UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
                    For the fiscal year ended: June 30, 2007
                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
             For the transition period from __________ to __________

                          Commission File No.: 0-22444

                               WVS Financial Corp.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Pennsylvania                                25-1710500
----------------------------------------  --------------------------------------
    (State or other jurisdiction                     (I.R.S. Employer
 of incorporation or organization)                Identification Number)

         9001 Perry Highway
      Pittsburgh, Pennsylvania                            15237
----------------------------------------  --------------------------------------
       (Address of Principal                            (Zip Code)
         Executive Offices)

       Registrant's telephone number, including area code: (412) 364-1911

           Securities registered pursuant to Section 12(b) of the Act:
 Common Stock, par value $.01 per share         NASDAQ Stock  Market LLC
----------------------------------------  --------------------------------------
           (Title of Class)               (Name of exchange on which registered)

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

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes |_|  No |X|

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

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

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

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

Large accelerated filer |_|   Accelerated filer |_|  Non-accelerated filer |X|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes |_| No |X|

As of December 31, 2006, the aggregate  value of the 1,872,499  shares of Common
Stock of the  registrant  issued and  outstanding  on such date,  which excludes
437,316  shares held by all directors and officers of the registrant as a group,
was  approximately  $30.9 million.  This figure is based on the last known trade
price of $16.50 per share of the registrant's Common Stock on December 31, 2006.

Number of shares of Common Stock outstanding as of September 26, 2007: 2,260,205

                       DOCUMENTS INCORPORATED BY REFERENCE

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

(1)   Portions of the Annual  Report to  Stockholders  for the fiscal year ended
      June 30, 2007 are incorporated into Part II.

(2)   Portions of the definitive  proxy statement for the 2007 Annual Meeting of
      Stockholders are incorporated into Part III.

<PAGE>

                           FORWARD-LOOKING STATEMENTS

      In the  normal  course  of  business,  we,  in an  effort to help keep our
shareholders and the public informed about our operations, may from time to time
issue or make  certain  statements,  either in writing  or  orally,  that are or
contain forward-looking  statements, as that term is defined in the U.S. federal
securities  laws.  Generally,  these  statements  relate  to  business  plans or
strategies, projected or anticipated benefits from acquisitions made by or to be
made by us, projections involving anticipated revenues, earnings,  profitability
or other  aspects of  operating  results  or other  future  developments  in our
affairs or the industry in which we conduct business. Forward-looking statements
may be  identified  by reference to a future  period or periods or by the use of
forward-looking   terminology  such  as  "anticipated,"   "believe,"   "expect,"
"intend," "plan," "estimate" or similar expressions.

      Although we believe  that the  anticipated  results or other  expectations
reflected in our forward-looking statements are based on reasonable assumptions,
we can give no assurance  that those results or  expectations  will be attained.
Forward-looking statements involve risks, uncertainties and assumptions (some of
which are  beyond  our  control),  and as a result  actual  results  may  differ
materially  from those  expressed in  forward-looking  statements.  Factors that
could cause actual results to differ from  forward-looking  statements  include,
but are not  limited to, the  following,  as well as those  discussed  elsewhere
herein:

            o     our  investments in our  businesses and in related  technology
                  could require additional  incremental spending,  and might not
                  produce  expected  deposit  and loan  growth  and  anticipated
                  contributions to our earnings;

            o     general   economic  or  industry   conditions  could  be  less
                  favorable  than  expected,  resulting  in a  deterioration  in
                  credit  quality,  a change in the allowance for loan and lease
                  losses or a reduced  demand for credit or  fee-based  products
                  and services;

            o     changes in the  interest  rate  environment  could  reduce net
                  interest income and could increase credit losses;

            o     the conditions of the securities  markets could change,  which
                  could  adversely  affect,  among  other  things,  the value or
                  credit quality of our assets,  the  availability  and terms of
                  funding  necessary to meet our liquidity needs and our ability
                  to originate loans and leases;

            o     changes  in  the  extensive  laws,  regulations  and  policies
                  governing  financial holding companies and their  subsidiaries
                  could alter our business environment or affect our operations;

            o     the potential need to adapt to industry changes in information
                  technology  systems,  on which we are highly dependent,  could
                  present  operational  issues or  require  significant  capital
                  spending;

            o     competitive   pressures   could   intensify   and  affect  our
                  profitability,  including  as a result of  continued  industry
                  consolidation,   the  increased   availability   of  financial
                  services from non-banks,  technological  developments  such as
                  the internet or bank regulatory reform;

            o     acquisitions may result in one-time changes to income, may not
                  produce  revenue  enhancements  or cost  savings  at levels or
                  within time frames  originally  anticipated  and may result in
                  unforeseen integration difficulties; and

            o     acts or threats of terrorism  and actions  taken by the United
                  States  or  other  governments  as a  result  of such  acts or
                  threats,  including  possible  military action,  could further
                  adversely  affect  business  and  economic  conditions  in the
                  United States  generally and in our principal  markets,  which
                  could have an adverse effect on our financial  performance and
                  that of our  borrowers  and on the  financial  markets and the
                  price of our common stock.

You  should  not  put  undue   reliance  on  any   forward-looking   statements.
Forward-looking  statements  speak  only as of the date  they are  made,  and we
undertake no  obligation  to update them in light of new or future events except
to the extent required by federal securities laws.

                                        2

<PAGE>

PART I.

Item 1.   Business.
-------   ---------

      WVS Financial Corp. ("WVS" or the "Company") is the parent holding company
of West View Savings Bank ("West View" or the "Savings  Bank").  The Company was
organized in July 1993 as a Pennsylvania-chartered  unitary bank holding company
and acquired 100% of the common stock of the Savings Bank in November 1993.

      West View Savings  Bank is a  Pennsylvania-chartered,  FDIC-insured  stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  The  Savings  Bank  converted  from the mutual to the stock form of
ownership in November  1993.  The Savings Bank had no  subsidiaries  at June 30,
2007.

Lending Activities

      General. At June 30, 2007, the Company's net portfolio of loans receivable
totaled $60.4 million,  as compared to $55.7 million at June 30, 2006. Net loans
receivable  comprised  14.8% of the  Company's  total  assets and 37.9% of total
deposits at June 30, 2007, as compared to 13.2% and 36.7%, respectively, at June
30, 2006.  The  principal  categories  of loans in the  Company's  portfolio are
single-family  and multi-family  residential real estate loans,  commercial real
estate  loans,   construction  loans,   consumer  loans,  land  acquisition  and
development  loans and  commercial  loans.  Substantially  all of the  Company's
mortgage loan portfolio consists of conventional mortgage loans, which are loans
that are  neither  insured by the  Federal  Housing  Administration  ("FHA") nor
partially guaranteed by the Department of Veterans Affairs ("VA"). Historically,
the  Company's  lending  activities  have  been  concentrated  in  single-family
residential and land  development and  construction  loans secured by properties
located in its primary market area of northern Allegheny County, southern Butler
County and eastern Beaver County, Pennsylvania.

      On  occasion,  the  Company  has  also  purchased  whole  loans  and  loan
participations  secured by properties located outside of its primary market area
but predominantly in Pennsylvania.  The Company believes that  substantially all
of its  mortgage  loans are  secured  by  properties  located  in  Pennsylvania.
Moreover,  substantially  all  of  the  Company's  non-mortgage  loan  portfolio
consists of loans made to  residents  and  businesses  located in the  Company's
primary market area.

      Federal  regulations  impose  limitations on the aggregate amount of loans
that a  savings  institution  can make to any one  borrower,  including  related
entities.  The permissible amount of loans-to-one  borrower follows the national
bank standard for all loans made by savings  institutions,  which generally does
not  permit  loans-to-one  borrower  to exceed  15% of  unimpaired  capital  and
surplus. Loans in an amount equal to an additional 10% of unimpaired capital and
surplus also may be made to a borrower if the loans are fully secured by readily
marketable   securities.   At  June  30,  2007,  the  Savings  Bank's  limit  on
loans-to-one  borrower was  approximately  $4.3 million.  The Company's  general
policy has been to limit loans-to-one  borrower,  including related entities, to
$2.0 million although this general limit may be exceeded based on the merit of a
particular  credit. At June 30, 2007, the Company's five largest loans or groups
of loans-to-one borrower,  including related entities,  ranged from an aggregate
of $2.1  million to $3.5  million,  and are  secured  primarily  by real  estate
located in the Company's primary market area.

                                        3

<PAGE>

      Loan Portfolio Composition. The following table sets forth the composition
of the  Company's  net loans  receivable  portfolio by type of loan at the dates
indicated.

<TABLE>
<CAPTION>
                                                                            At June 30,
                                 -------------------------------------------------------------------------------------------------
                                        2007                2006                2005                2004                2003
                                 -----------------   -----------------   -----------------   -----------------   -----------------
                                  Amount      %       Amount      %       Amount      %       Amount      %       Amount      %
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
                                                                      (Dollars in Thousands)
<S>                              <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>
Real estate loans:
Single-family                    $ 17,102    23.26%  $ 17,702    26.72%  $ 20,680    27.86%  $ 25,825    32.52%  $ 43,255    40.91%
Multi-family                        6,458     8.78      4,339     6.55      4,960     6.68      4,761     5.99      5,196     4.92
Commercial                          7,699    10.47      7,574    11.43      8,561    11.53      9,950    12.53     17,949    16.98
Construction                       25,679    34.92     20,964    31.64     22,065    29.72     18,070    22.76     16,942    16.03
Land acquisition and
   development                      2,195     2.99      3,221     4.86      5,884     7.93      7,947    10.01      7,437     7.03
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
Total real estate Loans            59,133    80.42     53,800    81.20     62,150    83.72     66,553    83.81     90,779    85.87
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
Consumer loans:
Home equity                         9,858    13.41      9,444    14.26     10,082    13.58     11,018    13.88     12,374    11.70
Other                                 551     0.75        962     1.45      1,089     1.47        870     1.09      1,069     1.01
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
Total consumer
   Loans                           10,409    14.16     10,406    15.71     11,171    15.05     11,888    14.97     13,443    12.71
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
Commercial loans                    3,988     5.42      2,050     3.09        915     1.23        968     1.22      1,499     1.42
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
Commercial lease
   Financings                          --     0.00         --     0.00         --     0.00         --     0.00         --     0.00
                                 --------   ------   --------   ------   --------   ------   --------   ------   --------   ------
                                   73,530   100.00%    66,256   100.00%    74,236   100.00%    79,409   100.00%   105,721   100.00%
                                 --------   ======   --------   ======   --------   ======   --------   ======   --------   ======
Less:
Undisbursed loan
   Proceeds                       (12,090)             (9,512)            (12,882)             (9,956)            (11,348)
Net deferred loan
   Origination fees                  (104)                (85)                (82)               (115)               (174)
Allowance for loan
   Losses                            (986)               (957)             (1,121)             (1,370)             (2,530)
                                 --------            --------            --------            --------            --------
Net loans
   Receivable                    $ 60,350            $ 55,702            $ 60,151            $ 67,968            $ 91,669
                                 ========            ========            ========            ========            ========
</TABLE>

      Contractual  Maturities.  The  following  table sets  forth the  scheduled
contractual maturities of the Company's loans and mortgage-backed  securities at
June 30, 2007.  The amounts  shown for each period do not take into account loan
prepayments and normal amortization of the Company's loan portfolio.

<TABLE>
<CAPTION>
                                                       Real Estate Loans
                                -------------------------------------------------------------
                                                                                     Land        Consumer
                                                                                  acquisition   loans and     Mortgage
                                 Single-    Multi-                                    and       commercial    -backed
                                 family     family    Commercial   Construction   development     loans      securities     Total
                                --------   --------   ----------   ------------   -----------   ----------   ----------   ---------
                                                                      (Dollars in Thousands)
<S>                             <C>        <C>        <C>          <C>            <C>           <C>          <C>          <C>
Amounts due in:
   One year or less             $     59   $     --    $   972       $ 20,530       $ 1,665      $    261     $     --    $  23,487
   After one year through
      five years                   1,140      1,600        112          3,450           453         4,292           --       11,047
   After five years               15,903      4,858      6,615          1,699            77         9,844      121,517      160,513
                                --------   --------    -------       --------       -------      --------     --------    ---------
      Total(1)                  $ 17,102   $  6,458    $ 7,699       $ 25,679       $ 2,195      $ 14,397     $121,517    $ 195,047
                                ========   ========    =======       ========       =======      ========     ========    =========

Interest rate terms on
  amounts due after one year:
   Fixed                        $ 13,921   $  1,877    $ 2,725       $  1,012       $   518      $  9,322     $  2,246    $  31,621
   Adjustable                      3,122      4,581      4,002          4,137            12         4,814      119,271      139,939
                                --------   --------    -------       --------       -------      --------     --------    ---------
      Total                     $ 17,043   $  6,458    $ 6,727       $  5,149       $   530      $ 14,136     $121,517    $ 171,560
                                ========   ========    =======       ========       =======      ========     ========    =========
</TABLE>

-------------
(1)   Does not include adjustments  relating to loans in process,  the allowance
      for loan  losses,  accrued  interest,  deferred  fee income  and  unearned
      discounts.

                                        4

<PAGE>

      Scheduled  contractual  principal  repayments  do not  reflect  the actual
maturities of loans. The average  maturity of loans is  substantially  less than
their average contractual terms because of prepayments and due-on-sale  clauses.
The average life of mortgage loans tends to increase when current  mortgage loan
rates are  substantially  higher  than  rates on  existing  mortgage  loans and,
conversely,  decrease when rates on existing mortgages are substantially  higher
than current  mortgage loan rates (due to  refinancings of  adjustable-rate  and
fixed-rate loans at lower rates).

      The Company has from time to time renewed commercial real estate loans and
speculative construction (single-family) loans due to slower than expected sales
of the underlying collateral. Commercial real estate loans are generally renewed
at a contract  rate that is the  greater  of the market  rate at the time of the
renewal  or  the  original   contract   rate.   Loans  secured  by   speculative
single-family  construction  or  developed  lots are  generally  renewed  for an
additional  twelve  month term with  monthly  payments of  interest.  Subsequent
renewals,  if necessary,  are generally  granted for an additional  twelve month
term;  principal  amortization  may  also  be  required.  Land  acquisition  and
development loans are generally renewed for an additional twelve month term with
monthly payments of interest.

      At June 30, 2007,  the Company had  approximately  $7.6 million of renewed
commercial  real estate and  construction  loans.  The $7.6 million in aggregate
disbursed  principal  that has  been  renewed  is  comprised  of:  single-family
speculative  construction  loans totaling $6.1 million and land  acquisition and
development loans totaling $1.5 million. Management believes that the previously
discussed whole loans will self-liquidate  during the normal course of business,
though some  additional  rollovers may be necessary.  All of the loans that have
been rolled over are in compliance with all loan terms, including the receipt of
all required payments, and are considered performing loans.

      Origination, Purchase and Sale of Loans. Applications for residential real
estate loans and consumer  loans are accepted at all of the  Company's  offices.
Applications  for  commercial  real estate loans are taken only at the Company's
Franklin Park office.  Loan applications are primarily  attributable to existing
customers,  builders, walk-in customers and referrals from both real estate loan
brokers and existing customers.

      All processing  and  underwriting  of real estate and commercial  business
loans is performed  solely at the  Company's  loan division at the Franklin Park
office.  The Company believes this  centralized  approach to approving such loan
applications  allows it to process and approve such applications faster and with
greater  efficiency.  The Company also believes that this approach increases its
ability to service the loans.  The  Savings  Bank's  Director of Retail  Lending
authority  ranges from $5 thousand  (unsecured  loans) to $300  thousand  (loans
secured by first  mortgage  liens).  With the  approval  of the  Savings  Bank's
President,   the  individual   lending   authorities  range  from  $25  thousand
(unsecured),  $500 thousand (loans secured by non-real estate collateral),  $750
thousand (first and second mortgages) and $2 million on secured builder lines of
credit.  All loan applications are required to be ratified by the Company's Loan
Committee,  comprised of both outside  directors and management,  which meets at
least monthly.

      Historically,  the Company has originated  substantially  all of the loans
retained in its  portfolio.  Substantially  all of the  residential  real estate
loans  originated  by  the  Company  have  been  under  terms,   conditions  and
documentation  which permit their sale to the Fannie Mae and other  investors in
the secondary market. Although West View has not been a frequent seller of loans
in the secondary market,  the Savings Bank is on the Fannie Mae approved list of
sellers/servicers.  The Company has held most of the loans it  originates in its
own portfolio until maturity, due, in part, to competitive pricing conditions in
the marketplace for origination by nationwide lenders and portfolio lenders. The
Company has not originated sub-prime,  no documentation or limited documentation
loans.

      The Company has not been an aggressive  purchaser of loans.  However,  the
Company may purchase whole loans or loan participations in those instances where
demand for new loan originations in the Company's market area is insufficient or
to increase the yield  earned on the loan  portfolio.  Such loans are  generally
presented  to  the  Company   from   contacts   primarily  at  other   financial
institutions,  particularly  those which have  previously done business with the
Company. At June 30, 2007, $697 thousand or 1.2% of the

                                        5

<PAGE>

Company's net loans receivable  consisted of single-family  mortgage whole loans
purchased from another financial institution.

      The  Company   requires  that  all  purchased  loans  be  underwritten  in
accordance with its underwriting  guidelines and standards.  The Company reviews
loans, particularly scrutinizing the borrower's ability to repay the obligation,
the  appraisal  and  the  loan-to-value  ratio.   Servicing  of  loans  or  loan
participations  purchased  by the Company  generally is performed by the seller,
with a portion of the interest being paid by the borrower retained by the seller
to  cover  servicing  costs.  At June 30,  2007,  $697  thousand  or 1.2% of the
Company's net loans receivable were being serviced for the Company by others.

      The following table shows  origination,  purchase and sale activity of the
Company  with  respect  to loans on a  consolidated  basis  during  the  periods
indicated.

<TABLE>
<CAPTION>
                                                             At or For the Year Ended June 30,
                                                            -----------------------------------
                                                                 2007       2006       2005
                                                               --------   --------   --------
                                                                   (Dollars in Thousands)
<S>                                                            <C>        <C>        <C>
Net loans receivable beginning balance                         $ 55,702   $ 60,151   $ 67,968
Real estate loan originations
   Single-family(1)                                               1,366      1,349        890
   Multi-family(2)                                                  766         --        495
   Commercial                                                       984        325      2,002
   Construction                                                  12,910      8,932     12,307
   Land acquisition and development                               3,107        299        353
                                                               --------   --------   --------
      Total real estate loan originations                        19,133     10,905     16,047
                                                               --------   --------   --------

Home equity                                                       2,319      2,088      1,680
Commercial                                                        1,205        480        100
Other                                                               227        179        303
                                                               --------   --------   --------
      Total loan originations                                    22,884     13,652     18,130
                                                               --------   --------   --------
Disbursements against available credit lines:
   Home equity                                                    2,530      2,554      2,848
   Other                                                              6          9          6
   Commercial                                                     2,195      1,638        725
Purchase of whole loans and participations                           --         --         --
                                                               --------   --------   --------
      Total originations and purchases                           27,615     17,853     21,709
                                                               --------   --------   --------
Less:
   Loan principal repayments                                     20,636     25,527     28,378
   Sales of whole loans (3)                                          --         --          4
   Sales of participation interests (4)                              --         --         --
   Transferred to real estate owned                                  --         10         70
   Change in loans in process                                     2,282     (3,074)     1,355
   Other, net(5)                                                     49       (161)      (281)
                                                               --------   --------   --------
      Net increase (decrease)                                  $  4,648   $ (4,449)  $ (7,817)
                                                               --------   --------   --------

Net loans receivable ending balance                            $ 60,350   $ 55,702   $ 60,151
                                                               ========   ========   ========
</TABLE>

----------
(1)   Consists of loans secured by one-to-four family properties.

(2)   Consists of loans secured by five or more family properties.

(3)   Loans sold included servicing rights.

(4)   As of June 30, 2007, loans serviced for others totaled  approximately $719
      thousand.

(5)   Includes  reductions  for  net  deferred  loan  origination  fees  and the
      allowance for loan losses.

                                        6

<PAGE>

      Real Estate Lending Standards.  All financial institutions are required to
adopt and maintain  comprehensive  written real estate lending policies that are
consistent with safe and sound banking  practices.  These lending  policies must
reflect  consideration  of the  Interagency  Guidelines  for Real Estate Lending
Policies  ("Guidelines")  adopted by the  federal  banking  agencies in December
1992.  The Guidelines set forth uniform  regulations  prescribing  standards for
real estate  lending.  Real estate  lending is defined as an extension of credit
secured  by  liens on  interests  in real  estate  or made  for the  purpose  of
financing the  construction of a building or other  improvements to real estate,
regardless of whether a lien has been taken on the property.

      The policies must address certain lending  considerations set forth in the
Guidelines,   including   loan-to-value   ("LTV")  limits,  loan  administration
procedures,  underwriting standards,  portfolio  diversification  standards, and
documentation,  approval and reporting requirements. These policies must also be
appropriate  to the size of the  institution  and the  nature  and  scope of its
operations, and must be reviewed and approved by the Board of Directors at least
annually.  The LTV ratio  framework,  with a LTV ratio being the total amount of
credit to be extended divided by the appraised value of the property at the time
the credit is originated,  must be established  for each category of real estate
loans.  If not a first  lien,  the lender  must  combine  all senior  liens when
calculating  this ratio.  The  Guidelines,  among other  things,  establish  the
following  supervisory  LTV limits:  raw land  (65%);  land  development  (75%);
construction  (commercial,  multi-family and  non-residential)  (80%);  improved
property (85%); and one-to-four family residential  (owner-occupied) (no maximum
ratio;  however  any LTV  ratio in  excess  of 90%  should  require  appropriate
mortgage  insurance  or  readily  marketable  collateral).  Consistent  with its
conservative  lending  philosophy,  the Company's LTV limits are generally  more
restrictive  than those in the  Guidelines:  raw land  (60%);  land  development
(70%);   construction   (commercial  -  70%;  multi-family  -  75%;  speculative
residential  - 80%); 1 - 4 family  residential  properties  (80%);  multi-family
residential (75%); and commercial real estate (80%).

      Single-Family  Residential  Real  Estate  Loans.   Historically,   savings
institutions such as the Company have concentrated  their lending  activities on
the  origination of loans secured  primarily by first mortgage liens on existing
single-family  residences.  At June  30,  2007,  $17.1  million  or 23.3% of the
Company's  total loan  portfolio  consisted of  single-family  residential  real
estate loans,  substantially all of which are conventional loans.  Single-family
loan originations totaled $1.4 million and increased $17 thousand or 1.3% during
the fiscal year ended June 30, 2007,  when  compared to the same period in 2006.
Due to low levels of market interest rates, the Company  continued to reduce its
portfolio  originations of long-term fixed rate mortgages,  while  continuing to
offer  consumer,   home  equity,   construction   loans,  land  acquisition  and
development loans and commercial loans.

      The Company historically has originated  fixed-rate loans with terms of up
to 30 years.  Although such loans are originated with the expectation  that they
will be maintained in the portfolio,  these loans are originated generally under
terms,  conditions  and  documentation  that permit their sale in the  secondary
market.   The   Company   also   makes   available   single-family   residential
adjustable-rate  mortgages ("ARMs"),  which provide for periodic  adjustments to
the  interest  rate,  but such loans have never been as widely  accepted  in the
Company's  market  area as the  fixed-rate  mortgage  loan  products.  The  ARMs
currently  offered by the Company have up to 30-year terms and an interest rate,
which adjusts in accordance with one of several indices.

      At  June  30,  2007,   approximately   $14.0   million  or  81.7%  of  the
single-family  residential  loans in the Company's loan  portfolio  consisted of
loans which provide for fixed rates of interest.  Although these loans generally
provide for repayments of principal over a fixed period of 15 to 30 years, it is
the Company's  experience that because of prepayments  and due-on-sale  clauses,
such loans generally  remain  outstanding for a substantially  shorter period of
time.

      The Company is permitted to lend up to 100% of the appraised value of real
property  securing a residential loan;  however,  if the amount of a residential
loan originated or refinanced exceeds 90% of the appraised value, the Company is
required by state banking  regulations to obtain private  mortgage  insurance on
the portion of the principal  amount that exceeds 75% of the appraised  value of
the security property.  Pursuant to underwriting guidelines adopted by the Board
of Directors,  private mortgage  insurance is obtained on residential  loans for
which loan-to-value ratios exceed 80% according to the following schedule: loans
exceeding  80% but less than 90% - 25%  coverage;  loans  exceeding 90% but less
than 95% - 30% coverage; and loans exceeding 95% through 100% - 35% coverage. No
loans are made in excess of 100% of appraised value.

                                        7

<PAGE>

      Property  appraisals  on the real  estate and  improvements  securing  the
Company's  single-family  residential  loans are made by independent  appraisers
approved by the Board of Directors.  Appraisals are performed in accordance with
federal  regulations and policies.  The Company obtains title insurance policies
on most of the first mortgage real estate loans  originated.  If title insurance
is not obtained or is unavailable,  the Company obtains an abstract of title and
a title opinion.  Borrowers also must obtain hazard  insurance  prior to closing
and,  when  required  by the  United  States  Department  of  Housing  and Urban
Development,  flood insurance.  Borrowers may be required to advance funds, with
each monthly  payment of principal and interest,  to a loan escrow  account from
which the Company  makes  disbursements  for items such as real estate taxes and
mortgage insurance premiums as they become due.

      Multi-Family  Residential  and Commercial  Real Estate Loans.  The Company
originates  mortgage  loans for the  acquisition  and  refinancing  of  existing
multi-family  residential  and commercial  real estate  properties.  At June 30,
2007,  $6.5 million or 8.8% of the Company's  total loan portfolio  consisted of
loans secured by existing multi-family residential real estate properties, which
represented  an increase of $2.1 million or 48.8% from fiscal 2006.  Of the $6.5
million,  approximately  $4.6 million or 70.9% provide for an adjustable rate of
interest, while approximately $1.9 million or 29.1% are fixed rate loans.

      At June 30, 2007,  $7.7 million or 10.5% of the Company's  loan  portfolio
consisted of loans secured by existing commercial real estate properties,  which
represented  an increase of $125  thousand or 1.7% from fiscal 2006. Of the $7.7
million,  approximately  $5.0 million or 64.6% provide for an adjustable rate of
interest, while approximately $2.7 million or 35.4% are fixed rate loans.

      The majority of the Company's  multi-family  residential loans are secured
primarily by 5 to 20 unit  apartment  buildings,  while  commercial  real estate
loans are secured by office buildings, small retail establishments and churches.
These types of properties  constitute  the majority of the Company's  commercial
real  estate  loan  portfolio.   The  Company's  multi-family   residential  and
commercial  real estate loan  portfolio  consists  primarily of loans secured by
properties located in its primary market area.

      Although terms vary,  multi-family  residential and commercial real estate
loans  generally are amortized  over a period of up to 15 years  (although  some
loans  amortize over a 20 year period) and mature in 5 to 15 years.  The Company
will originate these loans either with fixed or adjustable  interest rates which
generally is negotiated at the time of origination.  Loan-to-value ratios on the
Company's commercial real estate loans are currently limited to 75% or lower. As
part of the criteria for  underwriting  multi-family  residential and commercial
real estate loans,  the Company  generally  imposes a debt  coverage  ratio (the
ratio of net cash from  operations  before  payment of the debt  service to debt
service)  of at least  115%.  It is also the Savings  Bank's  general  policy to
obtain personal  guarantees on its multi-family  residential and commercial real
estate  loans from the  principals  of the  borrower  and,  when this  cannot be
obtained,  to  impose  more  stringent  loan-to-value,  debt  service  and other
underwriting requirements.

      At June 30, 2007 the Company's  multi-family  residential  and  commercial
real estate loan portfolio  consisted of  approximately 46 loans with an average
principal  balance of $308  thousand.  At June 30,  2007,  the  Company  had one
commercial  real estate loan,  totaling $972  thousand that was  classified as a
non-accrual  loan. During the year ended June 30, 2007, $71 thousand of interest
was collected and recognized.

      Construction  Loans.  For many  years,  the  Company  has been  active  in
originating loans to construct  primarily  single-family  residences,  and, to a
much lesser extent, loans to acquire and develop real estate for construction of
residential  properties.  These construction  lending  activities  generally are
limited to the Company's  primary  market area.  At June 30, 2007,  construction
loans amounted to  approximately  $25.7 million or 34.9% of the Company's  total
loan  portfolio,  which  represented  an increase of $4.7  million or 22.5% from
fiscal 2006. The increase was principally due to increased levels of speculative
construction loans. As of June 30, 2007, the Company's portfolio of construction
loans  consisted  primarily of $21.9  million of loans for the  construction  of
single-family  residential real estate.  Construction loan originations  totaled
$12.9  million and  increased  by $4.0  million or 44.5%  during the fiscal year
ended June 30, 2007, when compared to the same period in 2006.

      Construction   loans  are  made  for  the   purpose  of   constructing   a
single-family  residence.  The Company will underwrite such loans to individuals
on a  construction/permanent  mortgage loan basis or to a builder/developer on a
speculative (not pre-sold) construction mortgage loan basis. At June 30, 2007,

                                        8

<PAGE>

approximately  78.2% of total outstanding  construction loans were made to local
real  estate  builders  and  developers  with whom the  Company has worked for a
number  of  years  for  the  purpose  of  constructing  primarily  single-family
residences.  Upon  application,  credit  review and  analysis  of  personal  and
corporate  financial  statements,  the Company may grant local builders lines of
credit up to designated amounts.  These credit lines may be used for the purpose
of construction of speculative residential properties. In some instances,  lines
of credit will also be granted for  purposes of acquiring  finished  residential
lots and  developing  speculative  residential  properties  thereon.  Such lines
generally  have not  exceeded  $1.0  million,  with the  largest  line  totaling
approximately  $3.0 million.  Once approved for a construction line, a developer
must  still  submit  plans  and   specifications   and  receive  the   Company's
authorization,  including  an appraisal of the  collateral  satisfactory  to the
Company,  in order to begin utilizing the line for a particular  project.  As of
June 30,  2007,  the  Company  also had $2.2  million  or 3.0% of the total loan
portfolio  invested in land development loans, which consisted of 14 loans to 12
developers.

      Speculative  construction  loans  generally have  maturities of 18 months,
including  one 6  month  extension,  with  payments  being  made  monthly  on an
interest-only  basis.  Thereafter,  the permanent  financing  arrangements  will
generally  provide for either an adjustable or fixed interest  rate,  consistent
with the Company's  policies with respect to  residential  and  commercial  real
estate financing.

      The Company intends to maintain its  involvement in  construction  lending
within its primary market area. Such loans afford the Company the opportunity to
increase the interest rate  sensitivity of its loan  portfolio.  Commercial real
estate and  construction  lending is  generally  considered  to involve a higher
level of risk as  compared  to  single-family  residential  lending,  due to the
concentration  of principal in a limited  number of loans and  borrowers and the
effects of general economic  conditions on real estate  developers and managers.
Moreover,  a  construction  loan can  involve  additional  risks  because of the
inherent  difficulty in estimating both a property's  value at completion of the
project and the estimated cost (including  interest) of the project.  The nature
of these loans is such that they are  generally  more  difficult to evaluate and
monitor.  In  addition,  speculative  construction  loans to a  builder  are not
necessarily  pre-sold and thus pose a greater potential risk to the Company than
construction loans to individuals on their personal residences.

      The Company has attempted to minimize the foregoing  risks by, among other
things,  limiting the extent of its commercial real estate lending generally and
by limiting its construction  lending to primarily  residential  properties.  In
addition,  the Savings  Bank has adopted  underwriting  guidelines  which impose
stringent loan-to-value, debt service and other requirements for loans which are
believed to involve  higher  elements of credit risk, by generally  limiting the
geographic area in which the Savings Bank will do business to its primary market
area and by working with builders with whom it has established relationships.

      Consumer Loans.  The Company offers consumer loans,  although such lending
activity has not  historically  been a large part of its  business.  At June 30,
2007, $10.4 million or 14.2% of the Company's total loan portfolio  consisted of
consumer  loans,  which  represented  an  increase  of $3 thousand or 0.03% from
fiscal  2006.  The  consumer  loans  offered by the Company  include home equity
loans, home equity lines of credit,  automobile loans,  loans secured by deposit
accounts and personal loans. Approximately 90.5% of the Company's consumer loans
are secured by real  estate and are  primarily  obtained  through  existing  and
walk-in customers.

      The Company will  originate  either a  fixed-rate,  fixed term home equity
loan,  or a home equity line of credit with a variable  rate.  At June 30, 2007,
approximately  73.1% of the Company's home equity loans were at a fixed rate for
a  fixed  term.   Although  there  have  been  a  few  exceptions  with  greater
loan-to-value  ratios,  substantially  all of such loans are  originated  with a
loan-to-value  ratio which,  when coupled with the  outstanding  first  mortgage
loan, does not exceed 80%.

      Commercial  Loans. At June 30, 2007, $4.0 million or 5.4% of the Company's
total loan portfolio  consisted of commercial loans, which include loans secured
by accounts receivable, marketable investment securities, business inventory and
equipment,  and similar  collateral.  The $1.9  million or 94.5%  increase  from
fiscal 2006 was principally due to the Company's  emphasis in making these types
of loans. The Company is continuing to develop this line of business in order to
increase interest income and to attract compensating deposit account balances.

      Loan Fee Income.  In addition to interest earned on loans, the Company may
receive   income  from  fees  in  connection   with  loan   originations,   loan
modifications, late payments, prepayments and for

                                        9

<PAGE>

miscellaneous services related to its loans. Income from these activities varies
from  period to period  with the volume  and type of loans made and  competitive
conditions.

      The  Company's  loan  origination  fees  are  generally  calculated  as  a
percentage of the amount borrowed.  Loan origination and commitment fees and all
incremental  direct loan origination  costs are deferred and recognized over the
contractual  remaining  lives  of the  related  loans  on a level  yield  basis.
Discounts and premiums on loans purchased are accreted and amortized in the same
manner.  In accordance with Statement of Financial  Accounting  Standards (SFAS)
No. 91, the Company has recognized  $20 thousand,  $19 thousand and $61 thousand
of deferred  loan fees  during  fiscal  2007,  2006 and 2005,  respectively,  in
connection  with  loan  refinancings,   payoffs  and  ongoing   amortization  of
outstanding  loans. The reduced levels of loan origination fee income for fiscal
years 2007 and 2006,  were  principally  attributable to a higher volume of loan
refinancings with lower or no loan origination fees. Loans previously originated
with lower or no loan origination fees will reduce the recognition of associated
deferred fee balances.

      Non-Performing  Loans, Real Estate Owned, Troubled Debt Restructurings and
Potential  Problem Loans.  When a borrower fails to make a required payment on a
loan, the Company attempts to cure the deficiency by contacting the borrower and
seeking  payment.  Contacts  are  generally  made on the  fifteenth  day after a
payment is due. In most cases, deficiencies are cured promptly. If a delinquency
extends beyond 15 days, the loan and payment history is reviewed and efforts are
made to  collect  the loan.  While the  Company  generally  prefers to work with
borrowers to resolve such problems, when the account becomes 90 days delinquent,
the Company does institute  foreclosure or other proceedings,  as necessary,  to
minimize any potential loss.

      Loans  are  placed  on  non-accrual   status  when,  in  the  judgment  of
management,   the  probability  of  collection  of  interest  is  deemed  to  be
insufficient  to warrant further  accrual.  When a loan is placed on non-accrual
status, previously accrued but unpaid interest is deducted from interest income.
The Company normally does not accrue interest on loans past due 90 days or more.
The Company may continue to accrue interest if, in the opinion of management, it
believes it will collect on the loan.

      Real  estate  acquired  by the  Company as a result of  foreclosure  or by
deed-in-lieu of foreclosure is classified as real estate owned until it is sold.
When property is acquired,  it is recorded at the lower of cost or fair value at
the date of acquisition.  Any subsequent write-down, if necessary, is charged to
the allowance for losses on real estate owned. All costs incurred in maintaining
the Company's interest in the property are capitalized between the date the loan
becomes  delinquent and the date of acquisition.  After the date of acquisition,
all costs incurred in  maintaining  the property are expensed and costs incurred
for the improvement or development of such property are capitalized.

      Potential  problem loans are loans where  management  has some doubt as to
the ability of the borrower to comply with present loan repayment terms.

                                       10

<PAGE>

      The following table sets forth the amounts and categories of the Company's
non-performing assets,  troubled debt restructurings and potential problem loans
at the dates indicated.

<TABLE>
<CAPTION>
                                                                          At June 30,
                                                       -----------------------------------------------
                                                         2007      2006      2005      2004      2003
                                                       -------   -------   -------   -------   -------
                                                                    (Dollars in Thousands)
<S>                                                    <C>       <C>       <C>       <C>       <C>
Non-accruing loans:
Real estate:
   Single-family (1)                                   $   214   $   291   $    58   $   281   $    59
   Commercial (2)                                          972        --        --         4     3,342
   Construction                                             --        --       456        --        --
   Land Acquisition and Development                         --        --       387       427        58
Consumer (3)                                                18        17        86        71        --
Commercial loans and leases                                 --        --        --        45        22
                                                       -------   -------   -------   -------   -------
Total non-accrual loans                                  1,204       308       987       828     3,481
                                                       -------   -------   -------   -------   -------
Accruing loans greater than 90 days
   Delinquent                                               --        --        --        --        --
                                                       -------   -------   -------   -------   -------
      Total non-performing loans                       $ 1,204   $   308   $   987   $   828   $ 3,481
                                                       -------   -------   -------   -------   -------
Real estate owned (4)                                        2        10        70        --        --
                                                       -------   -------   -------   -------   -------
      Total non-performing assets                      $ 1,206   $   318   $ 1,057   $   828   $ 3,481
                                                       =======   =======   =======   =======   =======
Troubled debt restructurings                           $    --   $    --   $ 1,114   $ 1,343   $ 2,497
                                                       =======   =======   =======   =======   =======
Potential problem loans (5)                            $   368   $ 1,377   $    --   $    --   $    --
                                                       =======   =======   =======   =======   =======
Total non-performing loans and potential
   problem loans and troubled debt
   restructurings as a percentage of
   net loans receivable                                   2.60%     3.03%     3.49%     3.19%     4.36%
                                                       =======   =======   =======   =======   =======
Total non-performing assets to total assets               0.30%     0.08%     0.25%     0.19%     0.95%
                                                       =======   =======   =======   =======   =======
Total non-performing assets, troubled debt
   restructurings and potential problem
   loans as a percentage of total assets                  0.39%     0.40%     0.52%     0.50%     1.09%
                                                       =======   =======   =======   =======   =======
</TABLE>

----------
(1)   At June 30, 2007, non-accrual  single-family residential real estate loans
      consisted of three loans.

(2)   At June 30, 2007,  non-accrual  commercial  real estate loans consisted of
      one loan.

(3)   At June 30, 2007, non-accrual consumer loans consisted of two loans.

(4)   At June  30,  2007,  real  estate  owned  consisted  of one  single-family
      residential dwelling.

(5)   At June 30, 2007, potential problem loans consisted of two loans.

      The $888 thousand  increase in  nonperforming  assets during twelve months
ended June 30, 2007 was primarily  attributable  to the addition to  non-accrual
status of one  commercial  real estate loan  totaling  $972 thousand (as further
discussed  below) and one line of credit  secured by  single-family  real estate
which was partially offset by the  reclassification  of two  single-family  real
estate loans  totaling $75 thousand from  non-performing  to  performing,  an $8
thousand charge-off related to one single-family real estate owned property, and
$2  thousand  in  repayments.  The loans  are in  various  stages of  collection
activity and the real estate owned parcel was sold on August 2, 2007.

      At June  30,  2007,  the  Company  had  one  previously  restructured  and
non-accrual  commercial real estate loan to a retirement  village located in the
North Hills totaling $972 thousand.  The Savings  Bank's  outstanding  principal
balance on this loan totaled  $2.0 million at June 30, 2003.  During the quarter
ended   September  30,  2003,   the  Savings  Bank  redeemed  $388  thousand  of
participating  interests.  During the quarter ended  December 31, 2003, the Bank
sold a forty percent participating  interest to another financial institution at
par resulting in proceeds totaling $979 thousand. The Savings Bank's outstanding
principal  balance  totaled  $984  thousand  at June 30,  2006.  The Company had
recorded  interest  received  on this  credit  on a cost  recovery  basis  until
September  30, 2003 and is now  recording  interest  income on a cash basis.  At
March 31, 2007,  this credit was  classified as  non-performing.  The project is
experiencing  lower than desired levels of occupancy and the borrower is working
to increase occupancy.

      At June 30, 2007, the company had two potential  problem loans  consisting
of one previously  restructured  loan secured by undeveloped  land totaling $335
thousand and one previously restructured unsecured loan totaling $34 thousand to
two borrowers.  During the fourth  quarter of fiscal 2004, the Bankruptcy  court
approved a secured claim totaling $440 thousand and an unsecured  claim totaling
$76

                                       11

<PAGE>

thousand  be paid  on  these  loans  in  accordance  with a  Bankruptcy  Plan of
Reorganization.  All Court  ordered plan payments have been received in a timely
manner. In accordance with generally accepted accounting principles, the Company
had recorded  interest  payment received on a cost recovery basis until June 30,
2006 and is now recording interest income.

      The Company had three non-accrual single-family real estate loans totaling
approximately  $214 thousand at June 30, 2007.  One loan totaling  approximately
$57  thousand  is  being  serviced  by  another  financial  institution,  who is
proceeding with collection activities, while the other two are in various stages
of collection.

      During  fiscal  2007,  2006 and  2005,  approximately  $82  thousand,  $23
thousand and $150 thousand,  respectively,  of interest would have been recorded
on loans accounted for on a non-accrual  basis and troubled debt  restructurings
if such loans had been current according to the original loan agreements for the
entire period.  These amounts were not included in the Company's interest income
for the respective periods. The amount of interest income on loans accounted for
on a  non-accrual  basis and troubled debt  restructurings  that was included in
income  during the same periods  amounted to  approximately  $81  thousand,  $10
thousand and $99 thousand, respectively.

      Allowances  for Loan Losses.  The allowance for loan losses is established
through  provisions for loan losses charged against  income.  Loans deemed to be
uncollectible are charged against the allowance account.  Subsequent recoveries,
if any, are credited to the  allowance.  The  allowance is maintained at a level
believed  adequate by  management  to absorb  estimated  potential  loan losses.
Management's determination of the adequacy of the allowance is based on periodic
evaluations of the loan portfolio considering past experience,  current economic
conditions,  composition of the loan portfolio and other relevant factors.  This
evaluation is inherently subjective,  as it requires material estimates that may
be susceptible to significant change.

      Effective  December  13, 2006,  the FDIC,  in  conjunction  with the other
federal banking agencies adopted a Revised  Interagency  Policy Statement on the
Allowance  for Loan and Lease  Losses  ("ALLL").  The revised  policy  statement
revised and replaced the banking  agencies'  1993 policy  statement on the ALLL.
The revised policy statement  provides that an institution must maintain an ALLL
at a level that is appropriate to cover estimated  credit losses on individually
evaluated loans  determined to be impaired,  as well as estimated  credit losses
inherent in the remainder of the loan and lease portfolio.  The banking agencies
also revised the policy to ensure consistency with generally accepted accounting
principles ("GAAP").  The revised policy statement updates the previous guidance
that describes the responsibilities of the board of directors,  management,  and
bank examiners regarding the ALLL; factors to be considered in the estimation of
the ALLL; and the objectives and elements of an effective loan review system.

      Federal regulations require that each insured savings institution classify
its assets on a regular basis. In addition,  in connection with  examinations of
insured  institutions,  federal  examiners  have  authority to identify  problem
assets and, if appropriate,  classify them. There are three  classifications for
problem assets:  "substandard",  "doubtful" and "loss".  Substandard assets have
one or more defined weaknesses and are characterized by the distinct possibility
that the insured  institution will sustain some loss if the deficiencies are not
corrected.   Doubtful  assets  have  the  weaknesses  of  those   classified  as
substandard with the added characteristic that the weaknesses make collection or
liquidation  in full on the basis of currently  existing  facts,  conditions and
values  questionable,  and  there  is a  high  possibility  of  loss.  An  asset
classified  as loss is  considered  uncollectible  and of such little value that
continuance as an asset of the  institution is not warranted.  Another  category
designated  "asset  watch" is also  utilized by the Bank for assets which do not
currently  expose  an  insured  institution  to a  sufficient  degree of risk to
warrant  classification  as substandard,  doubtful or loss. Assets classified as
substandard or doubtful require the institution to establish general  allowances
for loan  losses.  If an asset or portion  thereof is  classified  as loss,  the
insured institution must either establish specific allowances for loan losses in
the amount of 100% of the portion of the asset  classified  loss,  or charge-off
such amount.  General  loss  allowances  established  to cover  possible  losses
related  to  assets  classified  substandard  or  doubtful  may be  included  in
determining  an  institution's  regulatory  capital,  while  specific  valuation
allowances for loan losses do not qualify as regulatory capital.

      The Company's  general  policy is to  internally  classify its assets on a
regular  basis and  establish  prudent  general  valuation  allowances  that are
adequate to absorb losses that have not been identified but that are inherent in
the loan portfolio.  The Company maintains general valuation  allowances that it
believes  are  adequate  to  absorb  losses in its loan  portfolio  that are not
clearly   attributable  to  specific  loans.  The  Company's  general  valuation
allowances are within the following ranges: (1) 0% to 5% of assets subject to

                                       12

<PAGE>

special mention; (2) 5% to 100% of assets classified substandard; and (3) 50% to
100% of assets classified doubtful.  Any loan classified as loss is charged-off.
To further  monitor and assess the risk  characteristics  of the loan portfolio,
loan  delinquencies are reviewed to consider any developing problem loans. Based
upon the procedures in place,  considering  the Company's past  charge-offs  and
recoveries and assessing the current risk elements in the portfolio,  management
believes the allowance for loan losses at June 30, 2007, is adequate.

      The allowance  for loan losses at June 30, 2007  increased $29 thousand to
$986  thousand.  The increase in the allowance for loan losses was primarily the
result of higher average loan balances during fiscal 2007. The Company  believes
that the loan loss reserve  levels are prudent and warranted at this time due to
the weakness of the  national  economy.  The changes in prior years  reflected a
number  of  factors,  the most  significant  of which  were the  changes  in the
Company's level of non-performing  assets and the industry trend towards greater
emphasis on the allowance method of providing for loan losses.

                                       13

<PAGE>

      The following table summarizes changes in the Company's allowance for loan
losses and other selected statistics for the periods indicated.

<TABLE>
<CAPTION>
                                                                    At June 30,
                                               -----------------------------------------------------
                                                 2007       2006       2005       2004        2003
                                               --------   --------   --------   --------   ---------
                                                                (Dollars in Thousands)
<S>                                            <C>        <C>        <C>        <C>        <C>
Average net loans                              $ 58,062   $ 55,881   $ 62,410   $ 74,656   $ 125,221
                                               ========   ========   ========   ========   =========
Allowance balance (at beginning of period)     $    957   $  1,121   $  1,370   $  2,530   $   2,758
Provision for loan losses                            13       (161)       (46)      (794)       (228)
Charge-offs:
   Real estate:
     Single-family                                   --          7         15         --          --
     Multi-family                                    --         --         --         --          --
     Commercial                                      --         --        186        524          --
     Construction                                    --         --         --         --          --
   Land acquisition and development                  --         --         --         --          --
   Consumer:
     Home equity                                     --         --         25         --          --
     Education                                       --         --         --         --          --
     Other                                           --         --         --         --          --
   Commercial loans and leases                       --         --         11         --          --
                                               --------   --------   --------   --------   ---------
     Total charge-offs                               --          7        237        524           -
                                               --------   --------   --------   --------   ---------
Recoveries:
   Real estate:
     Single-family                                   --         --         --         --          --
     Multi-family                                    --         --         --         --          --
     Commercial                                      --          4          4        158          --
     Construction                                    15         --         30         --          --
   Land acquisition and development                  --         --         --         --          --
   Consumer:
     Home equity                                      1         --         --         --          --
     Education                                       --         --         --         --          --
     Other                                           --         --         --         --          --
   Commercial loans and leases                       --         --         --         --          --
                                               --------   --------   --------   --------   ---------
     Total recoveries                                16          4         34        158          --
                                               --------   --------   --------   --------   ---------
Net loans charged-off                               (16)         3        203        366          --
                                               --------   --------   --------   --------   ---------
Transfer to real estate owned loss reserve           --         --         --         --          --
Allowance balance (at end of period)           $    986   $    957   $  1,121   $  1,370   $   2,530
                                               ========   ========   ========   ========   =========
Allowance for loan losses as a percentage of
   total loans receivable                          1.60%      1.69%      1.83%      1.97%       2.68%
                                               ========   ========   ========   ========   =========
Net loans charged-off as a percentage of
   average net loans                              (0.03)%     0.01%      0.33%      0.49%       0.00%
                                               ========   ========   ========   ========   =========
Allowance for loan losses to non-performing
   Loans                                          81.89%    310.71%    113.58%    165.46%      72.68%
                                               ========   ========   ========   ========   =========
Net loans charged-off to allowance for loan
   Losses                                         (1.62)%     0.31%     18.11%     26.72%       0.00%
                                               ========   ========   ========   ========   =========
Recoveries to charge-offs                          0.00%     57.14%     14.35%     30.15%       0.00%
                                               ========   ========   ========   ========   =========
</TABLE>

                                       14

<PAGE>

      The following  table  presents the  allocation of the  allowances for loan
losses by loan category at the dates indicated.

<TABLE>
<CAPTION>
                                                                        At June 30,
                        -----------------------------------------------------------------------------------------------------------
                               2007                  2006                  2005                  2004                  2003
                               ----                  ----                  ----                  ----                  ----
                        % of Total Loans by   % of Total Loans by   % of Total Loans by   % of Total Loans by   % of Total Loans by
                        Amount     Category   Amount     Category   Amount     Category   Amount     Category   Amount     Category
                        ------     --------   ------     --------   ------     --------   ------     --------   ------     --------
                                                                   (Dollars in Thousands)
<S>                     <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Real estate loans:
  Single-family         $   83       23.26%   $   54       26.72%   $   52       27.86%   $   82       32.52%   $   75       40.91%
  Multi-family              39        8.78        22        6.55        26        6.68        18        5.99        26        4.92
  Commercial               409       10.47       420       11.43       465       11.53       597       12.53     1,944       16.98
  Construction              35       34.92        32       31.64        54       29.72        30       22.76        33       16.03
  Land acquisition
   and development         190        2.99       218        4.86       262        7.93       302       10.01        73        7.03
  Unallocated               --        0.00        --        0.00        --        0.00        --        0.00        --        0.00
                        ------     --------   ------     --------   ------     -------    ------     -------    ------     -------
    Total real estate
      Loans                756       80.42       746       81.20       859       83.72     1,029       83.81     2,151       85.87
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
Consumer loans:
  Home equity              102       13.41       103       14.26       128       13.58       117       13.88       124       11.70
  Other                     38        0.75        50        1.45        61        1.47        78        1.09        22        1.01
  Unallocated               --        0.00        --        0.00        --        0.00        --        0.00        --        0.00
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
    Total consumer
      loans                140       14.16       153       15.71       189       15.05       195       14.97       146       12.71
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
Commercial loans:
  Commercial loans          90        5.42        58        3.09        35        1.23       116        1.22       200        1.42
  Unallocated               --        0.00        --        0.00        --        0.00        --        0.00        --        0.00
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
    Total commercial
      loans                 90        5.42        58        3.09        35        1.23       116        1.22       200        1.42
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
Commercial lease
  financings                --        0.00        --        0.00        --        0.00        --        0.00        --        0.00
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
Off balance-sheet
  Items (1)                 --        0.00        --        0.00        38        0.00        30        0.00        33        0.00
                        ------     -------    ------     -------    ------     -------    ------     -------    ------     -------
                        $  986      100.00%   $  957      100.00%   $1,121      100.00%   $1,370      100.00%   $2,530      100.00%
                        ======     =======    ======     =======    ======     =======    ======     =======    ======     =======
</TABLE>

----------
(1)   In accordance with generally accepted accounting  principles,  the Company
      established a separate  reserve for  off-balance  sheet items beginning in
      fiscal  2006.  At June  30,  2007  this  accounting  reserve  totaled  $42
      thousand.

      The Company  determines  its allowance for loan losses in accordance  with
generally  accepted  accounting  principles.   The  Company  uses  a  systematic
methodology  as required by Financial  Reporting  Release No. 28 and the various
Federal Financial Institutions Examination Council guidelines.  The Company also
endeavors to adhere to SEC Staff Accounting  Bulletin No. 102 in connection with
loan loss allowance methodology and documentation issues.

      Our methodology  used to determine the allocated  portion of the allowance
is as  follows.  For  groups of  homogenous  loans,  we apply a loss rate to the
groups'  aggregate  balance.  Our group loss rate reflects our  historical  loss
experience.  We may  adjust  these  group  rates to  compensate  for  changes in
environmental  factors;  but our  adjustments  have not been  frequent  due to a
relatively stable charge-off experience. The Company also monitors industry loss
experience  on similar  loan  portfolio  segments.  We then  identify  loans for
individual  evaluation under SFAS 114. If the individually  identified loans are
performing,  we  apply a  segment  specific  loss  rate  adjusted  for  relevant
environmental  factors, if necessary,  for those loans reviewed individually and
considered  individually impaired, we use one of the three methods for measuring
impairment  mandated by SFAS 114. Generally the fair value of collateral is used
since our impaired loans are generally real estate based. In connection with the
fair value of collateral measurement,  the Company generally uses an independent
appraisal and determines costs to sell. The Company's  appraisals for commercial
income based loans,  such as  multi-family  and  commercial  real estate  loans,
assess value based upon the  operating  cash flows of the business as opposed to
merely "as built" values.  The Company then validates the  reasonableness of our
calculated  allowances by: (1) reviewing  trends in loan volume,  delinquencies,
restructurings  and  concentrations;  (2)  reviewing  prior period  (historical)
charge-offs  and  recoveries;  and (3)  presents  the  results of this  process,
quarterly, to the Asset Classification Committee and the Savings Bank's Board of
Directors.  We then  tabulate,  format  and  summarize  the  current  loan  loss
allowance balance for financial and regulatory reporting purposes.

      The Company had no unallocated loss allowance balance at June 30, 2007.

                                       15

<PAGE>

      The following table summarizes the calculations of required  allowance for
loan losses by loan category as of June 30, 2007.

                                                                       Allowance
                                                                          for
                                                      Group Rate       Loan Loss
                                                   ---------------     ---------
Homogenous loans:
   Single-family                                        0.0015             $  56
   Multi-family                                         0.0050                39
   Commercial real estate                               0.0100                69
   Construction/land acquisition
     and development                               0.0015 - 0.0100 (1)        41
   Secured consumer                                     0.0100               105
   Unsecured consumer                                   0.0500                 1
   Commercial loans                                     0.0500                79
   Unallocated                                                                --

Individually evaluated loans:
   Single-family                                                              27
   Multi-family                                                               --
   Commercial real estate                                                    340
   Construction/land acquisition
     and development                                                         184
   Secured consumer                                                            1
   Unsecured consumer                                                         33
   Commercial loans                                                           11

Total allowance for loan losses:
   Single-family                                                              83
   Multi-family                                                               39
   Commercial real estate                                                    409
   Construction/land acquisition
     and development                                                         225
   Secured consumer                                                          106
   Unsecured consumer                                                         34
   Commercial loans                                                           90
   Unallocated                                                                --
                                                                           -----

Total allowance for loan losses                                            $ 986
                                                                           =====

----------
(1)   The rate applied ranges from 0.0015 to 0.0100 depending upon the
      underlying collateral, loan type (permanent vs. construction), historical
      loss experience, industry loss experience on similar loan segments,
      delinquency trends, loan volumes and concentrations, and other relevant
      economic and environmental factors.

      Management  believes that the reserves it has  established are adequate to
cover  potential  losses  in  the  Company's  loan  portfolio.  However,  future
adjustments  to these  reserves may be necessary,  and the Company's  results of
operations  could be adversely  affected if circumstances  differ  substantially
from the  assumptions  used by management in making its  determinations  in this
regard.

Mortgage-Backed Securities

      Mortgage-backed   securities   ("MBS")   include   mortgage   pass-through
certificates ("PCs") and collateralized  mortgage obligations  ("CMOs").  With a
pass-through  security,  investors  own an  undivided  interest  in the  pool of
mortgages that  collateralize the PCs.  Principal and interest is passed through
to the investor as it is generated by the mortgages underlying the pool. PCs and
CMOs may be insured or guaranteed by the Federal Home Loan Mortgage  Corporation
("FHLMC"),  the  Fannie  Mae  ("FNMA")  and  the  Government  National  Mortgage
Association ("GNMA"). CMOs may also be privately issued with varying

                                       16

<PAGE>

degrees of credit  enhancements.  A CMO reallocates mortgage pool cash flow to a
series of bonds (called  traunches)  with varying stated  maturities,  estimated
average lives, coupon rates and prepayment characteristics. All of the Company's
CMOs are rated in the highest category by at least two national rating services.

      At June 30, 2007,  the Company's MBS portfolio  totaled  $121.5 million as
compared to $155.8 million at June 30, 2006. The $34.3 million or 22.0% decrease
in MBS balances  outstanding  during fiscal 2007 was primarily  attributable  to
principal  repayments on floating rate CMOs which were partially  offset by $5.0
million of purchases  of floating  rate CMOs.  At June 30,  2007,  approximately
$119.3  million  or  98.2%  (book  value)  of the  Company's  portfolio  of MBS,
including  CMOs, were comprised of adjustable or floating rate  instruments,  as
compared to $153.5 million or 98.5% at June 30, 2006.  Substantially  all of the
Company's  floating  rate MBS  adjust  monthly  based  upon  changes  in certain
short-term market indices (e.g. LIBOR, Prime, etc.).

      The  following  tables set forth the amortized  cost and estimated  market
values of the Company's  MBSs  available for sale and held to maturity as of the
periods indicated.

                                                  2007        2006        2005
                                             ---------   ---------   ---------
                                                   (Dollars in Thousands)
MBS Available for Sale at June 30,
----------------------------------

FHLMC PCs                                    $      --   $      --   $      44
GNMA PCs                                         2,137       2,171       2,333
FNMA PCs                                            --          --         449
CMOs - agency collateral                            49          58          67
                                             ---------   ---------   ---------
Total amortized cost                         $   2,186   $   2,229   $   2,893
                                             =========   =========   =========
Total estimated market value                 $   2,246   $   2,292   $   3,120
                                             =========   =========   =========

MBS Held to Maturity at June 30,
--------------------------------

FHLMC PCs                                    $      --   $      --   $       9
GNMA PCs                                            --          --         370
FNMA PCs                                            --          --          16
CMOs - agency collateral                        59,533      85,436     127,915
CMOs - single-family whole loan collateral      59,738      68,025      30,721
                                             ---------   ---------   ---------
Total amortized cost                         $ 119,271   $ 153,461   $ 159,031
                                             =========   =========   =========
Total estimated market value                 $ 119,646   $ 152,706   $ 159,566
                                             =========   =========   =========

      The Company believes that its present MBS available for sale allocation of
$2.2 million or 1.8% of the carrying value of the MBS portfolio,  in conjunction
with other investment securities allocated as available for sale, is adequate to
meet  anticipated  future  liquidity  requirements and to reposition its balance
sheet and asset/liability mix should it wish to do so in the future.

      The following table sets forth the amortized cost,  contractual maturities
and weighted  average yields of the Company's MBS,  including  CMOs, at June 30,
2007.

<TABLE>
<CAPTION>
                          One Year   After One to   After Five to   Over Ten
                          or Less     Five Years      Ten Years       Years       Total
                          --------   ------------   -------------   ---------   ---------
                                               (Dollars in Thousands)
<S>                       <C>        <C>            <C>             <C>         <C>
MBS Available for Sale    $   --        $   --         $   --       $   2,186   $   2,186
                            0.00%         0.00%          0.00%           7.71%       7.71%

MBS Held to Maturity      $   --        $   --         $   --       $ 119,271   $ 119,271
                            0.00%         0.00%          0.00%           6.33%       6.33%
                          ------        ------         ------       ---------   ---------

Total                     $   --        $   --         $   --       $ 121,457   $ 121,457
                          ======        ======         ======       =========   =========
Weighted average yield      0.00%         0.00%          0.00%           6.35%       6.35%
                          ======        ======         ======       =========   =========
</TABLE>

      Due  to  prepayments  of  the   underlying   loans,   and  the  prepayment
characteristics of the CMO traunches, the actual maturities of the Company's MBS
are expected to be substantially less than the scheduled maturities.

                                       17

<PAGE>

      The following table sets forth  information  with respect to the MBS owned
by the Company at June 30, 2007,  which had a carrying value greater than 10% of
the Company's stockholders' equity at such date, other than securities issued by
the  United  States  Government  or  United  States   Government   agencies  and
corporations.  All MBS  owned  by the  Company  have  been  assigned  a triple A
investment grade rating.

<TABLE>
<CAPTION>
                                                        Number of                      Estimated
Name of Issuer                                         Securities   Carrying Value   Market Value
--------------                                         ----------   --------------   ------------
                                                                        (Dollars in Thousands)
<S>                                                    <C>          <C>              <C>
Countrywide Home Loans                                     8           $ 29,079        $ 29,063
Credit Suisse First Boston Mortgage Securities Corp.       3           $ 10,274        $ 10,413
Chase Mortgage Finance Corp.                               2           $ 10,144        $ 10,108
Bank of America Mortgage Securities                        3           $  6,688        $  6,760
GSR Mortgage Loan Trust                                    1           $  3,553        $  3,546
                                                                       --------        --------

                                                                       $ 59,738        $ 59,890
</TABLE>

Investment Securities

      The Company may invest in various types of securities, including corporate
debt  and  equity  securities,   U.S.  Government  and  U.S.  Government  agency
obligations,  securities of various federal, state and municipal agencies,  FHLB
stock,    commercial   paper,   bankers'   acceptances,    federal   funds   and
interest-bearing deposits with other financial institutions.

      The  Company's  investment   activities  are  directly  monitored  by  the
Company's  Finance  Committee  under policy  guidelines  adopted by the Board of
Directors.  In recent years, the general  objective of the Company's  investment
policy  has been to manage  the  Company's  interest  rate  sensitivity  gap and
generally to increase  interest-earning assets. As reflected in the table below,
the Company increased its position of U.S.  Government Agency  obligations while
decreasing  its  portfolio  of  floating  rate  CMOs.   The  Company   purchased
approximately $127.1 million of U.S. Government Agency obligations during fiscal
2007.  Outstanding  balances  totaled  $186.7  million  or  85.7%  of the  total
investment portfolio at June 30, 2006, as compared to $175.8 million or 86.0% of
the total investment portfolio at June 30, 2006. At June 30, 2007, approximately
$186.2 million or 99.7% of the Company's U.S.  Government  Agency  portfolio was
comprised of U.S. Government Agency securities with longer-terms to maturity and
optional principal redemption features ("callable bonds").

      The  following  tables set forth the  amortized  cost and  estimated  fair
market  values of the  Company's  investment  securities  portfolio at the dates
indicated.

<TABLE>
<CAPTION>
                                                            2007        2006        2005
                                                       ---------   ---------   ---------
                                                             (Dollars in Thousands)
<S>                                                    <C>         <C>         <C>
Investment Securities Available for Sale at June 30,
----------------------------------------------------

Corporate debt obligations                             $       5   $       4   $   8,655
Commercial paper                                           8,397       7,993          --
Obligations of states and political subdivisions              --          --          --
                                                       ---------   ---------   ---------
Total amortized cost                                       8,402       7,997       8,655
Equity securities                                            555         500         500
                                                       ---------   ---------   ---------
Total amortized cost                                   $   8,957   $   8,497   $   9,155
                                                       =========   =========   =========
Total estimated fair value                             $   8,933   $   8,469   $   9,155
                                                       =========   =========   =========

Investment Securities Held to Maturity at June 30,
--------------------------------------------------

Commercial paper                                       $   6,198   $      --   $      --
U.S. Government agency securities                        186,667     175,755     149,360
Obligations of states and political subdivisions           9,799      12,197      24,551
                                                       ---------   ---------   ---------
                                                         202,664     187,952     173,911
FHLB stock                                                 6,340       7,861       7,769
                                                       ---------   ---------   ---------
Total amortized cost                                   $ 209,004   $ 195,813   $ 181,680
                                                       =========   =========   =========
Total estimated fair value                             $ 207,850   $ 193,541   $ 182,092
                                                       =========   =========   =========
</TABLE>

                                       18

<PAGE>

      Information  regarding  the amortized  cost,  contractual  maturities  and
weighted average yields of the Company's  investment  portfolio at June 30, 2007
is presented below.

<TABLE>
<CAPTION>
Investment Securities                 One Year   After One to   After Five to   Over Ten
Available for Sale                     or Less    Five Years      Ten Years       Years      Total
---------------------                 --------   ------------   -------------   --------   ---------
                                                           (Dollars in Thousands)
<S>                                   <C>        <C>            <C>             <C>        <C>
Corporate debt obligations            $      5     $    --        $     --      $     --   $       5
                                          5.60%       0.00%           0.00%         0.00%       5.60%

Commercial paper                      $  8,397     $    --        $     --      $     --   $   8,397
                                          5.72%       0.00%           0.00%         0.00%       5.72%
                                      --------     -------        --------      --------   ---------

Total                                 $  8,402     $    --        $     --      $     --   $   8,402
                                      ========     =======        ========      ========   =========
Weighted average yield                    5.72%       0.00%           0.00%         0.00%       5.72%
                                      ========     =======        ========      ========   =========
</TABLE>

<TABLE>
<CAPTION>
Investment Securities                 One Year   After One to   After Five to   Over Ten
Held to Maturity                       or Less    Five Years      Ten Years       Years      Total
---------------------                 --------   ------------   -------------   --------   ---------
<S>                                   <C>        <C>            <C>             <C>        <C>
Commercial Paper                      $  6,198     $    --        $     --      $     --   $   6,198
                                          5.69%       0.00%           0.00%         0.00%       5.69%

U.S. Government Agency
   securities                         $     --     $    --        $118,497      $ 68,170   $ 186,667
                                          0.00%       0.00%           6.02%         5.64%       5.89%

Obligations of states and political
   subdivisions (1)                   $    100     $ 1,395        $     --      $  8,304   $   9,799
                                          5.45%       8.70%           0.00%         7.57%       7.71%
                                      --------     -------        --------      --------   ---------

Total                                 $  6,298     $ 1,395        $118,497      $ 75,484   $ 202,664
                                      ========     =======        ========      ========   =========
Weighted average yield                    5.69%       8.70%           6.02%         5.93%       5.97%
                                      ========     =======        ========      ========   =========
</TABLE>

----------
(1)   Tax exempt obligations of states and political subdivisions are calculated
      on a taxable  equivalent  basis utilizing a calculation  that reflects the
      tax-exempt  coupon, a 20% interest expense  disallowance and a federal tax
      rate of 34%.

                                       19

<PAGE>

      Information regarding the amortized cost, earliest call dates and weighted
average  yield  of the  Company's  investment  portfolio  at June 30,  2007,  is
presented  below.  All Company  investments in callable U.S.  Government  Agency
bonds were classified as held to maturity at June 30, 2007.

<TABLE>
<CAPTION>
                                      One Year    After One to   After Five to   Over Ten
                                       or Less     Five Years      Ten Years       Years      Total
                                      ---------   ------------   -------------   --------   ---------
<S>                                   <C>         <C>            <C>             <C>        <C>
Corporate debt obligations            $       5     $     --       $    --       $     --   $       5
                                           5.60%        0.00%         0.00%          0.00%       5.60%

Commercial paper                      $  14,595     $     --       $    --       $     --   $  14,595
                                           5.70%        0.00%         0.00%          0.00%       5.70%

U.S. Government Agency
   securities                         $ 124,665     $ 61,532       $    --       $    470   $ 186,667
                                           5.82%        6.01%         0.00%          5.88%       5.89%

Obligations of states and political
   subdivisions (1)                   $   1,658     $  8,141       $    --       $     --   $   9,799
                                           5.57%        8.14%         0.00%          0.00%       7.71%
                                      ---------     --------       -------       --------   ---------

Total                                 $ 140,923     $ 69,673       $    --       $    470   $ 211,066
                                      ---------     --------       -------       --------   ---------
Weighted average yield                     5.80%        6.26%         0.00%          5.88%       5.96%
                                      =========     ========       =======       ========   =========
</TABLE>

----------
(1)  Tax exempt obligations of states and political  subdivisions are calculated
     on a taxable  equivalent  basis  utilizing a calculation  that reflects the
     tax-exempt  coupon, a 20% interest  expense  disallowance and a federal tax
     rate of 34%.

      At June 30,  2007,  the Company had no  securities  classified  as trading
investment securities.

      The following table sets forth  information with respect to the investment
securities,  comprised  solely  of  short-term  commercial  paper,  owned by the
Company  at June 30,  2007 which had a carrying  value  greater  than 10% of the
Company's stockholders' equity at such date, other than securities issued by the
United States Government and United States Government agencies and corporations.
All Commercial  paper  securities  owned by the Company,  including  those shown
below,  have been assigned an  investment  grade rating by at least two national
rating services.

                                                                     Estimated
    Name of Issuer                                 Carrying Value   Market Value
    --------------                                 --------------   ------------
                                                       (Dollars in Thousands)
    Kansas City Power & Light                         $  4,199       $  4,199
    PHH Corp.                                         $  4,199       $  4,199
    Public Services New Mexico                        $  4,199       $  4,199
                                                      --------       --------
                                                      $ 12,597       $ 12,597
                                                      ========       ========

Sources of Funds

      The Company's  principal  source of funds for use in lending and for other
general business purposes has traditionally  come from deposits obtained through
the  Company's  home and  branch  offices.  Funding  is also  derived  from FHLB
advances,  short-term  borrowings,  amortization  and prepayments of outstanding
loans and MBS and from maturing investment securities.

                                       20

<PAGE>

      Deposits.  The Company's deposits totaled $159.4 million at June 30, 2007,
as compared to $151.7 million at June 30, 2006.  Transaction  accounts increased
approximately   $1.7  million  or  5.8%.   Certificates  of  deposit   increased
approximately  $6.3 million or 9.3%.  Savings accounts decreased $3.9 million or
10.6% and money market  accounts  increased  $3.6 million or 21.6%.  In order to
attract new and lower cost core deposits,  the Company continued to promote a no
minimum balance,  "free", checking account product and Internet Banking. Current
deposit products include regular savings accounts,  demand accounts,  negotiable
order  of  withdrawal  ("NOW")  accounts,  money  market  deposit  accounts  and
certificates  of deposit  ranging  in terms  from 30 days to 10 years.  Included
among  these  deposit  products  are  certificates  of deposit  with  negotiable
interest rates and balances of $100,000 or more, which amounted to $15.9 million
or 10.0% of the Company's  total deposits at June 30, 2007, as compared to $11.0
million or 7.3% at June 30, 2006.  The Company's  deposit  products also include
Individual Retirement Account certificates ("IRA certificates").

     The Company's  deposits are obtained  primarily  from residents of northern
Allegheny,  southern  Butler and  eastern  Beaver  counties,  Pennsylvania.  The
Company utilizes various  marketing methods to attract new customers and savings
deposits,  including print media  advertising and direct  mailings.  The Company
does not advertise for deposits  outside of its local market area or utilize the
services of deposit  brokers,  and  management  believes  that an  insignificant
number of deposit  accounts were held by  non-residents  of Pennsylvania at June
30, 2007.  The Company has drive-up  banking  facilities  and  automated  teller
machines  ("ATMs") at its  McCandless,  Franklin  Park,  Bellevue and  Cranberry
Township  offices.  The Company also has an ATM machine at its West View Office.
The Company participates in the STAR(R) and CIRRUS(R) ATM networks.  The Company
also  participates  in an ATM program called the Freedom ATM  Alliance(SM).  The
Freedom ATM  Alliance(SM)  allows West View Savings Bank  customers to use other
Pittsburgh  area  Freedom  ATM  Alliance(SM)   affiliates'  ATMs  without  being
surcharged and vice versa.  The Freedom ATM  Alliance(SM)  was organized to help
smaller  local  banks  compete  with larger  national  banks that have large ATM
networks.

      The Company has been  competitive in the types of accounts and in interest
rates it has offered on its deposit  products and continued to price its savings
products  nearer to the market  average  rate as  opposed to the upper  range of
market offering rates.  The Company has continued to emphasize the retention and
growth of core deposits,  particularly demand deposits.  Financial  institutions
generally, including the Company, have experienced a certain degree of depositor
disintermediation to other investment alternatives. Management believes that the
degree of  disintermediation  experienced  by the Company has not had a material
impact on overall liquidity.

      The  following  table sets  forth the  average  balance  of the  Company's
deposits and the average  rates paid  thereon for the past three years.  Average
balances were derived from daily average balances.

<TABLE>
<CAPTION>
                                                       At June 30,
                                  ----------------------------------------------------
                                        2007              2006              2005
                                        ----              ----              ----
                                    Amount    Rate    Amount    Rate    Amount    Rate
                                  ---------   ----  ---------   ----  ---------   ----
                                                 (Dollars in Thousands)
<S>                               <C>         <C>   <C>         <C>   <C>         <C>
Regular savings and club
  accounts                        $  33,635   0.70% $  39,877   0.70% $  44,479   0.70%
NOW accounts                         18,705   0.06     20,023   0.06     22,516   0.06
Money market deposit
  accounts                           17,557   3.55     15,024   2.75     13,538   1.23
Certificate of deposit accounts      72,805   4.54     66,599   3.62     65,036   2.67
Escrows                                 704   1.56        804   1.37        797   1.63
                                  ---------   ----  ---------   ----  ---------   ----
   Total interest-bearing
     deposits and escrows           143,406   2.92    142,327   2.19    146,366   1.53
Non-interest-bearing checking
  accounts                           12,927   0.00     12,513   0.00     12,774   0.00
                                  ---------   ----  ---------   ----  ---------   ----
   Total deposits and escrows     $ 156,333   2.68% $ 154,840   2.01% $ 159,140   1.41%
                                  =========   ====  =========   ====  =========   ====
</TABLE>

                                       21

<PAGE>

The following  table sets forth the net deposit flows of the Company  during the
periods indicated.

                                          Year Ended June 30,
                                     ----------------------------
                                      2007       2006      2005
                                     -------  ----------  -------
                                        (Dollars in Thousands)
Increase (decrease) before interest
  credited                           $ 3,692  $ (15,947)  $ 1,976
Interest credited                      3,972      2,954     2,167
                                     -------  ---------   -------
Net deposit increase (decrease)      $ 7,664  $ (12,993)  $ 4,143
                                     =======  =========   =======

      The following table sets forth maturities of the Company's certificates of
deposit of $100,000 or more at June 30, 2007, by time remaining to maturity.

                                                        Amounts
                                                       --------
                                                 (Dollars in Thousands)
      Three months or less                             $  7,089
      Over three months through six months                3,438
      Over six months through twelve months               3,223
      Over twelve months                                  2,187
                                                       --------
                                                       $ 15,937
                                                       ========

      Borrowings.  Borrowings  are comprised of FHLB advances with various terms
and repurchase  agreements with securities  brokers with original  maturities of
278 days or  less.  At June 30,  2007,  borrowings  totaled  $213.5  million  as
compared to $237.8 million at June 30, 2006. The $24.3 million or 10.2% decrease
was primarily due to redemptions of investments and  mortgage-backed  securities
and  increases  in  deposits,  which  were  partially  offset  by  purchases  of
investment  and  mortgage-backed  securities and increases in the Company's loan
portfolio.  For a  detailed  discussion  of the  Company's  asset and  liability
management activities,  please see the "Quantitative and Qualitative Disclosures
about  Market  Risk"  section of the  Company's  fiscal year 2007 Annual  Report
included as Exhibit 13.  Wholesale  funding  also  provides  the Company  with a
larger degree of control with respect to the term  structure of its  liabilities
than traditional retail deposits. By utilizing borrowings,  as opposed to retail
certificates of deposit,  the Company also avoids the additional operating costs
associated  with  increasing its branch network and associated  federal  deposit
insurance premiums.

Competition

      The Company faces significant competition in attracting deposits. Its most
direct  competition for deposits has historically come from commercial banks and
other savings  institutions  located in its market area.  The Company also faces
additional  significant  competition  for investors'  funds from other financial
intermediaries.  The  Company  competes  for  deposits  principally  by offering
depositors a variety of deposit programs, competitive interest rates, convenient
branch locations,  hours and other services.  The Company does not rely upon any
individual group or entity for a material portion of its deposits.

      The Company's  competition  for real estate loans comes  principally  from
mortgage banking  companies,  other savings  institutions,  commercial banks and
credit unions. The Company competes for loan originations  primarily through the
interest rates and loan fees it charges,  the efficiency and quality of services
it provides borrowers,  referrals from real estate brokers and builders, and the
variety of its products.  Factors which affect  competition  include the general
and local economic  conditions,  current  interest rate levels and volatility in
the mortgage markets.

Employees

      The Company had 33 full-time  employees  and 16 part-time  employees as of
June 30, 2007. None of these employees is represented by a collective bargaining
agent.  The  Company  believes  that it  enjoys  excellent  relations  with  its
personnel.

                                       22

<PAGE>

                           REGULATION AND SUPERVISION

The Company

      General.  The Company, as a bank holding company, is subject to regulation
and supervision by the Federal Reserve Board and by the Pennsylvania  Department
of Banking (the "Department"). The Company is required to file annually a report
of its operations with, and is subject to examination by, the Board of Governors
of the Federal Reserve System ("Federal Reserve Board") and the Department.

      Sarbanes-Oxley  Act of 2002.  On July 3,  2002,  President  George W. Bush
signed into law the  Sarbanes-Oxley  Act of 2002, which generally  establishes a
comprehensive  framework to modernize and reform the oversight of public company
auditing,  improve the quality and transparency of financial  reporting by those
companies and strengthen the independence of auditors.

      BHCA  Activities and Other  Limitations.  The Bank Holding  Company Act of
1956, as amended ("BHCA") prohibits a bank holding company from acquiring direct
or  indirect  ownership  or control of more than 5% of the voting  shares of any
bank,  or  increasing  such  ownership  or  control of any bank,  without  prior
approval of the Federal Reserve Board. The BHCA also generally  prohibits a bank
holding  company from  acquiring any bank located  outside of the state in which
the existing bank  subsidiaries  of the bank holding  company are located unless
specifically authorized by applicable state law.

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

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

      Limitations on Transactions with Affiliates.  Transactions between savings
banks and any  affiliate  are  governed by  Sections  23A and 23B of the Federal
Reserve  Act. An  affiliate  of a savings  bank is any  company or entity  which
controls,  is controlled by or is under common control with the savings bank. In
a holding company context, the parent holding company of a savings bank (such as
the Company)  and any  companies  which are  controlled  by such parent  holding
company are  affiliates of the savings bank.  Generally,  Section 23A (i) limits
the extent to which the savings bank or its  subsidiaries may engage in "covered
transactions"  with any one  affiliate  to an amount equal to 10% of such bank's
capital  stock  and  surplus,  and  contain  an  aggregate  limit  on  all  such
transactions with all affiliates to an amount equal to 20% of such capital stock
and surplus.  Section 23B applies to "covered  transactions"  as well as certain
other transactions and requires that all transactions be on terms  substantially
the same, or at least favorable,  to the bank or subsidiary as those provided to
a non-affiliate. The term "covered transaction" includes the making of loans to,
purchase of assets from,  issuance of a guarantee  to an  affiliate  and similar
transactions.  Section 23B transactions  also apply to the provision of services
and the sale of assets by a savings bank to an affiliate.

      In  addition,  Sections  22(h) and (g) of the  Federal  Reserve Act places
restrictions   on  loans  to  executive   officers,   directors   and  principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a greater than 10%  stockholder  of a savings  bank,  and certain  affiliated
interests of either,  may not exceed,  together with all other outstanding loans
to such  person  and  affiliated  interests,  the

                                       23

<PAGE>

savings bank's loans to one borrower limit (generally equal to 15% of the bank's
unimpaired  capital and  surplus).  Section  22(h) also  requires  that loans to
directors,  executive  officers  and  principal  stockholders  be made on  terms
substantially  the same as offered in comparable  transactions  to other persons
and also  requires  prior board  approval for certain  loans.  In addition,  the
aggregate  amount of  extensions  of credit  by a savings  bank to all  insiders
cannot exceed the bank's unimpaired  capital and surplus.  Furthermore,  Section
22(g) places additional restrictions on loans to executive officers.

      Capital  Requirements.  The  Federal  Reserve  Board has  adopted  capital
adequacy  guidelines  pursuant to which it assesses  the  adequacy of capital in
examining and supervising a bank holding  company and in analyzing  applications
to it under the BHCA.  The Federal  Reserve  Board capital  adequacy  guidelines
generally  require bank holding  companies to maintain total capital equal to 8%
of total risk-adjusted  assets, with at least one-half of that amount consisting
of Tier I or core capital and up to one-half of that amount  consisting  of Tier
II or supplementary capital. Tier I capital for bank holding companies generally
consists of the sum of common stockholders' equity and perpetual preferred stock
(subject in the case of the latter to limitations on the kind and amount of such
stocks which may be included as Tier I capital),  less goodwill. Tier II capital
generally  consists of hybrid capital  instruments;  perpetual  preferred  stock
which is not eligible to be included as Tier I capital;  term  subordinated debt
and  intermediate-term  preferred stock;  and,  subject to limitations,  general
allowances for loan losses.  Assets are adjusted under the risk-based guidelines
to take into account different risk characteristics, with the categories ranging
from 0% (requiring  no  additional  capital) for assets such as cash to 100% for
the bulk of assets which are typically held by a bank holding company, including
multi-family  residential and commercial real estate loans,  commercial business
loans and consumer loans.  Single-family  residential first mortgage loans which
are not (90 days or more) past-due or non-performing and which have been made in
accordance with prudent  underwriting  standards are assigned a 50% level in the
risk-weighting system, while certain  privately-issued MBS representing indirect
ownership of such loans are assigned a 20% level in the  risk-weighting  system.
Off-balance  sheet items also are  adjusted to take into  account  certain  risk
characteristics.

      In addition to the risk-based  capital  requirements,  the Federal Reserve
Board  requires bank holding  companies to maintain a minimum  leverage  capital
ratio of Tier I capital to total  assets of 3%.  Total  assets for this  purpose
does not include goodwill and any other  intangible  assets and investments that
the Federal Reserve Board determines should be deducted from Tier I capital. The
Federal  Reserve Board has announced  that the 3% Tier I leverage  capital ratio
requirement is the minimum for the top-rated bank holding  companies without any
supervisory,  financial or operational weaknesses or deficiencies or those which
are not  experiencing or  anticipating  significant  growth.  Other bank holding
companies  will be  expected to maintain  Tier I leverage  capital  ratios of at
least 4% to 5% or more, depending on their overall condition.

      The Company is in  compliance  with the  above-described  Federal  Reserve
Board regulatory capital requirements.

      Commitments  to  Affiliated  Institutions.  Under  Federal  Reserve  Board
policy,  the Company is expected to act as a source of financial strength to the
Savings   Bank  and  to  commit   resources  to  support  the  Savings  Bank  in
circumstances  when it might not do so absent  such  policy.  The  legality  and
precise scope of this policy is unclear.

The Savings Bank

      General.   The  Savings  Bank  is  subject  to  extensive  regulation  and
examination by the Department and by the FDIC, which insures its deposits to the
maximum  extent  permitted  by  law,  and is  subject  to  certain  requirements
established  by the  Federal  Reserve  Board.  The  federal  and state  laws and
regulations  which are  applicable to banks  regulate,  among other things,  the
scope of their business, their investments, their reserves against deposits, the
timing of the  availability  of deposited funds and the nature and amount of and
collateral for certain  loans.  The laws and  regulations  governing the Savings
Bank  generally  have been  promulgated  to protect  depositors  and not for the
purpose of protecting stockholders.

      Deposit Insurance Reform. On February 8, 2006,  President Bush signed into
law legislation that merged the Bank Insurance Fund and the Savings  Association
Insurance Fund to form the Deposit Insurance Fund, eliminated any disparities in
bank and thrift  risk-based  premium  assessments,  reduced  the  administrative
burden of maintaining and operating two separate funds and  established  certain
new insurance  coverage limits and a mechanism for possible periodic  increases.
The legislation  also gave the Federal  Deposit  Insurance  Corporation  greater
discretion  to  identify  the  relative  risks all  institutions  present to the
Deposit Insurance Fund and set risk-based premiums.

                                       24

<PAGE>

      Major provisions in the legislation include:

            o     merging  the  Savings  Association   Insurance Fund  and  Bank
                  Insurance Fund, which became effective March 31, 2006;

            o     maintaining  basic  deposit and  municipal  account  insurance
                  coverage at $100,000 but providing  for a new basic  insurance
                  coverage  for  retirement  accounts  of  $250,000.   Insurance
                  coverage for basic deposit and  retirement  accounts  could be
                  increased for inflation every five years in $10,000 increments
                  beginning in 2011;

            o     providing the Federal Deposit  Insurance  Corporation with the
                  ability to set the designated  reserve ratio within a range of
                  between l.l5% and 1.50%,  rather than maintaining 1.25% at all
                  times regardless of prevailing economic conditions;

            o     providing  a  one-time  assessment  credit of $4.7  billion to
                  banks and savings  associations  in  existence on December 31,
                  1996, which may be used to offset future premiums with certain
                  limitations; and

            o     requiring  the payment of dividends of 100% of the amount that
                  the  insurance  fund  exceeds  1.5% of the  estimated  insured
                  deposits  and  the  payment  of  50% of the  amount  that  the
                  insurance fund exceeds 1.35% of the estimated insured deposits
                  (when  the  reserve  is  greater  than  1.35% but no more than
                  1.5%).

      FDIC Insurance Premiums. The Savings Bank currently pays deposit insurance
premiums to the FDIC on a risk-based  assessment system established by the FDIC.
Under applicable regulations,  institutions are assigned to one of three capital
groups  which is based solely on the level of an  institution's  capital - "well
capitalized",  "adequately capitalized" and "undercapitalized"- which is defined
in the same manner as the regulations  establishing the prompt corrective action
system  under  Section 38 of the Federal  Deposit  Insurance  Act  ("FDIA"),  as
discussed below.

      Under  regulations  effective  January  1,  2007,  the FDIC  adopted a new
risk-based  premium system that provides for quarterly  assessments  based on an
insured  institution's  ranking  in one  of  four  risk  categories  based  upon
supervisory and capital evaluations.  Well-capitalized  institutions  (generally
those with CAMELS  composite  ratings of 1 or 2) are grouped in Risk  Category I
and assessed  for deposit  insurance at an annual rate of between five and seven
basis points.  The assessment  rate for an individual  institution is determined
according  to a  formula  based  on a  weighted  average  of  the  institution's
individual CAMEL component  ratings plus either five financial ratios or, in the
case of an institution with assets of $10.0 billion or more, the average ratings
of its long-term  debt.  Institutions in Risk Categories II, III and IV assessed
at annual rates of 10, 28 and 43 basis points, respectively.

      In  addition,  all  institutions  with  deposits  insured  by the FDIC are
required to pay  assessments  to fund  interest  payments on bonds issued by the
Financing Corporation,  a mixed-ownership  government corporation established to
recapitalize a predecessor to the DIF. The assessment rate for the first quarter
of 2007 was 1.22 basis points of insured deposits and it is adjusted  quarterly.
These assessments will continue until the Financing  Corporation bonds mature in
2019.

      The Savings Bank is a "well capitalized" institution as of June 30, 2007.

      Capital Requirements.  The FDIC has promulgated  regulations and adopted a
statement of policy  regarding  the capital  adequacy of  state-chartered  banks
which, like the Savings Bank, are not members of the Federal Reserve System. The
FDIC's capital  regulations  establish a minimum of 3.0% Tier I leverage capital
requirement for the most highly-rated state-chartered, non-member banks, with an
additional  cushion  of  at  least  100  to  200  basis  points  for  all  other
state-chartered,  non-member banks,  which effectively will increase the minimum
Tier I leverage  ratio for such other  banks to 4.0% to 5.0% or more.  Under the
FDIC's  regulation,  highest-rated  banks are those that the FDIC determines are
not  anticipating or experiencing  significant  growth and have well diversified
risk,  including no undue interest rate risk exposure,  excellent asset quality,
high  liquidity,  good earnings and, in general,  which are  considered a strong
banking organization, rated composite 1 under the Uniform Financial Institutions
Rating  System.  Leverage  or core  capital  is  defined  as the  sum of  common
stockholders'  equity (including  retained  earnings),  noncumulative  perpetual
preferred  stock and related  surplus,  and  minority  interest in  consolidated
subsidiaries,  minus all

                                       25

<PAGE>

intangible  assets  other than  certain  qualifying  supervisory  goodwill,  and
certain   purchased   mortgage   servicing   rights  and  purchased  credit  and
relationships.

      The FDIC also  requires  that  savings  banks  meet a  risk-based  capital
standard.  The  risk-based  capital  standard  for savings  banks  requires  the
maintenance   of  total   capital  which  is  defined  as  Tier  I  capital  and
supplementary (Tier 2 capital) to risk weighted assets of 8%. In determining the
amount of  risk-weighted  assets,  all assets,  plus  certain off balance  sheet
assets,  are multiplied by a risk-weight  of 0% to 100%,  based on the risks the
FDIC believes are inherent in the type of asset or item.

      The components of Tier I capital are equivalent to those  discussed  above
under the 3% leverage standard. The components of supplementary (Tier 2) capital
include  certain  perpetual  preferred  stock,  certain  mandatory   convertible
securities,  certain  subordinated  debt and  intermediate  preferred  stock and
general  allowances  for loan losses.  Allowance  for loan losses  includable in
supplementary  capital is limited to a maximum of 1.25% of risk-weighted assets.
Overall,  the amount of capital  counted  toward  supplementary  capital  cannot
exceed 100% of core capital.  At June 30, 2007, the Savings Bank met each of its
capital requirements.

      A bank which has less than the minimum leverage capital requirement shall,
within 60 days of the date as of which it fails to comply with such requirement,
submit to its FDIC regional  director for review and approval a reasonable  plan
describing  the means and timing by which the bank  shall  achieve  its  minimum
leverage capital requirement. A bank which fails to file such plan with the FDIC
is deemed to be operating in an unsafe and unsound manner, and could subject the
bank to a  cease-and-desist  order  from the FDIC.  The FDIC's  regulation  also
provides that any insured depository  institution with a ratio of Tier I capital
to total assets that is less than 2.0% is deemed to be operating in an unsafe or
unsound  condition  pursuant  to  Section  8(a) of the  FDIA and is  subject  to
potential  termination of deposit insurance.  However,  such an institution will
not be subject to an enforcement  proceeding thereunder solely on account of its
capital  ratios  if it has  entered  into and is in  compliance  with a  written
agreement  with the FDIC to increase its Tier I leverage  capital  ratio to such
level as the FDIC  deems  appropriate  and to take such  other  action as may be
necessary for the  institution  to be operated in a safe and sound  manner.  The
FDIC capital  regulation also provides,  among other things, for the issuance by
the FDIC or its  designee(s)  of a  capital  directive,  which is a final  order
issued to a bank that fails to maintain  minimum  capital to restore its capital
to the minimum leverage capital requirement within a specified time period. Such
directive is enforceable in the same manner as a final cease-and-desist order.

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

Miscellaneous

      The  Savings  Bank is  subject  to  certain  restrictions  on loans to the
Company,  on  investments in the stock or securities  thereof,  on the taking of
such stock or  securities as  collateral  for loans to any borrower,  and on the
issuance  of a  guarantee  or letter of  credit  on behalf of the  Company.  The
Savings  Bank  is  also  subject  to  certain  restrictions  on  most  types  of
transactions with the Company,  requiring that the terms of such transactions be
substantially  equivalent to terms of similar  transactions with  non-affiliated
firms.  In  addition,  there are  various  limitations  on the  distribution  of
dividends to the Company by the Savings Bank.

      The foregoing  references to laws and regulations  which are applicable to
the  Company  and the  Savings  Bank are brief  summaries  thereof  which do not
purport to be complete and which are qualified in their entirety by reference to
such laws and regulations.

                                       26

<PAGE>

                           FEDERAL AND STATE TAXATION

      General.  The Company and the  Savings  Bank are subject to the  generally
applicable  corporate tax  provisions of the Internal  Revenue Code of 1986 (the
"Code"),  as well as certain  provisions  of the Code which  apply to thrift and
other types of financial  institutions.  The following discussion of tax matters
is  intended  only as a  summary  and does  not  purport  to be a  comprehensive
description of the tax rules applicable to the Company and the Savings Bank.

      Fiscal Year. The Company currently files a consolidated federal income tax
return on the basis of the calendar year ending on December 31.

      Method of  Accounting.  The  Company  maintains  its books and records for
federal income tax purposes using the accrual method of accounting.  The accrual
method of accounting  generally requires that items of income be recognized when
all events have occurred that  establish the right to receive the income and the
amount of income can be determined  with  reasonable  accuracy and that items of
expense be deducted  at the later of (1) the time when all events have  occurred
that establish the liability to pay the expense and the amount of such liability
can be  determined  with  reasonable  accuracy  or (2) the  time  when  economic
performance with respect to the item of expense has occurred.

      Bad Debt  Reserves.  Historically  under  Section 593 of the Code,  thrift
institutions  such as the Savings  Bank,  which met certain  definitional  tests
primarily  relating  to their  assets  and the  nature of their  business,  were
permitted to establish a tax reserve for bad debts and to make annual  additions
within specified  limitations  which may have been deducted in arriving at their
taxable income. The Savings Bank's deduction with respect to "qualifying loans",
which are generally  loans secured by certain  interests in real  property,  may
currently be computed  using an amount based on the Savings  Bank's  actual loss
experience (the "experience method").

      The Small  Business Job  Protection  Act of 1996,  adopted in August 1996,
generally  (1) repealed the  provision of the Code which  authorized  use of the
percentage  of taxable  income  method by  qualifying  savings  institutions  to
determine deductions for bad debts,  effective for taxable years beginning after
1995,  and (2) required  that a savings  institution  recapture for tax purposes
(i.e. take into income) over a six-year period its applicable  excess  reserves.
For a savings  institution such as West View which is a "small bank", as defined
in the  Code,  generally  this is the  excess  of the  balance  of its bad  debt
reserves as of the close of its last taxable year  beginning  before  January 1,
1996, over the balance of such reserves as of the close of its last taxable year
beginning  before January 1, 1988. Any recapture  would be suspended for any tax
year that began after  December  31,  1995,  and before  January 1, 1998 (thus a
maximum of two years),  in which a savings  institution  originated an amount of
residential loans which was not less than the average of the principal amount of
such loans made by a savings  institution  during  its six most  recent  taxable
years  beginning  before  January 1, 1996.  The amount of tax bad debt  reserves
subject to  recapture  was  approximately  $1.2  million,  which was  recaptured
ratably over a six-year period ending December 31, 2003. In accordance with FASB
No. 109,  deferred  income taxes have  previously  been provided on this amount,
therefore no financial  statement  expense has been recorded as a result of this
recapture.  The Company's  supplemental bad debt reserve of  approximately  $3.8
million is not subject to recapture.

      The  above-referenced  legislation also repealed certain provisions of the
Code that only apply to thrift  institutions  to which Section 593 applies:  (1)
the denial of a portion of certain tax credits to a thrift institution;  (2) the
special rules with respect to the  foreclosure  of property  securing loans of a
thrift  institution;  (3) the reduction in the dividends received deduction of a
thrift  institution;  and (4) the ability of a thrift  institution  to use a net
operating  loss to offset its income  from a residual  interest in a real estate
mortgage  investment  conduit.  The  repeal of these  provisions  did not have a
material adverse effect on the Company's financial condition or operations.

      Audit by IRS. The Company's  consolidated  federal  income tax returns for
taxable  years  through  December 31, 2003,  have been closed for the purpose of
examination by the Internal Revenue Service.

      State Taxation.  The Company is subject to the Pennsylvania  Corporate Net
Income Tax and Capital Stock and Franchise Tax. The  Pennsylvania  Corporate Net
Income Tax rate is 9.99% and is imposed on the Company's  unconsolidated taxable
income for federal purposes with certain  adjustments.  In general,  the Capital
Stock Tax is a property  tax  imposed  at the rate of 0.389% of a  corporation's
capital stock

                                       27

<PAGE>

value, which is determined in accordance with a fixed formula based upon average
net income and consolidated net worth.

      The  Savings  Bank  is  taxed  under  the   Pennsylvania   Mutual   Thrift
Institutions  Tax Act (enacted on December  13, 1988,  and amended in July 1989)
(the "MTIT"),  as amended to include thrift  institutions  having capital stock.
Pursuant to the MTIT,  the Savings  Bank's  current tax rate is 11.5%.  The MTIT
exempts the Savings  Bank from all other taxes  imposed by the  Commonwealth  of
Pennsylvania  for state income tax purposes and from all local taxation  imposed
by  political  subdivisions,  except  taxes  on  real  estate  and  real  estate
transfers.  The MTIT is a tax upon net earnings,  determined in accordance  with
generally accepted accounting principles ("GAAP") with certain adjustments.  The
MTIT, in computing GAAP income,  allows for the deduction of interest  earned on
state and federal  securities,  while  disallowing  a  percentage  of a thrift's
interest expense  deduction in the proportion of those securities to the overall
investment  portfolio.  Net operating losses, if any,  thereafter can be carried
forward three years for MTIT purposes.

Item 1A.  Risk Factors.
--------  -------------

      In  analyzing  whether  to  make  or to  continue  an  investment  in  our
securities,  investors should consider,  among other factors, the following risk
factors.

      Our  results  of  operations  are  significantly   dependent  on  economic
conditions and related uncertainties.

      Commercial banking is affected,  directly and indirectly,  by domestic and
international economic and political conditions and by governmental monetary and
fiscal policy. Conditions such as inflation, recession,  unemployment,  volatile
interest rates, real estate values,  government  monetary policy,  international
conflicts,  the actions of terrorists  and other factors  beyond our control may
adversely  affect our  results of  operations.  Changes in  interest  rates,  in
particular,  could adversely affect our net interest income and have a number of
other  adverse  effects  on our  operations,  as  discussed  in the  immediately
succeeding  risk factor.  Adverse  economic  conditions  also could result in an
increase in loan  delinquencies,  foreclosures and  non-performing  assets and a
decrease in the value of the  property  or other  collateral  which  secures our
loans,  all of which could  adversely  affect our results of operations.  We are
particularly   sensitive   to  changes  in  economic   conditions   and  related
uncertainties in Western Pennsylvania because we derive substantially all of our
loans,  deposits  and other  business  from this  area.  Accordingly,  we remain
subject to the risks  associated  with  prolonged  declines in national or local
economies.

      Changes in  interest  rates  could have a material  adverse  effect on our
operations.

      The  operations  of financial  institutions  such as us are dependent to a
large  extent  on net  interest  income,  which is the  difference  between  the
interest income earned on  interest-earning  assets such as loans and investment
securities and the interest expense paid on interest-bearing liabilities such as
deposits  and  borrowings.  Changes in the general  level of interest  rates can
affect our net interest income by affecting the difference  between the weighted
average  yield earned on our  interest-earning  assets and the weighted  average
rate paid on our interest-bearing  liabilities, or interest rate spread, and the
average life of our interest-earning  assets and  interest-bearing  liabilities.
Changes in interest  rates also can affect our ability to originate  loans;  the
value of our  interest-earning  assets and our ability to realize gains from the
sale of such assets;  our ability to obtain and retain  deposits in  competition
with other available  investment  alternatives;  the ability of our borrowers to
repay  adjustable or variable rate loans;  and the fair value of the derivatives
carried on our balance sheet,  derivative  hedge  effectiveness  testing and the
amount of ineffectiveness recognized in our earnings.  Interest rates are highly
sensitive to many factors,  including  governmental monetary policies,  domestic
and international economic and political conditions and other factors beyond our
control.   Although   we  believe   that  the   estimated   maturities   of  our
interest-earning assets currently are well balanced in relation to the estimated
maturities of our interest-bearing liabilities (which involves various estimates
as to how changes in the  general  level of  interest  rates will  impact  these
assets and liabilities),  there can be no assurance that our profitability would
not be adversely affected during any period of changes in interest rates.

      There are increased  risks involved with  speculative  construction,  land
acquisition and development,  multi-family residential,  commercial real estate,
commercial business and consumer lending activities.

      Our lending activities include loans secured by speculative  construction,
land acquisition and development and commercial real estate.  In addition,  from
time to time we originate loans for the purchase

                                       28

<PAGE>

or refinancing of multi-family residential real estate.  Speculative residential
construction,  land  acquisition and development,  multi-family  residential and
commercial  real estate  lending  generally  is  considered  to involve a higher
degree of risk  than  single-family  residential  lending  due to a  variety  of
factors,  including generally larger loan balances, the dependency on successful
completion  or  operation  of the project for  repayment,  the  difficulties  in
estimating  construction  costs and loan terms which  often do not require  full
amortization  of the loan  over its term  and,  instead,  provide  for a balloon
payment at stated  maturity.  Our lending  activities  also  include  commercial
business  loans to small to medium  businesses,  which  generally are secured by
various  equipment,  machinery  and other  corporate  assets,  and a variety  of
consumer loans,  including home improvement  loans,  home equity loans and loans
secured by automobiles and other personal property. Although commercial business
loans and leases and consumer  loans  generally  have  shorter  terms and higher
interest  rates than  mortgage  loans,  they  generally  involve  more risk than
mortgage loans because of the nature of, or in certain cases the absence of, the
collateral which secures such loans.

      Our  allowance for losses on loans and leases may not be adequate to cover
probable losses.

      We have  established  an  allowance  for loan  losses  which we believe is
adequate to offset probable  losses on our existing loans and leases.  There can
be no  assurance  that any future  declines  in real estate  market  conditions,
general economic  conditions or changes in regulatory  policies will not require
us to increase our allowance for loan and lease  losses,  which would  adversely
affect our results of operations.

      We are subject to extensive  regulation  which could adversely  affect our
business and operations.

      We and our  subsidiaries  are  subject  to  extensive  federal  and  state
governmental  supervision and regulation,  which are intended  primarily for the
protection of depositors.  In addition,  we and our  subsidiaries are subject to
changes  in  federal  and  state  laws,  as  well  as  changes  in  regulations,
governmental  policies  and  accounting  principles.  The  effects  of any  such
potential  changes cannot be predicted but could  adversely  affect the business
and operations of us and our subsidiaries in the future.

      We face strong competition which may adversely affect our profitability.

      We are  subject to  vigorous  competition  in all aspects and areas of our
business from banks and other financial institutions, including savings and loan
associations,   savings  banks,  finance  companies,  credit  unions  and  other
providers of financial  services,  such as money market mutual funds,  brokerage
firms, consumer finance companies and insurance companies.  We also compete with
non-financial  institutions,  including  retail stores that  maintain  their own
credit  programs  and  governmental  agencies  that make  available  low cost or
guaranteed  loans to certain  borrowers.  Certain of our  competitors are larger
financial  institutions with substantially  greater  resources,  lending limits,
larger  branch  systems  and a  wider  array  of  commercial  banking  services.
Competition from both bank and non-bank organizations will continue.

      We  and  our  banking   subsidiary   are  subject  to  capital  and  other
requirements which restrict our ability to pay dividends.

      Our ability to pay dividends to our shareholders depends to a large extent
upon the dividends we receive from West View Savings Bank. Dividends paid by the
Savings Bank are subject to restrictions under Pennsylvania and federal laws and
regulations.  In addition,  West View Savings Bank must maintain certain capital
levels,  which may restrict  the ability of the Bank to pay  dividends to us and
our ability to pay dividends to our shareholders.

      Holders of our common  stock have no  preemptive  right and are subject to
potential dilution.

      Our  articles  of  incorporation  do not provide  any  shareholder  with a
preemptive  right to subscribe  for  additional  shares of common stock upon any
increase  thereof.  Thus, upon issuance of any additional shares of common stock
or other voting securities of the Company or securities  convertible into common
stock or other voting  securities,  shareholders may be unable to maintain their
pro rata voting or ownership interest in us.

Item 1B.  Unresolved Staff Comments
--------  -------------------------

      Not applicable.

                                       29

<PAGE>

Item 2.   Properties.
-------   -----------

          The following table sets forth certain information with respect to the
          offices and other properties of the Company at June 30, 2007.

          Description/Address                       Leased/Owned
          -------------------                       ------------

          McCandless Office                         Owned
           9001 Perry Highway
           Pittsburgh, PA 15237

          West View Boro Office                     Owned
           456 Perry Highway
           Pittsburgh, PA 15229

          Cranberry Township Office                 Owned
           20531 Perry Highway
           Cranberry Township, PA 16066

          Sherwood Oaks Office                      Leased(1)
           100 Norman Drive
           Cranberry Township, PA 16066

          Bellevue Boro Office                      Leased(2)
           572 Lincoln Avenue
           Pittsburgh, PA 15202

          Franklin Park Boro Office                 Owned
           2566 Brandt School Road
           Wexford, PA 15090

----------
(1)   The Company operates this office out of a retirement community.  The lease
      has been extended on the same terms pending  final  negotiations  on a new
      lease.

(2)   The lease is for a period of 10 years ending in November 2016.

Item 3.   Legal Proceedings.
-------   ------------------

      (a)   The Company is involved with various  legal  actions  arising in the
            ordinary  course of  business.  Management  believes  the outcome of
            these  matters  will have no  material  effect  on the  consolidated
            operations  or  consolidated  financial  condition of WVS  Financial
            Corp.

      (b)   Not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.
-------   ----------------------------------------------------

          Not applicable.

                                       30

<PAGE>

PART II.

Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and
-------   ----------------------------------------------------------------------
          Issuer Purchases of Equity Securities.
          --------------------------------------

          (a)   The information required herein is incorporated by reference on
                page 52 of the Company's 2007 Annual Report to Stockholders
                included as Exhibit 13 ("2007 Annual Report").

          (b)   Not applicable.

          (c)   The following table sets forth information with respect to
                purchases of common stock of the Company made by or on behalf of
                the Company during the three months ended June 30, 2007.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                             ISSUER PURCHASES OF EQUITY SECURITIES
------------------------------------------------------------------------------------------------
                                                         Total Number of      Maximum Number of
                        Total                           Shares Purchased     Shares that may yet
                      Number of                        as part of Publicly     be Repurchased
                        Shares       Average Price       Announced Plans     Under the Plans or
       Period         Purchased   Paid per Share ($)     or Programs (1)        Programs (2)
------------------------------------------------------------------------------------------------
<S>                   <C>         <C>                  <C>                   <C>
04/01/07 - 04/30/07       4,158                16.40                 4,158                47,270
------------------------------------------------------------------------------------------------
05/01/07 - 05/31/07         300                16.40                   300                46,970
------------------------------------------------------------------------------------------------
06/01/07 - 06/30/07           0                   --                     0                46,970
------------------------------------------------------------------------------------------------
     Total                4,458                16.40                 4,458                46,970
------------------------------------------------------------------------------------------------
</TABLE>

----------
      (1)   All shares indicated were purchased under the Company's Eighth Stock
            Repurchase Program.

      (2)   Eighth Stock Repurchase Program

            (a)   Announced September 27, 2005.

            (b)   125,000 common shares approved for repurchase.

            (c)   No fixed date of expiration.

            (d)   This Program has not expired and has 46,970 shares remaining
                  to be purchased at June 30, 2007.

            (e)   Not applicable.

Item 6.    Selected Financial Data.
-------    ------------------------

           The information required herein is incorporated by reference from
           pages 3 to 4 of the Company's 2007 Annual Report.

Item 7.    Management's Discussion and Analysis of Financial Condition and
-------    ---------------------------------------------------------------
           Results of Operation.
           ---------------------

           The information required herein is incorporated by reference from
           pages 5 to 13 of the Company's 2007 Annual Report.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.
--------   -----------------------------------------------------------

           The information required herein is incorporated by reference from
           pages 13 to 18 of the Company's 2007 Annual Report.

Item 8.    Financial Statements and Supplementary Data.
-------    --------------------------------------------

           The information required herein is incorporated by reference from
           pages 19 to 51 of the Company's 2007 Annual Report.

Item 9.    Changes in and Disagreements with Accountants on Accounting and
-------    ---------------------------------------------------------------
           Financial Disclosure.
           ---------------------

           Not applicable.

Item 9A.   Controls and Procedures.
--------   ------------------------

           Not applicable.

                                       31

<PAGE>

Item 9A(T). Controls and Procedures.
----------  ------------------------

           Our  management  evaluated,  with  the  participation  of  our  Chief
           Executive Officer and Chief Financial  Officer,  the effectiveness of
           our disclosure controls and procedures (as defined in Rules 13a-15(e)
           and 15d-15(e)  under the Securities  Exchange Act of 1934) as of June
           30, 2007. Based on such evaluation,  our Chief Executive  Officer and
           Chief Financial  Officer have concluded that our disclosure  controls
           and procedures are designed to ensure that information required to be
           disclosed  by us in the  reports  that we file or  submit  under  the
           Securities  Exchange Act of 1934 is recorded,  processed,  summarized
           and reported within the time periods specified in the SEC's rules and
           regulations and are operating in an effective manner.

           No  change in our  internal  control  over  financial  reporting  (as
           defined  in Rules  13a-15(f)  and  15(d)-15(f)  under the  Securities
           Exchange Act of 1934)  occurred  during the fourth fiscal  quarter of
           fiscal 2007 that has materially affected,  or is reasonably likely to
           materially affect, our internal control over financial reporting.

Item 9B.   Other Information.
-------    ------------------

           Not applicable.

PART III

Item 10.   Directors and Executive Officers of the Registrant.
--------   ---------------------------------------------------

           The  information  required  herein is  incorporated by reference from
           pages 2 to 7 of the  Company's  Proxy  Statement  for the 2007 Annual
           Meeting of Stockholders dated September 28, 2007 ("Proxy Statement").

           The  Company  has  adopted a Code of  Ethics  for its  employees  and
           directors and executive officers.  See Exhibits 14.1 and 14.2 to this
           Annual Report on Form 10-K.  Upon receipt of a written  request,  the
           Company will  furnish to any person,  without  charge,  a copy of its
           Code  of  Ethics  for  its  employees  and  directors  and  executive
           officers.  Such written  requests should be directed to WVS Financial
           Corp., 9001 Perry Highway, Pittsburgh, Pennsylvania 15237, attention:
           Corporate Secretary.

Item 11.   Executive Compensation.
--------   -----------------------

           The  information  required  herein is  incorporated by reference from
           pages 9 to 16 of the Company's Proxy Statement.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and
--------   ------------------------------------------------------------------
           Related Stockholder Matters.
           ----------------------------

           The security  ownership of certain  beneficial  owners and management
           information required herein is incorporated by reference from pages 7
           to 8 of the Company's Proxy Statement. The following table sets forth
           certain  information for all equity compensation plans and individual
           compensation  arrangements  (whether with employees or non-employees,
           such as directors) in effect as of June 30, 2007.

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                        Number of securities remaining
                                Number of securities to be     Weighted-average      available for future issuance under
                                  issued upon exercise of      exercise price of           equity compensation plans
                                   outstanding options,      outstanding options,   (excluding securities reflected in the
          Plan Category             warrants and rights       warrants and rights                 first column)
--------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                    <C>
Equity compensation plans
approved by security holders              15,908                    $15.39                            --
--------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders                  --                        --                            --
--------------------------------------------------------------------------------------------------------------------------
Total                                     15,908                    $15.39                            --
==========================================================================================================================
</TABLE>

                                       32

<PAGE>

Item 13.  Certain Relationships and Related Transactions, and Director
--------  ------------------------------------------------------------
          Independence.
          -------------

          The information  required herein is incorporated by reference on pages
          3 and 18 of the Company's Proxy Statement.

Item 14.  Principal Accounting Fees and Services.
--------  ---------------------------------------

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

PART IV.

Item 15.  Exhibits and Financial Statement Schedules.
--------  -------------------------------------------

          (a)   Documents filed as part of this report.

                (1)   The following documents are filed as part of this report
                      and are incorporated herein by reference from the
                      Company's 2007 Annual Report.

                      Report of Independent Registered Public Accounting Firm.

                      Consolidated Balance Sheet at June 30, 2007 and 2006.

                      Consolidated Statement of Income for the Years Ended June
                      30, 2007, 2006 and 2005.

                      Consolidated Statement of Changes in Stockholders' Equity
                      for the Years Ended June 30, 2007, 2006 and 2005.

                      Consolidated Statement of Cash Flows for the Years Ended
                      June 30, 2007, 2006 and 2005.

                      Notes to the Consolidated Financial Statements.

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

                                       33

<PAGE>

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

<TABLE>
<CAPTION>
 No.                Description                                                      Page
-----   --------------------------------                                             ----
<S>     <C>                                                                <C>
  3.1   Amended and Restated Articles of Incorporation                                *
  3.2   Amended and Restated By-Laws                                                  *
    4   Stock Certificate of WVS Financial Corp.                                      **
 10.1   WVS Financial Corp. Recognition Plans and Trusts for
           Executive Officers, Directors and Key Employees***                         *
 10.2   WVS Financial Corp. 1993 Stock Incentive Plan***                              *
 10.3   WVS Financial Corp. 1993 Directors' Stock Option Plan***                      *
 10.4   WVS Financial Corp. Employee Stock Ownership Plan and Trust***                *
 10.5   Amended West View Savings Bank Employee Profit Sharing Plan***                *
 10.6   Employment Agreements between WVS Financial Corp. and
           David Bursic ***                                                         ****
 10.7   Directors Deferred Compensation Program***                                    *
   13   2007 Annual Report to Stockholders                                 filed herewith
 14.1   Ethics Policy                                                               *****
 14.2   Code of Ethics for Senior Financial Officers                                *****
   21   Subsidiaries of the Registrant - Reference is made to
           Item 1. "Business" for the required information                            2
   23   Consent of Independent Registered Public Accounting Firm           filed herewith
 31.1   Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive
         Officer                                                           filed herewith
 31.2   Rule 13a-14(a) / 15d-14(a) Certification of the Chief Accounting
         Officer                                                           filed herewith
 32.1   Section 1350 Certification of the Chief Executive Officer          filed herewith
 32.2   Section 1350 Certification of the Chief Accounting Officer         filed herewith
</TABLE>

*       Incorporated  by reference  from the Current Report on Form 8-K filed by
        the Company with the SEC on August 1, 2007.

**      Incorporated  by reference from the  Registration  Statement on Form S-1
        (Registration  No. 33-67506) filed by the Company with the SEC on August
        16, 1993, as amended.

***     Management contract or compensatory plan or arrangement.

****    Incorporated  by  reference  from the Form  10-Q for the  quarter  ended
        September  30,  1998 filed by the Company  with the SEC on November  13,
        1998.

*****   Incorporated  by reference  from the Annual Report on Form 10-K filed by
        the Company with the SEC on September 24, 2004.

                                       34

<PAGE>

                                   SIGNATURES

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

                                          WVS FINANCIAL CORP.

September 24, 2007                    By: /s/ David J. Bursic
                                          -------------------------------------
                                          David J. Bursic
                                          President and Chief Executive Officer

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

/s/ David J. Bursic
-------------------------------------------------
David J. Bursic, Director, President and                      September 24, 2007
Chief Executive Officer
(Principal Executive Officer)

/s/ Keith A. Simpson
-------------------------------------------------
Keith A. Simpson,  Vice President, Treasurer                  September 24, 2007
and Chief Accounting Officer
(Principal Accounting Officer)

/s/ Donald E. Hook
-------------------------------------------------
Donald E. Hook,                                               September 24, 2007
Chairman of the Board of Directors

/s/ David L. Aeberli
-------------------------------------------------
David L. Aeberli, Director                                    September 24, 2007

/s/ Arthur H. Brandt
-------------------------------------------------
Arthur H. Brandt, Director                                    September 24, 2007

/s/ Lawrence M. Lehman
-------------------------------------------------
Lawrence M. Lehman, Director                                  September 24, 2007

/s/ Margaret VonDerau
-------------------------------------------------
Margaret VonDerau, Director                                   September 24, 2007

                                       35