- ------------ --------- -----------------
                                                                                Weighted
                         Carrying   Carrying      Carrying   Carrying  Carrying Average
                          Value       Value        Value       Value    Value    Yield
                         -------- ------------- ------------ --------- -------- --------
                                             (Dollars in thousands)
<S>                      <C>      <C>           <C>          <C>       <C>      <C>
Investment securities:
  U.S. Government agency
   debt................. $   999     $11,578      $ 3,830    $ 21,019  $ 37,426   6.75%
  Municipal
   obligations(1).......   1,505       2,677        5,628      51,163    60,973   6.72
  Corporate
   obligations..........      --       7,381           --       1,845     9,226   6.41
  Marketable equity
   securities...........  37,745          --           --          --    37,745   4.82
                         -------     -------      -------    --------  --------   ----
    Total investment
     securities.........  40,249      21,636        9,458      74,027   145,370   6.22%
                         -------     -------      -------    --------  --------   ----
Mortgage-backed and
 mortgage-related
 securities:
  Mortgage-backed
   securities...........   3,024          74          783     194,973   198,854   6.88
  Collateral mortgage
   obligations..........      --          --       13,457      53,370    66,827   6.37
                         -------     -------      -------    --------  --------   ----
    Total mortgage-
     backed and
     mortgage-
     related
     securities.........   3,024          74       14,240     248,343   265,681   6.75
                         -------     -------      -------    --------  --------   ----
    Total investments... $43,273     $21,710      $23,698    $322,370  $411,051   6.56%
                         =======     =======      =======    ========  ========   ====
</TABLE>
--------
(1)The weighted average yield for municipal obligations are fully taxable
equivalent.

  The table below sets forth certain information regarding the carrying value,
weighted average yields and contractual maturities of the Association's held
to maturity investments as of December 31, 2000.

<TABLE>
<CAPTION>
                                             As of December 31, 2000
                         ---------------------------------------------------------------
                                    More than    More than
                         One Year   One Year     Five Years  More than
                         or Less  to Five Years to Ten Years Ten Years       Total
                         -------- ------------- ------------ --------- -----------------
                                                                                Weighted
                         Carrying   Carrying      Carrying   Carrying  Carrying Average
                          Value       Value        Value       Value    Value    Yield
                         -------- ------------- ------------ --------- -------- --------
                                             (Dollars in thousands)
<S>                      <C>      <C>           <C>          <C>       <C>      <C>
Corporate Obligations...  $9,882     $2,879          --          --    $12,761    7.40%
                          ------     ------         ---         ---    -------    ----
</TABLE>


                                      14
<PAGE>

Sources of Funds

  General. Deposits, loan repayments and prepayments, proceeds from sales of
loans, principal and interest payments on investment and mortgage-backed and
mortgage-related securities, FHLB advances and cash flows generated from
operations are the primary sources of the Association's funds for use in
lending, investing and for other general purposes.

  Deposits. The Association offers a variety of deposit accounts with a range
of interest rates and terms. The Association's deposits consist of savings,
checking accounts, money market accounts and certificate accounts. The flow of
deposits is influenced significantly by general and regional economic
conditions, changes in money market rates, prevailing interest rates and
competition. The Association's deposits are obtained predominantly from the
areas in which its branch offices are located. To attract and retain deposits,
the Association relies primarily on pricing its deposit products at a
competitive rate providing customer service and its long-standing
relationships with customers; however, market interest rates and rates offered
by competing financial institutions significantly affect the Association's
ability to attract and retain deposits. The Association uses traditional means
of advertising its deposit products, including radio and print media and
generally does not solicit deposits from outside its market area. Certificate
accounts in excess of $100,000 are not actively solicited by the Association
and the Association does not currently use brokers to obtain deposits.

  As of December 31, 2000, certificate accounts with maturities of one year or
less totaled $102.3 million, or 19.6% of total deposits. While the Association
believes that, based on the Association's historical deposit outflow activity,
the substantial majority of such accounts will remain with the Association, if
a material amount of such accounts were not renewed it could have a material
adverse impact on the liquidity and cash flows of the Association and may
result in increased interest expense in the event the Association paid higher
rates to attract and retain deposit accounts or increased its utilization of
higher cost borrowings to fund its liquidity needs.

  The following table presents the deposit activity of the Association for the
periods indicated:

<TABLE>
<CAPTION>
                                               For the Years Ended December 31,
                                               ---------------------------------
                                                  2000       1999        1998
                                               ---------- ----------  ----------
                                                        (In thousands)
<S>                                            <C>        <C>         <C>
Net deposits (withdrawals).................... $    7,198 $   (4,798) $    2,221
Interest credited on deposit accounts.........     20,163     17,374      18,173
                                               ---------- ----------  ----------
  Total increase (decrease) in deposit
   accounts................................... $   27,361 $   12,576  $   20,394
                                               ========== ==========  ==========
</TABLE>

  The following table sets forth the distribution of the Association's average
deposit accounts for the periods indicated and the weighted average nominal
interest rates on each category of deposits presented. Averages for the
periods presented utilize daily average balances.

<TABLE>
<CAPTION>
                                                 For the Years Ended December 31,
                         --------------------------------------------------------------------------------
                                    2000                       1999                       1998
                         -------------------------- -------------------------- --------------------------
                                  Percent                    Percent                    Percent
                                  of Total Weighted          of Total Weighted          of Total Weighted
                         Average  Average  Average  Average  Average  Average  Average  Average  Average
                         Balance  Deposits   Cost   Balance  Deposits   Cost   Balance  Deposits   Cost
                         -------- -------- -------- -------- -------- -------- -------- -------- --------
                                                      (Dollars in thousands)
<S>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
Money market savings
 accounts............... $ 63,490   12.56%   5.42%  $ 18,770    3.87%   3.66%  $ 14,342    3.04%   2.29%
Savings accounts........  136,367   26.99    2.40    157,920   32.58    2.41    159,374   33.84    2.76
Checking accounts.......   36,859    7.29    1.61     33,744    6.96    1.82     31,886    6.77    1.78
Non-interest-bearing
 accounts...............   31,143    6.17      --     31,944    6.59      --     25,565    5.43      --
Time deposits...........  237,458   46.99    5.47    242,384   50.00    5.30    239,819   50.92    5.58
                         --------  ------    ----   --------  ------    ----   --------  ------    ----
 Total average
  deposits.............. $505,317  100.00%   4.02%  $484,762  100.00%   3.69%  $470,986  100.00%   3.95%
                         ========  ======    ====   ========  ======    ====   ========  ======    ====
</TABLE>

                                      15
<PAGE>

  Borrowings. The Association utilizes advances from the FHLB as an
alternative to retail deposits to fund its operations and may do so in the
future as part of its operating strategy. These FHLB advances are
collateralized primarily by certain of the Association's mortgage loans and
mortgage-backed securities and secondarily by the Association's investment in
capital stock of the FHLB. FHLB advances are made pursuant to several
different credit programs, each of which has its own interest rate and range
of maturities. The maximum amount that the FHLB will advance to member
institutions, including the Association, fluctuates from time to time in
accordance with the policies of the OTS and the FHLB. The Association also
utilizes securities sold under agreement to repurchase. As of December 31,
2000 the Association had $217.5 million of FHLB advances and $51.1 million of
securities sold under agreement to repurchase.

  The following table sets forth certain information regarding the
Association's short term borrowed funds as of or for the periods ended on the
dates indicated:

<TABLE>
<CAPTION>
                                                   As of or For the Year
                                                     Ended December 31,
                                                 ----------------------------
                                                   2000      1999      1998
                                                 --------  --------  --------
                                                   (Dollars in thousands)
<S>                                              <C>       <C>       <C>
Average balance outstanding..................... $125,734  $ 84,539  $126,128
                                                 ========  ========  ========
Maximum amount outstanding at any month-end
 during the period ............................. $148,977  $117,660  $147,038
                                                 ========  ========  ========
Balance outstanding at end of period............ $137,598  $115,160  $ 95,785
                                                 ========  ========  ========
Weighted average interest rate
 during the period..............................     6.36%     6.02%     5.83%
                                                 ========  ========  ========
Weighted average interest rate at end
 of period......................................     6.35%     5.82%     5.93%
                                                 ========  ========  ========
</TABLE>
Subsidiary Activities

  GA Financial Inc. is the parent company of the Association and New Eagle
Capital, Inc. Great American Financial Services, Inc. is a wholly-owned
subsidiary of the Association, which currently does not conduct any
activities.

                          REGULATION AND SUPERVISION

General

  As a savings and loan holding company, the Company is required by federal
law to file reports with, and otherwise comply with, the rules and regulations
of the OTS. The Association is subject to extensive regulation, examination
and supervision by the OTS, as its primary federal regulator, and the FDIC, as
the deposit insurer. The Association is a member of the Federal Home Loan Bank
System and, with respect to deposit insurance, of the Savings Association
Insurance Fund ("SAIF") managed by the FDIC. The Association must file reports
with the OTS and the FDIC concerning its activities and financial condition in
addition to obtaining regulatory approvals prior to entering into certain
transactions such as mergers with, or acquisitions of, other savings
institutions. The OTS and/or the FDIC conduct periodic examinations to test
the Association's safety and soundness and compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which an institution can engage and is intended
primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive
discretion in connection with their supervisory and enforcement activities and
examination policies, including policies with respect to the classification of
assets and the establishment of adequate loan loss reserves for regulatory
purposes. Any change in such regulatory requirements and policies, whether by
the OTS, the FDIC or the Congress, could have a material adverse impact on the
Company, the Association and their operations. Certain of the regulatory
requirements applicable to the Association and to the Company are referred to
below or elsewhere herein. The description of statutory provisions and
regulations applicable to savings institutions and

                                      16
<PAGE>

their holding companies set forth in this Form 10-K does not purport to be a
complete description of such statutes and regulations and their effects on the
Association and the Company.

Holding Company Regulation

  The Company is a non-diversified unitary savings and loan holding company
within the meaning of federal law. Under prior law, a unitary savings and loan
holding company, such as the Company was not generally restricted as to the
types of business activities in which it may engage, provided that the
Association continued to be a qualified thrift lender. See "Federal Savings
Institution Regulation--QTL Test." The Gramm-Leach-Bliley Act of 1999 provides
that no company may acquire control of a savings association after May 4, 1999
unless it engages only in the financial activities permitted for financial
holding companies under the law or for multiple savings and loan holding
companies as described below. Further, the Gramm-Leach-Bliley Act specifies
that existing savings and loan holding companies may only engage in such
activities. The Gramm-Leach-Bliley Act, however, grandfathered the
unrestricted authority for activities with respect to unitary savings and loan
holding companies existing prior to May 4, 1999, such as the Company, so long
as the Association continues to comply with the QTL Test. Upon any non-
supervisory acquisition by the Company of another savings institution or
savings bank that meets the qualified thrift lender test and is deemed to be a
savings institution by the OTS, the Company would become a multiple savings
and loan holding company (if the acquired institution is held as a separate
subsidiary) and would generally be limited to activities permissible for bank
holding companies under Section 4(c)(8) of the Association Holding Company
Act, subject to the prior approval of the OTS, and certain activities
authorized by OTS regulation.

  A savings and loan holding company is prohibited from, directly or
indirectly, acquiring more than 5% of the voting stock of another savings
institution or savings and loan holding company, without prior written
approval of the OTS and from acquiring or retaining control of a depository
institution that is not insured by the FDIC. In evaluating applications by
holding companies to acquire savings institutions, the OTS considers the
financial and managerial resources and future prospects of the company and
institution involved, the effect of the acquisition on the risk to the deposit
insurance funds, the convenience and needs of the community and competitive
factors.

  The OTS may not approve any acquisition that would result in a multiple
savings and loan holding company controlling savings institutions in more than
one state, subject to two exceptions: (i) the approval of interstate
supervisory acquisitions by savings and loan holding companies and (ii) the
acquisition of a savings institution in another state if the laws of the state
of the target savings institution specifically permit such acquisitions. The
states vary in the extent to which they permit interstate savings and loan
holding company acquisitions.

  Although savings and loan holding companies are not subject to specific
capital requirements or specific restrictions on the payment of dividends or
other capital distributions, federal regulations do prescribe such
restrictions on subsidiary savings institutions as described below. The
Association must notify the OTS 30 days before declaring any dividend to the
Company. In addition, the financial impact of a holding company on its
subsidiary institution is a matter that is evaluated by the OTS and the agency
has authority to order cessation of activities or divestiture of subsidiaries
deemed to pose a threat to the safety and soundness of the institution.

  Acquisition of the Holding Company. Under the Federal Change in Bank Control
Act ("CIBCA"), a notice must be submitted to the Office of Thrift Supervision
if any person (including a company), or group acting in concert, seeks to
acquire 10% or more of the Company's outstanding voting stock, unless the
Office of Thrift Supervision has found that the acquisition will not result in
a change of control of the Company. Under the CIBCA, the Office of Thrift
Supervision has 60 days from the filing of a complete notice to act, taking
into consideration certain factors, including the financial and managerial
resources of the acquirer and the anti-trust effects of the acquisition. Any
company that so acquires control would then be subject to regulation as a
savings and loan holding company.


                                      17
<PAGE>

Federal Savings Institution Regulation

  Business Activities. The activities of federal savings institutions are
governed by federal law and regulations. These laws and regulations delineate
the nature and extent of the activities in which federal associations may
engage. In particular, many types of lending authority for federal
association, e.g., commercial, non-residential real property loans and
consumer loans, are limited to a specified percentage of the institution's
capital or assets.

  Capital Requirements. The OTS capital regulations require savings
institutions to meet three minimum capital standards: a 1.5% tangible capital
ratio, a 4% leverage ratio (3% for institutions receiving the highest rating
on the CAMELS rating system) and an 8% risk-based capital ratio. In addition,
the prompt corrective action standards discussed below also establish, in
effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for
institutions receiving the highest rating on the CAMELS financial institution
rating system), and, together with the risk-based capital standard itself, a
4% Tier 1 risk-based capital standard. The OTS regulations also require that,
in meeting the tangible, leverage and risk-based capital standards,
institutions must generally deduct investments in and loans to subsidiaries
engaged in activities as principal that are not permissible for a national
bank.

  The risk-based capital standard for savings institutions requires the
maintenance of Tier 1 (core) and total capital (which is defined as core
capital and supplementary capital) to risk-weighted assets of at least 4% and
8%, respectively. In determining the amount of risk-weighted assets, all
assets, including certain off-balance sheet assets, are multiplied by a risk-
weight factor of 0% to 100%, assigned by the OTS capital regulation based on
the risks believed inherent in the type of asset. Core (Tier 1) capital is
defined as common stockholders' equity (including retained earnings), certain
non-cumulative perpetual preferred stock and related surplus, and minority
interests in equity accounts of consolidated subsidiaries less intangibles
other than certain mortgage servicing rights and credit card relationships.
The components of supplementary capital currently include cumulative preferred
stock, long-term perpetual preferred stock, mandatory convertible securities,
subordinated debt and intermediate preferred stock, the allowance for loan and
lease losses limited to a maximum of 1.25% of risk-weighted assets and up to
45% of unrealized gains on available-for-sale equity securities with readily
determinable fair market values. Overall, the amount of supplementary capital
included as part of total capital cannot exceed 100% of core capital.

  The capital regulations also incorporate an interest rate risk component.
Savings institutions with "above normal" interest rate risk exposure are
subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. For the present time, the OTS has deferred
implementation of the interest rate risk capital charge. At December 31, 2000,
the Association met each of its capital requirements.

  Prompt Corrective Regulatory Action. The OTS is required to take certain
supervisory actions against undercapitalized institutions, the severity of
which depends upon the institution's degree of undercapitalization. Generally,
a savings institution that has a ratio of total capital to risk weighted
assets of less than 8%, a ratio of Tier 1 (core) capital to risk-weighted
assets of less than 4% or a ratio of core capital to total assets of less than
4% (3% or less for institutions with the highest examination rating) is
considered to be "undercapitalized." A savings institution that has a total
risk-based capital ratio less than 6%, a Tier 1 capital ratio of less than 3%
or a leverage ratio that is less than 3% is considered to be "significantly
undercapitalized" and a savings institution that has a tangible capital to
assets ratio equal to or less than 2% is deemed to be "critically
undercapitalized." Subject to a narrow exception, the OTS is required to
appoint a receiver or conservator for an institution that is "critically
undercapitalized." The regulation also provides that a capital restoration
plan must be filed with the OTS within 45 days of the date a savings
institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." Compliance with the plan
must be guaranteed by any parent holding company. In addition, numerous
mandatory supervisory actions become immediately applicable to an
undercapitalized institution, including, but not limited to, increased
monitoring by regulators and restrictions on growth, capital distributions and
expansion. The OTS could also take any one of a number of discretionary
supervisory actions, including the issuance of a capital directive and the
replacement of senior executive officers and directors.


                                      18
<PAGE>

  Insurance of Deposit Accounts. The Association is a member of the SAIF. The
FDIC maintains a risk-based assessment system by which institutions are
assigned to one of three categories based on their capitalization and one of
three subcategories based on examination ratings and other supervisory
information. An institution's assessment rate depends upon the categories to
which it is assigned. Assessment rates for SAIF member institutions are
determined semiannually by the FDIC and currently range from zero basis points
for the healthiest institutions to 27 basis points for the riskiest.

  In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation ("FICO") to recapitalize the predecessor to the SAIF. During 2000,
FICO payments for SAIF members approximated 2.06 basis points.

  The Association's assessment rate for fiscal 2000 was approximately 2.1
basis points. The FDIC has authority to increase insurance assessments. A
significant increase in SAIF insurance premiums would likely have an adverse
effect on the operating expenses and results of operations of the Association.
Management cannot predict what insurance assessment rates will be in the
future.

  Insurance of deposits may be terminated by the FDIC upon a finding that the
institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC or the OTS. The
management of the Association does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

  Loans to One Borrower. Federal law provides that savings institutions are
generally subject to the limits on loans to one borrower applicable to
national banks. A savings institution may not make a loan or extend credit to
a single or related group of borrowers in excess of 15% of its unimpaired
capital and surplus. An additional amount may be lent, equal to 10% of
unimpaired capital and surplus, if secured by specified readily-marketable
collateral. At December 31, 2000, the Association's limit on loans to one
borrower was $12.0 million, and the Association's largest aggregate
outstanding balance of loans to one borrower was $5.6 million.

  QTL Test. The HOLA requires savings institutions to meet a qualified thrift
lender test. Under the test, a savings association is required to either
qualify as a "domestic building and loan association" under the Internal
Revenue Code or maintain at least 65% of its "portfolio assets" (total assets
less: (i) specified liquid assets up to 20% of total assets; (ii) intangibles,
including goodwill; and (iii) the value of property used to conduct business)
in certain "qualified thrift investments" (primarily residential mortgages and
related investments, including certain mortgage-backed securities) in at least
9 months out of each 12 month period.

  A savings institution that fails the qualified thrift lender test is subject
to certain operating restrictions and may be required to convert to a bank
charter. As of December 31, 2000, the Association maintained 97% of its
portfolio assets in qualified thrift investments and, therefore, met the
qualified thrift lender test. Recent legislation has expanded the extent to
which education loans, credit card loans and small business loans may be
considered "qualified thrift investments."

  Limitation on Capital Distributions. OTS regulations impose limitations upon
all capital distributions by a savings institution, including cash dividends,
payments to repurchase its shares and payments to shareholders of another
institution in a cash-out merger. Under the new regulation, an application to
and the prior approval of the OTS is required prior to any capital
distribution if the institution does not meet the criteria for "expedited
treatment" of applications under OTS regulations (i.e., generally, examination
ratings in the two top categories), the total capital distributions for the
calendar year exceed net income for that year plus the amount of retained net
income for the preceding two years, the institution would be undercapitalized
following the distribution or the distribution would otherwise be contrary to
a statute, regulation or agreement with OTS. If an application is not
required, the institution must still provide prior notice to OTS of the
capital distribution if, like the Association, it is a subsidiary of a holding
company. In the event the Association's capital fell below its regulatory
requirements or the OTS notified it that it was in need of more than normal
supervision, the

                                      19
<PAGE>

Association's ability to make capital distributions could be restricted. In
addition, the OTS could prohibit a proposed capital distribution by any
institution, which would otherwise be permitted by the regulation, if the OTS
determines that such distribution would constitute an unsafe or unsound
practice.

  Liquidity. During 2000, the Association is required to maintain an average
daily balance of specified liquid assets equal to a monthly average of not
less than a specified percentage of its net withdrawable deposit accounts plus
short-term borrowings. This liquidity requirement was 4%.

  Assessments. Savings institutions are required to pay assessments to the OTS
to fund the agency's operations. The general assessments, paid on a semi-
annual basis, are computed upon the savings institution's total assets,
including consolidated subsidiaries, as reported in the Association's latest
quarterly thrift financial report. The assessments paid by the Association for
the fiscal year ended December 31, 2000 totaled $101,000.

  Transactions with Related Parties. The Association's authority to engage in
transactions with "affiliates" (e.g., any company that controls or is under
common control with an institution, including the Company and its non-savings
institution subsidiaries) is limited by federal law. The aggregate amount of
covered transactions with any individual affiliate is limited to 10% of the
capital and surplus of the savings institution. The aggregate amount of
covered transactions with all affiliates is limited to 20% of the savings
institution's capital and surplus. Certain transactions with affiliates are
required to be secured by collateral in an amount and of a type described in
federal law. The purchase of low quality assets from affiliates is generally
prohibited. The transactions with affiliates must be on terms and under
circumstances, that are at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. In addition, savings institutions are prohibited from lending to
any affiliate that is engaged in activities that are not permissible for bank
holding companies and no savings institution may purchase the securities of
any affiliate other than a subsidiary.

  The Association's authority to extend credit to executive officers,
directors and 10% shareholders ("insiders"), as well as entities such persons
control, is also governed by federal law. Such loans are required to be made
on terms substantially the same as those offered to unaffiliated individuals
and not involve more than the normal risk of repayment. Recent legislation
created an exception for loans made pursuant to a benefit or compensation
program that is widely available to all employees of the institution and does
not give preference to insiders over other employees. The law limits both the
individual and aggregate amount of loans the Association may make to insiders
based, in part, on the Association's capital position and requires certain
board approval procedures to be followed.

  Enforcement. The OTS has primary enforcement responsibility over savings
institutions and has the authority to bring actions against the institution
and all institution-affiliated parties, including stockholders, and any
attorneys, appraisers and accountants who knowingly or recklessly participate
in wrongful action likely to have an adverse effect on an insured institution.
Formal enforcement action may range from the issuance of a capital directive
or cease and desist order to removal of officers and/or directors to
institution of receivership, conservatorship or termination of deposit
insurance. Civil penalties cover a wide range of violations and can amount to
$25,000 per day, or even $1 million per day in especially egregious cases. The
FDIC has the authority to recommend to the Director of the OTS that
enforcement action to be taken with respect to a particular savings
institution. If action is not taken by the Director, the FDIC has authority to
take such action under certain circumstances. Federal law also establishes
criminal penalties for certain violations.

  Standards for Safety and Soundness. The federal banking agencies have
adopted Interagency Guidelines prescribing Standards for Safety and Soundness.
The guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. If the OTS determines that a
savings institution fails to meet any standard prescribed by the guidelines,
the OTS may require the institution to submit an acceptable plan to achieve
compliance with the standard.


                                      20
<PAGE>

Federal Home Loan Bank System

  The Association is a member of the Federal Home Loan Bank System, which
consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. The
Association, as a member of the Federal Home Loan Bank, is required to acquire
and hold shares of capital stock in that Federal Home Loan Bank in an amount
at least equal to 1.0% of the aggregate principal amount of its unpaid
residential mortgage loans and similar obligations at the beginning of each
year, or 1/20 of its advances (borrowings) from the Federal Home Loan Bank,
whichever is greater. The Association was in compliance with this requirement
with an investment in Federal Home Loan Bank stock at December 31, 2000 of
$15.5 million.

  The Federal Home Loan Banks are required to provide funds for the resolution
of insolvent thrifts in the late 1980s and to contribute funds for affordable
housing programs. These requirements could reduce the amount of dividends that
the Federal Home Loan Banks pay to their members and could also result in the
Federal Home Loan Banks imposing a higher rate of interest on advances to
their members. If dividends were reduced, or interest on future Federal Home
Loan Bank advances increased, the Association's net interest income would
likely also be reduced. Recent legislation has changed the structure of the
Federal Home Loan Banks funding obligations for insolvent thrifts, revised the
capital structure of the Federal Home Loan Banks and implemented entirely
voluntary membership for Federal Home Loan Banks. Management cannot predict
the effect that these changes may have with respect to its Federal Home Loan
Bank membership.

Federal Reserve System

  The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The regulations generally
provide that reserves be maintained against aggregate transaction accounts as
follows: a 3% reserve ratio is assessed on net transaction accounts over $5.5
million to and including $42.8 million and a 10% reserve ratio is applied
above $42.8. The first $5.5 million of otherwise reservable balances (subject
to adjustments by the Federal Reserve Board) are exempted from the reserve
requirements. These amounts are adjusted annually. The Association complies
with the foregoing requirements.

                          FEDERAL AND STATE TAXATION

Federal Taxation

  General. The Company and the Association report their income on a calendar
year, consolidated basis and the accrual method of accounting, and are subject
to federal income taxation in the same manner as other corporations with some
exceptions, including particularly the Association's reserve for bad debts
discussed below. The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax
rules applicable to the Association or the Company. The Association was last
audited by the IRS for 1995. Tax years 1996 through 1999 are still open for
examination under the statute of limitations. For its 2000 taxable year, the
Association is subject to a maximum federal income tax rate of 34.0%.

  Bad Debt Reserves. For fiscal years beginning prior to December 31, 1995,
thrift institutions which qualified under certain definitional tests and other
conditions of the Internal Revenue Code of 1986 (the "Code") were permitted to
use certain favorable provisions to calculate their deductions from taxable
income for annual additions to their bad debt reserve. A reserve could be
established for bad debts on qualifying real property loans (generally secured
by interests in real property improved or to be improved) under (i) the
Percentage of Taxable Income Method (the "PTI Method") or (ii) the Experience
Method. The reserve for nonqualifying loans was computed using the Experience
Method.

  The Small Business Job Protection Act of 1996 (the "1996 Act"), which was
enacted on August 20, 1996, repeals the reserve method of accounting for bad
debts for tax years beginning after 1995 and requires savings

                                      21
<PAGE>

institutions to recapture (i.e., take into income) certain portions of their
accumulated bad debt reserves. The thrift institutions eligible to be treated
as "small banks" (assets of $500 million or less) are allowed to use the
Experience Method applicable to such institutions, while thrift institutions
that are treated as large banks (assets exceeding $500 million) are required
to use only the specific charge-off method. The PTI Method of accounting for
bad debts is no longer available for any financial institution.

  A thrift institution required to change its method of computing reserves for
bad debts will treat such change as a change in method of accounting,
initiated by the taxpayer, and having been made with the consent of the IRS.
Any Section 481(a) adjustment required to be taken into income with respect to
such change generally will be taken into income ratably over a six-taxable
year period, beginning with the first taxable year beginning after 1995,
subject to a 2-year suspension if the "residential loan requirement" is
satisfied.

  Under the residential loan requirement provision, the recapture required by
the 1996 Act will be suspended for each of two successive taxable years,
beginning with the Association's 1996 taxable year, in which the Association
originates a minimum of certain residential loans based upon the average of
the principal amounts of such loans made by the Association during its six
taxable years preceding its current taxable year.

  The Association is required to recapture (i.e., take into income) over a six
year period the excess of the balance of its tax bad debt reserves as of
December 31, 1995 other than its supplemental reserve for losses on loans, if
any over the balance of such reserves as of December 31, 1987 (or a lesser
amount since the Association's loan portfolio decreased since December 31,
1987). As a result of such recapture, the Association will incur an additional
tax liability of approximately $765,000 which is to be paid beginning in 1998
over a six year period. As of December 31, 2000, the tax liability remaining
for such recapture is $383,000.

  Distributions. Under the 1996 Act, if the Association makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Association's unrecaptured tax bad debt reserves (including
the balance of its reserves as of December 31, 1987) to the extent thereof,
and then from the Association's supplemental reserve for losses on loans, to
the extent thereof, and an amount based on the amount distributed (but not in
excess of the amount of such reserves) will be included in the Association's
income. Non-dividend distributions include distributions in excess of the
Association's current and accumulated earnings and profits, as calculated for
federal income tax purposes, distributions in redemption of stock, and
distributions in partial or complete liquidation. Dividends paid out of the
Association's current or accumulated earnings and profits will not be so
included in the Association's income.

  The amount of additional taxable income triggered by a non-dividend is an
amount that, when reduced by the tax attributable to the income, is equal to
the amount of the distribution. Thus, if the Association makes a non-dividend
distribution to the Company, approximately one and one-half times the amount
of such distribution (but not in excess of the amount of such reserves) would
be includable in income for federal income tax purposes, assuming a 34%
federal corporate income tax rate. The Association does not intend to pay
dividends that would result in a recapture of any portion of its bad debt
reserves.

ITEM 2. PROPERTIES.

  The Company presently conducts its business through an administrative and
full service office located in the Borough of Whitehall and fourteen other
full service branch offices, all of which are located in the greater
Pittsburgh metropolitan area. The Association owns the building and land for
eight of its offices and leases its remaining seven offices. As of December
31, 2000, Great American Federal's land, building and equipment had a net book
value of $7.4 million.

ITEM 3. LEGAL PROCEEDINGS.

  The Association is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business. Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the Company's financial condition and results of operations.

                                      22
<PAGE>

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

  None.

                                    PART II

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

  Information relating to the market for Registrant's common equity and
related stockholder matters appears under "Stock Information" and "Stock
Price" on the inside back cover of the Registrant's 2000 Annual Report to
Stockholders and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

  The above-captioned information appears under "Selected Consolidated
Financial and Other Data" in the Registrant's 2000 Annual Report to
Stockholders on page 5 and is incorporated herein by reference.

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

  The above-captioned information appears under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Registrant's
2000 Annual Report to Stockholders on pages 6 though 14 and is incorporated
herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

  This information contained in the Section captioned, "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Management of Interest Rate Risk and Market Risk Analysis" on pages 6 through
8 of the 2000 Annual Report to Stockholders is incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The Consolidated Financial Statements of GA Financial, Inc. and its
subsidiaries, together with the report thereon by KPMG LLP appears in the
Registrant's 2000 Annual Report to Stockholders on pages 15 through 38 and are
incorporated herein by reference. The report and consent of
PricewaterhouseCoopers LLP for their audit of the consolidated financial
statements of GA Financial, Inc. for the year ended December 31, 1998 is filed
herewith.

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

  None.

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 25, 2001,
at pages 4 through 6.

ITEM 11. EXECUTIVE COMPENSATION.

  The information relating to directors' compensation and executives'
compensation is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 25,

                                      23
<PAGE>

2001, at pages 7 through 10 and pages 12 through 15 (excluding the Executive
Compensation Committee Report, Audit and Compliance Committee Report and Stock
Performance Graph).

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

  The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 25, 2001,
at page 3.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

  The information relating to certain relationships and related transactions
is incorporated herein by reference to the Registrant's Proxy Statement for
the Annual Meeting of Stockholders to be held on
April 25, 2001, at page 16 and 17.

                                    PART IV

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

  (a) The following documents are filed as a part of this report:

  (1) Consolidated Financial Statements of the Company are incorporated by
reference to the following indicated pages of the 2000 Annual Report to
Stockholders.

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         -----
   <S>                                                                   <C>
   Independent Auditors' Report for 2000 Financial Statements...........    15

   Consolidated Statements of Financial Condition as of December 31,
    2000 and 1999.......................................................    16

   Consolidated Statements of Income and Comprehensive Income for the
    Years Ended December 31, 2000, 1999 and 1998........................    17

   Consolidated Statements of Cash Flows for the Years Ended December
    31, 2000, 1999 and 1998.............................................    18

   Consolidated Statements of Shareholders' Equity for the Years Ended
    December 31, 2000, 1999 and 1998....................................    19

   Notes to Consolidated Financial Statements for the Years Ended
    December 31, 2000, 1999 and 1998.................................... 20-38
</TABLE>

  The remaining information appearing in the 2000 Annual Report to
Stockholders is not deemed to be filed as part of this report, except as
expressly provided herein.

  (2) All schedules are omitted because they are not required or applicable,
or the required information is shown in the consolidated financial statements
or the notes thereto.

  (3) Exhibits

    (a) The following exhibits are filed as part of this report.

<TABLE>
     <C>  <S>
      3.1 Certificate of Incorporation of GA Financial, Inc. (1)

      3.2 Amended Bylaws of GA Financial, Inc. (2)

      4.0 Stock Certificate of GA Financial, Inc. (1)

          Amended and Restated GA Financial Inc. 1996 Stock-Based Incentive
     10.1 Plan (3)

          Employment Agreement between Great American Federal and John M. Kish
     10.2 (4)
</TABLE>


                                      24
<PAGE>

<TABLE>
     <C>  <S>
     10.3 Employment Agreement between GA Financial, Inc. and John M. Kish (4)

     10.4 Change in Control Agreement between Great American Federal and Todd
          Cover (5)

     10.5 Change in Control Agreement between GA Financial, Inc. and Raymond G.
          Suchta (1)

     11.0 Statements are computation of per share earnings is incorporated
          herein by reference to Part IV.

     13.0 Portions of the 2000 Annual Report to Stockholders (filed herewith)

     21.0 Subsidiary information is incorporated herein by reference to "Part
          I--Subsidiaries"

     23.0 Consent of KPMG LLP (filed herewith)

     23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)

     23.2 Report of Independent Accountants for 1998 Financial Statements
          (filed herewith)

     99.1 Proxy Statement, dated March 23, 2001, for the 2001 Annual Meeting of
          Stockholders (filed herewith)
</TABLE>

    (b) Reports on Form 8-K

  None.
--------
(1) Incorporated by reference into this document from the Exhibits to Form S-
    1, Registration Statement, filed on December 21, 1995, as amended,
    Registration No. 33-80715.
(2) Incorporated by reference into this document from the Company's Form 10-Q
    filed on November 15, 1999.
(3) Incorporated by reference into this document from the Proxy Statement for
    the 1999 Annual Meeting of Shareholders filed on March 26, 1999.
(4) Incorporated by reference into this document from the Company's Form 10-Q
    filed on May 13, 1998.
(5) Incorporated by reference into this document from the Company's Form 10-Q
    filed on November 13, 2000.

                                      25
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          GA Financial, Inc.

                                                    /s/ John M. Kish
                                          By: _________________________________
                                                        John M. Kish
                                              Chairman of the Board and Chief
                                                     Executive Officer

                                                  Date: March 30, 2001

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

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
         /s/ John M. Kish              Chairman of the Board and    March 30, 2001
______________________________________  Chief Executive Officer
             John M. Kish               (principal executive
                                        officer)

      /s/ Raymond G. Suchta            Chief Financial Officer      March 30, 2001
______________________________________  and Treasurer (principal
          Raymond G. Suchta             accounting and financial
                                        officer)

       /s/ Thomas E. Bugel             Director                     March 30, 2001
______________________________________
           Thomas E. Bugel

       /s/ Darrell J. Hess             Director                     March 30, 2001
______________________________________
           Darrell J. Hess

      /s/ Thomas M. Stanton            Director                     March 30, 2001
______________________________________
          Thomas M. Stanton

        /s/ David R. Wasik             Director                     March 30, 2001
______________________________________
            David R. Wasik

      /s/ Robert J. Ventura            Director                     March 30, 2001
______________________________________
          Robert J. Ventura
</TABLE>

                                      26