FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934
                    For the fiscal year ended: June 30, 2002

                                       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:
                                 Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock (par value $.01 per share)
                     --------------------------------------
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of 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]

As of September 24, 2002, the aggregate value of the 2,173,002  shares of Common
Stock of the  Registrant  issued and  outstanding  on such date,  which excludes
478,784  shares held by all directors and officers of the Registrant as a group,
was  approximately  $34.5 million.  This figure is based on the last known trade
price of $15.86 per share of the  Registrant's  Common  Stock on  September  24,
2002.

Number of shares of Common Stock outstanding as of September 24, 2002: 2,651,786


                       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, 2002 are incorporated into Parts I, II and IV.

(2) Portions of the  definitive  proxy  statement for the 2002 Annual Meeting of
Stockholders are incorporated into Part III.


<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,  SAIF-insured  stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  The  Savings  Bank  converted  to the stock  form of  ownership  in
November 1993. The Savings Bank had no subsidiaries at June 30, 2002.


Lending Activities

     General.  At June 30, 2002, the Company's net portfolio of loans receivable
totaled  $152.9  million,  as compared to $185.2  million at June 30, 2001.  Net
loans  receivable  comprised  37.8% of Company  total  assets and 86.1% of total
deposits at June 30,  2002,  as compared to 46.7% and 102.1%,  respectively,  at
June 30, 2001. 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 and land  acquisition  and
development  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  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 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,  2002,  the  Savings  Bank's  limit  on
loans-to-one  borrower was  approximately  $3.7 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, 2002, 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.


                                       2
<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,
                     ---------------------------------------------------------------------------------------------------------------
                            2002                    2001                  2000                    1999                     1998
                     -----------------------  ------------------  ----------------------  ---------------------    -----------------

                        Amount        %      Amount        %        Amount        %        Amount        %      Amount        %
                        ------        -      ------        -        ------        -        ------        -      ------        -
                                                                (Dollars in Thousands)
Real estate loans:
<S>                 <C>            <C>      <C>            <C>      <C>             <C>     <C>           <C>     <C>         <C>
Single-family       $  89,889      53.69%   $ 105,623      51.50%   $ 105,964       52.49%  $ 103,035     54.43%  $ 104,849   61.06%
Multi-family            6,173       3.69        6,920       3.37        6,077        3.01       5,925      3.12       4,012    2.34
Commercial             25,439      15.19       34,955      17.05       32,847       16.27      28,546     15.08      21,021   12.24
Construction           19,965      11.92       28,157      13.73       26,935       13.34      23,810     12.58      17,779   10.35
Land acquisition
 and development        6,691       4.00        6,343       3.09        7,510        3.72       7,646      4.04       7,233    4.21
                        -----       ----        -----       ----        -----        ----       -----      ----       -----    ----
Total real estate
  Loans               148,157      88.49      181,998      88.74      179,333       88.83     168,962     89.25     154,894   90.20
                      -------      -----      -------      -----      -------       -----     -------     -----     -------   -----
Consumer loans:
Home equity            16,319       9.75       19,142       9.33       18,558        9.19      16,467      8.70      13,613    7.93
Education                   1       0.00           31       0.02           57        0.03          11      0.01         591    0.34
Other                   1,514       0.90        2,092       1.02        2,062        1.02       2,153      1.14       2,336    1.36
                        -----       ----        -----       ----        -----        ----       -----      ----       -----    ----
Total consumer
  Loans                17,834      10.65       21,265      10.37       20,677       10.24      18,631      9.85      16,540    9.63
                       ------      -----       ------      -----       ------       -----      ------      ----      ------    ----
Commercial loans        1,447       0.86        1,819       0.89        1,879        0.93       1,720      0.90         290    0.17
                        -----       ----        -----       ----        -----        ----       -----      ----         ---    ----
Commercial lease
  Financings              ---       0.00          ---       0.00          ---        0.00         ---      0.00        ---     0.00

                      167,438     100.00%     205,082     100.00%     201,889      100.00%    189,313    100.00%    171,724  100.00%
                      -------     ======      -------     ======      -------      ======     -------    ======     -------   ======
Less:
Undisbursed loan
  Proceeds            (11,311)                (16,481)                (15,820)                (16,327)              (11,312)
Net deferred loan
  origination fees       (464)                   (659)                   (801)                   (817)                 (815)
Allowance for loan
  Losses               (2,758)                 (2,763)                 (1,973)                 (1,842)               (1,860)
                       ------                  ------                  ------                  ------                ------
Net loans
  Receivable        $ 152,905               $ 185,179             $   183,295               $ 170,327           $   157,737
                    =========               =========             ===========               =========           ===========

</TABLE>

     Contractual  Maturities.  The  following  table  sets  forth the  scheduled
contractual maturities of the Company's loans and mortgage-backed  securities at
June 30, 2002.  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)
Amounts due in:
<S>                        <C>           <C>          <C>           <C>              <C>        <C>           <C>
  One year or less         $ 2,339       $  5         $ 485         $11,407          $1,756     $     812     $     443    $  17,247
  After one year through
     five years              2,588         645        1,407           3,450           4,935         5,100           ---       18,125
  After five years          84,962       5,523       23,547           5,108             ---        13,369        82,100      214,609
                            ------       -----       ------           -----          ------        ------        ------      -------
     Total(1)             $ 89,889      $6,173      $25,439         $19,965          $6,691       $19,281       $82,543     $249,981
                          ========      ======      =======         =======          ======       =======       =======     ========

</TABLE>

<TABLE>
<CAPTION>

  Interest rate terms on amounts due after one year:


<S>                       <C>           <C>         <C>              <C>          <C>             <C>           <C>         <C>
  Fixed                   $ 79,457      $3,808      $11,978          $5,108       $     212       $12,836       $23,620     $137,019
  Adjustable                 8,093       2,360       12,976           3,450           4,723         5,633        58,480       95,715
                             -----       -----       ------           -----           -----         -----        ------       ------
     Total                $ 87,550      $6,168      $24,954          $8,558          $4,935       $18,469       $82,100     $232,734
                          ========      ======      =======          ======          ======       =======       =======     ========

</TABLE>

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


                                       3
<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).

     As further  discussed  below,  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  six month term with  monthly  payments of
interest.  Subsequent  renewals,  if  necessary,  are  generally  granted for an
additional six 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,  2002,  the Company had  approximately  $6.9 million of renewed
commercial  real estate and  construction  loans.  The $6.9 million in aggregate
disbursed  principal  that has been renewed is comprised  of:  construction  and
business  lines  of  credit  totaling  $4.2  million  and land  acquisition  and
single-family  speculative construction loans totaling $2.7 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 but one of the loans that have been rolled  over,  as  discussed
above,  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 obtained 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
brokers and existing customers.

     All processing and  underwriting of real estate and commercial  business 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.  All loan  applications are required to be approved 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  Federal  National  Mortgage
Association 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 Federal National Mortgage Association 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. During fiscal 2002, the
Company  sold  loans  with an  approximate  combined  principal  balance of $3.0
million  comprised  primarily of two pools of  residential  loans  totaling $2.7
million and education loans totaling  approximately  $300 thousand.  The Company
did not retain any servicing rights with respect to the loans sold.

     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
t o 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


                                       4
<PAGE>


which have  previously  done business with the Company.  At June 30, 2002,  $3.2
million or 2.1% of the Company's total loans receivable consisted of whole loans
and participation interests in loans purchased from other financial institutions
which consisted of single-family mortgage pools.

     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, 2002, $3.2 million or 2.1% of the Company's total
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,
                                                         -------------------------------------------------------

                                                             2002                2001                 2000
                                                             ----                ----                 ----
                                                                        (Dollars in Thousands)

<S>                                                      <C>                    <C>                  <C>
Net loans receivable beginning balance                   $ 185,179              $183,295             $ 170,327
Real estate loan originations
   Single-family(1)                                          5,313                 7,918                13,396
   Multi-family(2)                                              40                   412                    --
   Commercial                                                  578                 3,268                 5,989
   Construction                                             13,634                22,255                17,157
   Land acquisition and development                          3,695                 1,954                 2,451
                                                             -----                 -----                 -----
      Total real estate loan originations                   23,260                35,807                38,993
                                                            ------                ------                ------

Home equity                                                  3,950                 5,358                 6,387
Education                                                      333                   342                   348
Commercial                                                     215                   295                   621
Other                                                          370                   979                   873
                                                               ---                   ---                   ---
          Total loan originations                           28,128                42,781                47,222
                                                            ------                ------                ------
Disbursements against available credit lines:
   Home equity                                               3,472                 4,491                 4,348
   Other                                                       250                   776                   998
Purchase of whole loans and participations                     ---                 2,848                   ---
                                                            ------                ------                ------
     Total originations and purchases                       31,850                50,896                52,568
                                                            ------                ------                ------
Less:
   Loan principal repayments                                66,054                47,398                38,861
   Sales of whole loans and participations(3)                2,988                   313                 1,093
   Transferred to real estate owned                            500                   ---                    20
   Change in loans in process                               (5,170)                  661                  (508)
   Other, net(4)                                              (248)                  640                   134
             --                                               ----                   ---                   ---
     Net increase (decrease)                             $ (32,274)             $  1,884             $  12,968
                                                         ---------              --------             ---------
Net loans receivable ending balance                      $ 152,905              $185,179             $ 183,295
                                                         =========              ========             =========
</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 in fiscal years 2002, 2001 and 2000 included  servicing  rights.
     As of June 30, 2002, loans serviced for others totaled  approximately $1.65
     million.
(4)  Includes  reductions  for  net  deferred  loan  origination  fees  and  the
     allowance for loan losses.

                                       5
<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 80%  should  require  appropriate
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%);  and
residential properties (75% on larger family non-owner-occupied residences).

     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,  2002,  $89.9  million  or 53.7% 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  $5.3  million and  decreased  $2.6 million or 32.9%
during the fiscal year ended June 30, 2002,  when compared to the same period in
2001.  The decrease in  single-family  originations  was  primarily due to lower
cyclical mortgage refinancing activity.

     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, 2002, approximately $81.8 million or 91.0% 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 95% 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%


                                       6
<PAGE>



coverage; and loans exceeding 95% through 100% - 35% coverage. No loans are made
in excess of 100% of appraised value.

     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,
2002,  $6.2 million or 3.7% of the Company's  total loan portfolio  consisted of
loans secured by existing multi-family residential real estate properties, which
represented  a decrease of $747  thousand or 10.8% from fiscal 2001. At June 30,
2002, $25.4 million or 15.2% of the loan portfolio consisted of loans secured by
existing commercial real estate properties, which represented a decrease of $8.9
million or 25.9% from fiscal 2001.  During fiscal 2002, the Company chose not to
emphasize  originations  of  commercial  real  estate  loans  due to  less  than
favorable  pricing and to reduce  credit risk  associated  with the national and
local economic recessions.

     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,  hotels, 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 twenty  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 100%. 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, 2002,  the Company's  multi-family  residential  and commercial
real estate loan portfolio  consisted of  approximately 97 loans with an average
principal  balance of $326  thousand.  At June 30,  2002,  the Company had three
commercial  real estate loans to three  borrowers,  totaling $3.3 million,  that
were not accruing interest.

     Construction  Loans.  In  recent  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, 2002,  construction
loans amounted to  approximately  $20.0 million or 11.9% of the Company's  total
loan  portfolio,  which  represented  a decrease  of $8.2  million or 29.1% from
fiscal 2001. The decrease was  principally  due to decreased  levels of new home
construction. As of June 30, 2002, the Company's portfolio of construction loans
consisted  of $17.7  million  of loans  for the  construction  of  single-family
residential  real  estate,  $1.0  million  of  loans  for  the  construction  of
commercial  real  estate,  and $1.3  million  of loans for the  construction  of
multi-family  residential real estate.  Construction loan  originations  totaled
$13.6  million and  decreased  by $8.6  million or 38.7%  during the fiscal year
ended June 30, 2002, when compared to the same period in 2001.


                                       7
<PAGE>


     Construction  loans are made for the  purpose  of  constructing  a personal
residence.  In such  circumstances,  the Company will underwrite such loans on a
construction/permanent  mortgage  loan basis.  At June 30,  2002,  approximately
74.4% 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   residential
developments, with 20.6% of total construction loans made to individuals for the
purpose of  constructing a personal  residence,  and 5.0% of total  construction
loans made to a church parish for an addition.  Upon application,  credit review
and analysis of personal and corporate  financial  statements,  the Company will
grant local  builders  lines of credit up to  designated  amounts.  These credit
lines may be used for the purpose of  construction  of  speculative  (or unsold)
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  $1.2  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, 2002,  the Company also had $6.7
million or 4.0% of the total loan portfolio  invested in land development loans,
which consisted of 24 loans to 19 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,
2002, $17.8 million or 10.6% of the Company's total loan portfolio  consisted of
consumer  loans,  which  represented  a decrease  of $3.5  million or 16.1% from
fiscal  2001.  The  consumer  loans  offered by the Company  include home equity
loans, home equity lines of credit,  education loans,  automobile loans, deposit
account secured loans and personal loans.  Approximately  91.5% 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, 2002,
approximately  69.6% 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%.


                                       8
<PAGE>


     Commercial  Loans.  At June 30,  2002,  $1.4 million or less than 1% of the
Company's  total loan  portfolio  consisted of commercial  loans,  which include
loans secured by accounts  receivable,  business  inventory and  equipment,  and
similar  collateral.  The $372  thousand or 20.5%  decrease from fiscal 2001 was
principally due to principal repayments.  The Company is selectively  developing
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
receives   income  from  fees  in  connection  with  loan   originations,   loan
modifications, late payments, prepayments and for 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 FASB 91, the Company has recognized  $285 thousand,
$202 thousand and $212  thousand of deferred loan fees during fiscal 2002,  2001
and 2000,  respectively,  in  connection  with loan  refinancings,  payoffs  and
ongoing amortization of outstanding loans. The increases in loan origination fee
income for fiscal year 2002 was  principally  attributable to a higher volume of
loan  refinancings.  A  higher  volume  of loan  refinancings  will  permit  the
acceleration of associated deferred fee balances.

     Non-Performing  Loans, Real Estate Owned and Troubled Debt  Restructurings.
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
will  continue to accrue  interest on  education  loans past due 90 days or more
because of the  repayment  guarantee  provided  by the Federal  government.  The
Company may also 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 and any write-down resulting therefrom 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.


                                       9
<PAGE>


     The following  table sets forth the amounts and categories of the Company's
non-performing assets at the dates indicated.

<TABLE>
<CAPTION>

                                                                  At June 30,
                                               ------------------------------------------------

                                                2002      2001        2000      1999     1998
                                                ----      ----        ----      ----     ----
                                                             (Dollars in Thousands)
<S>                                            <C>        <C>        <C>        <C>      <C>
Non-accruing loans:
Real estate:
   Single-family(1)                            $  582     $  201     $   67     $189     $ 52
   Commercial(2)                                3,267      3,326      2,344      274      481
   Construction(3)                                520      1,355      1,520      ---      ---
   Land Acquisition and Development (4)           477        ---        ---      ---      ---
Consumer                                          ---        134        113       77       70
Commercial loans and leases(5)                    198        ---          6        7      ---
                                               ------     ------     ------   ------   ------
Total non-accrual loans                         5,044      5,016      4,050      547      603
                                               ------     ------     ------   ------   ------
Accruing loans greater than 90 days

   Delinquent                                     ---        ---        ---      ---      ---
                                               ------     ------     ------   ------   ------
     Total non-performing loans                $5,044     $5,016     $4,050     $547     $603
                                               ------     ------     ------   ------   ------
Real estate owned                                 235        ---        ---      218      ---
                                               ------     ------     ------   ------   ------
     Total non-performing assets               $5,279     $5,016     $4,050     $765     $603
                                               ======     ======     ======   ======   ======
Troubled debt restructurings                   $  ---     $  ---     $  ---   $  ---   $  ---
                                               ======     ======     ======   ======   ======
Total non-performing loans and troubled
 debt restructurings as a percentage of
 net loans receivable                            3.30%      2.71%      2.21%    0.32%    0.38%
                                               ======     ======     ======   ======   ======
Total non-performing assets to total assets      1.30%      1.27%      0.99%    0.22%    0.20%
                                               ======     ======     ======   ======   ======
Total non-performing assets and troubled
   debt restructurings as a percentage of
    total assets                                 1.30%      1.27%      0.99%    0.22%    0.20%
                                               ======     ======     ======   ======   ======
</TABLE>

-----------------------------
(1)  At June 30, 2002, non-accrual  single-family  residential real estate loans
     consisted of three loans.
(2)  At June 30, 2002,  non-accrual  commercial  real estate loans  consisted of
     three loans.
(3)  At June 30, 2002, non-accrual construction loans consisted of one loan.
(4)  At June 30,  2002,  non-accrual  land  acquisition  and  development  loans
     consisted of one loan.
(5)  At June 30, 2002,  non-accrual commercial loans and leases consisted of one
     loan.

     The $28  thousand  increase  in  non-accrual  loans  during  fiscal 2002 is
comprised  of a $477  thousand  increase in  non-accrual  land  acquisition  and
development  loans, a $381 thousand increase in non-accrual  single-family  real
estate loans and a $198 thousand  increase in non-accrual  commercial  loans and
leases, partially offset by a $835 thousand decrease in non-accrual construction
loans, a $134 thousand decrease in non-accrual consumer loans and a $59 thousand
decrease in non-accrual commercial real estate loans.

     As of June 30,  2002,  the Company had three  commercial  real estate loans
classified as non-accrual  status.  One of the  commercial  real estate loans is
secured by a restaurant and real estate located in Wexford,  PA. The outstanding
principal  balance  of this loan  totals  $206  thousand  and is part of a court
supervised  bankruptcy plan. In brief,  the original  bankruptcy plan called for
payments in excess of the original  loan terms to cure the  deficiency  with the
next three years.  During the quarter  ended June 30, 2002,  the original  court
appointed  disbursing agent stopped making payments and is being investigated by
the U.S.  Attorney's Office for bankruptcy fraud and money  laundering.  On July
31,  2002 the  United  States  Bankruptcy  Court  for the  Western  District  of
Pennsylvania  appointed a successor  disbursing agent for the limited purpose of
disbursing  funds  currently held in escrow (rent payments) as well as regularly
scheduled  payments  due under the plan.  The Savings  Bank has not modified the
original terms of this loan and we are presently  providing a loan accounting to
the successor  disbursing  agent.  We believe that a small lump sum payment from
escrow, and future monthly payments, will commence in September 2002.


                                       10
<PAGE>


     The Company  has one  non-accrual  commercial  real  estate  loan,  and one
non-accrual  construction loan, to a retirement village located within the North
Hills  area.  Both loans  became  delinquent  in fiscal  2000.  The  outstanding
principal  balances  total $3.8  million  of which $2.6  million is owned by the
Company  and the  remaining  $1.2  million is  serviced  by the Company for four
participating  lenders.  Prior to January 2002, the borrower had been paying $15
thousand  per  month  towards  curing  the  arrearages.  See  Part  II  -  Other
Information - Item #1, "Legal  Proceedings".  As of this date,  the Savings Bank
and the borrower have not been able to negotiate a mutually  acceptable  written
work-out agreement; therefore no modification of these credits has occurred. The
Savings Bank remains  willing to endeavor to work towards a loan  work-out  with
respect to these credits while pursuing appropriate legal remedies.

     The Company  has one  non-accruing  commercial  real  estate  loan,  with a
principal balance of $980 thousand,  to a personal care home that was originally
part  of the  two  retirement  village  loans  discussed  above.  Due to the low
occupancy  of the  personal  care  home,  and  the  related  cash  drain  on the
retirement  village,  the Savings Bank "carved out"  approximately $1 million of
loan debt from the retirement  village,  assigned that $1 million in debt to the
personal care home, and allowed one of the obligors - a geriatric physician - to
separately  own and operate the personal care home as a separate  facility.  The
borrower was in compliance with a written loan work-out agreement until February
2002.  Sporadic  payments  have been  received  since March 2002.  The  borrower
alleges  insufficient  operating cash,  along with the loss of other income,  to
service the debt.  The Savings  Bank also holds  three other  loans,  secured by
pledges of various real estate and  chattel,  to this same  borrower  which were
accruing  interest as of June 30, 2002.  If  satisfactory  payment  arrangements
cannot be  worked-out  with the borrower on these  loans,  the Savings Bank will
classify the loans as non-accrual and begin appropriate legal proceedings during
the quarter ending September 30, 2002.

     The loan acquisition and development loan classified as non-accrual at June
30, 2002 was released by the Bankruptcy Court and sold in July 2002. The Savings
Bank recovered the full  principal  balance plus  approximately  $36 thousand in
previously unaccrued interest.

     As of June 30, 2002 the Company had one non-accruing commercial loan with a
principal  balance of $198 thousand.  The loan is secured by various  commercial
business  assets  including  photographic  equipment  and a truck along with the
personal  guarantees of both owners.  In July 2002,  the Company  entered into a
loan work-out  that  provided for reduced  monthly loan payments in exchange for
the pledging of additional  unrelated  business assets. The revised payment plan
went into  effect in August  2002 and the  borrowers  are  performing  under the
modified terms.

     The  Company  had three  non-accrual  single-family  loans at June 30, 2002
which  totaled $582  thousand.  During July 2002 one of these  loans,  with $171
thousand of principal  and $9 thousand of unaccrued  interest,  was satisfied in
full. The other two single-family loans are in the process of collection.

     Real  estate  owned,  at June  30,  2002,  totaled  $235  thousand  and was
comprised of two undeveloped  residential  lots and one completed  single-family
home.  During May 2002,  the Company sold one  partially  completed  speculative
construction home to an independent third party builder and realized proceeds of
approximately  $114 thousand with the Savings Bank financing  approximately  $53
thousand for completion of the home.  Additionally,  a developed residential lot
from the same real estate  owned  grouping  was sold with the Company  realizing
proceeds of approximately  $38 thousand.  The completed  single-family  home was
sold in August 2002 with the Company realizing  proceeds totaling  approximately
$188 thousand. In August 2002 the Company entered into a sales agreement to sell
the remaining two lots and recorded a $15 thousand loss provision.

     During  fiscal  2002,  2001 and 2000,  approximately  $408  thousand,  $422
thousand and $357 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  $162 thousand,  $296
thousand and $180 thousand, respectively.


                                       11
<PAGE>


     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 21, 1993, the FDIC, in  conjunction  with the Office of
the  Comptroller  of the  Currency,  the  Office of Thrift  Supervision  and the
Federal Reserve Board,  adopted an Interagency Policy Statement on the Allowance
for Loan and Lease Losses  ("Policy  Statement").  The Policy  Statement,  which
effectively supersedes previous FDIC proposed guidance, includes guidance (1) on
the  responsibilities  of management for the assessment and  establishment of an
adequate allowance and (2) for the agencies'  examiners to use in evaluating the
adequacy  of  such  allowance  and  the  policies  utilized  to  determine  such
allowance.  The Policy Statement also sets forth  quantitative  measures for the
allowance with respect to assets classified substandard and doubtful,  described
below,  and with  respect  to the  remaining  portion of an  institution's  loan
portfolio.   Specifically,   the  Policy  Statement  sets  forth  the  following
quantitative measures which examiners may use to determine the reasonableness of
an allowance:  (1) 50% of the portfolio that is classified doubtful;  (2) 15% of
the portfolio  that is classified  substandard;  and (3) for the portions of the
portfolio that have not been  classified  (including  loans  designated  special
mention), estimated credit losses over the upcoming twelve months based on facts
and  circumstances  available on the evaluation date. While the Policy Statement
sets forth this quantitative measure, such guidance is not intended as a "floor"
or "ceiling".

     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
special mention; (2) 5% to 25% 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, 2002, is adequate.


                                       12
<PAGE>


     The  allowance  for loan losses at June 30, 2002  decreased  $5 thousand to
$2.76 million due to charge-offs of $68 thousand, which were partially offset by
additional provisions of $57 thousand and recoveries of $6 thousand. The Company
believes  that the loan loss  reserve  levels are prudent and  warranted at this
time due to the weakening of the national economy.  The increases in prior years
reflected a number of factors,  the most  significant of which were the industry
trend towards  greater  emphasis on the  allowance  method of providing for loan
losses and the specific charge-off method and the increase in non-accrual loans.

     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,
                                               ----------------------------------------------------------------
                                                  2002         2001           2000        1999          1998
                                                  ----         ----           ----        ----          ----
                                                                       (Dollars in Thousands)

<S>                                             <C>          <C>            <C>          <C>          <C>
Average net loans                               $173,023     $ 185,895      $177,557     $158,651     $ 163,046
                                                ========      ========      ========     ========      ========
Allowance balance (at beginning of period)      $  2,763     $   1,973      $  1,842     $  1,860     $   2,009
Provision for loan losses                             57           788           150          ---          (120)
Charge-offs:
   Real estate:
     Single-family                                   ---           ---           ---           5             1
     Multi-family                                    ---           ---           ---          ---           ---
     Commercial                                      ---            10           ---          ---           ---
     Construction                                    ---           ---           ---          ---           ---
   Land acquisition and development                  ---           ---           ---          ---           ---
   Consumer:
     Home equity                                      25           ---           ---           15            15
     Education                                       ---           ---           ---          ---           ---
     Other                                            43           ---            19          ---            23
   Commercial loans and leases                       ---             7           ---          ---           ---
                                                 -------       -------       -------      -------       -------
     Total charge-offs                                68            17            19           20            39
Recoveries:
   Real estate:
     Single-family                                   ---           ---           ---            1             8
     Multi-family                                    ---           ---           ---          ---           ---
     Commercial                                      ---           ---           ---          ---           ---
     Construction                                    ---           ---           ---          ---           ---
   Land acquisition and development                  ---           ---           ---          ---           ---
   Consumer:
     Home equity                                     ---           ---           ---            1           ---
     Education                                       ---           ---           ---          ---           ---
     Other                                             6            19           ---          ---             1
   Commercial loans and leases                       ---           ---           ---          ---             1
                                                 -------       -------       -------      -------       -------

     Total recoveries                                  6            19           ---            2            10
                                                 -------       -------       -------      -------       -------
Net loans charged-off                                 62            (2)           19           18            29
Transfer to real estate owned loss reserve           ---           ---           ---          ---           ---
                                                 -------       -------       -------      -------       -------
Allowance balance (at end of period)            $  2,758     $   2,763      $  1,973     $  1,842     $   1,860
                                                 =======       =======       =======      =======       =======


Allowance for loan losses as a percentage of
  total loans receivable                            1.77%         1.47%         1.06%        1.07%         1.08%
                                                    ====          ====          ====         ====          ====
Net loans charged-off as a percentage of
  average net loans                                 0.04%         0.01%         0.01%        0.02%         0.02%
                                                    ====          ====          ====         ====          ====
Allowance for loan losses to non-performing
  Loans                                            54.68%        55.08%        48.72%      336.75%       308.46%
                                                   =====         =====         =====       ======        ======
Net loans charged-off to allowance for loan
  Losses                                            2.25%        (0.07)%        0.96%        0.98%         1.56%
                                                    ====         =====          ====         ====          ====
Recoveries to charge-offs                           8.82%       111.76%         0.00%       11.12%        25.64%
                                                    ====        ======          ====        =====         =====
</TABLE>

                                       13
<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,
                      --------------------------------------------------------------------------------------------------------

                             2002                 2001                 2000                 1999                 1998
                      -------------------  -------------------  -------------------  -------------------  -------------------
                      % 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           $191    53.69%       $180    51.50%     $  167    52.49%     $  174    54.43%     $  164    61.06%
  Multi-family              31     3.69          35     3.37          30     3.01         152     3.12         143     2.34
  Commercial             1,745    15.19       1,721    17.05         704    16.27         283    15.08         423    12.24
  Construction             300    11.92         407    13.73         287    13.34          85    12.58          52    10.35
  Land acquisition
   and development          66     4.00          41     3.09          57     3.72          57     4.04          59     4.21
  Unallocated               10     0.00         ---     0.00         363     0.00         695     0.00         652     0.00
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
    Total real estate
     loans               2,343    88.49       2,384    88.74       1,608    88.83       1,446    89.25       1,493    90.20
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------

Consumer loans:
  Home equity              165     9.75         231     9.33         184     9.19         202     8.70         168     7.93
  Education                ---     0.00         ---     0.02           1     0.03         ---     0.01           5     0.34
  Other                     28     0.90          73     1.02          80     1.02          24     1.14          17     1.36
  Unallocated              ---     0.00         ---     0.00         ---     0.00          77     0.00         167     0.00
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
    Total consumer
      loans                193    10.65         304    10.37         265    10.24         303     9.85         357     9.63
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
Commercial loans:
  Commercial loans         187     0.86          75     0.89         100     0.93          86     0.90          10     0.17
  Unallocated              ---     0.00         ---     0.00         ---     0.00           7     0.00         ---     0.00
    Total commercial
      loans                187     0.86          75     0.89         100     0.93          93     0.90          10     0.17
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
Commercial lease
  financings               ---     0.00         ---     0.00         ---     0.00         ---     0.00         ---     0.00
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
Off balance-sheet
   items                    35     0.00         ---     0.00         ---     0.00         ---     0.00         ---     0.00
                       -------   ------     -------   ------     -------   ------     -------   ------     -------   ------
                       $ 2,758   100.00%    $ 2,763   100.00%    $ 1,973   100.00%    $ 1,842   100.00%    $ 1,860   100.00%
                       =======   ======     =======   ======     =======   ======     =======   ======     =======   ======

</TABLE>


     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 to
date out impaired loans are real estate based. In connection with the fair value
of  collateral  measurement,  the  Company  generally  would use an  independent
appraisal and determine  costs to sell. The Company's  appraisals for commercial
income based loans, such as the retirement village,  now 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) review prior period (historical) charge-offs and recoveries;
and  (3)  present  the  results  of  this  process,   quarterly,  to  the  Asset
Classification  Committee and the 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 a $10 thousand  unallocated loss allowance  balance at June
30, 2002. In prior fiscal  years,  an  unallocated  loss  allowance  balance was
maintained for real estate, consumer and small


                                       14
<PAGE>


commercial  loans.  With respect to real estate loans, the Company believed that
it was prudent to maintain a certain level of unallocated loss allowances as the
Bank grew its commercial real estate and construction  segments. At the time the
Company's  historical  loss  experience  with these two  segments  was  somewhat
limited.  At the time management  believed that risks were inherent within those
segments but was  uncertain  as to the degree of loss.  A  reasonable  estimate,
using industry loss factors,  was utilized.  The same  rationale  applied to the
unallocated  allowance  for  consumer  loans.  The  Company  had no  unallocated
consumer loan allowances for the past three fiscal years.

     The following table summarizes the  calculations of required  allowance for
loan losses by loan category as of June 30, 2002.


                                                                   Allowance
                                                                      for
                                               Group Rate          Loan Loss
                                            -----------------     ------------
Homogenous loans:
      Single-family                              0.0015              $   132
      Multi-family                               0.0050                   31
      Commercial real Estate                     0.0100                  223
      Construction/land acquisition
        and development                          0.0015-0.0100(1)         85

      Secured consumer                           0.0100                  165
      Unsecured consumer                         0.0500                   26
      Commercial loans                           0.0500                   66
      Off balance-sheet items (2)                0.0100                   35
      Unallocated                                                         10

Individually evaluated Loans:
      Single-family                                                       59
      Multi-family                                                       ---
      Commercial real Estate                                           1,522
      Construction/land acquisition
        and development                                                  281
      Secured consumer                                                   ---
      Unsecured consumer                                                   2
      Commercial loans                                                   121
      Off balance-sheet items                                            ---

Total allowance for loan losses:
      Single-family                                                      191
      Multi-family                                                        31
      Commercial real estate                                           1,745
      Construction/land acquisition
        and development                                                  366
      Secured consumer                                                   165
      Unsecured consumer                                                  28
      Commercial loans                                                   187
      Off balance-sheet items                                             35
      Unallocated                                                         10
                                                                 -----------
Total allowance for loan losses                                     $  2,758
                                                                 ===========

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

(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.

(2)  The  1.00%  rate  is  applied  to  the  credit  equivalent  amount  of  the
     off-balance  sheet item.  Various off- balance  sheet items have  different
     risk weightings and credit conversion factors.


                                       15
<PAGE>



     Management  believes that the reserves it has  established  are adequate to
cover potential  losses in the Company's loan and real estate owned  portfolios.
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 may
be  insured  or  guaranteed  by  the  Federal  Home  Loan  Mortgage  Corporation
("FHLMC"), the Federal National Mortgage Association ("FNMA") and the Government
National Mortgage Association  ("GNMA").  CMOs may also be privately issued with
varying 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, 2002,  the  Company's  MBS  portfolio  totaled $82.5 million as
compared to $64.1 million at June 30, 2001.  The $18.4 million or 28.7% increase
in MBS balances  outstanding  during fiscal 2002 was primarily  attributable  to
purchases  of  floating  rate CMOs  which  were  partially  offset by  principal
repayments.  At June 30, 2002, approximately $58.5 million or 70.9% (book value)
of the Company's  portfolio of MBS, including CMOs, were comprised of adjustable
or floating rate instruments,  as compared to $16.0 million or 25.0% at June 30,
2001.  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.


                                                2002        2001       2000
                                                ----        ----       ----
MBS Available for Sale at June 30,
----------------------------------                (Dollars in Thousands)


FHLMC PCs                                     $    48    $    49    $   100
GNMA PCs                                        2,627      2,777      2,924
FNMA PCs                                        3,228      4,840      6,010
CMOs - agency collateral                          293        472        595
CMOs - single-family whole loan collateral        ---        248        521
                                               -------    -------    -------
Total amortized cost                          $ 6,196    $ 8,386    $10,150
                                              =======    =======    =======
Total estimated market value                  $ 6,450    $ 8,551    $ 9,936
                                              =======    =======    =======

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

FHLMC PCs                                     $    60    $    74    $   107
GNMA PCs                                        4,069      7,413      9,217
FNMA PCs                                           35         27         45
CMOs - agency collateral                       55,587     17,590     17,792
CMOs - single-family whole loan collateral     16,342     30,477     36,576
                                              -------    -------    -------
Total amortized cost                          $76,093    $55,581    $63,737
                                              =======    =======    =======
Total estimated market value                  $76,819    $56,082    $61,943
                                              =======    =======    =======



     The Company  believes that its present MBS available for sale allocation of
$6.2 million or 7.5% of the carrying value of the MBS portfolio,  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.


                                       16
<PAGE>


     The following table sets forth the amortized cost,  contractual  maturities
and weighted  average yields of the Company's MBSs,  including CMOs, at June 30,
2002.

<TABLE>
<CAPTION>

                                    One Year or     After One to     After Five to     Over Ten
                                       Less          Five Years        Ten Years         Years        Total
                                       ----          ----------        ---------         -----        -----
                                                                (Dollars in Thousands)

<S>                              <C>                 <C>              <C>               <C>          <C>
MBS available for sale            $      433          $     ---        $    35           $ 5,728      $  6,196
                                        6.02%              0.00%          9.01%             7.23%         7.16%

MBS held to maturity              $      ---          $     ---        $    58           $76,035      $ 76,093
                                        0.00%             0.00%           9.03%             3.93%         3.93%
                                        ----               ----           ----              ----          ----

Total                             $      433          $     ---        $    93           $81,763      $ 82,289
                                  ==========          =========        =======           =======      ========
Weighted average yield                  6.02%             0.00%           9.02%             4.16%         4.18%
                                  ==========          =========        =======           =======      ========

</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.

     The following table sets forth information with respect to the MBS owned by
the Company at June 30, 2002, 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 MBS owned by the  Company  have been  assigned a triple A  investment  grade
rating.

                                                                     Estimated
          Name of Issuer                          Carrying Value    Market Value
          --------------                          --------------    ------------
                                                      (Dollars in Thousands)

          Norwest Asset Securities Corp.           $  3,820         $  3,922
          Countrywide Home Loans, Inc.                4,180            4,323
          Residential Funding
          Mortgage Securities, Inc.                   3,573            3,624
                                                      -----            -----

                                                   $ 11,573         $ 11,869
                                                   ========         ========

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
Investment  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
experienced  significant  prepayments in  significant  portion of its investment
portfolio from U.S. Government agency obligations.  Outstanding balances totaled
$55.2  million or 36.5% of the total  investment  portfolio at June 30, 2002, as
compared to $87.9 million or 67.8% of the total investment portfolio at June 30,
2001.  At June 30, 2002,  approximately  $52.7 million or 95.5% 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 Company purchased  approximately $59.0 million
of investment  grade corporate debt securities  during fiscal year 2002 and held
approximately  $58.4  million  or 38.6% of the  total  investment  portfolio  in
Corporate Debt Obligations.


                                       17
<PAGE>



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

<TABLE>
<CAPTION>

                                                              2002              2001            2000
                                                              ----              ----            ----
Investment Securities Available for Sale at June 30,
----------------------------------------------------
                                                                (Dollars in Thousands)

<S>                                                           <C>               <C>            <C>
Preferred trust securities                                  $   860           $   161        $    ---
Corporate debt obligations                                    6,495               ---             ---
                                                            -------           -------         -------
Total amortized cost                                          7,355               161             ---
Equity securities                                             1,020             1,219           1,380
                                                            -------           -------         -------
Total amortized cost                                        $ 8,375           $ 1,380         $ 1,380
                                                            =======           =======         =======
Total estimated market value                                $ 8,426           $ 1,380         $ 1,296
                                                            =======           =======         =======


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

Corporate debt obligations                                  $58,415           $10,520         $   ---
U.S. Government agency securities                            55,216            87,927         116,052
State and municipal securities                               29,327            29,766          20,154
                                                             ------            ------          ------
                                                            142,958           128,213         136,206
FHLB stock                                                    8,281             8,150           5,225
                                                              -----             -----           -----
Total amortized cost                                       $151,239          $136,363        $141,431
                                                           ========          ========        ========
Total estimated market value                               $154,427          $137,341        $134,497
                                                           ========          ========        ========

</TABLE>

     Information  regarding  the  amortized  cost,  contractual  maturities  and
weighted average yields of the Company's  investment  portfolio at June 30, 2002
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>
Preferred trust                        $     ---         $  ---         $  ---          $     860         $  860
                                            0.00%          0.00%          0.00%              9.54%          9.54%

Corporate debt obligations             $   6,495         $  ---         $  ---          $     ---         $6,495
                                            2.67%          0.00%          0.00%              0.00%          2.67%

Equity securities                      $     ---         $  ---         $  ---          $   1,020         $1,020
                                            0.00%          0.00%          0.00%              5.76%         5.76%

Total                                  $   6,495         $  ---         $  ---          $   1,880         $8,375
                                       =========          =====          =====          =========         ======
Weighted average yield                      2.67%          0.00%          0.00%              7.49%          3.75%
                                       =========          =====          =====          =========         ======

</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>
Corporate debt obligations             $   48,479        $   9,936        $     ---        $      ---       $ 58,415
                                             3.82%            4.38%            0.00%             0.00%          3.92%

U.S. Government agency
   securities                          $      ---        $      ---       $     ---        $   55,216       $ 55,216

                                             0.00%            0.00%            0.00%             4.96%          4.96%

State and municipal securities (1)     $      ---        $      ---       $   1,461        $   27,866       $ 29,327

                                             0.00%            0.00%            7.24%             8.15%          8.10%
                                       ----------        ---------        ---------        ----------       --------
Total                                  $   48,479        $   9,936        $   1,461        $   83,082       $142,958
                                       ==========        =========        =========        ==========       ========
Weighted average yield                       3.82%            4.38%            7.24%             6.03%          5.18%
                                       ==========        =========        =========        ==========       ========
</TABLE>

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

(1)  State and municipal  security yields are calculated on a taxable equivalent
     basis.

                                       18
<PAGE>


     Information  regarding the amortized cost, earliest call dates and weighted
average  yield  of the  Company's  investment  portfolio  at June 30,  2002,  is
presented  below.  All Company  investments in callable bonds were classified as
held to maturity at June 30, 2002.

<TABLE>
<CAPTION>

                                    One Year or     After One to    After Five to      Over Ten
                                        Less         Five Years       Ten Years          Years           Total
                                        ----         ----------       ---------          -----           -----

<S>                              <C>                 <C>             <C>                 <C>             <C>
Corporate debt obligations       $    54,974         $ 9,936         $      ---          $     ---       $ 64,910
                                        3.69%           4.38%              0.00%              0.00%        3.791%

U.S. Government agency
   securities                    $    47,550         $ 5,197         $      ---          $   2,469       $ 55,216
                                        4.76%           8.03%              0.00%              2.38%        4.962%

Preferred trust  securities      $       ---         $   ---         $      ---          $     860       $    860

                                        0.00%           0.00%              0.00%              9.54%         9.536%
State and municipal
   securities (1)                $       ---         $21,759         $    7,568          $     ---       $ 29,327

                                        0.00%           8.90%              8.58%              0.00%        8.818%
                                 -----------         -------         ----------          ---------       --------
Total debt obligations           $   102,524         $36,892         $    7,568          $   3,329       $150,313
                                 ===========         =======         ==========          =========       ========


Weighted average yield                  4.18%           7.56%              8.58%              4.22%         5.235%

Equity securities                $       ---           $ ---         $      ---          $   1,020       $  1,020

                                 -----------         -------         ----------          ---------        --------
Total                            $   102,524         $36,892         $    7,568          $   4,349       $151,333
                                 ===========         =======         ==========          =========       ========

</TABLE>

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

(1)  State and municipal  security yields are calculated on a taxable equivalent
     basis.

     The Company to date has not  engaged,  and does not intend to engage in the
immediate future, in trading investment securities.

     The following table sets forth  information  with respect to the investment
securities  owned by the Company at June 30,  2002,  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  investment  securities  owned by the Company,
including those shown below, have been assigned an investment grade rating by at
least two national rating services. The Company's investments in preferred trust
securities are unrated.

<TABLE>
<CAPTION>

                                                                                     Estimated
         Name of Issuer                                     Carrying Value           Market Value
         --------------                                     --------------           ------------
                                                                   (Dollars in Thousands)
         <S>                                                <C>                      <C>
         Capital One Bank (2)                                $3,043                   $3,064
         Daimler Chrysler Financial Services N.A. LLC         3,637                    3,650
         Ford Motor Credit Co.                                3,554                    3,569
         General Motors Acceptance Corp.                      3,532                    3,550
         Harleysville Group, Inc.                             3,383                    3,374
         Pittston PA Area School District                     5,220                    5,768
         Potomac Capital Investment Corp.                     3,497                    3,497
         Sears Roebuck Acceptance Corp.                       3,407                    3,439
         Viacom, Inc.                                         3,060                    3,042
                                                              -----                    -----
                                                            $32,333                  $32,953
                                                            =======                  =======
</TABLE>

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

(2)  Capital  One  Bank  Corp.  matures  on  February  15,  2003 and is rated as
     follows: Standard & Poors; BBB-; Moody's: Baa2; & Fitch BBB+.

                                       19
<PAGE>


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.

     Deposits.  The Company's  deposits totaled $177.6 million at June 30, 2002,
as compared to $181.3  million at June 30, 2001.  The $3.7 million  decrease was
primarily  attributable to an approximate $14.6 million decrease in certificates
of deposit and a $297 thousand decrease in escrows,  which were partially offset
by a $8.4 million increase in core deposits and a $2.7 million increase in money
market deposit  accounts.  In order to attract new and lower cost core deposits,
the Company continued to promote a no minimum balance,  "free", checking account
product.  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
$12.3  million or 6.9% of the  Company's  total  deposits at June 30,  2002,  as
compared  to $16.4  million  or 9.0% at June 30,  2001.  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, 2002.  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 MAC(R) and CIRRUS(R) ATM networks.  The Company
also  participates in a new ATM program called the Freedom ATM  AllianceSM.  The
Freedom ATM  AllianceSM  allows West View  Savings  Bank  customers to use other
Pittsburgh area Freedom ATM AllianceSM affiliates' ATMs without being surcharged
and vice versa.  The Freedom ATM  AllianceSM 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.


                                       20
<PAGE>


<TABLE>
<CAPTION>

     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.

                                                                        At June 30,
                                       ------------------------------------------------------------------------------
                                                 2002                      2001                      2000
                                                 ----                      ----                      ----
                                         Amount        Rate         Amount        Rate        Amount        Rate
                                         ------        ----         ------        ----        ------        ----
                                                                  (Dollars in Thousands)
<S>                                      <C>           <C>           <C>           <C>        <C>            <C>
Regular savings and club
   accounts                                $38,277      1.92%         $35,623      2.51%        $37,085      2.53%
NOW accounts                                19,463      0.31           17,543      0.54          17,356      0.56
Money market deposit
   accounts                                 13,460      1.91           12,409      2.65          12,717      2.67
Certificate of deposit accounts             90,022      4.44           93,879      5.82          92,206      5.38
Escrows                                      2,116      1.56            2,367      1.69           2,363      1.74
                                             -----      ----            -----      ----           -----      ----
     Total interest-bearing
        deposits and escrows               163,338      3.11          161,821      4.22         161,727      3.94
Non-interest-bearing checking
   accounts                                 11,814      0.00           11,616      0.00          10,281      0.00
                                            ------      ----           ------      ----          ------      ----
     Total deposits and escrows           $175,152      2.90%        $173,437      3.93%       $172,008      3.70%
                                          ========      ====         ========      ====        ========      ====

</TABLE>


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

<TABLE>
<CAPTION>

                                                              Year Ended June 30,
                                         --------------------------------------------------------------------

                                                2002                    2001                   2000
                                                ----                    ----                   ----
                                                              (Dollars in Thousands)

<S>                                           <C>                      <C>                    <C>
Increase(decrease) before interest
   credited                                    $(9,465)                 $1,975                 $(7,653)
Interest credited                                5,698                   6,506                   6,268
                                                 -----                   -----                   -----
Net deposit increase (decrease)                $(3,767)                 $8,481                 $(1,385)
                                               =======                  ======                 =======


</TABLE>


     The following table sets forth maturities of the Company's  certificates of
deposit of $100,000 or more at June 30, 2002, by time remaining to maturity.

                                                              Amounts
                                                              -------
                                                      (Dollars in Thousands)
         Three months or less                                $  2,864
         Over three months through six months                   4,800
         Over six months through twelve months                  2,753
         Over twelve months                                     1,860
                                                                -----
                                                              $12,277
                                                              =======

     Borrowings.  Borrowings  are  comprised of FHLB advances with various terms
and repurchase  agreements with securities  brokers with original  maturities of
ninety-two days or less. At June 30, 2002,  borrowings totaled $193.7 million as
compared to $182.2  million at June 30, 2001. The $11.5 million or 6.3% increase
was  primarily  due to increased  purchases of  investment  and  mortgage-backed
securities.  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 2002 Annual  Report.
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.


                                       21
<PAGE>



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 43 full-time  employees  and 10  part-time  employees as of
June 30, 2002. None of these employees is represented by a collective bargaining
agent.  The  Company  believes  that it  enjoys  excellent  relations  with  its
personnel.

                           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 30,  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. No approval under the BHCA is
required,  however, for a bank holding company already owning or controlling 50%
of the voting shares of a bank to acquire additional shares of such bank.

     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

                                       22
<PAGE>


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.

     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, as are certain privately-issued MBS representing indirect
ownership of such loans.  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, however, in light of recent judicial precedent.


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.

     FDIC Insurance Premiums.  The Savings Bank currently pays deposit insurance
premiums to the FDIC on a risk-based  assessment system  established by the FDIC
for all SAIF-member institutions. Under


                                       23
<PAGE>


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.  These three groups are then divided into three subgroups which
reflect varying levels of supervisory  concern,  from those which are considered
to be healthy to those which are  considered  to be of  substantial  supervisory
concern. The matrix so created results in nine assessment risk  classifications,
with rates  ranging from 0.00% for well  capitalized,  healthy  institutions  to
0.27% for undercapitalized  institutions with substantial  supervisory concerns.
The Savings Bank is a "well capitalized" institution as of June 30, 2002.

     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.
These  requirements  are  substantially  similar to those adopted by the Federal
Reserve Board regarding bank holding companies, as described above.

     The  FDIC's  capital  regulations  establish  a minimum  3% 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% to 5% 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  and rated  composite  1 under the Uniform  Financial  Institutions
Rating System.

     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% 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 be restored 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.


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.

                                       24
<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 is  approximately  $1.2 million,  which is being 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, 1998,  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

                                     25
<PAGE>


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  0.649%  of a  corporation's  capital  stock  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.

                                     26
<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, 2002.

         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
     expires in June 2003.
(2)  The lease is for a period  of 15 years  ending  in  September  2006 with an
     option for the Company to renew the lease for an additional five years.


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

     The  Savings   Bank  filed  a  Complaint  in  Mortgage   Foreclosure   (the
"Foreclosure")  in March 2000 against the Development  Group of Rose Valley (the
"Obligor"),  an obligor on two  previously  disclosed  impaired and  non-accrual
loans.  The  Foreclosure  was filed in the Court of  Common  Pleas of  Allegheny
County,  Pennsylvania  to  request  a  judicial  sale  of  the  underlying  real
properties securing the mortgage loans due to nonpayment as per the terms of the
mortgage  notes.  In November 2001, the Obligor filed an Answer,  New Matter and
Counterclaim to the Foreclosure.  The counterclaims  include breach of contract,
promissory estoppel,  breach of duty of good faith and fair dealing and tortuous
interference with prospective and existing business  relations and seeks damages
of approximately $5.2 million. In January 2002, the Court dismissed the tortuous
interference claim. The Company believes the remaining counterclaims are without
merit. The Company anticipates a January 2003 trial date for the Foreclosure. In
April 2002,  the Savings Bank filed a Petition for  Enforcement of Assignment of
Rents and for Supplementary  Aid of Execution.  This Petition seeks to sequester
$25 thousand per month to adequately  protect the Savings Bank's interest in the
loan during the pending litigation and any possible workout. The discovery phase
of the Petition is  substantially  complete and the Company  anticipates a Court
review during October 2002. The Savings Bank remains willing to endeavor to work
towards a loan work-out with respect to these credits.


                                       27
<PAGE>


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

        Not applicable.

PART II.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
------- ----------------------------------------------------------------------

     The  information  required herein is incorporated by reference from page 47
     of the Company's 2002 Annual Report.

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

     The  information  required herein is incorporated by reference from pages 2
     to 3 of the Company's 2002 Annual Report.

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

     The  information  required herein is incorporated by reference from pages 4
     to 17 of the Company's 2002 Annual Report.

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

     The information  required herein is incorporated by reference from pages 11
     to 15 of the Company's 2002 Annual Report.

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

     The information  required herein is incorporated by reference from pages 18
     to 46 of the Company's 2002 Annual Report.

PART III.

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

     Not applicable.

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

     The  information  required herein is incorporated by reference from pages 2
     to 6 of the  Company's  Proxy  Statement  for the 2002  Annual  Meeting  of
     Stockholders dated September 27, 2002 ("Proxy Statement").

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

     The  information  required herein is incorporated by reference from pages 9
     to 14 of the Company's Proxy Statement.

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

     The  information  required herein is incorporated by reference from pages 7
     to 9 of the Company's Proxy Statement.


Item 13. Certain Relationships and Related Transactions.
-------- -----------------------------------------------

     The information  required herein is incorporated by reference from pages 14
     to 15 of the Company's Proxy Statement.


                                       28
<PAGE>


PART IV.

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

          (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 2002
                    Annual Report.

               Report of Independent Auditors.

               Consolidated  Balance Sheets at June 30, 2002 and 2001.

               Consolidated  Statements  of Income for the Years  Ended June 30,
               2002, 2001 and 2000.

               Consolidated  Statements of Changes in  Stockholders'  Equity for
               the Years Ended June 30, 2002, 2001 and 2000.

               Consolidated  Statements  of Cash Flows for the Years  Ended June
               30, 2002, 2001 and 2000.

               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.

               (3)  (a) 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       Articles of Incorporation                                                    *
                   3.2       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, Margaret VonDerau and Edward Wielgus **                  ***
                  10.7       Directors Deferred Compensation Program**                                    *
                    13       2002 Annual Report to Stockholders                                         E-1
                    21        Subsidiaries of the Registrant - Reference is made to
                                 Item 1. "Business" for the required information                          2
                    23        Consent of Independent Auditors                                          E-53

</TABLE>


     *    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.

     (3)(b)Not applicable.


                                       29
<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, 2002                             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, 2002
Chief Executive Officer
(Principal Executive Officer)




/s/ Donald E. Hook
------------------------------------------
Donald E. Hook                                 September 24, 2002
Chairman of the Board


/s/ Margaret VonDerau
------------------------------------------
Margaret VonDerau, Director,                   September 24, 2002
Senior Vice President, Treasurer
and Corporate Secretary


/s/ Keith A. Simpson
------------------------------------------
Keith A. Simpson,                              September 24, 2002
Controller
(Principal Accounting Officer)


/s/ David L. Aeberli
------------------------------------------
David L. Aeberli, Director                     September 24, 2002


/s/ Arthur H. Brandt
------------------------------------------
Arthur H. Brandt, Director                     September 24, 2002


/s/ Lawerence M. Lehman
------------------------------------------
Lawrence M. Lehman, Director                   September 24, 2002


/s/ John M. Seifarth
------------------------------------------
John M. Seifarth, Director                     September 24, 2002



                                       30

<PAGE>




                                  CERTIFICATION

     I, David J. Bursic, certify that:

     1.   I have  reviewed  this  annual  report on Form  10-K of WVS  Financial
          Corp.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have;

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation,  to the registrant's auditors and Audit
          committee of  registrant's  board of directors (or persons  performing
          the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.


Date:  September 24, 2002


                                                   /s/ David J. Bursic
                                                   -----------------------
                                                   David J. Bursic
                                                   President and Chief
                                                   Executive Officer


                                       31
<PAGE>


                                  CERTIFICATION

     I, Keith A. Simpson, certify that:

     1.   I have  reviewed  this  annual  report on Form  10-K of WVS  Financial
          Corp.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have;

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation,  to the registrant's auditors and Audit
          committee of  registrant's  board of directors (or persons  performing
          the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.


Date:  September 24, 2002


                                                   /s/ Keith A. Simpson
                                                   ----------------------------
                                                   Keith A. Simpson
                                                   Controller and Assistant
                                                   Treasurer
                                                  (Principal Accounting Officer)



                                       32