<PAGE>

                                  EXHIBIT 13.0


               Portions of the 1999 Annual Report to Stockholders
<PAGE>
                SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
Dollars in thousands                                                            1999       1998       1997       1996       1995
                                                                              ---------------------------------------------------
<S>                                                                           <C>        <C>        <C>        <C>        <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets                                                                  $882,980   $823,322   $783,948   $634,048   $521,398
-----------------------------------------------------------------------------------------------------------------------------------
Investment securities available for sale                                       150,960    163,108    151,265    119,347     71,060
-----------------------------------------------------------------------------------------------------------------------------------
Mortgage-related securities available for sale                                 306,724    273,124    284,161    244,482    168,779
-----------------------------------------------------------------------------------------------------------------------------------
Loans held for sale                                                             19,158     20,040     18,853     15,383         --
-----------------------------------------------------------------------------------------------------------------------------------
Loans receivable, net                                                          334,351    310,688    287,674    216,376    180,275
-----------------------------------------------------------------------------------------------------------------------------------
Borrowed funds                                                                 297,160    222,545    198,237     51,525         --
-----------------------------------------------------------------------------------------------------------------------------------
Total equity/2/                                                               $ 84,571   $109,216   $116,126   $122,404   $ 48,230

SELECTED OPERATING DATA:
Interest income                                                               $ 56,645   $ 55,205   $ 52,680   $ 40,350   $ 32,833
-----------------------------------------------------------------------------------------------------------------------------------
Interest expense                                                                33,388     31,639     27,233     17,545     16,543
-----------------------------------------------------------------------------------------------------------------------------------
  Net interest income before provision for loan losses                          23,257     23,566     25,447     22,805     16,290
-----------------------------------------------------------------------------------------------------------------------------------
  Provision for loan losses                                                        390        360        300        210         --
-----------------------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses                           22,867     23,206     25,147     22,595     16,290
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest income                                                              3,826      4,774      2,648      3,460        422
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest expense                                                            17,258     15,580     14,752     16,972     12,280
-----------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes                                         9,435     12,400     13,043      9,083      4,432
-----------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes                                                       2,320      4,158      4,726      3,481      1,612
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                                                    $  7,115   $  8,242   $  8,317   $  5,602   $  2,820
-----------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                                        1.22       1.23       1.15        .71         --
                                                                              -----------------------------------------------------
SELECTED FINANCIAL RATIOS AND OTHER DATA:
P E R F O R M A N C E  R A T I O S:
Return on average assets                                                          0.81%      1.01%      1.15%      1.00%      0.59%
-----------------------------------------------------------------------------------------------------------------------------------
Return on average equity                                                          7.61       7.73       7.19       5.21       6.27
-----------------------------------------------------------------------------------------------------------------------------------
Average equity to average assets                                                 10.67      13.11      15.92      19.22       9.49
-----------------------------------------------------------------------------------------------------------------------------------
Equity to total assets at end of period                                           9.58      13.26      14.81      19.31       9.25
-----------------------------------------------------------------------------------------------------------------------------------
Average interest rate spread                                                      2.46       2.37       2.81       3.27       3.08
-----------------------------------------------------------------------------------------------------------------------------------
Net-interest margin                                                               2.99       3.03       3.61       4.20       3.54
-----------------------------------------------------------------------------------------------------------------------------------
Average interest-earning assets to average                                         113        116        121        129        113
 interest-bearing liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest expense to average assets                                            1.83       1.92       2.03       2.54/1/    2.59
-----------------------------------------------------------------------------------------------------------------------------------
Efficiency ratio                                                                    59         59         54         58         68
-----------------------------------------------------------------------------------------------------------------------------------
Cash dividends paid per share                                                     0.64       0.54       0.42       0.13         --
-----------------------------------------------------------------------------------------------------------------------------------
Dividend payout ratio                                                            52.46      43.90      36.52      18.31         --
-----------------------------------------------------------------------------------------------------------------------------------
R E G U L A T O R Y  C A P I T A L  R A T I O S :
Tier I leverage capital                                                           8.11      12.02      12.59      15.26       8.76
-----------------------------------------------------------------------------------------------------------------------------------
Tier I risk-based capital                                                        22.44      30.90      33.30      43.59      18.30
-----------------------------------------------------------------------------------------------------------------------------------
Total risk-based capital                                                         23.12      31.78      33.76      44.08      18.63

A S S E T  Q U A L I T Y  R A T I O S :
Non-performing loans as a percent of gross loans  receivable                      0.51       0.56       0.56       0.38       0.81
-----------------------------------------------------------------------------------------------------------------------------------
Non-performing assets as a percent of total assets                                0.21       0.23       0.22       0.14       0.28
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses as a percent of gross loans receivable                  0.48       0.48       0.43       0.44       0.45
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses as a percent of
 non-performing assets                                                              95         86         76        115         56
-----------------------------------------------------------------------------------------------------------------------------------
N U M B E R  O F  F U L L - S E R V I C E  C U S T O M E R
 F A C I L I T I E S                                                                15         14         13         13         10
</TABLE>
/1/Excludes one-time SAIF assessment of $2.8 million.
/2/The Company completed its conversion to a stock company on March 25, 1996.

                                                                               5
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

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

GENERAL

GA Financial, Inc. (the "Company") was incorporated on December 14, 1995, and is
the holding company for Great American Federal Savings and Loan Association (the
"Association") and New Eagle Capital, Inc. On March 25, 1996 the Association
completed its conversion from a federally chartered mutual savings and loan
association to a stock form of ownership, and simultaneously, the Company issued
8,900,000 shares of common stock, utilizing a portion of the net proceeds to
acquire all of the outstanding stock of the Association. Currently, other than
investing in various securities, the Company does not directly transact any
material business other than through the Association. Accordingly, the
discussion herein addresses the operations of the Company as they are conducted
through the Association.

  The Company conducts business primarily through its ownership of the
Association which operates its administrative/branch office in Whitehall,
Pennsylvania and twelve other branch offices in Allegheny County and two offices
in Westmoreland County, all of which are located in southwestern Pennsylvania.
The Company's primary business is attracting retail deposits from the general
public and investing those deposits and other borrowed funds in loans, mortgage-
related securities, U.S government and federal agency securities and other
investments. The Company's revenues are derived principally from interest on
mortgage loans, mortgage-related securities, consumer loans and, to a lesser
extent, interest and dividends on its investment portfolio. The Company also
generates non-interest income from service fees. The Company's primary sources
of funds are retail deposits, principal and interest repayments on loans, sales
of investments and mortgage-related securities, Federal Home Loan Bank of
Pittsburgh ("FHLB") advances and, to a significantly lesser extent, sales of
loans.

  The Company's results of operations are dependent primarily on net interest
income, which is the difference between the interest income earned on interest-
earning assets and the interest expense incurred on interest-bearing
liabilities. Non-interest income is the result of service fees, sales of data
processing services and net gains on the sale of loans and securities. The
Company previously announced that it will no longer continue to provide data
processing to other companies. The Company's operating expenses consist
primarily of compensation and employee benefits, occupancy and equipment
expenses, deposit insurance premiums, data processing service expenses and other
general and administrative expenses. The Company's results of operations are
also significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory agencies.

MANAGEMENT OF INTEREST RATE RISK AND MARKET RISK ANALYSIS

The principal objective of the Company's interest rate risk management function
is to evaluate the interest rate risk included in certain balance sheet
accounts, determine the level of risk appropriate given the Company's business
strategy, operating environment, capital and liquidity requirements and
performance objectives, and manage the risk consistent with the Board of
Directors approved guidelines. Through such management, the Company seeks to
reduce the vulnerability of its operations to changes in interest rates. The
Company monitors its interest rate risk as such risk relates to its operating
strategies. The Company's Board of Directors has established an Asset/Liability
Management committee, which is responsible for reviewing its asset/liability
policies and interest rate risk position, and which meets at least on a
quarterly basis. The Asset/Liability Management committee reviews trends in
interest rates, the financial position of the Company, the Company's actual
performance to budgeted performance, the Company's interest rate position as
measured by changes in its net income and net portfolio value under certain
interest rate scenarios and the projected impact of such interest rate scenarios
on its earnings and capital.The extent of the movement of interest rates is an
uncertainty that could have a negative impact on the earnings of the Company.
The Company has only limited involvement with derivative financial instruments.

  In recent years, the Company has utilized the following strategies to manage
interest rate risk: (1) purchasing adjustable interest rate mortgage-related
securities; (2) investing in short-term fixed-rate corporate and government
agency bonds or in such types of bonds with adjustable interest rates; and (3)
attempting to reduce the overall interest rate sensitivity of liabilities by
emphasizing longer term deposits. The Company has not emphasized the origination
of adjustable-

6
<PAGE>

rate mortgages due to customer preference for fixed-rate loans in its primary
market area and competitive pricing of such loans by other lenders in its market
area. The Company has attempted to address the lack of demand for adjustable-
rate mortgage loans by emphasizing the purchase of adjustable-rate mortgage-
related securities. To manage the interest rate risk of the Company, the Board
of Directors has also established parameters relating to the types of securities
in which the Company may invest and parameters relating to the types of deposits
which may be offered by the Company and rates which may be paid on such
deposits. The primary tool utilized by the Company for its interest rate risk
management is a modeling program which estimates the effect various market
interest rate scenarios will have on the Company's net portfolio value, interest
income, net income and capital position. Such interest rate scenarios range from
an increase in market interest rate of 300 basis points to a decrease in market
interest rates of 300 basis points.

  Market risk is the risk of losses resulting from adverse changes in market
pricing and rates. The Company's market risk is primarily its interest rate risk
associated with its lending, investing, deposit and borrowing functions.
Interest rate risk arises when interest rates on assets change in a different
time period or in a different proportion from that of liabilities. Management
actively monitors its interest rate sensitivity position with the primary
objective to prudently structure the balance sheet so that movements of interest
rates on assets and liabilities are highly correlated and produce a reasonable
net interest margin even in periods of volatile interest rates. Interest rate
risk is considered by management to be the Company's most significant market
risk that could materially impact the Company's financial position or result of
operations. In its normal course of business, the Company is not exposed to
other types of market risk such as risk associated with commodity prices or
foreign currencies.

NET PORTFOLIO VALUE

The Association's interest rate sensitivity is monitored by management through
the use of a third party generated model which estimates the change in the
Association's net portfolio value ("NPV") over a range of interest rate
scenarios. NPV is the present value of expected cash flows from assets,
liabilities and off-balance sheet contracts. The NPV ratio, under any interest
rate scenario, is defined as the NPV in that scenario divided by the market
value of assets in that same scenario. The Office of Thrift Supervision ("OTS")
also produces a similar analysis using its own model, based on data submitted on
the Association's quarterly Thrift Financial Reports, the results of which may
vary from the Association's third party model primarily due to differences in
assumptions utilized between the Association's third party model and the OTS
model, including estimated loan and securities prepayment rates, reinvestment
rates, and deposit decay rates. There was no material difference between the
Association's NPV as calculated by the OTS model and the NPV as calculated by
the third party model. The following table indicates the Association's NPV as of
December 31, 1999, as calculated by the OTS, and indicates the value of the
Association's assets and liabilities would result in a decline in the
Association's NPV in a rising interest rate environment. Specifically, the table
indicates that, as of December 31, 1999, the Association's NPV was $79.7 million
(or 9.2% of the market value of total assets) and that, based upon the
assumptions utilized by the OTS, an immediate increase in market interest rates
of 300 basis points would result in a $61.8 million, or 78% decrease in the
Association's NPV, and an immediate decrease in market rates of 300 basis points
would result in a $26.5 million, or 33% increase in the Association's NPV.

--------------------------------------------------------------------------------
As of December 31, 1999 (Dollars in thousands)
<TABLE>
<CAPTION>

CHANGE IN INTEREST
RATES IN BASIS POINTS                                                                    NPV AS A % OF PORTFOLIO
(RATE SHOCK)                                            NET PORTFOLIO VALUE                  VALUE OF ASSETS
                                             AMOUNT              $ CHANGE     % CHANGE      NPV RATIO   % CHANGE
                                            ------------------------------------------------------------------------
<S>                                         <C>                  <C>          <C>        <C>            <C>
+300 bp                                     $ 17,899             ($61,760)       -78%          2.3%      -690bp
--------------------------------------------------------------------------------------------------------------------
+200 bp                                       37,915              (41,744)       -52%          4.7%      -451bp
--------------------------------------------------------------------------------------------------------------------
+100 bp                                       58,866              (20,793)       -26%          7.0%      -217bp
--------------------------------------------------------------------------------------------------------------------
Static                                        79,659                   --         --           9.2%          --
--------------------------------------------------------------------------------------------------------------------
-100 bp                                       95,590               15,931        +20%         10.7%      +154bp
--------------------------------------------------------------------------------------------------------------------
-200 bp                                      102,463               22,804        +29%         11.3%      +212bp
--------------------------------------------------------------------------------------------------------------------
-300 bp                                      106,152               26,493        +33%         11.6%      +237bp
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                               7
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

  Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in the NPV require the making
of certain assumptions which may or may not reflect the manner in which actual
yields and costs respond to changes in market interest rates. In this regard,
the NPV model presented assumes that the composition of the Association's
interest rate sensitive assets and liabilities existing at the beginning of a
period remains constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across the yield
curve regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the NPV measurements and net interest income
models provide an indication of the Association's interest rate risk exposure at
a particular point in time, such measurements are not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on
the Association's net interest income and will differ from actual results.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1999 AND DECEMBER 31, 1998

The Company's total assets were $883.0 million at December 31, 1999, an increase
of $59.7 million or 7.2% over total assets of $823.3 at December 31, 1998. The
increase was funded primarily through FHLB borrowings consistent with
management's strategy of funding asset growth partly through the use of FHLB
borrowings as opposed to aggressively increasing deposit pricing to attract
increased deposits. Changes in the components of assets are discussed herein.

  Cash and federal funds sold increased $3.1 million or 13.4% to $26.6 million
at December 31, 1999 due to an increase in liquid funds on hand in preparation
for year 2000 related issues.

 Investment securities decreased $12.1 million or 7.4% to $151.0 million at
December 31, 1999 due to maturities.

  Mortgage-related securities increased $33.6 million or 12.3% to $306.7 million
at December 31, 1999 due to purchases of securities funded primarily through
FHLB borrowings.

  Loan receivables increased $23.7 million or 7.6% to $334.4 million at December
31, 1999 due to loan purchases of $57.7 million.

  The Company's non-performing loans decreased $53,000 to $1.8 million at
December 31, 1999. The foregone interest on these loans amounted to $138,000 in
1999 and $147,000 in 1998.

  FHLB stock increased $4.0 million or 35.4% to $15.5 million at December 31,
1999 due to increased borrowings at the FHLB. The Association is required to own
FHLB stock based partly on the levels of borrowings at the FHLB.

  Prepaid expenses and other assets increased $8.0 million or 84.4% to $17.6
million at December 31, 1999 primarily due to a deferred tax benefit of $8.4
million related to the unrealized loss on the available for sale securities and
an increase in the surrender values of bank owned life insurance policies of
$538,000.

  Savings accounts increased $12.6 million or 2.6% to $495.1 million due
primarily to interest crediting on the savings accounts.

  Borrowed funds increased $74.6 million or 33.5% to $297.2 million. This
increase is a result of management's decision to continue the utilization of
FHLB borrowings to fund asset growth, particularly in investment and mortgage-
related securities. FHLB borrowings can be invested at yields higher than the
cost of the borrowed funds thereby increasing net interest income. The maximum
amount of borrowings outstanding at any month end during the year 1999 was
$307.2 million.

  Accrued interest payable increased $963,000 or 60.0% to $2.6 million at
December 31, 1999 due to an increase in savings accounts and borrowed funds
during the year.

  There were $29,000 of securities purchased, not settled, at December 31, 1999.
These securities settled in January, 2000. Securities purchased, not settled,
was $1.9 million at December 31, 1998 due to the purchases of municipal
securities which settled in January, 1999.

  Shareholder's equity decreased $24.6 million or 22.6% to $84.6 million at
December 31, 1999. This was due to a decrease of $17.6 million in accumulated
other comprehensive income, net of tax, cash dividends paid of $3.8 million,
purchases of GA Financial stock of $13.7 million, ESOP payment of $1.0 million
and the related $521,000 to record the allocated shares at fair value, and
stock-based compensation of $1.8 million which was partially offset by net
income of $7.1 million.

8
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

Average Balance Sheet. The following table sets forth certain information
relating to the Company's average balance sheet and reflects the average yield
on assets and average cost of liabilities for the periods indicated. Such yields
and costs are derived by dividing income or expense by the average balance of
assets or liabilities, respectively, for the periods presented. Average balances
are daily averages during the periods.

<TABLE>
<CAPTION>

Dollar amounts in thousands                   Year ended Dec. 31, 1999     Year ended Dec. 31, 1998        Year ended Dec. 31, 1997

                                              -------------------------------------------------------------------------------------
                                              AVERAGE             YIELD/   AVERAGE             YIELD/   AVERAGE             YIELD/
                                              BALANCE   INTEREST   COST    BALANCE   INTEREST   COST    BALANCE   INTEREST   COST
                                              -------------------------------------------------------------------------------------
ASSETS :
I N T E R E S T - E A R N I N G
A S S E T S :
<S>                                           <C>       <C>       <C>      <C>       <C>       <C>      <C>       <C>       <C>
  Interest-earning deposits and
   short-term investments                     $ 12,488  $   552     4.42%  $ 10,637  $   637     5.99%  $  7,829  $   517     6.60%
-----------------------------------------------------------------------------------------------------------------------------------
  Investment securities, net/1,2/              161,720    9,101     6.75    161,531   10,084     6.24    134,660    8,693     6.46
-----------------------------------------------------------------------------------------------------------------------------------
  Loans receivable, net/1,3/                   343,179   25,426     7.41    325,190   25,465     7.83    273,547   22,310     8.16
-----------------------------------------------------------------------------------------------------------------------------------
  Mortgage-related securities, net/1/          307,612   20,628     6.71    268,440   18,290     6.81    280,376   20,706     7.39
-----------------------------------------------------------------------------------------------------------------------------------
  FHLB stock                                    14,366      938     6.53     11,291      729     6.46      7,543      454     6.02
-----------------------------------------------------------------------------------------------------------------------------------
  Total interest-earning assets                839,365   56,645     6.97    777,089   55,205     7.10    703,955   52,680     7.48
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest earning assets                     36,784       --       --     36,125       --       --     22,055       --       --
-----------------------------------------------------------------------------------------------------------------------------------
  Total assets                                $876,149       --       --   $813,214       --       --   $726,010       --       --
                                              -------------------------------------------------------------------------------------

LIABILITIES AND EQUITY:
I N T E R E S T - B E A R I N G
L I A B I L I T I E S :

  Money market accounts                       $ 18,770  $   687     3.66%  $ 14,342  $   329     2.29%  $ 16,152  $   397     2.46%
-----------------------------------------------------------------------------------------------------------------------------------
  Passbook accounts                            157,920    3,808     2.41    159,374    4,394     2.76    160,155    4,805     3.00
-----------------------------------------------------------------------------------------------------------------------------------
  NOW accounts                                  33,744      613     1.82     31,886      570     1.78     28,339      552     1.95
-----------------------------------------------------------------------------------------------------------------------------------
  Certificate accounts                         242,384   12,837     5.30    239,819   13,383     5.58    229,620   12,688     5.53
-----------------------------------------------------------------------------------------------------------------------------------

    Total                                      452,818   17,945     3.96    445,421   18,676     4.19    434,266   18,442     4.25
-----------------------------------------------------------------------------------------------------------------------------------
  Borrowed funds                               286,034   15,413     5.39    222,057   12,931     5.82    146,481    8,755     5.98
-----------------------------------------------------------------------------------------------------------------------------------
  Other                                          1,539       30     1.95      1,628       32     1.97      1,780       36     2.02
-----------------------------------------------------------------------------------------------------------------------------------

    Total interest-bearing liabilities         740,391   33,388     4.51    669,106   31,639     4.73    582,527   27,233     4.67
-----------------------------------------------------------------------------------------------------------------------------------
  Non-interest bearing liabilities              42,274       --       --     37,492       --       --     27,887       --       --
-----------------------------------------------------------------------------------------------------------------------------------
  Equity                                        93,484       --       --    106,616       --       --    115,596       --       --
-----------------------------------------------------------------------------------------------------------------------------------
    Total liabilities and equity              $876,149       --       --   $813,214       --       --   $726,010       --       --
                                              -------------------------------------------------------------------------------------
Net earning assets                            $ 98,974       --       --   $107,983       --       --   $121,428       --       --
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income                                 --  $23,257       --         --  $23,566       --         --  $25,447       --
-----------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread/4/                         --       --     2.46%        --       --     2.37%        --       --     2.81%
-----------------------------------------------------------------------------------------------------------------------------------
Net interest margin/5/                              --       --     2.99%        --       --     3.03%        --       --     3.61%
-----------------------------------------------------------------------------------------------------------------------------------
Ratio of interest-earning assets to
 interest-bearing liabilities                       --       --   113.37%        --       --   116.14%        --       --   120.85%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/  Includes related assets available for sale and unamortized discounts and
     premiums.

/2/  Includes municipal obligations and yield stated is fully taxable
     equivalent.

/3/  Amount is net of deferred loan fees, undisbursed loan funds, discounts
     and premiums and estimated loan loss allowances and includes loans held
     for sale and non-performing loans.

/4/  Net interest rate spread represents the difference between the yield on
     interest-earning assets and the cost of interest-bearing liabilities.

/5/  Net interest margin represents net interest income divided by interest-
     earning assets.


                                                                               9
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

COMPARISON OF THE CONSOLIDATED RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998

Net Income. Net income for the year ended December 31, 1999 decreased $1.1
million or 13.7% from the previous year to $7.1 million. Changes in the
components of net income are discussed herein.

Interest Income. Total interest income increased $1.4 million or 2.6% to $56.6
million for the year ended 1999. This is substantially the result of an increase
of $62.3 million in the average balances of interest-earning assets offset
slightly by a decrease in the weighted average yield from 7.10% in 1998 to 6.97%
in 1999. Interest on deposits and short-term investments decreased $85,000 or
13.3% to $552,000 during 1999 due to lower yields on short-term investments.
Interest on investment securities decreased $983,000 or 9.7% due to lower
yields. Also, interest on loans receivable decreased $39,000 or 0.2% to $25.4
million due to the increase in average balances of 18.0 million or 5.5% offset
slightly by the decline in the weighted average yield on loans. The Company
purchased $57.6 million of loans in 1999 as compared to $66.8 million in 1998.
Borrowed funds were used to purchase investment securities and mortgate-related
securities in 1999. Interest on mortgage-related securities increased $2.3
million or 12.8% due to the average balances increasing $39.2 million or 14.6%
offset slightly by the decrease of the weighted average yield of 6.81% in 1998
to 6.71% in 1999 due to the interest rate environment. The dividends on FHLB
stock increased $209,000 or 28.7% to $938,000 in 1999 due to an increase of $3.1
million in the weighted average balance resulting from the purchase of
additional FHLB stock. The Association is required to own FHLB stock based
partly on the levels of FHLB borrowings.

Interest Expense. Total interest expense on interest-bearing liabilities
increased $1.7 million or 5.5% due to an increase in the weighted average
balance of interest-bearing liabilities of $71.3 million or 10.7% to $740.4
million offset by a decrease in the weighted average cost from 4.73% to 4.51%.
The interest on savings accounts decreased $731,000 or 3.9% to $17.9 million for
1999 due primarily to the weighted average cost decreasing 23 basis points. The
interest on borrowings increased $2.5 million or 19.2% due to an increase of
$64.0 million or 28.8% in the weighted average balances of borrowings offset by
the weighted average cost decrease from 5.82% to 5.39% for 1999. Funding asset
growth through FHLB borrowings is one of the strategies management is currently
employing. Management believes the FHLB borrowings can be invested at yields
higher than the cost of the borrowed funds, thereby increasing net interest
income. FHLB borrowings have been invested in residential mortgage loans,
mortgage-related securities, and other investment securities.

Rate/Volume Analysis. The following table presents the extent to which changes
in interest rates and changes in the volume of interest-earning assets and
interest-bearing liabilities have affected the Company's interest income and
interest expense during the period indicated. Information is provided with
respect to: (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated to
changes due to rate.

<TABLE>
<CAPTION>
                                                                               YEAR ENDED DEC. 31, 1999 COMPARED TO THE
                                                                             YEAR ENDED DEC. 31, 1998 INCREASE (DECREASE)

                                                                                              DUE TO
(Dollars in thousands)                                                        Volume            Rate             Net
                                                                          ---------------------------------------------------
<S>                                                                       <C>              <C>              <C>
Interest-earning assets:
  Interest-earning deposits and short-term investments                            $  111          $  (196)          $  (85)
-----------------------------------------------------------------------------------------------------------------------------
  Investments securities, net                                                         12             (995)            (983)
-----------------------------------------------------------------------------------------------------------------------------
  Loans receivable, net                                                            1,409           (1,448)             (39)
-----------------------------------------------------------------------------------------------------------------------------
  Mortgage-related securities                                                      2,668             (330)           2,338
-----------------------------------------------------------------------------------------------------------------------------
  FHLB Stock                                                                         199               10              209
-----------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets                                                  4,399           (2,959)           1,440
                                                                          ---------------------------------------------------

Interest-bearing liabilities:
  Money market savings accounts                                                      101              257              358
-----------------------------------------------------------------------------------------------------------------------------
  Passbook savings accounts                                                          (40)            (546)            (586)
-----------------------------------------------------------------------------------------------------------------------------
  NOW accounts                                                                        33               10               43
-----------------------------------------------------------------------------------------------------------------------------
  Certificate accounts                                                               143             (689)            (546)
-----------------------------------------------------------------------------------------------------------------------------
  Borrowings                                                                       3,723           (1,241)           2,482
-----------------------------------------------------------------------------------------------------------------------------
  Other                                                                               (2)              (0)              (2)
-----------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing liabilities                                             3,958           (2,209)           1,749
-----------------------------------------------------------------------------------------------------------------------------
    Net Change in Net Interest Income                                             $  441          $  (750)          $ (309)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

10
<PAGE>

Provision for Loan Losses. The Company provided $390,000 for loan losses during
1999 as compared to $360,000 during 1998 due to an analysis of the allowance for
loan losses in connection with a review of the Company's loan portfolio. The
Company purchased $57.6 million and $66.8 million, including premiums, of loans
in 1999 and 1998, respectively. The allowance for loan losses is maintained at
an amount management considers appropriate to cover estimated losses on loans
receivable which are deemed probable and estimable based on information
currently known to management. While management believes the Company's allowance
for loan losses is sufficient to cover losses inherent in its portfolio at this
time, no assurance can be given that the Company's level of allowance for loan
losses will be sufficient to cover future loan losses incurred by the Company,
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 analyzed by management to determine the current
level of the allowance for loan losses.

Net Interest Income. Net interest income after the loan loss provision for 1999
was $22.9 million, a decrease of $339,000 or 1.5% compared to 1998.

Non-interest Income. Non-interest income consists of service fees, net gains on
sale of securities and education loans, data processing service fees and other
miscellaneous non-interest income. Service fees increased $526,000 or 28.7% to
$2.4 million for 1999 primarily due to a restructuring of the service fees and
products beginning Sept. 1, 1999. Net gains on the sale of securities decreased
by $203,000 or 73.3%. Net gains on the sale of education loans decreased $31,000
or 12.7% to $214,000 for 1999 due to the timing of education loan sales.
Education loans are sold as they reach repayment status. Data processing fees
decreased $161,000 or 21.4% to $593,000 for 1999 due to the previously announced
discontinuation of its data services. The Company previously announced that it
will no longer continue to provide data processing services for other companies.
The information services department will concentrate on providing data
processing services to the Company only. Other miscellaneous income decreased
$1.1 million or 64.8% to $586,000 for 1999 primarily due to a one-time $876,000
Pennsylvania foreign franchise tax refund recorded in 1998.

Non-interest Expense. Total non-interest expense increased $1.7 million or 10.8%
to $17.3 million for 1999. Compensation and employee benefits increased $1.3
million or 15.7% to $9.2 million for 1999 due to the opening of an additional
branch office, salary increases, a one time pre-tax charge of $579,000 related
to the Employee Stock Ownership Plan and a one-time pre-tax charge of $650,000
related to the retirement of a former executive. Occupancy and equipment expense
increased $223,000 or 12.5% to $2.0 million due to the opening of an additional
branch office in 1999. Deposit insurance premiums, and data processing expenses
remained substantially the same for both 1999 and 1998. Other miscellaneous
expenses increased $323,000 or 8.1% to $4.3 million for 1999 due substantially
to increases in real estate owned expenses of $205,000.

Income Tax Expense. The provision for income taxes decreased $1.8 million or
44.2% to $2.3 million for 1999. The effective tax rate for 1999 is 24.6% as
compared to 33.5% for 1998. This decrease is primarily a result of a reduction
in pretax income, coupled with an increase in the level of non-taxable income
and a decrease in the current year state tax expense.

                                                                              11
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

COMPARISON OF THE CONSOLIDATED RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997

Net Income. Net income for the year ended December 31, 1998 decreased $75,000 or
0.9% to $8.2 million from the previous year. Changes in the components of net
income are discussed herein.

Interest Income. Total interest income increased $2.5 million or 4.8% to $55.2
million for the year ended 1998. This is substantially the result of an increase
of $73.1 million in the average balances of interest-earning assets even though
the weighted average yield fell from 7.48% in 1997 to 7.10% in 1998. This yield
decrease is due to the declining interest rate environment. Interest on deposits
and short-term investments increased $120,000 or 23.2% to $637,000 during 1998
due to the Company having more short-term investments as a result of prepayments
on loans and mortgage-related investment securities. Interest on investment
securities increased $1.4 million or 16.0% due to the Company purchasing
securities with the increased borrowings from the FHLB. Also, interest on loans
receivable increased $3.2 million or 14.1% to $25.5 million due to an increase
in the average balances of loans. The Company purchased $66.8 million of loans
in 1998 as compared to $71.2 million in 1997. Borrowed funds were used to
purchase loans, investment securities and mortgage-related securities. Interest
on mortgage-related securities decreased $2.4 million or 11.7% due to the
average balances declining $11.9 million or 4.3% and yields declining from a
weighted average yield of 7.39% in 1997 to 6.81% in 1998 due to the interest
rate environment. The dividend on FHLB stock increased $275,000 or 60.6% to
$729,000 in 1998 due to an increase of $3.7 million in the weighted average
balance resulting from the purchase of additional FHLB stock. The Association is
required to own FHLB stock based on the levels of FHLB borrowings.

Interest Expense. Total interest on interest-bearing liabilities increased $4.4
million or 16.2% due to an increase in the weighted average balance of interest-
bearing liabilities of $86.6 million or 14.9% to $669.1 million and an increase
in the weighted average cost from 4.67% to 4.73%. The interest on savings
accounts increased $234,000 or 1.3% to $18.7 million for 1998 due to an increase
in the average balances of $11.2 million or 2.6% to $445.4 million. The interest
on borrowings increased $4.2 million or 47.7% due to an increase of $75.6
million or 51.6% in the weighted average balances of borrowings. Funding asset
growth through FHLB borrowings is one of the strategies management is currently
employing. Management believes the FHLB borrowings can be invested at yields
higher than the cost of the borrowed funds, thereby increasing net interest
income. FHLB borrowings have been invested in residential mortgage loans,
mortgage-related securities, and other investment securities.

Rate/Volume Analysis. The following table presents the extent to which changes
in interest rates and changes in the volume of interest-earning assets and
interest-bearing liabilities have affected the Company's interest income and
interest expense during the period indicated. Information is provided with
respect to: (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated to
changes due to rate.

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DEC. 31, 1998COMPARED TO THE
                                                                            YEAR ENDED DEC. 31, 1997INCREASE (DECREASE)

                                                                                              DUE TO
(Dollars in thousands)                                                        Volume           Rate             Net
                                                                          --------------------------------------------------
<S>                                                                       <C>             <C>              <C>
Interest-earning assets:
  Interest-earning deposits and short-term investments                           $  185          $   (65)         $   120
----------------------------------------------------------------------------------------------------------------------------
  Investments securities, net                                                     1,735             (344)           1,391
----------------------------------------------------------------------------------------------------------------------------
  Loans receivable, net                                                           4,212           (1,057)           3,155
----------------------------------------------------------------------------------------------------------------------------
  Mortgage-related securities                                                      (881)          (1,535)          (2,416)
----------------------------------------------------------------------------------------------------------------------------
  FHLB Stock                                                                        226               49              275
----------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets                                                 5,477           (2,952)           2,525
                                                                          --------------------------------------------------

Interest-bearing liabilities:
  Money market savings accounts                                                     (44)             (24)             (68)
----------------------------------------------------------------------------------------------------------------------------
  Passbook savings accounts                                                         (23)            (388)            (411)
----------------------------------------------------------------------------------------------------------------------------
  NOW accounts                                                                       69              (51)              18
----------------------------------------------------------------------------------------------------------------------------
  Certificate accounts                                                              564              131              695
----------------------------------------------------------------------------------------------------------------------------
  Borrowings                                                                      4,517             (341)           4,176
----------------------------------------------------------------------------------------------------------------------------
  Other                                                                              (3)              (1)              (4)
----------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing liabilities                                            5,080             (674)           4,406
----------------------------------------------------------------------------------------------------------------------------
    Net Change in Net Interest Income                                            $  397          $(2,278)         $(1,881)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

12
<PAGE>

Provision for Loan Losses. The Company provided $360,000 for loan losses during
1998 as compared to $300,000 during 1997 due to an analysis of the allowance for
loan losses in connection with a review of the Company's loan portfolio. The
Company purchased $66.8 million and $97.6 million, including premiums, of loans
in 1998 and 1997, respectively. The allowance for loan losses is maintained at
an amount management considers appropriate to cover estimated losses on loans
receivable which are deemed probable and estimable based on information
currently known to management. While management believes the Company's allowance
for loan losses is sufficient to cover losses inherent in its portfolio at this
time, no assurance can be given that the Company's level of allowance for loan
losses will be sufficient to cover future loan losses incurred by the Company,
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 analyzed by management to determine the current
level of the allowance for loan losses.

Net Interest Income. Net interest income after the loan loss provision for 1998
was $23.2 million, a decrease of $1.9 million or 7.7% compared to 1997.

Non-interest Income. Non-interest income consists of service fees, net gains on
sale of securities and education loans, data processing service fees and other
miscellaneous non-interest income. Service fees increased $534,000 or 41.1% to
$1.8 million for 1998 due to the increase in checking account fees. Net gains on
the sale of securities decreased $162,000 or 36.9% in 1998. Net gains on the
sale of education loans increased $58,000 or 31.0% to $245,000 for 1998 due to
the timing of education loan sales. Education loans are sold as they reach
repayment status. Data processing service fees increased $122,000 or 19.3% to
$754,000 for 1998 due primarily to the additional services provided to clients.
The Company announced that after a comprehensive study of its DataOne data
processing division, it has concluded that it will no longer continue to provide
data processing services for other companies. The information services
department will concentrate on providing data processing services to the Company
only. Other miscellaneous income increased $1.6 million or greater than 100% to
$1.7 million for 1998 due primarily to earnings of $420,000 on the bank owned
life insurance policies the Company purchased in 1997 and $876,000 Pennsylvania
foreign franchise tax receivable.

Non-interest Expense. Total non-interest expense increased $828,000 or 5.6% to
$15.6 million for 1998. Compensation and employee benefits increased $365,000 or
4.8% to $7.9 million for 1998 due to the opening of an additional branch office
and salary increases. Occupancy and equipment, deposit insurance premiums, and
data processing expenses remained substantially the same for both 1998 and 1997.
Other miscellaneous expenses increased $460,000 or 13.0% to $4.0 million for
1998 due substantially to increases in professional fees. The Company engaged
consulting firms to review operational procedures and human resources at all
levels of the Company.

Income Tax Expense. The provision for income taxes decreased $568,000 or 12.0%
to $4.2 million for 1998 due to an increase in municipal bonds and tax credit
investment security purchases for 1998. The effective tax rate for 1998 is 33.5%
as compared to 36.2% for 1997.

OTHER MATTERS

Liquidity and Capital Resources. The Company's primary sources of funds are
deposits, principal and interest payments on loans and mortgage-related
securities, proceeds from maturing investment securities, advances from the
FHLB, and other borrowed funds. While scheduled maturities of investments and
amortizations of loans are predictable sources of funds, deposit flows and
prepayments on mortgage loans and mortgage-related securities are greatly
influenced by general interest rates, economic conditions and competition. The
Association is required to maintain an average daily balance of liquid assets
and short-term borrowings as defined by the OTS regulations. The total liquidity
for the month of December, 1999 was 45.5%. The higher than required levels of
liquidity are used to better manage interest rate risk.

  Liquidity can be further analyzed by utilizing the Consolidated Statement of
Cash Flows. There was an increase in net cash provided by financing activities
of $69.7 million during the year ended December 31, 1999. This was primarily due
to a net increase in borrowings of $74.6 million. Net cash used in investing
activities was $79.1 million, consisting primarily of a $22.8 million net
increase in loans. Net cash provided by operating activities was $12.6 million.
Overall, cash and cash equivalents increased $3.1 million at year-end 1999
compared to year-end 1998.

  At December 31, 1999, the Association had commitments to extend credit of
$42.2 million.

  At December 31, 1999, the Association had exceeded each of the OTS' capital
requirements for tangible, core, and risk-based capital. The OTS requires the
Association to maintain a minimum regulatory tangible capital of at least 1.50%
of tangible assets, a minimum 3.0% core capital ratio (expressed as a percentage
of adjusted total assets) and a minimum risk-based capital of 8.0% (expressed as
a percentage of risk-weighted assets, which includes off-balance sheet items) as
defined by the OTS. The Company is not required by the OTS to maintain minimum
levels of capital for regulatory purposes. Refer to footnote 11 for capital
requirements and regulatory restrictions.

                                                                              13
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

Year 2000 Compliance. In 1996, the Company's data processing division began to
address the risks associated with the coming millennium. The Company completed
the preparations related to this event in 1999. These preparations involved
examining all computer hardware and software as well as third-party systems and
equipment to identify and remediate date recognition problems. In addition, the
Company developed contingency plans to address potential risks in the event of
Year 2000 failures. To date, the Company has experienced no known distruptions
as a result of the Year 2000 date change.

  Although considered unlikely, unanticipated problems could still occur,
including problems associated with non-compliant third parties and disruptions
to the economy in general, despite efforts to date to remediate affected systems
and develop contingency plans. Management will continue to monitor all business
processes throughout 2000 to address any issues and ensure all processes
continue to function properly.

  Through 1999, the Year 2000 project totaled approximately $250,000 in costs
primarily related to internal and external personnel who worked on the project.
No additional material costs are estimated to be incurred in future periods
related to this event.

Other. The Company announced that after a comprehensive study of its DataOne
data processing division, it has concluded that it will no longer continue to
provide data processing services for other financial institutions. The study
included analysis of strategic business planning objectives, a review of the
current data processing system and its operation, as well as review of the
competition in the data processing service arena. Two of the three external
clients of DataOne were deconverted prior to the year 2000 and the other client
is scheduled to be deconverted during the first six months of the year 2000.

New Accounting Pronouncements. SFAS No. 133; "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133," requires that derivative instruments be carried at
fair value on the balance sheet. The statement continues to allow derivative
instruments to be used to hedge various risks and sets forth specific criteria
to be used to determine when hedge accounting can be used. The statement also
provides for offsetting changes in fair value or cash flows of both the
derivative and the hedged asset or liability to be recognized in earnings in the
same period; however, any changes in fair value or cash flow that represent the
ineffective portion of a hedge are required to be recognized in earnings and
cannot be deferred. For derivative instruments not accounted for as hedges,
changes in fair value are required to be recognized in earnings.

  The provisions of this statement as amended will be adopted by the Company for
its quarterly and annual reporting beginning January 1, 2001. The impact of
adopting the provisions of this statement on the Company's financial position,
results of operations and cash flow subsequent to the effective date is not
currently estimable and will depend on the financial position of the Company and
the nature and purpose of the derivative instruments in use by management at
that time.

Impact of Inflation and Changing Prices. The Consolidated Financial Statements
of the Company and Notes thereto, presented elsewhere herein, have been prepared
in accordance with generally accepted accounting principles ("GAAP"), which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Company's operations. Unlike most industrial
companies, nearly all the assets and liabilities of the Company are monetary in
nature. As a result, interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the direction or to the same extent as the price of
goods and services.

Recent Developments. The Board of Directors declared a dividend of $.18 per
share to shareholders of record on February 9, 2000, payable on February 23,
2000.

  The Company's Board of Directors approved the repurchase of up to 5% of the
outstanding shares of the Company, or 311,172 shares of GA Financial, Inc.
common stock in January 2000. The plan must be completed by January, 25, 2001.
The total treasury shares of the Company's stock were 2,887,941 as of March 7,
2000.

Private Securities Litigation Reform Act Safe Harbor Statement. In addition to
historical information, this Annual Report may include certain forward looking
statements based on current management expectations. The Company's actual
results could differ materially from those management expectations. Factors that
could cause future results to vary from current management expectations include,
but are not limited to, general economic conditions, legislative and regulatory
changes, monetary and fiscal policies of the federal government, changes in tax
policies, rates and regulations of federal, state and local tax authorities,
changes in interest rates, deposit flows, the cost of funds, demand for loan
products, demand for financial services, competition, changes in the quality or
composition of the Company's loan and investment portfolios, changes in
accounting principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices. Further description of the risks and
uncertainties to the business are included in detail in Item 1, "Business," of
the Company's 1999 Form 10-K.

14
<PAGE>

                         INDEPENDENT AUDITORS' REPORT


THE BOARD OF DIRECTORS AND SHAREHOLDERS
GA FINANCIAL, INC.

We have audited the accompanying consolidated statement of financial condition
of GA Financial, Inc. and subsidiaries as of December 31, 1999, and the related
consolidated statements of income and comprehensive income, shareholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The accompanying
consolidated financial statements of GA Financial, Inc. and subsidiaries as of
December 31, 1998, and for each of the years in the two-year period ended
December 31, 1998, were audited by other auditors whose report thereon dated
January 27, 1999, expressed an unqualified opinion on those statements.

  We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

  In our opinion, the 1999 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GA
Financial, Inc. and subsidiaries as of December 31, 1999, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.


                                              /s/  KPMG LLP

Pittsburgh, Pennsylvania
January 28, 2000


                                                                              15
<PAGE>

                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
Dollar amounts in thousands, except share data

<TABLE>
<CAPTION>
                                                                                                Dec. 31, 1999   Dec. 31, 1998
                                                                                                -------------------------------
A S S E T S
<S>                                                                                             <C>             <C>
Cash (including interest-bearing demand deposits of $12,457 in 1999 and $7,705 in 1998)              $ 26,632        $ 22,987
-------------------------------------------------------------------------------------------------------------------------------
Federal funds sold                                                                                         --             500
-------------------------------------------------------------------------------------------------------------------------------
Available for sale securities, at fair value (Note 4):
-------------------------------------------------------------------------------------------------------------------------------
  Investment securities                                                                               150,960         163,108
-------------------------------------------------------------------------------------------------------------------------------
  Mortgage-related securities                                                                         306,724         273,124
-------------------------------------------------------------------------------------------------------------------------------
Loans receivable, net of allowance for loan losses of $1,731 and $1,604, respectively (Note 5)        334,351         310,688
-------------------------------------------------------------------------------------------------------------------------------
Education loans held for sale (Note 5)                                                                 19,158          20,040
-------------------------------------------------------------------------------------------------------------------------------
Accrued interest receivable on investments                                                              3,482           3,518
-------------------------------------------------------------------------------------------------------------------------------
Accrued interest receivable on loans                                                                    2,612           2,532
-------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank stock (Note 3)                                                                  15,458          11,413
-------------------------------------------------------------------------------------------------------------------------------
Office, property and equipment, net (Note 6)                                                            5,670           5,114
-------------------------------------------------------------------------------------------------------------------------------
Foreclosed assets                                                                                         345             758
-------------------------------------------------------------------------------------------------------------------------------
Prepaid expenses and other assets                                                                      17,588           9,540
-------------------------------------------------------------------------------------------------------------------------------
  Total Assets                                                                                       $882,980        $823,322
                                                                                                -------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
L I A B I L I T I E S :

Non-interest-bearing demand deposits (Note 7)                                                        $ 29,418        $ 30,373
-------------------------------------------------------------------------------------------------------------------------------
Savings accounts (Note 7)                                                                             465,706         452,175
-------------------------------------------------------------------------------------------------------------------------------
Borrowed funds (Note 3)                                                                               297,160         222,545
-------------------------------------------------------------------------------------------------------------------------------
Advances from borrowers for taxes and insurance                                                         1,444           1,514
-------------------------------------------------------------------------------------------------------------------------------
Accrued interest payable                                                                                2,569           1,606
-------------------------------------------------------------------------------------------------------------------------------
Securities purchased, not settled (Note 4)                                                                 29           1,901
-------------------------------------------------------------------------------------------------------------------------------
Other liabilities (Note 8)                                                                              2,083           3,992
-------------------------------------------------------------------------------------------------------------------------------
  Total Liabilities                                                                                   798,409         714,106

Commitments and contingencies (Notes 9 and 12)

S H A R E H O L D E R S ' E Q U I T Y :

Preferred stock, (.01 par value); 1,000,000 shares authorized; 0 shares outstanding                        --              --
-------------------------------------------------------------------------------------------------------------------------------
Common stock, (.01 par value); 23,000,000 shares authorized; 8,900,000 shares issued                       89              89
-------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                             86,722          86,467
-------------------------------------------------------------------------------------------------------------------------------
Treasury stock, at cost (2,676,561 shares at December 31, 1999
 and 1,858,865 shares at December 31, 1998)                                                           (45,036)        (32,255)
-------------------------------------------------------------------------------------------------------------------------------
Unearned employee stock ownership plan (ESOP) shares                                                   (4,488)         (5,520)
-------------------------------------------------------------------------------------------------------------------------------
Unearned recognition and retention plan (RRP) shares                                                   (1,317)         (2,431)
-------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive (loss) income, net of taxes (Note 4)                                  (14,332)          3,306
-------------------------------------------------------------------------------------------------------------------------------
Retained earnings, substantially restricted (Note 2)                                                   62,933          59,560
-------------------------------------------------------------------------------------------------------------------------------
  Total Shareholders' Equity                                                                           84,571         109,216

  Total Liabilities and Shareholders' Equity                                                         $882,980        $823,322
                                                                                                -------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

16
<PAGE>

                       CONSOLIDATED STATEMENTS OF INCOME
                           AND COMPREHENSIVE INCOME



FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
Dollar amounts in thousands, except share data

<TABLE>
<CAPTION>
                                                                                        1999          1998         1997
                                                                                    ----------------------------------------
I N T E R E S T  I N C O M E :
<S>                                                                                 <C>            <C>          <C>
  Loans, including fees                                                             $   25,426     $   25,465   $   22,310
----------------------------------------------------------------------------------------------------------------------------
  Mortgage-related securities                                                           20,628         18,290       20,706
----------------------------------------------------------------------------------------------------------------------------
  Investment securities:
    Taxable interest                                                                     3,854          6,758        6,437
----------------------------------------------------------------------------------------------------------------------------
    Taxable dividend                                                                     3,083          2,623        2,181
----------------------------------------------------------------------------------------------------------------------------
    Nontaxable interest                                                                  3,102          1,432          529
----------------------------------------------------------------------------------------------------------------------------
  Bank deposits                                                                            552            637          517
----------------------------------------------------------------------------------------------------------------------------
  Total interest income                                                                 56,645         55,205       52,680
----------------------------------------------------------------------------------------------------------------------------

I N T E R E S T  E X P E N S E :
  Savings accounts                                                                      17,945         18,676       18,442
----------------------------------------------------------------------------------------------------------------------------
  Interest on borrowed funds                                                            15,413         12,931        8,755
----------------------------------------------------------------------------------------------------------------------------
  Other                                                                                     30             32           36
----------------------------------------------------------------------------------------------------------------------------
  Total interest expense                                                                33,388         31,639       27,233
----------------------------------------------------------------------------------------------------------------------------
  Net interest income before provision for losses on loans                              23,257         23,566       25,447
----------------------------------------------------------------------------------------------------------------------------
Provision for losses on loans (Note 5)                                                     390            360          300
----------------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for losses on loans                               22,867         23,206       25,147
----------------------------------------------------------------------------------------------------------------------------

N O N - I N T E R E S T  I N C O M E :
  Service fees                                                                           2,359          1,833        1,299
----------------------------------------------------------------------------------------------------------------------------
  Net gain on sales of securities (Note 4)                                                  74            277          439
----------------------------------------------------------------------------------------------------------------------------
  Gain on sale of education loans                                                          214            245          187
----------------------------------------------------------------------------------------------------------------------------
  Data processing service fees                                                             593            754          632
----------------------------------------------------------------------------------------------------------------------------
  Other                                                                                    586          1,665           91
----------------------------------------------------------------------------------------------------------------------------
  Total non-interest income                                                              3,826          4,774        2,648
----------------------------------------------------------------------------------------------------------------------------

N O N - I N T E R E S T  E X P E N S E :
  Compensation and employee benefits                                                     9,202          7,935        7,570
----------------------------------------------------------------------------------------------------------------------------
  Occupancy and equipment                                                                2,005          1,782        1,770
----------------------------------------------------------------------------------------------------------------------------
  Deposit insurance premiums (Note 14)                                                     281            282          283
----------------------------------------------------------------------------------------------------------------------------
  Data processing service expenses                                                       1,456          1,590        1,598
----------------------------------------------------------------------------------------------------------------------------
  Other                                                                                  4,314          3,991        3,531
----------------------------------------------------------------------------------------------------------------------------
  Total non-interest expense                                                            17,258         15,580       14,752
----------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes                                                 9,435         12,400       13,043
----------------------------------------------------------------------------------------------------------------------------
Provision for income taxes (Note 8)                                                      2,320          4,158        4,726
----------------------------------------------------------------------------------------------------------------------------
Net income                                                                          $    7,115     $    8,242   $    8,317
----------------------------------------------------------------------------------------------------------------------------

O T H E R  C O M P R E H E N S I V E  I N C O M E :
  Unrealized holding gains (losses) on available for sale securities, net of taxes     (17,724)          (756)       3,306
----------------------------------------------------------------------------------------------------------------------------
  Reclassification adjustment for net gains included in net income                          86            338          330
----------------------------------------------------------------------------------------------------------------------------
  Other comprehensive income (loss)                                                    (17,638)          (418)       3,636
----------------------------------------------------------------------------------------------------------------------------
  Comprehensive income (loss)                                                       $  (10,523)    $    7,824   $   11,953
                                                                                    ----------------------------------------

Basic earnings per share                                                                 $1.24          $1.26        $1.18
----------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                                               $1.22           1.23         1.15
                                                                                    ----------------------------------------

Average shares outstanding - Basic                                                   5,756,793      6,516,237    7,021,900
----------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - Diluted                                                 5,819,577      6,696,898    7,218,088
                                                                                    ----------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                                                              17
<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS



FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>

Dollar amounts in thousands                                                                    1999           1998           1997
                                                                                       --------------------------------------------
C A S H  F L O W S  F R O M  O P E R A T I N G  A C T I V I T I E S :
<S>                                                                                    <C>            <C>            <C>
Net income                                                                                $   7,115      $   8,242      $   8,317
-----------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash provided by operating activities:
  Provision for losses on loans                                                                 390            360            300
-----------------------------------------------------------------------------------------------------------------------------------
  Provision for writedown of REO                                                                 --             51             --
-----------------------------------------------------------------------------------------------------------------------------------
  Depreciation on office, property and equipment                                                698            766            921
-----------------------------------------------------------------------------------------------------------------------------------
  Net premium amortization on securities                                                         69            253            103
-----------------------------------------------------------------------------------------------------------------------------------
  Accretion of net deferred loan fees                                                          (252)          (416)          (215)
-----------------------------------------------------------------------------------------------------------------------------------
  Amortization of intangibles                                                                   185            185            185
-----------------------------------------------------------------------------------------------------------------------------------
  Net realized gain on sale of office, property and equipment                                    --            (32)            --
-----------------------------------------------------------------------------------------------------------------------------------
  Net realized gain on sales of assets                                                         (114)          (508)          (518)
-----------------------------------------------------------------------------------------------------------------------------------
  Net realized gain on sale of education loans                                                 (214)          (245)          (187)
-----------------------------------------------------------------------------------------------------------------------------------
  Net realized loss (gain) on sale of REO                                                       169            (38)            (3)
-----------------------------------------------------------------------------------------------------------------------------------
  Allocation of ESOP shares                                                                   1,553          1,343          1,161
-----------------------------------------------------------------------------------------------------------------------------------
  Allocation of recognition and retention plan shares                                         1,791            801            812
-----------------------------------------------------------------------------------------------------------------------------------
  Deferred income tax benefit                                                                  (459)          (328)           (99)
-----------------------------------------------------------------------------------------------------------------------------------
  Decrease in accrued interest receivable                                                       (44)           (73)        (1,725)
-----------------------------------------------------------------------------------------------------------------------------------
  Decrease (Increase) in prepaid expenses and other assets                                      642         (1,485)        (6,486)
-----------------------------------------------------------------------------------------------------------------------------------
  Increase in other liabilities                                                                  63            168            328
-----------------------------------------------------------------------------------------------------------------------------------
  Increase in accrued interest payable                                                          963            221            686
-----------------------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                                  12,555          9,265          3,580
-----------------------------------------------------------------------------------------------------------------------------------

C A S H  F L O W S  F R O M  I N V E S T I N G  A C T I V I T I E S :
  Proceeds from sale of available for sale securities                                        56,751        118,952        136,090
-----------------------------------------------------------------------------------------------------------------------------------
  Repayments and maturities of available for sale securities                                 84,284        129,471         53,157
-----------------------------------------------------------------------------------------------------------------------------------
  Purchases of available for sale securities                                               (192,339)      (247,738)      (260,487)
-----------------------------------------------------------------------------------------------------------------------------------
  Proceeds from sale of education loans                                                      10,023          9,089          6,176
-----------------------------------------------------------------------------------------------------------------------------------
  Purchases of loans                                                                        (57,610)       (66,831)       (97,612)
-----------------------------------------------------------------------------------------------------------------------------------
  Net decrease in loans                                                                      24,477         32,842         16,764
-----------------------------------------------------------------------------------------------------------------------------------
  Purchases of office, property and equipment, net                                           (1,254)          (694)          (480)
-----------------------------------------------------------------------------------------------------------------------------------
  Net proceeds from sale of REO                                                                 648            229              9
-----------------------------------------------------------------------------------------------------------------------------------
  Net proceeds from sale of office, property and equipment                                       --             49             --
-----------------------------------------------------------------------------------------------------------------------------------
  Purchase of Federal Home Loan Bank stock                                                   (4,045)        (1,580)        (7,507)
-----------------------------------------------------------------------------------------------------------------------------------
  Net cash used in investing activities                                                     (79,065)       (26,211)      (153,890)
-----------------------------------------------------------------------------------------------------------------------------------

C A S H  F L O W S  F R O M  F I N A N C I N G  A C T I V I T I E S :
  Net increase in demand and savings deposits                                                10,118         11,702          2,723
-----------------------------------------------------------------------------------------------------------------------------------
  Net increase in certificates of deposit                                                     2,458          8,692          9,865
-----------------------------------------------------------------------------------------------------------------------------------
  Payments of borrowed funds                                                               (481,285)      (471,479)      (703,963)
-----------------------------------------------------------------------------------------------------------------------------------
  Proceeds from borrowed funds                                                              555,900        495,787        850,675
-----------------------------------------------------------------------------------------------------------------------------------
  Dividends paid                                                                             (3,742)        (4,007)        (3,413)
-----------------------------------------------------------------------------------------------------------------------------------
  Net decrease in advances from borrowers for taxes and insurance                               (70)           (88)          (178)
-----------------------------------------------------------------------------------------------------------------------------------
  Purchase of treasury stock                                                                (13,724)       (12,872)       (12,696)
-----------------------------------------------------------------------------------------------------------------------------------
  Purchase of recognition and retention plan shares                                              --             --         (4,095)
-----------------------------------------------------------------------------------------------------------------------------------
  Payments made under capital lease obligations                                                  --            (44)          (165)
-----------------------------------------------------------------------------------------------------------------------------------
  Net cash provided by financing activities                                                  69,655         27,691        138,753
-----------------------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in cash and cash equivalents                                        3,145         10,745        (11,557)
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                                               23,487         12,742         24,299
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                                  $  26,632      $  23,487      $  12,742
                                                                                       --------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


18
<PAGE>

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
Dollar amounts and number of stock shares in thousands

<TABLE>
<CAPTION>

                                                                                                     ACCUMULATED
                                                                                                        OTHER
                                             NUMBER OF                                                 COMPRE-             TOTAL
                                              COMMON          ADDITIONAL           UNEARNED UNEARNED   HENSIVE             SHARE-
                                              STOCK    COMMON    PAID-   TREASURY    ESOP     RRP      INCOME    RETAINED HOLDERS'
                                             SHARES(1) STOCK  IN CAPITAL   STOCK    SHARES   SHARES    (LOSS)    EARNINGS EQUITY

<S>                                          <C>       <C>    <C>        <C>       <C>      <C>      <C>         <C>      <C>
Balance as of December 31, 1996               7,794     $89    $86,316    ($6,768) ($6,612)   ($523) $      88   $49,814  $122,404
-----------------------------------------------------------------------------------------------------------------------------------

Net income                                       --      --         --         --       --       --         --     8,317     8,317
-----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax           --      --         --         --       --       --      3,636        --     3,636
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchased                       (737)     --         --    (12,696)               --         --        --   (12,696)
-----------------------------------------------------------------------------------------------------------------------------------
Recognition and retention
 plan shares purchased                         (259)     --       (699)        --       --   (3,396)        --        --    (4,095)
-----------------------------------------------------------------------------------------------------------------------------------
Cash dividends ($0.42 per share)                 --      --         --         --       --       --         --    (3,135)   (3,135)
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated to ESOP                         51      --        375         --      508       --         --        --       883
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated
 stock-based compensation                       259      --         --         --       --      812         --        --       812
-----------------------------------------------------------------------------------------------------------------------------------

Balance as of December 31, 1997               7,108     $89    $85,992   ($19,464) ($6,104) ($3,107) $   3,724   $54,996  $116,126
-----------------------------------------------------------------------------------------------------------------------------------

Net income                                       --      --         --         --       --       --         --     8,242     8,242
-----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax           --      --         --         --       --       --       (418)       --      (418)
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchased                       (678)     --         --    (12,872)      --       --         --        --   (12,872)
-----------------------------------------------------------------------------------------------------------------------------------
Cash dividends ($0.54 per share)                 --      --         --         --       --       --         --    (3,678)   (3,678)
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated to ESOP                         59      --        431         --      584       --         --        --     1,015
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated
 stock-based compensation                        --      --         44         81       --      676         --        --       801
-----------------------------------------------------------------------------------------------------------------------------------

Balance as of December 31, 1998               6,489     $89    $86,467   ($32,255) ($5,520) ($2,431) $   3,306   $59,560  $109,216
-----------------------------------------------------------------------------------------------------------------------------------

Net income                                       --      --         --         --       --       --         --     7,115     7,115
-----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax           --      --         --         --       --       --    (17,638)       --   (17,638)
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchased                       (868)     --         --    (13,724)      --       --         --        --   (13,724)
-----------------------------------------------------------------------------------------------------------------------------------
Cash dividends ($0.64 per share)                 --      --         --         --       --       --         --    (3,776)   (3,776)
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated to ESOP                        103      --        521         --    1,032       --         --        --     1,553
-----------------------------------------------------------------------------------------------------------------------------------
Shares allocated
 stock-based compensation                        51      --       (266)       943       --    1,114         --        34     1,825
-----------------------------------------------------------------------------------------------------------------------------------

Balance as of December 31, 1999               5,775     $89    $86,722   ($45,036) ($4,488) ($1,317)  ($14,332)  $62,933  $ 84,571
                                             --------------------------------------------------------------------------------------
</TABLE>

Other comprehensive income for 1999, 1998, and 1997 is net of (tax benefit) tax
of ($10,359), ($246), and $2,137, respectively.

The accompanying notes are an integral part of the consolidated financial
statements.

/1/  Does not include unallocated ESOP Shares.


                                                                              19
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ACCOUNTING POLICIES

The significant accounting policies followed by GA Financial, Inc. (the
"Company") and subsidiaries are as follows:

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of GA
Financial, Inc. and its subsidiaries, Great American Federal Savings and Loan
Association (the "Association") and New Eagle Capital, Inc., and the
Association's wholly owned subsidiary, Great American Financial Services, Inc.,
as of December 31, 1999 and December 31, 1998. Intercompany accounts and
transactions have been eliminated in consolidation.

  The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, including interest-bearing demand deposits, and
federal funds sold. Generally, federal funds are sold for one-day periods.

INVESTMENT SECURITIES AND MORTGAGE-RELATED SECURITIES

Securities classified as "available for sale" include investments management
intends to use as part of its asset/liability management strategy, and that may
be sold in response to changes in interest rates, resultant prepayment risk and
other factors. Unrealized holding gains and losses, net of tax, on available for
sale securities are reported as a net amount in a separate component of
shareholders' equity until realized. Declines in the fair value of individual
available for sale securities below their cost that are other than temporary
will result in write-downs of the individual securities to their fair value. Any
related write-downs will be included in earnings as realized losses. Realized
gains and losses on the sale of securities are recognized using the specific
identification method and are included in non-interest income in the
Consolidated Statements of Income and Comprehensive Income. Premiums and
discounts on securities are recognized in interest income using the interest
method over the period to maturity.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is based on management's evaluation of losses in
the current loan portfolio, which includes an assessment of economic conditions,
changes in the nature of the loan portfolio, loan loss experience and other
relevant factors. While management uses the best information available to make
such evaluations, future adjustments to the allowance may be necessary if
economic conditions differ substantially from the assumptions used in making the
evaluations. Additions are made to the allowance through periodic provisions
charged to income and recovery of principal and interest on loans previously
charged-off. Losses of principal are charged directly to the allowance when a
loss actually occurs or when a determination is made that a specific loss is
probable.

  The Company follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan" and
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" an amendment of SFAS No. 114. SFAS No. 114
addresses the accounting by creditors for impairment of loans by specifying how
reserves for credit losses related to certain loans should be measured.

  Within the context of SFAS No. 114 for loan losses, a loan is considered to be
impaired when, based upon current information and events, it is probable that
the Company will be unable to collect all amounts due for principal and interest
according to the original contractual terms of the loan agreement. Impairment is
measured based on the present value of expected future cash flows discounted at
a loan's effective interest rate, or as a practical expedient, the observable
market price or, if the loan is collateral dependent, the fair value of the
underlying collateral. When the measurement of an impaired loan is less than the
recorded investment in the loan, the impairment is recorded in a specific
valuation allowance through a charge to provision for losses on loans. This
specific valuation allowance is periodically adjusted for significant changes in
the amount or timing of expected future cash flows, observable market price or
fair value of the collateral. The specific valuation allowance, or allowance for
impaired loan losses, is part of the total allowance for loan losses. Cash

20
<PAGE>

payments received on impaired loans are recorded as a direct reduction of the
recorded investment in the loan. When the recorded investment has been fully
collected, receipts are recorded as recoveries to the allowance for loan losses
until the previously charged-off interest is fully recovered. Subsequent amounts
collected are recognized as interest income. Impaired loans are not returned to
accrual status until all amounts due, both principal and interest, are current
and a sustained payment history has been demonstrated. At December 31, 1999 and
1998, the Company did not have any recorded investment in loans for which
impairment has been recognized in accordance with SFAS No. 114 and 118. Since
the Company had no loans considered impaired under SFAS No. 114 during the years
ended December 31, 1999, 1998 or 1997, there was no interest income recognized
on impaired loans during the years ended December 31, 1999, 1998, or 1997.

  Generally, management considers all nonaccrual loans and certain renegotiated
debt, when it exists, for impairment. The maximum period without payment that
typically can occur before a loan is considered for impairment is ninety days.
SFAS No. 114 does not apply to large groups of smaller balance homogeneous loans
that are collectively evaluated for impairment. Generally, the Company
collectively reviews for impairment smaller balance homogeneous loans (i.e.
primarily residential and consumer loans).

LOANS

Interest income is recognized on a level yield basis. Loan origination fees, net
of certain direct origination costs, are deferred and recognized over the
contractual life of the related loan as a yield adjustment using the interest
method. Discounts and premiums on purchased loans are amortized to income using
the interest method over the remaining period to contractural maturity,
adjusting for anticipated prepayments. The accrual of interest is discontinued,
when in management's judgment, it is determined that the collectibility of
interest, but not necessarily principal, is doubtful. Interest accrual is
normally discontinued when the loan becomes delinquent 90 days or more past due.
Interest receipts on such nonaccrual loans are first applied to principal.
A nonaccrual loan is not returned to accruing status until all amounts due, both
principal and interest, are current and a sustained payment history has been
demonstrated. Loans held for sale are education loans, which are recorded at
cost which approximates market value.

OFFICE, PROPERTY AND EQUIPMENT

Office, property and equipment is stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method based on the estimated
useful lives of the assets. Estimated useful lives range from 20 to 50 years for
buildings, 10 years for site improvements and 3 to 5 years for furniture,
fixtures and equipment. Maintenance and repairs are charged to expense as
incurred. Expenditures for renovations and major improvements are capitalized
and depreciated over their estimated useful lives.

INTANGIBLE ASSETS

Premiums paid for branch deposits are allocated to core deposit intangibles and
are recorded in other assets. Core deposit intangibles are amortized on a
straight-line basis over seven years. Core deposit intangibles amounted to
$725,000 and $910,000 at December 31, 1999 and 1998, respectively. Management
periodically evaluates the carrying value and remaining amortization period of
intangible assets for possible impairment. Adjustments will be recorded when the
purchased deposits decay at an earlier period than the amortization period.

FORECLOSED ASSETS

Foreclosed assets consist of property acquired in settlement of real estate loan
indebtedness. Such assets are carried at the lower of cost or market value less
estimated costs to sell. Net costs to maintain the foreclosed assets and
subsequent gains and losses attributable to their disposal are included in other
expense.

TREASURY STOCK

The purchase of the Company's stock is recorded at cost. If reissuance occurs,
the treasury stock account will be reduced by the cost of such stock using the
average cost method, with any difference in proceeds being debited or credited
to additional paid-in capital.

                                                                              21
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES

The Company joins with its wholly owned subsidiaries in filing a consolidated
federal income tax return.

  The Company accounts for income taxes using the asset and liability method.
The objective of the asset and liability method is to establish deferred tax
assets and liabilities for temporary differences between the financial reporting
and tax basis of the Company's assets and liabilities based on enacted tax rates
expected to be in effect when such amounts are realized or settled.

  In tax years prior to fiscal year 1997, the Company was permitted, under the
Internal Revenue Code, ("Code"), to deduct an annual addition to a reserve for
bad debts in determining taxable income, subject to certain limitations. Bad
debt deductions for income tax purposes are included in taxable income of later
years only if the bad debt reserve is used subsequently for purposes other than
to absorb bad debt losses. Because the Company does not intend to use the
reserve for purposes other than to absorb losses, no deffered income taxes have
been provided prior to fiscal year 1987. Retained earnings at December 31, 1999
includes approximately $13.3 million representing such bad debt deductions for
which no deferred income taxes have been provided.

DERIVATIVE FINANCIAL INSTRUMENTS

Gains and losses on unconditional forward commitments (Note 9) to purchase
Government National Mortgage Association Securities are deferred and
incorporated in the carrying amount of the securities purchased.

RECLASSIFICATIONS

For comparative purposes, reclassifications have been made to certain amounts
previously reported to conform with the current period presentation in the
consolidated financial statements.


NOTE 2. THE CONVERSION

On March 22, 1996, the members of the Association approved a Plan of Conversion
to convert the Association from a federally chartered mutual savings and loan
association to a federally chartered capital stock savings and loan association,
with the concurrent sale of all of the newly-converted Association's outstanding
capital stock to the Company, and the sale of the Company's common stock to the
public. The Company, on March 25, 1996, sold 8,900,000 shares of common stock at
$10.00 per share to depositors, directors, officers and certain employees of the
Company and to certain other eligible subscribers. The net proceeds from the
sale of the common stock, after conversion expenses of $2.6 million, were $86.4
million. The Company purchased all of the capital stock of the Association in
exchange for 50% of the net proceeds, or $43.3 million, and utilized $7.1
million to fund the Employee Stock Ownership Plans'(the "ESOP") purchase of
conversion stock.

  At the time of Conversion, the Association established a liquidation account
in an amount equal to its capital as of December 31, 1995. The liquidation
account will be maintained for the benefit of eligible account holders who
continue to maintain their accounts at the Association after the Conversion. The
liquidation account will be reduced annually to the extent that eligible account
holders have reduced their qualifying deposits as of each anniversary date.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account. In the event of a complete liquidation, each eligible
account holder will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held. Dividends cannot be paid from retained earnings
allocated to the liquidation account. A liquidation account was established in
the amount of $45.3 million in 1996.

22
<PAGE>

NOTE 3. FEDERAL HOME LOAN BANK STOCK AND ADVANCES AND OTHER BORROWINGS

The Association is a member of the Federal Home Loan Bank system. As a member,
the Association is required to maintain an investment in the capital stock of
the Federal Home Loan Bank (FHLB), which is carried at cost. The required
investment is based on 1% of its outstanding home loans, and also a percentage
of FHLB borrowings.

  The Association can take short-term and long-term advances with the FHLB. FHLB
advances by year of maturity as of December 31, 1999 and 1998 are summarized as
follows:

<TABLE>
<CAPTION>

DECEMBER 31, 1999                                                 WEIGHTED
(Dollars in Thousands)                     AMOUNT               AVERAGE RATE
------------------------------------------------------------------------------
<S>                                     <C>                 <C>
2000                                      $115,160                  5.82%
------------------------------------------------------------------------------
2001                                        34,000                  5.58
------------------------------------------------------------------------------
2002                                        25,000                  5.47
------------------------------------------------------------------------------
2003                                            --                    --
------------------------------------------------------------------------------
2004                                            --                    --
------------------------------------------------------------------------------
2005 and thereafter                        123,000                  5.29
------------------------------------------------------------------------------
Total                                     $297,160                  5.54%
                                        --------------------------------------


<CAPTION>

DECEMBER 31, 1998                                                 WEIGHTED
(Dollars in Thousands)                      AMOUNT              AVERAGE RATE
------------------------------------------------------------------------------
<S>                                     <C>                 <C>
1999                                      $ 90,785                  5.91%
------------------------------------------------------------------------------
2000                                        29,760                  5.67
------------------------------------------------------------------------------
2001                                         4,000                  5.90
------------------------------------------------------------------------------
2002                                        25,000                  5.47
------------------------------------------------------------------------------
2003                                            --                    --
------------------------------------------------------------------------------
2004 and thereafter                         68,000                  5.28
------------------------------------------------------------------------------
Total                                     $217,545                  5.63%
                                        --------------------------------------
</TABLE>

  Advances from the FHLB are collateralized by qualifying securities and loans.
Qualifying collateral includes U.S. Treasury, government agency and mortgage-
backed securities and real estate loans based upon the amount of outstanding
advances. These advances are subject to restrictions or penalties related to
prepayments.

  As of December 31, 1998 the Company also maintained securities sold under
agreements to repurchase.

  Securities sold under agreement to repurchase as of December 31, 1998 are
summarized as follows:

<TABLE>
<CAPTION>

(Dollars in Thousands)                      AMOUNT                 RATE
--------------------------------------------------------------------------
<S>                                     <C>                 <C>
Securities sold under
 agreements to repurchase                   $5,000                 6.25%
                                        ----------------------------------
</TABLE>

  Securities sold under agreements to repurchase were collateralized by a
mortgage-backed security with an amortized cost and fair value of $3.9 million
at December 31, 1998. The $5 million was comprised of one commitment which
matured on August 26, 1999.

                                                                              23
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. INVESTMENT SECURITIES AND MORTGAGE-RELATED SECURITIES

As of December 31, 1999, there were $29,000 of securities purchased which did
not settle until January, 2000 and accordingly, have been reflected as
"Securities purchased, not settled" in the accompanying consolidated statements
of financial condition.

  The amortized cost and estimated fair value of investment securities and
mortgage-related securities as of December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>

(Dollars in thousands)                                      December 31, 1999
                                          -----------------------------------------------------
                                                           GROSS           GROSS
                                          AMORTIZED     UNREALIZED      UNREALIZED
AVAILABLE FOR SALE SECURITIES:              COST           GAINS          LOSSES     FAIR VALUE
                                          -----------------------------------------------------
<S>                                       <C>           <C>             <C>          <C>
Mortgage-backed certificates               $248,193        $  323       $(10,525)    $237,991
-----------------------------------------------------------------------------------------------
Marketable equity securities                 42,839         1,850         (2,237)      42,452
-----------------------------------------------------------------------------------------------
U.S. government agency debt                  40,070            --         (2,922)      37,148
-----------------------------------------------------------------------------------------------
Municipal obligations                        64,640             1         (4,757)      59,884
-----------------------------------------------------------------------------------------------
Corporate obligations                        12,109            --           (633)      11,476
-----------------------------------------------------------------------------------------------
Collateralized mortgage obligations          72,581            14         (3,862)      68,733
-----------------------------------------------------------------------------------------------
  Total                                    $480,432        $2,188       $(24,936)    $457,684
                                          -----------------------------------------------------

<CAPTION>

(Dollars in thousands)                                      December 31, 1998
                                          -----------------------------------------------------
                                                           GROSS           GROSS
                                          AMORTIZED     UNREALIZED      UNREALIZED
AVAILABLE FOR SALE SECURITIES:              COST           GAINS          LOSSES     FAIR VALUE
                                          -----------------------------------------------------
<S>                                       <C>           <C>             <C>          <C>
Mortgage-backed certificates               $183,312        $2,707       $   (291)    $185,728
-----------------------------------------------------------------------------------------------
Marketable equity securities                 33,750         2,808           (530)      36,028
-----------------------------------------------------------------------------------------------
U.S. government agency debt                  58,689           858           (267)      59,280
-----------------------------------------------------------------------------------------------
Municipal obligations                        39,863           154            (19)      39,998
-----------------------------------------------------------------------------------------------
Corporate obligations                        27,457           345             --       27,802
-----------------------------------------------------------------------------------------------
Collateralized mortgage obligations          87,913           821         (1,338)      87,396
-----------------------------------------------------------------------------------------------
  Total                                    $430,984        $7,693       $ (2,445)    $436,232
                                          -----------------------------------------------------
</TABLE>

  The amortized cost and estimated fair value of investment securities and
mortgage-related securities at December 31, 1999, by contractural maturity, are
shown below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or to prepay obligations with or without
call or prepayment penalties.

<TABLE>
<CAPTION>

(Dollars in thousands)                                      December 31, 1999
                                          -----------------------------------------------------
                                                            AMORTIZED
AVAILABLE FOR SALE SECURITIES:                                COST                   FAIR VALUE
                                          -----------------------------------------------------
<S>                                                     <C>                          <C>
Due in one year or less                                        5,973                    5,963
-----------------------------------------------------------------------------------------------
Due after one year through five years                         23,517                   23,193
-----------------------------------------------------------------------------------------------
Due after five years through ten years                        34,225                   33,100
-----------------------------------------------------------------------------------------------
Due after ten years                                          373,878                  352,976
-----------------------------------------------------------------------------------------------
Total                                                        437,593                  415,232
-----------------------------------------------------------------------------------------------
Marketable equity securities                                  42,839                   42,452
-----------------------------------------------------------------------------------------------
  Total                                                      480,432                  457,684
                                          -----------------------------------------------------
</TABLE>

  Proceeds from sales of available for sale securities for the year ended
December 31, 1999 were approximately $56.8 million. Gross gains of approximately
$253,000 were realized on those sales and gross losses of approximately $179,000
were realized for the year ended December 31, 1999.

24
<PAGE>

  Proceeds from sales of available for sale securities for the year ended
December 31, 1998 were approximately $119.0 million. Gross gains of
approximately $348,000 and gross losses of approximately $71,000 were realized
for the year ended December 31, 1998.

  Proceeds from sales of available for sale securities for the year ended
December 31, 1997 were approximately $136.1 million. Gross gains of
approximately $1.7 million and gross losses of approximately $1.3 million were
realized for the year ended December 31, 1997.

NOTE 5. LOANS RECEIVABLE

Loans receivable as of December 31, 1999 and 1998 consist of the following:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                  December 31, 1999                       December 31, 1998
                                               --------------------------------------------------------------------
<S>                                            <C>                                   <C>
M O R T G A G E S :
  One to four family residential                             $256,172                                 $239,648
-------------------------------------------------------------------------------------------------------------------
  Multi-family                                                  4,405                                    5,293
-------------------------------------------------------------------------------------------------------------------
  Real estate-commercial                                       17,592                                    7,329
-------------------------------------------------------------------------------------------------------------------
  Construction and development                                  3,658                                    2,371
-------------------------------------------------------------------------------------------------------------------

C O N S U M E R  L O A N S :
  Home equity                                                  52,819                                   54,953
-------------------------------------------------------------------------------------------------------------------
  Educational loans                                            19,158                                   20,040
-------------------------------------------------------------------------------------------------------------------

O T H E R :
  Loans on savings accounts                                     1,725                                    2,003
-------------------------------------------------------------------------------------------------------------------
  Unsecured personal loans and other                            3,317                                    3,013
-------------------------------------------------------------------------------------------------------------------
  Total                                                       358,846                                  334,650
-------------------------------------------------------------------------------------------------------------------

L E S S :
  Undisbursed mortgage loans                                    2,905                                    1,350
-------------------------------------------------------------------------------------------------------------------
  Deferred loan fees                                              701                                      968
-------------------------------------------------------------------------------------------------------------------
  Allowance for loan losses                                     1,731                                    1,604
-------------------------------------------------------------------------------------------------------------------
    Net loans                                                $353,509                                 $330,728
                                               --------------------------------------------------------------------
</TABLE>

  The Company purchased approximately $57.6 million and $66.8 million, including
premiums, in 1999 and 1998, respectively, of residential mortgage loans
collateralized by single-family properties located outside its primary market
area, such as other regions of Pennsylvania, Ohio and New York. The sellers have
retained the servicing rights on these purchases.

  In the ordinary course of business, the Company has transactions, including
loans, with the Company's principal officers and directors and their related
interests. Related party loans outstanding were approximately $996,000 and
$938,000 at December 31, 1999 and 1998, respectively.

  The following is a summary of activity in the allowance for loan losses:

<TABLE>
<CAPTION>

                                                                    Years Ended December 31
(Dollars in Thousands)                                    1999                1998              1997
                                                         ---------------------------------------------
<S>                                                      <C>                 <C>               <C>
Balance, beginning of year                               $1,604              $1,322            $1,031
------------------------------------------------------------------------------------------------------
Provision charged to operations                             390                 360               300
------------------------------------------------------------------------------------------------------
Loan charge-offs                                           (269)               (116)              (78)
------------------------------------------------------------------------------------------------------
Loan recoveries                                               6                  38                69
------------------------------------------------------------------------------------------------------
Balance, end of year                                     $1,731              $1,604            $1,322
                                                         ---------------------------------------------
</TABLE>

  At December 31, 1999 and 1998, the Company had approximately $1.5 million and
$1.1 million, respectively, in loans which were 90 days or more past due and
were not accruing interest. In addition, the Company had $345,000 and $758,000
of foreclosed assets as of December 31, 1999 and 1998, respectively.

                                                                              25
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. OFFICE, PROPERTY AND EQUIPMENT

Office, property and equipment as of December 31, 1999 and 1998 consist of the
following:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                           December 31, 1999              December 31, 1998
                                                                 -------------------------------------------------
<S>                                                              <C>                            <C>
Office buildings                                                       $ 8,736                        $ 8,522
------------------------------------------------------------------------------------------------------------------
Equipment                                                               10,049                          9,638
------------------------------------------------------------------------------------------------------------------
Land and land improvements                                               1,630                          1,001
------------------------------------------------------------------------------------------------------------------
  Subtotal                                                              20,415                         19,161
------------------------------------------------------------------------------------------------------------------
Less: accumulated depreciation and amortization                         14,745                         14,047
------------------------------------------------------------------------------------------------------------------
  Net office, property and equipment                                   $ 5,670                        $ 5,114
                                                                 -------------------------------------------------
</TABLE>

  The Company recognized depreciation of approximately $698,000, $766,000 and
$921,000 for the years ended December 31, 1999, 1998 and 1997, respectively.


NOTE 7. NON-INTEREST BEARING DEMAND DEPOSITS AND SAVINGS ACCOUNTS

Non-interest bearing demand deposits and savings accounts are summarized as
follows:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                  December 31, 1999             December 31, 1998
                                                   ------------------------------------------------------------
                                                   AVERAGE                       AVERAGE
                                                     RATE     AMOUNT   PERCENT     RATE     AMOUNT   PERCENT
                                                   ------------------------------------------------------------
<S>                                                <C>       <C>       <C>       <C>       <C>       <C>
Non-interest bearing accounts                                $ 29,418     5.94%            $ 30,373     6.29%
---------------------------------------------------------------------------------------------------------------

I N T E R E S T  B E A R I N G  A C C O U N T S :
  Non-certificate accounts:
    NOW accounts                                      1.63%    35,708     7.21      1.80%    34,298     7.11
---------------------------------------------------------------------------------------------------------------
    Money market                                      4.76%    34,509     6.97      2.00%    13,710     2.84
---------------------------------------------------------------------------------------------------------------
    Passbook savings                                  2.43%   148,376    29.97      2.75%   159,512    33.06
---------------------------------------------------------------------------------------------------------------
      Total non-certificate accounts                          218,593    44.15              207,520    43.01
---------------------------------------------------------------------------------------------------------------

C E R T I F I C A T E S  O F  D E P O S I T :
                                                   ------------------------------------------------------------
    0% to 4.00%                                       3.13%     1,917     0.39      3.10%     1,268     0.26
---------------------------------------------------------------------------------------------------------------
    4.00% to 4.99%                                    4.58%    88,720    17.92      4.55%    52,889    10.96
---------------------------------------------------------------------------------------------------------------
    5.00% to 5.99%                                    5.45%    85,549    17.28      5.47%   116,924    24.23
---------------------------------------------------------------------------------------------------------------
    6.00% and above                                   6.78%    70,927    14.32      6.72%    73,574    15.25
---------------------------------------------------------------------------------------------------------------
    Total certificates of deposit                     5.50%   247,113    49.91      5.68%   244,655    50.70
---------------------------------------------------------------------------------------------------------------
Total interest bearing accounts                               465,706    94.06              452,175    93.71
---------------------------------------------------------------------------------------------------------------
Total deposits                                               $495,124   100.00%            $482,548   100.00%
                                                   ------------------------------------------------------------
</TABLE>

  The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 was $19.7 million and $17.4 million at December 31, 1999 and 1998,
respectively. Deposits in excess of $100,000 are not federally insured.

26
<PAGE>

  The following table presents, by various rate categories, the amount of
certificate of deposit accounts outstanding at the dates indicated and the
periods to maturity of the certificate of deposit accounts outstanding at
December 31, 1999 and 1998:

<TABLE>
<CAPTION>

(Dollars in Thousands)         Period to Maturity at December 31, 1999        Period to Maturity at December 31, 1998
                            ---------------------------------------------------------------------------------------------
                             WITHIN   ONE TO   TWO TO    OVER               WITHIN   ONE TO   TWO TO    OVER
ACTUAL RATES                ONE YR.   TWO YRS   3 YRS    3 YRS    TOTAL    ONE YR.   TWO YR    3 YRS    3 YRS    TOTAL
                            ---------------------------------------------------------------------------------------------
<S>                         <C>       <C>      <C>      <C>      <C>       <C>       <C>      <C>      <C>      <C>
Interest rate:
Less than 4%                $  1,917  $    --  $    --  $    --  $  1,917  $  1,268  $    --  $    --  $    --  $  1,268
-------------------------------------------------------------------------------------------------------------------------
4.00% to 4.99%                71,851    8,000    3,442    5,427    88,720    50,254    1,608    1,027       --    52,889
-------------------------------------------------------------------------------------------------------------------------
5.00% to 5.99%                57,019   16,820    6,958    4,752    85,549    52,391   49,969   10,326    4,238   116,924
-------------------------------------------------------------------------------------------------------------------------
6.00% and over                32,982    2,095   19,449   16,401    70,927    28,470   33,529    4,346    7,229    73,574
-------------------------------------------------------------------------------------------------------------------------
  Total                     $163,769  $26,915  $29,849  $26,580  $247,113  $132,383  $85,106  $15,699  $11,467  $244,655
                            ---------------------------------------------------------------------------------------------
</TABLE>

  Interest expense on savings accounts for the years ended December 31, 1999,
1998 and 1997 is summarized as follows:

<TABLE>
<CAPTION>

                                                    Years Ended December 31,
                                                    -------------------------
(Dollars in Thousands)                               1999     1998     1997
<S>                                                 <C>      <C>      <C>
Passbook accounts                                   $ 3,808  $ 4,394  $ 4,805
-----------------------------------------------------------------------------
NOW accounts                                            613      570      552
-----------------------------------------------------------------------------
Money market accounts                                   687      329      397
-----------------------------------------------------------------------------
Certificates of deposit                              12,837   13,383   12,688
-----------------------------------------------------------------------------
  Total                                             $17,945  $18,676  $18,442
                                                    -------------------------
</TABLE>


NOTE 8. INCOME TAXES

The provision for income taxes was allocated as following:

<TABLE>
<CAPTION>

                                                                  For the Years Ended December 31,
                                                                 ----------------------------------
(Dollars in Thousands)                                              1999         1998        1997
<S>                                                              <C>          <C>         <C>
Income before income taxes                                         $  2,320      $4,158      $4,726
----------------------------------------------------------------------------------------------------
Shareholders' equity for unrealized gain (loss) on securities
 available for sale                                                 (10,359)       (246)      2,137
----------------------------------------------------------------------------------------------------
                                                                   $ (8,039)     $3,912      $6,863
</TABLE>

Income tax expense (benefit) applicable to income before taxes consist of:

<TABLE>

<S>                                                              <C>          <C>         <C>
F E D E R A L :
  Current                                                          $  2,374      $3,831      $4,098
----------------------------------------------------------------------------------------------------
  Deferred                                                             (459)       (346)        (99)
----------------------------------------------------------------------------------------------------
                                                                      1,915       3,485       3,999
                                                                 ----------------------------------
S T A T E :
  Current                                                               405         673         727
----------------------------------------------------------------------------------------------------
Provision for income taxes                                         $  2,320      $4,158      $4,726
                                                                 ----------------------------------
</TABLE>

  A reconciliation of the federal statutory tax rate to the tax rate applicable
to income before federal income taxes are as follows:

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                    1999         1998        1997
                                                                 ----------------------------------
<S>                                                              <C>          <C>         <C>
Federal statutory rate                                              34.0%        34.0%       34.0%
----------------------------------------------------------------------------------------------------
State income taxes, net of federal benefit                           2.8          3.6         3.7
----------------------------------------------------------------------------------------------------
Tax exempt income, net                                             (11.2)        (3.7)         --
----------------------------------------------------------------------------------------------------
Other                                                               (1.0)        (0.4)       (1.5)
----------------------------------------------------------------------------------------------------
                                                                    24.6%        33.5%       36.2%
                                                                 ----------------------------------
</TABLE>


                                                                              27
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  The deferred tax assets and deferred tax liabilities recorded on the
statements of financial condition are as follows:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                      December 31, 1999                     December 31, 1998
                                                ---------------------------------------------------------------------------
                                                    DEFERRED TAX        DEFERRED TAX       DEFERRED TAX       DEFERRED TAX
                                                       ASSETS            LIABILITIES          ASSETS           LIABILITIES
                                                ---------------------------------------------------------------------------
<S>                                             <C>                    <C>              <C>                 <C>
Tax bad debt reserve                                   $   --              $  510              $ --               $  638
---------------------------------------------------------------------------------------------------------------------------
Reserve for possible loan loss                            589                  --               545                   --
---------------------------------------------------------------------------------------------------------------------------
Loan origination fees/costs                                --                   3                32                   --
---------------------------------------------------------------------------------------------------------------------------
Depreciation/amortization                                  --                 526                --                  634
---------------------------------------------------------------------------------------------------------------------------
Net unrealized holding gains/losses
  on securities available for sale                      8,416                  --                --                1,943
---------------------------------------------------------------------------------------------------------------------------
Other                                                     225                  --                11                   --
---------------------------------------------------------------------------------------------------------------------------
Deferred tax asset/liability                           $9,230              $1,039              $588               $3,215
                                                ---------------------------------------------------------------------------
</TABLE>

  Net accumulated deferred income tax (assets) liabilities at December 31, 1999
and 1998 were $8.2 million and $2.6 million, respectively.

  The Company determined that it was not required to establish a valuation
allowance for deferred tax assets because it is management's assertion that the
deferred tax assets are likely to be realized through carryback to taxable
income in prior years, future reversals of existing taxable temporary
differences, and, to a lesser extent, future taxable income.


NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company had only limited involvement with derivative financial instruments.
Periodically, the Company entered into unconditional forward commitments to
purchase mortgage-backed certificates, such as those issued by the Government
National Mortgage Association ("GNMA"), 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 GNMA'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 contact 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
certificates 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, 1999. Such
activity did not result in a material impact to operations for the years ended
December 31, 1999, 1998, and 1997, respectively.


NOTE 10. EMPLOYEE BENEFIT PLANS

Currently, the Company offers a 401(k) program for all eligible employees
permitting participants to defer a maximum of 15% of their base salary with the
Company contributing a 50% match on the first 6% of the employee's deferred
salary. Compensation expense relating to the 401(k) match was $111,000 for 1999,
$124,000 for 1998, and $127,000 for 1997.


28
<PAGE>

  The Company has established for full-time employees who have attained the age
of 21 a separate ESOP in connection with the conversion (See Note 2). The ESOP
borrowed an aggregate of $7.1 million from the Company and purchased 712,000
common shares issued in the conversion. The Association intends to make
scheduled discretionary cash contributions to the ESOP sufficient to service and
repay the amounts borrowed over a period of up to 14 years. In connection with
the formation of the ESOP, the Company adopted the American Institute of
Certified Public Accountants' Statement of Position 93-6. As shares in the ESOP
are earned and committed to be released, compensation expense will be recorded
based on their fair value during each reporting period. The difference between
the fair value of the shares committed to be released and the cost of those
shares to the ESOP will be charged or credited to additional paid-in capital.
The balance of unearned shares held by the ESOP is shown as a reduction of
shareholders' equity. Only those shares in the ESOP which have been earned and
are committed to be released will be included in the computation of earnings per
share. At December 31, 1999 and 1998, 263,168 and 159,960, respectively, of the
shares in the ESOP were earned and committed to be released. Compensation
expense related to the ESOP amounted to $1.5 million, $1.0 million and $883,000
for the years ended December 31, 1999, 1998 and 1997, respectively. Dividends
received on unallocated ESOP shares in 1999, 1998, and 1997 amounted to
$361,000, $330,000, and $278,000, respectively, and are included in compensation
expense and were used to reduce current principal payments on the ESOP loan. The
fair value at December 31, 1999 and 1998 of the unearned shares in the ESOP was
$5.9 million and $8.6 million, respectively, based on the last sales price of
the company's common stock of approximately $13.25 and $15.50, respectively on
those dates.


NOTE 11. CAPITAL REQUIREMENTS AND REGULATORY RESTRICTIONS

As a savings and loan holding company, GA Financial, Inc. is not required to
maintain any minimum level of capital; however, Great American Federal Savings
and Loan Association is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the Association's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Association must meet specific capital guidelines that involve quantitative
measures of the Association's assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Association's
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.

  Quantitative measures established by regulation to ensure capital adequacy
require the Association to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted assets and Tier I
capital to total assets. Management believes, as of December 31, 1999 that the
Association meets all capital adequacy requirements to which it is subject.

  As of December 31, 1999, the most recent notification from the OTS categorized
the Association as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the Association must
maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios
as set forth in the table. There are no conditions or events since that
notification that management believes have changed the Association's category.

  As of December 31, 1999 and 1998, the Association exceeded all fully phased-in
capital requirements and had not been notified by the OTS that it is in need of
more than normal supervision.

  The Office of Thrift Supervision ("OTS") imposes limitations upon all capital
distributions by savings institutions, including cash dividends. An institution
that exceeds all fully phased-in capital requirements before and after a
proposed capital distribution and has not been notified by the OTS that it is in
need of more than normal supervision could, after prior notice but without the
approval of the OTS, make capital distributions during a calendar year up to the
higher of (i) 100% of its net income to date during the calendar year plus the
amount that would reduce by one-half its "surplus capital ratio" (the excess
capital over its fully phased-in capital requirements) at the beginning of the
calendar year, or (ii) 75% of its net income over the most recent four-quarter
period. Any additional capital distributions would require prior regulatory
approval. The Association can declare dividends subsequent to December 31, 1999,
of up to approximately $6.2 million of retained earnings. The Association paid a
special dividend of $32.5 million to the Company in 1999, and dividends of $6.0
million and $4.1 million for 1998 and 1997, respectively.


                                                                              29
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

(Dollars in Thousands)                             Tier I Leverage Capital   Tier I Risk-based Capital   Total Risk-based Capital
                                                   -------------------------------------------------------------------------------
<S>                                                <C>                       <C>                         <C>
December 31, 1999:
  Equity capital/1/                                               $ 58,871                    $ 58,871                   $ 58,871
----------------------------------------------------------------------------------------------------------------------------------
  General valuation allowance/2/                                        --                          --                      1,731
----------------------------------------------------------------------------------------------------------------------------------
  Unrealized losses on certain available-
   for-sale securities                                              13,018                      13,018                     13,456
----------------------------------------------------------------------------------------------------------------------------------
  Less core deposit intangible                                        (725)                       (725)                      (725)
----------------------------------------------------------------------------------------------------------------------------------
  Total regulatory capital                                          71,164                      71,164                     73,333
----------------------------------------------------------------------------------------------------------------------------------
  Minimum regulatory capital                                        35,089                      12,687                     25,374
----------------------------------------------------------------------------------------------------------------------------------
  Excess regulatory capital                                       $ 36,075                    $ 58,477                   $ 47,959
                                                   ------------------------------------------------------------------------------
  Regulatory capital as a percentage                                  8.11%                      22.44%                     23.12%
----------------------------------------------------------------------------------------------------------------------------------
  Minimum regulatory capital as a percentage                          4.00%                       4.00%                      8.00%
----------------------------------------------------------------------------------------------------------------------------------
  Excess regulatory capital as a percentage                           4.11%                      18.44%                     15.12%
                                                   ------------------------------------------------------------------------------
  Well capitalized requirement under
   prompt corrective actions provisions                               5.00%                       6.00%                     10.00%
                                                   ------------------------------------------------------------------------------
  Adjusted assets as reported to the OTS                          $877,230                    $317,174                   $317,174
                                                   ------------------------------------------------------------------------------

December 31, 1998:
  Equity capital/1/                                               $101,688                    $101,688                   $101,688
----------------------------------------------------------------------------------------------------------------------------------
  General valuation allowance/2/                                        --                          --                      1,604
----------------------------------------------------------------------------------------------------------------------------------
  Less unrealized gains on certain available-
   for-sale securities                                              (3,490)                     (3,490)                    (2,320)
----------------------------------------------------------------------------------------------------------------------------------
  Less core deposit intangible                                        (910)                       (910)                      (910)
----------------------------------------------------------------------------------------------------------------------------------
  Total regulatory capital                                          97,288                      97,288                    100,062
----------------------------------------------------------------------------------------------------------------------------------
  Minimum regulatory capital                                        32,381                      12,594                     25,188
----------------------------------------------------------------------------------------------------------------------------------
  Excess regulatory capital                                       $ 64,907                    $ 84,694                   $ 74,874
                                                   ------------------------------------------------------------------------------
  Regulatory capital as a percentage                                 12.02%                      30.90%                     31.78%
----------------------------------------------------------------------------------------------------------------------------------
  Minimum regulatory capital as a percentage                          4.00%                       4.00%                      8.00%
----------------------------------------------------------------------------------------------------------------------------------
  Excess regulatory capital as a percentage                           8.02%                      26.90%                     23.78%
                                                   ------------------------------------------------------------------------------
  Well capitalized requirement under
   prompt corrective actions provisions                               5.00%                       6.00%                     10.00%
                                                   ------------------------------------------------------------------------------
  Adjusted assets as reported to the OTS                          $809,516                    $314,850                   $314,850
                                                   ------------------------------------------------------------------------------
</TABLE>

/1/ Represents equity capital of the Association as reported to the OTS.

/2/ Limited to 1.25% of risk-weighted assets.

  Pursuant to Regulation D of the Federal Reserve, the Association is required
to maintain certain balances which include both cash on hand and deposits with
the Federal Reserve. The amount of these balances as of December 31, 1999 and
1998 approximated $2.4 million and $2.3 million, respectively.


NOTE 12. CONTINGENT LIABILITIES

The Company is subject to a number of asserted and unasserted potential claims
encountered in the normal course of business. In the opinion of management,
after consultation with legal counsel, the resolution of these claims will not
have a material adverse effect on the Company's financial position, liquidity or
results of operations.

30
<PAGE>

NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS/CONCENTRATIONS OF CREDIT RISK

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
the determination of fair value for certain of the Company's assets, liabilities
and off balance sheet liabilities. The following methods and assumptions were
used to estimate the fair value of each class of financial instruments for which
it is practicable to estimate that value.

CASH

The carrying amount of cash, which includes interest-bearing demand deposits,
approximates fair value.

FEDERAL FUNDS SOLD

The carrying amount of these overnight federal funds approximates fair value.

INVESTMENTS SECURITIES

The fair values of some investments are based on quoted market prices or on bid
quotations received from security dealers. If a quoted market price is not
available, fair value is estimated using quoted market prices for securities
with similar remaining maturities, comparable credit risk and coupon rates.

MORTGAGE-RELATED SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS

The fair values are based on quoted market prices or dealer quotes.

LOANS RECEIVABLE

Fair values were estimated for loan portfolios with similar financial
characteristics by discounting contractural cash flows with adjustments for
prepayment. Assumptions regarding cash flows and discount rates were
judgmentally determined using available internal information which management
believes to be reasonable, taking into consideration the credit rating of the
counter-parties, current interest rates and remaining maturities.

FEDERAL HOME LOAN BANK STOCK

The stock can be redeemed at its carrying amount: therefore, the carrying amount
approximates fair value.

NON-INTEREST-BEARING DEMAND DEPOSITS

The fair value on these deposits is the amount payable on demand on the
reporting date.

SAVINGS ACCOUNTS

The fair value of Passbook, NOW and Money Market accounts is the amount payable
on demand at the reporting date. The fair value of fixed-maturity certificates
of deposit is estimated based on present value computations using as a discount
rate the rates currently offered on advances from the FHLB with similar
maturities.

BORROWED FUNDS

Fair value is determined by discounting the borrowings using current rates of
borrowings with comparable maturities as of the reporting date.

COMMITMENTS TO EXTEND CREDIT

Fair value was estimated using the fees currently charged, if any, to enter into
similar agreements, taking into account the remaining terms of the agreements
and the creditworthiness of the counterparties.

FORWARD AND STANDBY COMMITMENTS

Fair value was estimated based on bid quotations from security dealers.

                                                                              31
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  The following table presents the estimates of fair value of financial
instruments as of December 31, 1999 and 1998.

<TABLE>
<CAPTION>

(Dollars in Thousands)                                     December 31, 1999                December 31, 1998
                                                   -----------------------------------------------------------------
                                                       ESTIMATED        CARRYING        ESTIMATED        CARRYING
FINANCIAL ASSETS:                                     FAIR VALUE         VALUE         FAIR VALUE         VALUE
                                                   -----------------------------------------------------------------
<S>                                                <C>                    <C>           <C>                <C>
Cash                                                    $ 26,632          $ 26,632        $ 22,987         $ 22,987
--------------------------------------------------------------------------------------------------------------------
Federal funds sold                                            --                --             500              500
--------------------------------------------------------------------------------------------------------------------
FHLB stock                                                15,458            15,458          11,413           11,413
--------------------------------------------------------------------------------------------------------------------
Investment securities                                    150,960           150,960         163,108          163,108
--------------------------------------------------------------------------------------------------------------------
Mortgage-related securities                              306,724           306,724         273,124          273,124
--------------------------------------------------------------------------------------------------------------------
Loans receivable                                         346,015           353,509         335,180          330,728
--------------------------------------------------------------------------------------------------------------------
                                                        $845,789          $853,283        $806,312         $801,860
                                                   -----------------------------------------------------------------

FINANCIAL LIABILITIIES:
Non-interest-bearing demand deposits                    $ 29,418          $ 29,418        $ 30,373         $ 30,373
--------------------------------------------------------------------------------------------------------------------
Savings accounts                                         463,384           465,706         452,314          452,175
--------------------------------------------------------------------------------------------------------------------
Borrowed funds                                           289,520           297,160         221,887          222,545
--------------------------------------------------------------------------------------------------------------------
                                                        $782,322          $792,284        $704,574         $705,093
                                                   -----------------------------------------------------------------

<CAPTION>
                                                       ESTIMATED      CONTRACT OR       ESTIMATED      CONTRACT OR
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS               FAIR VALUE      NOTIONAL AMT     FAIR VALUE      NOTIONAL AMT
                                                   -----------------------------------------------------------------
<S>                                                <C>                    <C>           <C>                <C>
Commitments to extend credit                                 --             42,200              --           28,100
                                                   -----------------------------------------------------------------
Forward and standby commitments                              --                 --          50,500           50,000
                                                   -----------------------------------------------------------------
</TABLE>

  A reconciliation of forward and standby commitment activity for periods
presented as follows:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                                      Forward Commitments          Standby Commitments
                                                                        --------------------------------------------------------
<S>                                                                     <C>                           <C>
Balance at December 31, 1997                                                              $  26,000                    $ 16,000
--------------------------------------------------------------------------------------------------------------------------------
Purchase commitments                                                                        149,380                      16,000
--------------------------------------------------------------------------------------------------------------------------------
Commitments matured / expired                                                                    --                     (24,000)
--------------------------------------------------------------------------------------------------------------------------------
Commitments settled / purchased                                                             (94,780)                         --
--------------------------------------------------------------------------------------------------------------------------------
Commitments sold                                                                            (38,600)                         --
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                                                              $  42,000                    $  8,000
--------------------------------------------------------------------------------------------------------------------------------

Purchase commitments                                                                         79,000                      16,000
--------------------------------------------------------------------------------------------------------------------------------
Commitments matured / expired                                                                    --                     (12,000)
--------------------------------------------------------------------------------------------------------------------------------
Commitments settled / purchased                                                            (114,000)                    (12,000)
--------------------------------------------------------------------------------------------------------------------------------
Commitments sold                                                                             (7,000)                         --
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                                                              $      --                    $     --
                                                                        --------------------------------------------------------
</TABLE>

  The Company also has loan commitments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
instruments involve elements of credit risk in excess of the amount recognized
in the consolidated financial statements. The Company's exposure to credit loss
in the event of nonperformance by the counterparty to the financial instruments
for commitments to extend credit is represented by the contractual amount of
those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments and the commitments expire within 60 days. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the counterparty.
Collateral held includes residential real estate and income-producing
properties. Total commitments to extend credit at December 31, 1999 and 1998
were $42.2 million and $28.1 million, respectively, in loan commitments and
unused lines of credit which bear market rates at the time the commitments are
exercised. The loan

32
<PAGE>

commitments are held other than for trading. Since many of the loan commitments
may expire without being drawn upon, the total commitment amount does not
necessarily represent future cash requirements.

  The Company believes that reasonable comparability between financial
institutions may not be likely due to the wide range of permitted valuation
techniques and numerous estimates which must be made given the absence of active
secondary markets for many financial instruments. This lack of uniform valuation
methodologies also introduces a greater degree of subjectivity to these
estimated values.

  The Company's origination of loans is primarily concentrated in the local
southwestern Pennsylvania market. At December 31, 1999, the Company had
approximately $190.0 million of residential real estate loans located outside of
its primary market area. These loans are concentrated in other regions of
Pennsylvania, Ohio, Delaware and New York and are not serviced by the Company.
The Company has no significant concentrations of credit risk with any individual
counterparty.

  The Company has various operating leases on branches which commit the Company
to future lease payments.


NOTE 14. SAIF ASSESSMENT

Effective January 1, 1997, Savings Association Insurance Fund ("SAIF") members
have the same risk-based assessment schedule as Bank Insurance Fund ("BIF")
members. The Association, as a well capitalized bank, will pay no assessment for
deposit insurance coverage. However, all SAIF and BIF institutions including the
Association will be responsible for sharing the cost of interest payments on the
Financing Corporation ("FICO") bonds. For the years ended December 31, 1999,
1998, and 1997, the cost to the Association approximated 5.9, 6.1, and 6.5 basis
points, respectively, for SAIF deposits. The annual cost of interest payments
for the Association was $281,000, $282,000 and $283,000 for the years ended
December 31, 1999, 1998, and 1997, respectively.


NOTE 15. SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid during the years ended December 31, for interest and income taxes was
approximately $32.4 million and $2.7 million, respectively, in 1999, $31.4
million and $5.1 million, respectively, in 1998 and $26.5 million and $4.5
million, respectively, in 1997. Noncash investing and financing activity
consisted of the following: In December, 1999 and 1998, the Company purchased
investment securities that did not settle with the brokers until subsequent to
December 31. Accordingly, amount due to broker of $29,000 and $1.9 million is
shown separately on the consolidated statements of financial condition as of
December 31, 1999 and 1998, respectively. The Company transferred $404,000 and
$997,000 of loans to foreclosed assets during 1999 and 1998, respectively.


NOTE 16. NEW ACCOUNTING PRONOUNCEMENTS

SFAS No. 133; "Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133,"
requires that derivative instruments be carried at fair value on the balance
sheet. The statement continues to allow derivative instruments to be used to
hedge various risks and sets forth specific criteria to be used to determine
when hedge accounting can be used. The statement also provides for offsetting
changes in fair value or cash flows of both the derivative and the hedged asset
or liability to be recognized in earnings in the same period; however, any
changes in fair value or cash flow that represent the ineffective portion of a
hedge are required to be recognized in earnings and cannot be deferred. For
derivative instruments not accounted for as hedges, changes in fair value are
required to be recognized in earnings.

  The provisions of this statement as amended, will be adopted by the Company
for its quarterly and annual reporting beginning January 1, 2001. The impact of
adopting the provisions of this statement on the Company's financial position,
results of operations and cash flow subsequent to the effective date is not
currently estimable and will depend on the financial position of the Company and
the nature and purpose of the derivative instruments in use by management at
that time.

                                                                              33
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share," which became effective for the Company for financial
statements issued for periods ending after December 15, 1997. Under the
provisions of SFAS No. 128, primary and fully-diluted earnings per share were
replaced with basic and diluted earnings per share in an effort to simplify the
computation of these measures and align them more closely with the methodology
used internationally. Basic earnings per share is arrived at by dividing net
income available to common stockholders by the weighted-average number of common
shares outstanding and does not include the impact of any potentially dilutive
common stock equivalents. The diluted earnings per share calculation method is
similar to, but slightly different from, the previously required fully-diluted
earnings per share method and is arrived at by dividing net income by the
weighted-average number of shares outstanding, adjusted for the dilutive effect
of outstanding stock options and the conversion impact of convertible equity
securities and other common stock equivalents. The adoption of this statement
did not have a material impact on the Company's earnings per share computation.

  The calculation of earnings per share follows:

<TABLE>
<CAPTION>

                                                                                For the Calendar Year
(Dollars in Thousands, Except Per Share Amounts)                           1999         1998         1997
                                                                        -------------------------------------
<S>                                                                     <C>          <C>          <C>
B A S I C :
  Net income                                                            $    7,115   $    8,242   $    8,317
-------------------------------------------------------------------------------------------------------------
  Average common shares outstanding - basic                              5,756,793    6,516,237    7,021,900
                                                                        -------------------------------------
  Basic earnings per share                                              $     1.24   $     1.26   $     1.18
                                                                        -------------------------------------

D I L U T E D :
  Net income                                                            $    7,115   $    8,242   $    8,317
-------------------------------------------------------------------------------------------------------------
  Average common shares outstanding - basic                              5,756,793    6,516,237    7,021,900
-------------------------------------------------------------------------------------------------------------
  Effect of dilutive securities:
  Shares issuable upon exercise of outstanding stock options and stock
   awards                                                                   62,784      180,661      196,188
-------------------------------------------------------------------------------------------------------------
  Average common shares outstanding - diluted                            5,819,577    6,696,898    7,218,088
                                                                        -------------------------------------
  Diluted earnings per share                                            $     1.22   $     1.23   $     1.15
                                                                        -------------------------------------
</TABLE>


NOTE 18. GA FINANCIAL, INC. (PARENT COMPANY)

The following are the parent company's condensed financial statements:

<TABLE>
<CAPTION>

(Dollars in Thousands)                                    December 31, 1999    December 31, 1998
                                                         -------------------------------------------
<S>                                                      <C>                  <C>
STATEMENT OF FINANCIAL CONDITION
A S S E T S
  Cash                                                               $   440             $    396
---------------------------------------------------------------------------------------------------
  Investment securities, at fair value                                 3,993                1,304
---------------------------------------------------------------------------------------------------
  Investment in the Association                                       58,871              101,688
---------------------------------------------------------------------------------------------------
  Investment in New Eagle Capital, Inc.                               25,947                7,312
---------------------------------------------------------------------------------------------------
  Prepaid expenses and other assets                                      603                1,201
---------------------------------------------------------------------------------------------------
  Total Assets                                                       $89,854             $111,901
                                                         -------------------------------------------

L I A B I L I T I E S  A N D  S H A R E H O L D E R S '
E Q U I T Y
  Other liabilities                                                  $ 5,283             $  2,685
---------------------------------------------------------------------------------------------------
  Shareholder's Equity                                                84,571              109,216
---------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity                           $89,854             $111,901
                                                         -------------------------------------------
</TABLE>

34
<PAGE>

<TABLE>
<CAPTION>
                                                                                     For the Years Ended
(Dollars in Thousands)                                           December 31, 1999    December 31, 1998    December 31, 1997
                                                                 -------------------------------------------------------------
<S>                                                              <C>                 <C>                   <C>
STATEMENT OF INCOME
  Dividend from Association                                               $     --              $  6,000            $  4,117
------------------------------------------------------------------------------------------------------------------------------
  Investment and mortgage-related securities interest income                   186                 1,128               1,699
------------------------------------------------------------------------------------------------------------------------------
  Net gain on sale of investment securities                                     --                   205                 196
------------------------------------------------------------------------------------------------------------------------------
  Capital stock tax refund                                                      --                   876                  --
------------------------------------------------------------------------------------------------------------------------------
  Other income                                                                 135                    86                  --
------------------------------------------------------------------------------------------------------------------------------
  General and administrative expenses                                         (576)                 (495)               (407)
------------------------------------------------------------------------------------------------------------------------------
  State franchise taxes                                                       (132)                 (196)               (495)
------------------------------------------------------------------------------------------------------------------------------
  Income taxes                                                                (475)                 (569)               (360)
------------------------------------------------------------------------------------------------------------------------------
  Income before equity in undistributed earnings of Association
   and investment subsidiary                                                  (862)                7,035               4,750
------------------------------------------------------------------------------------------------------------------------------
  Equity in undistributed earnings of Association                            6,191                 1,207               3,567
------------------------------------------------------------------------------------------------------------------------------
  Equity in undistributed earnings of investment subsidiary                  1,786                    --                  --
------------------------------------------------------------------------------------------------------------------------------
    Net income                                                            $  7,115              $  8,242            $  8,317
                                                                 -------------------------------------------------------------

<CAPTION>
                                                                                     For the Years Ended
(Dollars in Thousands)                                           December 31, 1999     December 31, 1998   December 31, 1997
                                                                 -------------------------------------------------------------
STATEMENT OF CASH FLOWS

C A S H  F L O W S  F R O M  O P E R A T I N G
A C T I V I T I E S :

Net income                                                                $  7,115              $  8,242            $  8,317
------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Equity in undistributed earnings of Association                           (6,191)               (1,207)             (3,567)
------------------------------------------------------------------------------------------------------------------------------
  Equity in undistributed earnings of investment subsidiary                 (1,786)                   --                  --
------------------------------------------------------------------------------------------------------------------------------
  Net realized gain on securities                                               --                  (205)               (196)
------------------------------------------------------------------------------------------------------------------------------
  Net premium amortization on investment securities                             --                    --                 (59)
------------------------------------------------------------------------------------------------------------------------------
  Decrease in accrued interest receivable                                       --                    53                 664
------------------------------------------------------------------------------------------------------------------------------
  Allocation of recognition and retention plan shares                        1,791                   801                 812
------------------------------------------------------------------------------------------------------------------------------
  Allocation of ESOP Plan shares                                             1,553                 1,343               1,161
------------------------------------------------------------------------------------------------------------------------------
  (Decrease) Increase in prepaid expenses and other assets                     598                  (690)               (427)
------------------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in other liabilities                               2,598                 2,584                 (42)
------------------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                  5,678                10,921               6,663
------------------------------------------------------------------------------------------------------------------------------

C A S H  F L O W S  F R O M  I N V E S T I N G
A C T I V I T I E S :
                                                                 -------------------------------------------------------------
  Proceeds from sale of available for sale securities                       18,162                46,895              50,001
------------------------------------------------------------------------------------------------------------------------------
  Investment in Association                                                 32,500                    --                  --
------------------------------------------------------------------------------------------------------------------------------
  Investment in investment subsidiary                                      (17,893)               (7,536)                 --
------------------------------------------------------------------------------------------------------------------------------
  Repayments, maturities and calls of available for sale
   securities                                                                   --                    --                 372
------------------------------------------------------------------------------------------------------------------------------
  Purchases of available for sale securities                               (20,937)              (33,071)            (36,787)
------------------------------------------------------------------------------------------------------------------------------
  Net cash provided by investing activities                                 11,832                 6,288              13,586
------------------------------------------------------------------------------------------------------------------------------

C A S H  F L O W S  F R O M  F I N A N C I N G
A C T I V I T I E S :
                                                                 -------------------------------------------------------------
  Purchase of treasury stock                                               (13,724)              (12,872)            (12,696)
------------------------------------------------------------------------------------------------------------------------------
  Purchase of recognition and retention stock                                   --                    --              (4,095)
------------------------------------------------------------------------------------------------------------------------------
  Dividends paid to shareholders                                            (3,742)               (4,007)             (3,413)
------------------------------------------------------------------------------------------------------------------------------
  Net cash used in financing activities                                    (17,466)              (16,879)            (20,204)
------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                                       44                   330                  45
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period                               396                    66                  21
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                $    440              $    396            $     66
                                                                 -------------------------------------------------------------
</TABLE>

                                                                              35
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19. SUBSEQUENT EVENTS (UNAUDITED)

The Board of Directors declared a dividend of $.18 per share to shareholders of
record on February 9, 2000, payable on February 23, 2000. The Board of Directors
approved up to a 5% repurchase of the outstanding common stock of GA Financial,
Inc., on January 25, 2000. The repurchase must be completed by January 25, 2001.
The total treasury shares of the Company's stock was 2,887,941 as of March 7,
2000.


NOTE 20. STOCK-BASED COMPENSATION PLANS

The Company has two stock-based compensation plans which are described below.
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting For Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its stock-based compensation plans.

STOCK AWARDS

On October 16, 1996 shareholders approved the "GA Financial, Inc. 1996 Stock
Based Incentive Plan," as amended. Under this program up to 4% of the Company's
outstanding shares or 356,000 shares could be awarded to directors, officers, or
employees. The Company originally awarded 308,650 shares in October, 1996. The
awards vest at the rate of 20% per year for five years and can be forfeited if
an employee is dismissed for cause. Compensation expense recorded in the
consolidated financial statements under this plan for 1999, 1998, and 1997 was
$779,000, $801,000, and $812,000, respectively. The unearned compensation
expense as of December 31, 1999 and 1998 is $1.3 million and $2.4 million,
respectively.

STOCK OPTIONS

Under the "GA Financial, Inc., 1996 Stock Based Incentive Plan," as amended, the
Company was authorized to issue options of up to 890,000 shares. The Plan was
approved by shareholders on October 16, 1996. The options vest at the rate of
20% per year for five years and are exercisable over a period of ten years from
the date of the grant. Because the Company accounts for this stock option plan
using APB 25, no compensation expense has been recorded in the financial
statements for this plan. Had compensation cost for this stock option plan been
determined based on the fair value at the grant date consistent with the method
of SFAS No. 123 "Accounting for Stock-Based Compensation," the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below.

<TABLE>
<CAPTION>

                                                  1999       1998       1997
                                                 ----------------------------
<S>                              <C>             <C>        <C>        <C>
Net income (thousands)           As reported     $7,115     $8,242     $8,317
                                 Pro forma        7,055     $7,979     $8,047
-----------------------------------------------------------------------------
Basic earnings per share         As reported     $ 1.24     $ 1.26     $ 1.18
                                 Pro forma         1.23     $ 1.22     $ 1.15
-----------------------------------------------------------------------------
Diluted earnings per share       As reported     $ 1.22     $ 1.23     $ 1.15
                                 Pro forma         1.21     $ 1.19     $ 1.11
-----------------------------------------------------------------------------
</TABLE>

  The fair value for the options described above was estimated at the date of
the grant using a Black-Scholes option pricing model with the following weighted
average assumptions for 1999: risk-free interest rate of 6.27%, dividend yield
of 5.54%, volatility factors of the expected market price of the Company's
common stock of .217, and an average life of the options of 3.8 years. The
following weighted average assumptions were used for 1998: risk free interest
rate of 5.18%, dividend yield of 4%, volatility factors of the expected market
price of the Company's common stock of .381, and an average life of the options
of 4.5 years. The following weighted average assumptions were used for 1997:
risk free interest rate of 5.64%, dividend yield of 2%, volatility factors of
the expected market price of the Company's common stock of .249, and an average
life of the options of 5.5 years. The Black-Scholes valuation model was
developed for use in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the expected
stock price volatility.

36
<PAGE>

  A summary of the status of the Company's stock awards and fixed stock option
plan as of December 31, 1999, 1998, and 1997 and changes during the year is
presented below:

<TABLE>
<CAPTION>

                                                                                         1999
                                                            -----------------------------------------------------------------
                                                                                                          WEIGHTED AVG.
                                                                   STOCK                 STOCK            EXERCISE PRICE
                                                                   AWARDS               OPTIONS             ON OPTIONS
                                                            -----------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
Outstanding at the beginning of the year                                189,180               619,000                13.16
-----------------------------------------------------------------------------------------------------------------------------
Granted                                                                      --                    --                   --
-----------------------------------------------------------------------------------------------------------------------------
Exercised                                                                    --               (85,900)               12.75
-----------------------------------------------------------------------------------------------------------------------------
Vested and forfeited                                                    (85,440)              (31,000)               12.75
-----------------------------------------------------------------------------------------------------------------------------
Outstanding at year end                                                 103,740               502,100                13.26
-----------------------------------------------------------------------------------------------------------------------------
Options exercisable at year end                                                               227,800
-----------------------------------------------------------------------------------------------------------------------------
  Weighted average fair value of options
   granted during the year                                                   --                    --
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                         1998
                                                            -----------------------------------------------------------------
                                                                                                          WEIGHTED AVG.
                                                                   STOCK                 STOCK            EXERCISE PRICE
                                                                  AWARDS                OPTIONS             ON OPTIONS
                                                            -----------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
Outstanding at the beginning of the year                                240,800               614,000               $12.75
-----------------------------------------------------------------------------------------------------------------------------
Granted                                                                  17,000                30,000                21.24
-----------------------------------------------------------------------------------------------------------------------------
Exercised                                                                    --                (9,000)               12.75
-----------------------------------------------------------------------------------------------------------------------------
Vested and forfeited                                                    (68,620)              (16,000)               12.75
-----------------------------------------------------------------------------------------------------------------------------
Outstanding at year end                                                 189,180               619,000                13.16
-----------------------------------------------------------------------------------------------------------------------------
Options exercisable at year end                                                               233,800
-----------------------------------------------------------------------------------------------------------------------------
  Weighted average fair value of options/awards
   granted during the year                                               $20.97                $21.24
-----------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                         1997
                                                            -----------------------------------------------------------------
                                                                                                          WEIGHTED AVG.
                                                                   STOCK                 STOCK            EXERCISE PRICE
                                                                  AWARDS                OPTIONS             ON OPTIONS
                                                            -----------------------------------------------------------------
<S>                                                         <C>                   <C>                   <C>
Outstanding at the beginning of the year                                308,650               626,500               $12.75
-----------------------------------------------------------------------------------------------------------------------------
Granted                                                                      --                    --
-----------------------------------------------------------------------------------------------------------------------------
Exercised                                                                    --                    --
-----------------------------------------------------------------------------------------------------------------------------
Vested and forfeited                                                    (67,850)              (12,500)               12.75
-----------------------------------------------------------------------------------------------------------------------------
Outstanding at year end                                                 240,800               614,000                12.75
-----------------------------------------------------------------------------------------------------------------------------
Options exercisable at year end                                                               124,400
-----------------------------------------------------------------------------------------------------------------------------
  Weighted average fair value of options
   granted during the year                                                   --                    --
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                              37
<PAGE>
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  Information about the fixed-stock option plan is described below:

<TABLE>
<CAPTION>
                                                          Options Outstanding                Options Exercisable
                                           ------------------------------------------------------------------------------------
                             RANGE OF        WEIGHTED AVG.      REMAINING    WEIGHTED AVG.       WEIGHTED AVG.       NUMBER
                          EXERCISE PRICES    EXERCISE PRICE    OUTSTANDING  CONTRACTUAL LIFE    EXERCISE PRICE     EXERCISABLE
                                           ------------------------------------------------------------------------------------
<S>                       <C>              <C>                 <C>          <C>               <C>                  <C>
December 31, 1999                  $12.75              $12.75      472,100        6.75 years               $12.75      221,800
-------------------------------------------------------------------------------------------------------------------------------
December 31, 1999                  $19.76              $19.76       10,000        8.33 years               $19.76        2,000
-------------------------------------------------------------------------------------------------------------------------------
December 31, 1999                  $21.99              $21.99       20,000        8.33 years               $21.99        4,000
-------------------------------------------------------------------------------------------------------------------------------

December 31, 1998                  $12.75              $12.75      589,000        7.75 years               $12.75      223,800
-------------------------------------------------------------------------------------------------------------------------------
December 31, 1998                  $19.76              $19.76       10,000        9.33 years               $19.76            0
-------------------------------------------------------------------------------------------------------------------------------
December 31, 1998                  $21.99              $21.99       20,000        9.33 years               $21.99            0
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


NOTE 21. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>

Dollars in thousands, except per share data                                  Three months ended
                                             ------------------------------------------------------------------------------
1999                                              MARCH 31            JUNE 30          SEPTEMBER 30         DECEMBER 31
                                             ------------------------------------------------------------------------------
<S>                                          <C>                 <C>                <C>                  <C>
Interest income                                         $13,343            $14,112              $14,510            $14,680
---------------------------------------------------------------------------------------------------------------------------
Interest expense                                          7,829              8,251                8,484              8,824
---------------------------------------------------------------------------------------------------------------------------
Net interest income
 before provision for losses on loans                     5,514              5,861                6,026              5,856
---------------------------------------------------------------------------------------------------------------------------
Provision for losses on loans                                60                 90                   90                150
---------------------------------------------------------------------------------------------------------------------------
Non-interest income                                         819                824                1,309                874
---------------------------------------------------------------------------------------------------------------------------
Non-interest expense                                      4,041              4,025                4,604              4,588
---------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                2,232              2,570                2,641              1,992
---------------------------------------------------------------------------------------------------------------------------
Provision for income taxes                                  550                620                  665                485
---------------------------------------------------------------------------------------------------------------------------
  Net income                                            $ 1,682            $ 1,950              $ 1,976            $ 1,507
                                             ------------------------------------------------------------------------------
Basic earnings per share/1/                             $  0.27            $  0.33              $  0.36            $  0.27
                                             ------------------------------------------------------------------------------
Diluted earnings per share/1/                           $  0.27            $  0.33              $  0.35            $  0.27
                                             ------------------------------------------------------------------------------

<CAPTION>

1998                                              MARCH 31            JUNE 30          SEPTEMBER 30         DECEMBER 31
                                             ------------------------------------------------------------------------------
<S>                                          <C>                 <C>                <C>                  <C>
Interest income                                         $14,039            $13,911              $13,822            $13,433
---------------------------------------------------------------------------------------------------------------------------
Interest expense                                          7,737              7,916                8,090              7,896
---------------------------------------------------------------------------------------------------------------------------
Net interest income
 before provision for losses on loans                     6,302              5,995                5,732              5,537
---------------------------------------------------------------------------------------------------------------------------
Provision for losses on loans                                90                 90                   90                 90
---------------------------------------------------------------------------------------------------------------------------
Non-interest income                                         807                888                1,764              1,315
---------------------------------------------------------------------------------------------------------------------------
Non-interest expense                                      4,047              4,101                3,584              3,848
---------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                2,972              2,692                3,822              2,914
---------------------------------------------------------------------------------------------------------------------------
Provision for income taxes                                1,042                890                1,279                947
---------------------------------------------------------------------------------------------------------------------------
  Net income                                            $ 1,930            $ 1,802              $ 2,543            $ 1,967
                                             ------------------------------------------------------------------------------
Basic earnings per share/1/                             $  0.28            $  0.27              $  0.40            $  0.31
                                             ------------------------------------------------------------------------------
Diluted earnings per share/1/                           $  0.27            $  0.26              $  0.39            $  0.31
                                             ------------------------------------------------------------------------------
</TABLE>
/1/  Quarterly earnings per share may vary from annual earnings per share due to
     rounding.

38
<PAGE>

                            DIRECTORS AND OFFICERS

DIRECTORS

JOHN M. KISH

Chairman and Chief Executive Officer
GA Financial, Inc.

THOMAS E. BUGEL

Vice President
East Liberty Electro-Plating Company

DARRELL J. HESS

Owner
Dee Jay's Hallmark Card & Gift Shop

THOMAS M. STANTON

Securities Supervisor
Mass Mutual

ROBERT J. VENTURA

Merger and Acquisition Consultant

DAVID R. WASIK

Partner
Savolskis-Wasik-Glenn Funeral Home

JOSEPH E. BUGEL*

*Director Emeritus



OFFICERS OF GA FINANCIAL, INC.

JOHN M. KISH

Chairman of the Board and
Chief Executive Officer

LAWRENCE A. MICHAEL

Corporate Secretary

RAYMOND G. SUCHTA, CPA

Chief Financial Officer and Treasurer



OFFICERS OF NEW EAGLE
CAPITAL, INC.

JOHN M. KISH

President

RAYMOND G. SUCHTA, CPA

Secretary/Treasurer



PRINCIPAL OFFICERS OF
GREAT AMERICAN FEDERAL
SAVINGS AND LOAN ASSOCIATION

JOHN M. KISH
Chief Executive Officer

TODD L. COVER
Executive Vice President,
Chief Operating Officer

LAWRENCE A. MICHAEL

Vice President, Secretary

RAYMOND G. SUCHTA, CPA

Vice President, Finance

ANDREW R. GETSY

(Retired January 28, 1999)
Vice President, Treasurer

AARON T. FLAITZ, JR.

Vice President, Assistant Secretary

NORMAN A. LITTERINI

Vice President, Lending

WAYNE A. CALLEN

Vice President, Data Processing

JUDITH A. STOECKLE

Vice President, Systems Coordinator




CORPORATE HEADQUARTERS

GA FINANCIAL, INC.

4750 Clairton Boulevard, Pittsburgh, Pennsylvania 15236-2187
(412) 882-9946 . (412) 882-8580 FAX

ANNUAL MEETING

The annual meeting of shareholders will be held at 10:00 a.m., on Wednesday,
April 26, 2000 at The Bradley House, 5239 Brownsville Road, Pittsburgh, PA
15236. Shareholders are encouraged to attend.

ANNUAL REPORT ON FORM 10-K

A copy of GA Financial, Inc.'s Annual Report on Form 10-K without exhibits is
available without charge to shareholders upon written request. Requests should
be sent to Mr. Raymond G. Suchta, Chief Financial Officer and Treasurer.

STOCK TRANSFER/REGISTER

Questions regarding the transfer of stock, lost certificates, address changes,
account consolidation and cash dividends should be addressed to Registrar and
Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016 (800) 866-1340.

SPECIAL COUNSEL

Muldoon, Murphy and Faucette LLP, 5101 Wisconsin Avenue, NW Washington, D.C.
20016.

INDEPENDENT ACCOUNTANTS

KPMG LLP, One Mellon Bank Center, Pittsburgh, PA 15219.

INQUIRIES

Security analysts, retail brokers and shareholders seeking financial information
should contact Mr. Raymond G. Suchta, Chief Financial Officer and Treasurer.
Requests for written materials can be forwarded to the attention of Mr. Lawrence
A. Michael, Corporate Secretary.

DIVIDEND REINVESTMENT PLAN

GA Financial, Inc. maintains a Dividend Reinvestment/Cash Purchase Plan for
registered holders of its common stock. A brochure describing the Plan and an
application to participate may be obtained by contacting Mr. Lawrence A.
Michael, Corporate Secretary.

STOCK INFORMATION

GA Financial, Inc. is traded on the American Stock Exchange under the ticker
symbol "GAF." As of March 7, 2000, GA Financial, Inc. had 6,012,059 shares of
common stock outstanding and approximately 1,693 shareholders of record.

STOCK PRICE

The following table illustrates GA Financial, Inc.'s high and low closing stock
price on the American Stock Exchange and the cash dividend per share paid during
1999.

<TABLE>
<CAPTION>

                       1999
----------------------------------------------------
Quarter       High          Low        Cash Dividend
<S>           <C>           <C>        <C>
QI            $16.375       $14.625        $.16
QII           $15.875       $14.000        $.16
QIII          $15.813       $12.875        $.16
QIV           $13.625       $12.500        $.16
</TABLE>