<PAGE>   1
                                                                  


                              RECENT DEVELOPMENTS

         The selected financial and other data presented below at December 31,
1997 and for the three month periods ended December 31, 1997 and 1996 are
derived from unaudited financial data, but, in the opinion of management,
reflect all adjustments (consisting only of normal recurring adjustments) which
are necessary to present fairly the results for such interim periods.  The
results of operations for the three months ended December 31, 1997 are not
necessarily indicative of the results of operations that may be expected for
the fiscal year ending September 30, 1998.

<TABLE>
<CAPTION>
                                                                                    AT                 AT
                                                                               DECEMBER 31,       SEPTEMBER 30,
                                                                                  1997                1997
                                                                               ------------       -------------
                                                                                        (IN THOUSANDS)

                                                                                (UNAUDITED)
<S>                                                                              <C>                <C>
SELECTED CONSOLIDATED FINANCIAL DATA:
   Total assets   . . . . . . . . . . . . . . . . . . . . . . . . .              $386,532           $369,242
   Cash and cash equivalents  . . . . . . . . . . . . . . . . . . .                 4,537             13,214
   Loans, net (1)   . . . . . . . . . . . . . . . . . . . . . . . .               264,509            261,469
   Securities held-to-maturity:
      Mortgage-related securities, net  . . . . . . . . . . . . . .                10,495              9,965
      Investment securities, net  . . . . . . . . . . . . . . . . .                38,045             28,960
   Securities available-for-sale:
      Mortgage-related securities, net  . . . . . . . . . . . . . .                34,867             29,982
      Investment securities, net  . . . . . . . . . . . . . . . . .                22,687             14,791
   Real estate-owned  . . . . . . . . . . . . . . . . . . . . . . .                   301                319
   Deposits   . . . . . . . . . . . . . . . . . . . . . . . . . . .               304,119            314,123
   FHLB advances  . . . . . . . . . . . . . . . . . . . . . . . . .                49,512             23,516
   Total equity   . . . . . . . . . . . . . . . . . . . . . . . . .                29,494             28,538
   Nonperforming assets and troubled debt restructuring   . . . . .                 1,110              1,208
</TABLE>

<TABLE>
<CAPTION>
                                                                                    FOR THE THREE MONTHS
                                                                                     ENDED DECEMBER 31,
                                                                                 ---------------------------
                                                                                  1997                 1996
                                                                                 ------               ------
                                                                                       (IN THOUSANDS)
                                                                                         (UNAUDITED)

<S>                                                                              <C>                  <C>
SELECTED CONSOLIDATED OPERATING DATA:
   Total interest income  . . . . . . . . . . . . . . . . . . . . .              $6,914               $6,566
   Interest expense . . . . . . . . . . . . . . . . . . . . . . . .               3,709                3,513
                                                                                 ------               ------
     Net interest income  . . . . . . . . . . . . . . . . . . . . .               3,205                3,053
   Provision for loan losses  . . . . . . . . . . . . . . . . . . .                 246                   32
                                                                                 ------               ------
     Net interest income after provision for loan losses  . . . . .               2,959                3,021
   Noninterest income . . . . . . . . . . . . . . . . . . . . . . .                 160                  148
   Noninterest expense  . . . . . . . . . . . . . . . . . . . . . .               2,286                2,240
                                                                                 ------               ------
     Income before income taxes   . . . . . . . . . . . . . . . . .                 833                  929
   Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .                 276                  285
                                                                                 ------               ------
     Net income   . . . . . . . . . . . . . . . . . . . . . . . . .              $  557               $  644
                                                                                 ======               ======
</TABLE>





                                       8
<PAGE>   2
<TABLE>
<CAPTION>
                                                                                 AT OR FOR THE THREE MONTHS
                                                                                     ENDED DECEMBER 31,
                                                                               -----------------------------
                                                                                  1997                1996
                                                                               ---------           ---------
                                                                                         (UNAUDITED)
<S>                                                                            <C>                   <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA (2):
PERFORMANCE RATIOS:
    Average interest rate spread (3)  . . . . . . . . . . . . . . .              3.22%                 3.39%
    Net interest margin (4) . . . . . . . . . . . . . . . . . . . .              3.60                  3.55
    Ratio of average interest-earning assets to average                                                    
      interest-bearing liabilities  . . . . . . . . . . . . . . . .            105.33                104.98
    Total noninterest expense as a percent of average assets  . . .              2.40                  2.49
    Return on average assets  . . . . . . . . . . . . . . . . . . .              0.59                  0.72
    Return on average equity  . . . . . . . . . . . . . . . . . . .              7.98                  9.76
    Ratio of average retained equity to average assets  . . . . . .              7.31                  7.28
    Retained earnings to total assets at end of period  . . . . . .              7.20                  7.42
REGULATORY CAPITAL RATIOS (5):
    Tangible capital ratio  . . . . . . . . . . . . . . . . . . . .              7.20                  7.42
    Core capital ratio  . . . . . . . . . . . . . . . . . . . . . .              7.20                  7.42
    Risk-based capital ratio  . . . . . . . . . . . . . . . . . . .             14.80                 14.61
ASSET QUALITY RATIOS:
    Nonperforming loans and troubled debt restructurings                                                   
        as a percent of total loans (6)   . . . . . . . . . . . . .              0.28                  0.30
    Nonperforming assets and troubled debt restructurings                                                  
        as a percent of total assets (7)  . . . . . . . . . . . . .              0.29                  0.37
    Allowance for loan losses as a percent of total loans . . . . .              0.56                  0.30
    Allowance for loan losses as a percent of non-                                                         
      performing loans and troubled debt restructurings . . . . . .            200.40                 56.94
FULL-SERVICE BANKING FACILITIES (8) . . . . . . . . . . . . . . . .                 9                     9
</TABLE>
-------------------------
(1) Loans, net, represent gross loans receivable net of the Bank's allowance
    for loan losses, loans in process and deferred loan origination fees.  The
    allowance for loan losses at December 31, 1997 and 1996 was $1.5 million
    and $742,000, respectively.

(2) Asset Quality Ratios and Regulatory Capital Ratios are end of period
    ratios.  With the exception of end of period ratios, all ratios are based
    on average monthly balances during the indicated periods and are annualized
    where appropriate.

(3) The average interest rate spread represents the difference between the
    weighted average yield on average interest-earning assets and the weighted
    average cost of average interest-bearing liabilities.  See "Business of the
    Bank--Sources of Funds."

(4) The net interest margin represents net interest income as a percent of
    average interest-earning assets.  See "Business of the Bank--Sources of
    Funds."

(5) For definitions and further information relating to the Bank's regulatory
    capital, see "Regulation and Supervision--FDIC Regulations - Capital
    Requirements."  See "Regulatory Capital Compliance" for the Bank's pro
    forma capital levels as a result of the Offerings.

(6) Nonperforming loans consist of all non-accrual loans and all other loans 90
    days or more past due.  It is the policy of the Bank to cease accruing
    interest on loans 90 days or more past due (unless the loan principal and
    interest are determined by management to be fully secured and in the
    process of collection) and to charge off all accrued interest.  See
    "Business of the Bank--Delinquent Loans, Classified Assets and Real Estate
    Owned ."

(7) Nonperforming assets consist of nonperforming loans, real estate-owned, net
    ("REO"), and other repossessed assets.

(8) In January 1998, the Bank opened an additional branch office and combined
    one of its previous two separate loan production offices with that branch
    office.





                                       9
<PAGE>   3
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1997 AND SEPTEMBER 30, 1997

    Total assets increased by $17.3 million, or 4.7%, from $369.2 million at
September 30, 1997 to $386.5 million at December 31, 1997.  The growth in
assets was due to increases in investments, which were funded primarily through
FHLB advances and a reduction in cash and cash equivalents.

    At the end of  its fiscal year ended September 30, 1997, the Bank
restructured its available-for-sale securities portfolio in order to increase
its yield on such portfolio.  This restructuring involved the sale of its
lower-yielding shorter-term available-for-sale securities in order to reinvest
the proceeds in higher-yielding mortgage-related securities and federal agency
and municipal obligations with stated or estimated lives of three to five
years.  Pending  reinvestment, some of such proceeds were used to repay FHLB
advances and held as cash and cash equivalents.  The Bank completed the
reinvestment of such proceeds during October and November 1997.  As a result,
cash and cash equivalents decreased $8.7 million from $13.2 million at
September 30, 1997 to $4.5 million at December 31, 1997.  The Bank's portfolio
of securities available for sale increased by $12.8 million, or 28.6%, from
$44.8 million at September 30, 1997 to $57.6 million at December 31, 1997, and
its portfolio of securities held to maturity increased by $9.6 million, or
24.7% from $38.9 million to $48.5 million.  Such increases in the securities
portfolios were funded by FHLB advances in addition to the reinvestment of
amounts held as cash and cash equivalents.

    Loans receivable, net, remained relatively constant for the period, growing
$3.0 million from $261.5 million to $264.5 million, an increase of 1.2%.
Nonperforming loans remained relatively stable, decreasing $132,000 from
$774,000 at September 30, 1997 to $642,000 at December 31, 1997, representing
0.30% and 0.24%, respectively, of total loans at such dates.  Nonperforming
assets and troubled debt restructurings also remained stable, decreasing from
$1.2 million at September 30, 1997 to $1.1 million at December 31, 1997,
representing 0.32% and 0.29%, respectively, of total assets at such dates.

    Total deposits decreased by $10.0 million, or 3.2%, from $314.1 million at
September 30, 1997 to $304.1 million at December 31, 1997.  The decrease was
primarily due to a $10.4 million, or 5.4%, decrease in certificates of deposit
from $192.7 million at September 30, 1997 to $182.3 million at December 31,
1997, primarily as a result of maturities of $9.7 million in jumbo certificates
of deposit which were not renewed.  Management determined there were
opportunities to obtain FHLB advances at a lower effective rate than required
to retain the jumbo certificates of deposit.  There was also a $1.6 million, or
2.2%, decrease in savings deposits, from $71.8 million at September 30, 1997 to
$70.2 million at December 31, 1997.  The decrease in deposits was slightly
offset by an increase of $2.1 million, or 4.0%, in checking account deposits
from $49.6 million at September 30, 1997 to $51.7 million at December 31, 1997.





                                       10
<PAGE>   4
     FHLB advances and other borrowings increased by $26.1 million, from $23.6
million at September 30, 1997 to $49.7 million at December 31, 1997.  The
increase in FHLB advances and other borrowings was primarily due to the
utilization of advances to fund purchases of investment securities, as part of
the Bank's restructuring of the available-for-sale securities portfolio that
the Bank commenced in September 1997, as well as to offset the withdrawals of
the jumbo certificates of deposits.

    Total equity increased by $956,000, or 3.4%, from $28.5 million at
September 30, 1997 to $29.5 million at December 31, 1997.  The increase in
equity was a result of retained earnings of $557,000 and a $399,000 increase in
net unrealized gain on available-for-sale securities, net of taxes.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
AND DECEMBER 31, 1996

GENERAL.  Net income for the three months ended December 31, 1997 was $557,000,
a decrease of $87,000, or 13.5%, from  $644,000 for the three months ended
December 31, 1996.  The $87,000 decrease was primarily attributable to an
increase of $214,000 in the provision for loan losses.  This increase in
provision for loan losses was offset by an increase in net interest income of
$152,000 from $3.05 million for the three months ended December 31, 1996 to
$3.21 million for the three months ended December 31, 1997 and an increase in
noninterest income of $12,000, from $148,000 for the three months ended
December 31, 1996 to $160,000 for the three months ended December 31, 1997, an
increase of 8.1%.  Also, contributing to the decrease in net income for the
December 31, 1997 period was an increase of $50,000 in noninterest expenses,
from $2.24 million for the three months ended December 31, 1996 to $2.29
million for the three months ended December 31, 1997, a 2.2% increase.

INTEREST INCOME.  Interest income for the three months ended December 31, 1997
was $6.9 million, compared to $6.6 million for the three months ended December
31, 1996, an increase of $348,000, or 5.3%.  The increase in interest income
was primarily the result of a $18.2 million increase in the average balance of
loans from $247.8 million at December 31, 1996 to $266.0 million average
balance at December 31, 1997.

INTEREST EXPENSE.  Interest expense increased $196,000, or 5.6%, in the three
months ended December 31, 1996 compared to the three months ended December 31,
1997, as a result of an increase of $200,000 in interest expense on FHLB
advances, from $277,000 to $477,000 for the same respective periods.  This
increase was a result of an increase of $13.2 million in the average balance in
FHLB advances, from $20.5 million at December 31, 1996 to $33.7 million at
December 31, 1997.  In addition, the cost of FHLB advances increased by 24
basis points, from 5.34% for the three months ended December 31, 1996 to 5.58%
for the three months ended December 31, 1997.  The average balance in deposits
increased $2.2 million from $311.3 million for the three months ended December
31, 1996 to $313.5 million for the three months ended December 31, 1997.
Offsetting the increase in the average deposits was a reduction during the





                                       11
<PAGE>   5
period in the cost of funds for savings and checking of 24 basis points and 21
basis points, respectively.  This was partially offset by a 10 basis point
increase in the cost of funds for certificates of deposit.

PROVISION/ALLOWANCE FOR LOAN LOSSES.  The Bank's provision for loan losses
totalled $246,000 for the three months ended December 31, 1997, compared to
$32,000 for the three months ended December 31, 1996, an increase of $214,000.
The allowance for loan losses increased from $742,000 at December 31, 1996 to
$1.5 million at December 31, 1997.  The increase in the provision for loan
losses and corresponding increase in the allowance for loan losses reflected
the changing loan portfolio composition caused by a change in management's
strategic lending direction, as well as a decision to give a greater
consideration to the allowance for loan loss ratio levels of peer group
institutions.  The Bank continues to anticipate, that as a result of its
increasing emphasis on consumer, commercial, multi-family, and commercial real
estate and construction lending, in the future, it may need to maintain an
allowance for loan losses at a higher level than it has maintained in previous
periods to offset any greater risk resulting from the shifting composition of
its loan portfolio.  See "Business of the Bank--Delinquent Loans, Classified
Assets, and Real Estate Owned" and "Allowance for Loan Losses."

NONINTEREST INCOME.  Noninterest income increased $12,000 to $160,000 for the
three months ended December 31, 1997, from $148,000 for the three months ended
December 31, 1996.  Noninterest income improved primarily due to additional
loan fee and other service charge income, particularly the implementation in
fiscal 1997 of ATM fees for non-bank customers.

NONINTEREST EXPENSE.  Noninterest expense increased by $46,000, or 2.1% from
$2.24 million for the three months ended December 31, 1996, to $2.29 million
for the three months ended December 31, 1997, primarily due to a contribution
of $110,000 to a low and moderate income housing project.  The Company expects
that such contribution will result in $55,000 of Commonwealth of Pennsylvania
tax credits under Pennsylvania's Neighborhood Assistance Program.  This
increase in noninterest expense was partially offset by a $32,000 reduction in
compensation from $1.16 million for the three months ended December 31, 1996 to
$1.13 million for the three months ended December 31, 1997, a reduction of
2.76%.  As a result of becoming a publicly held company and implementing
various stock-based incentive plans, the Company expects its future noninterest
expense will be higher than in prior periods primarily due to higher
compensation costs, and professional fees and costs related to satisfying
regulatory reporting requirements.  In addition, establishment of the
Foundation will have an adverse effect on the Company's and the Bank's earnings
in the year in which the contribution is made.  The contribution expense will,
however, be partially offset by the tax deductibility of the expense.  See
"Risk Factors--Establishment of the Charitable Foundation--Negative Impact on
Earnings" and "-- Stock-Based Benefits to Management and Directors, Employment
Contracts and Change in Control Payments."





                                       12
<PAGE>   6
INCOME TAXES.  Income tax expense was $276,000 for the three months ended
December 31, 1997, compared to $285,000 for the three months ended December 31,
1996.  The decline in income tax expense for 1997 is attributable to lower
pretax earnings, offset by a reduction of 1996 state income tax credits not
available for 1997.  The effective tax rate for the three  months ended
December 31, 1997 was 33.1%, as compared to 30.7% for the same period in 1996,
as result of the state income tax credits utilized in 1996.





                                       13