[GRAPHIC -- COMPANY LOGO]




                                       WVS
                                FINANCIAL CORP.










                                                              1997 ANNUAL REPORT
<PAGE>
                                TABLE OF CONTENTS


                                                                          Page
                                                                          Number
                                                                          ------

         Stockholders' Letter                                                 1

         Selected Financial and Other Data                                    2

         Management's Discussion and Analysis                                 4

         Report of Independent Auditors                                      25

         Consolidated Statements of Financial Condition                      26

         Consolidated Statements of Income                                   27

         Consolidated Statements of Changes in Stockholders' Equity          28

         Consolidated Statements of Cash Flows                               29

         Notes to the Consolidated Financial Statements                      30

         Common Stock Market Price and Dividend Information                  57

         Corporate Information                                               58
<PAGE>
To Our Stockholders:


Fiscal  1997  was a year of  accomplishment  for  WVS  Financial  Corp.  and its
operating  subsidiary  West View Savings Bank.  Company assets  increased  $35.1
million  or  13.5%  to  $294.7   million  at  June  30,  1997.   Investment  and
mortgage-backed  securities grew $23.7 million or 23.4% significantly  enhancing
bottom  line  results.  Net loans  receivable  rose by $9.1  million and totaled
$158.1 million or 53.6% of Company  assets.  Cash dividends paid to stockholders
totaled  $3.00 per share in fiscal 1997 as compared to $2.06 per share in fiscal
1996,  including  special  cash  dividends  of $2.30 and $1.70 per share paid in
fiscal years 1997 and 1996, respectively.

Net  income  for the year  totaled  $2.96  million  or $1.69 per share both on a
primary and fully  diluted basis as compared to $3.58 million or $2.06 per share
on a comparable  basis for the same period in 1996.  Fiscal 1997 operations were
significantly  impacted by a $1.1 million  one-time  expense to recapitalize the
Federal  Deposit  Insurance  Corporation's  Savings  Association  Insurance Fund
(SAIF).  Without  this  one-time  charge,  Company  net  income  would have been
approximately $3.65 million or $2.08 per share.

Our commitment to enhance stockholder value remains steadfast.  On June 30, 1997
the Company's stock was trading at $25 7/8 compared to $20 1/2 on June 30, 1996,
which,  when combined with the cash dividends paid during fiscal 1997,  provided
an impressive 40.9% return.

The Board of Directors,  Senior Management and staff would like to thank you for
your  continued  support  and we  welcome  the  opportunity  to serve you in the
future.  By referring  your family,  friends and  neighbors to West View Savings
Bank, you can contribute to the Company's future success.





ROBERT C. SINEWE                                     JAMES S. McKAIN, JR.
President and                                        Chairman of the Board
Chief Executive Officer

                                       1
<PAGE>
                   FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED
                            FINANCIAL AND OTHER DATA

<TABLE>
<CAPTION>
                                                      As of or For the Year Ended June 30,
                                      ------------------------------------------------------------------
                                         1997          1996          1995         1994           1993
                                      ----------    ----------    ----------    ----------    ----------
                                                            (Dollars in Thousands)
<S>                                   <C>           <C>           <C>           <C>           <C>
Selected Financial Data:
Total assets ......................   $  294,693    $  259,622    $  227,368    $  221,315    $  210,633
Net loans receivable ..............      158,134       149,011       133,343       123,600       119,348
Mortgage-backed securities ........       37,490        42,118        22,655        25,704        14,793
Investment securities .............       87,548        59,218        61,525        63,578        61,917
Real estate owned .................         --            --            --              25          --
Deposit accounts ..................      170,879       170,843       168,786       180,329       190,358
FHLB advances .....................       77,857        38,000        14,984         4,000          --
Other borrowings ..................        6,784        10,652         4,047          --            --
Stockholders' equity ..............       32,889        34,038        33,809        32,369        15,349
Nonperforming assets and troubled
   debt restructurings(1) .........          274           980         1,959         1,931         1,118

Selected Operating Data:
Interest income ...................   $   21,125    $   18,317    $   15,612    $   14,615    $   16,026
Interest expense ..................       10,884         8,840         7,372         7,545         8,815
                                      ----------    ----------    ----------    ----------    ----------
Net interest income ...............       10,241         9,477         8,240         7,070         7,211
Provision for loan losses .........           60           150           211           211           666
                                      ----------    ----------    ----------    ----------    ----------
Net interest income after provision
   for loan losses ................       10,181         9,327         8,029         6,859         6,545
Non-interest income ...............          374           383           307           315           298
Non-interest expense ..............        5,666         4,067         4,894         4,270         3,598
                                      ----------    ----------    ----------    ----------    ----------
Income before income tax expense ..        4,889         5,643         3,442         2,904         3,245
Income tax expense ................        1,930         2,066         1,652           914         1,369
                                      ----------    ----------    ----------    ----------    ----------
Net income before cumulative effect
   of accounting change ...........        2,959         3,577         1,790         1,990         1,876
Cumulative effect of change in
   accounting for income taxes ....         --            --            --             245          --
                                      ----------    ----------    ----------    ----------    ----------
Net income ........................   $    2,959    $    3,577    $    1,790    $    2,235    $    1,876
                                      ==========    ==========    ==========    ==========    ==========


<PAGE>
<CAPTION>
                                                      As of or For the Year Ended June 30,
                                      ------------------------------------------------------------------
                                         1997          1996          1995         1994           1993
                                      ----------    ----------    ----------    ----------    ----------
                                                            (Dollars in Thousands)
<S>                                   <C>           <C>           <C>           <C>           <C>
Per Share Information(2):
Primary:
Net income before cumulative effect
   of accounting change ...........   $     1.69    $     2.06    $     1.05    $     1.18           N/A
Cumulative effect of change in
   accounting for income taxes ....         --            --            --            0.14           N/A
                                      ----------    ----------    ----------    ----------    ----------
Primary and fully diluted earnings    $     1.69    $     2.06    $     1.05    $     1.32           N/A
                                      ==========    ==========    ==========    ==========    ==========
Dividends per share(3) ............   $     3.00    $     2.06    $     0.42    $     0.04           N/A
Dividend payout ratio(3) ..........       177.51%       100.00%        40.00%         3.10%          N/A
Book value per share at period end    $    18.82    $    19.60    $    19.47    $    18.64           N/A
Average shares outstanding
   primary ........................    1,752,216     1,732,348     1,709,243     1,693,580           N/A
   fully diluted ..................    1,754,442     1,734,467     1,710,696     1,694,138           N/A
</TABLE>


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                 As of or For the Year Ended June 30,
                                           ----------------------------------------------
                                            1997      1996      1995      1994      1993
                                           ------    ------    ------    ------    ------
                                                       (Dollars in Thousands)
<S>                                        <C>       <C>       <C>       <C>       <C>
Selected Operating Ratios(4):
Average yield earned on interest-
   earning assets ...................        7.69%     7.83%     7.33%     6.81%     7.97%
Average rate paid on interest-
   bearing liabilities ..............        4.78      4.58      4.19      4.02      4.67
Average interest rate spread(5) .....        2.91      3.25      3.14      2.79      3.30
Net interest margin(5) ..............        3.73      4.05      3.87      3.30      3.59
Ratio of interest-earning assets
   to interest-bearing liabilities ..      120.70    121.18    121.09    114.30    106.43
Non-interest expense as a percent
   of average assets ................        2.04      1.71      2.26      1.96      1.73
Return on average assets ............        1.06      1.51      0.83      1.02      0.90
Return on average equity ............        8.63     10.19      5.34      8.74     13.15
Ratio of average equity to average
   assets ...........................       12.33     14.81     15.48     11.70      6.85
Full-service offices at end of period        5         5         5         5         5
Asset Quality Ratios(4):
Non-performing loans and troubled
   debt restructurings as a percent
   of net total loans(1) ............        0.17%     0.66%     1.47%     1.54%     0.94%
Non-performing assets as a percent
   of total assets(1) ...............        0.09      0.15      0.45      0.45      0.08
Non-performing assets and troubled
   debt restructurings as a percent
   of total assets ..................        0.09      0.38      0.86      0.86      0.53
Allowances for loan losses as a
   percent of total loans receivable         1.16      1.17      1.25      1.14      1.10
Allowances for loan losses as a
   percent of non-performing loans ..      733.21    520.95    178.43    169.75    893.21
Charge-offs to average loans
   receivable outstanding during
   the period .......................        0.01      0.02      0.01      0.02      0.07
Capital Ratios(4):
Tier 1 risk-based capital ratio .....       24.52     27.19     27.06     21.39     11.13
Total risk-based capital ratio ......       25.77     28.44     28.32     22.47     12.18
Tier 1 leverage capital ratio .......       11.44     13.90     14.74     14.59      7.36
</TABLE>
<PAGE>

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

(1)      Non-performing  assets consist of non-performing  loans and real estate
         owned ("REO").  Non- performing loans consist of non-accrual  loans and
         accruing loans greater than 90 days  delinquent,  while REO consists of
         real estate  acquired  through  foreclosure and real estate acquired by
         acceptance of a deed in lieu of foreclosure.

(2)      Earnings per share for fiscal 1994 have been  computed as if all shares
         were issued on July 1, 1993. Earnings per share computed for the period
         from November 29, 1993 (date of the mutual-to-stock conversion) to June
         30, 1994, would be $0.78.

(3)      Dividends  per share and dividend  payout ratio  includes  special cash
         dividends of $2.30, $1.70 and $0.20 per share, paid during fiscal 1997,
         1996 and 1995, respectively.

(4)      Asset  quality  ratios and  capital  ratios  are end of period  ratios,
         except for net charge-offs to average net loans.  With the exception of
         end of period ratios,  all ratios are based on average monthly balances
         during the indicated periods.

(5)      Interest rate spread  represents  the  difference  between the weighted
         average yield on interest-earning  assets and the weighted average cost
         of interest-bearing liabilities, and net interest margin represents net
         interest income as a percent of average interest-earning assets.


                                       3
<PAGE>
                       WVS FINANCIAL CORP. AND SUBSIDIARY


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


          General - 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.  Originally  organized under  Pennsylvania  law in 1908 as West View
Building Loan  Association,  West View changed its name to West View Savings and
Loan   Association   in  1954.  In  June  1992,   West  View  converted  from  a
Pennsylvania-chartered    mutual    savings   and   loan    association   to   a
Pennsylvania-chartered  mutual  savings bank.  The Savings Bank converted to the
stock form of ownership in November 1993.  The Savings Bank had no  subsidiaries
at June 30, 1997.

          The operating  results of the Company  depend  primarily  upon its net
interest  income,  which is  determined  by the  difference  between  income  on
interest-earning  assets,  principally  loans,  mortgage-backed  securities  and
investment  securities,  and interest expense on  interest-bearing  liabilities,
which consist  primarily of deposits.  The Company's net income is also affected
by its  provision  for loan  losses,  as well as the  level of its  non-interest
income,  including loan fees and service charges, and its non-interest expenses,
such as compensation and employee benefits,  income taxes, deposit insurance and
occupancy costs.

          The  Company's   strategy  focuses  on  traditional   thrift  lending,
maintaining  asset quality and  increasing  core  earnings.  Specific  strategic
components include:

          Core  Deposits - As of June 30, 1997,  $71.2  million or 41.7% of West
View's total  deposits  consisted of regular  savings and club  accounts,  money
market deposit accounts,  and checking accounts.  Approximately $36.6 million or
51.4% of core deposits consisted of regular savings and club accounts.  Checking
Account  balances grew $1.9 million or 9.3% during fiscal 1997 and totaled $22.5
million or 31.6% of core  deposits at June 30,  1997.  The  continued  growth in
checking  account  deposits  was  primarily  due  to  increased   marketing  and
promotional efforts by the Company to gain market share. Core deposits are

                                       4
<PAGE>
considered to be more stable and lower cost funds than  certificates  of deposit
and other borrowings.

          Consistent  Core  Earnings - The  Company's  net  interest  income has
consistently covered operating expenses  (non-interest  expense).  During fiscal
1997, net interest income totaled $10.2 million,  representing a $0.7 million or
7.4% increase over fiscal 1996. See "Selected  Consolidated  Financial and Other
Data".

          Asset Quality - Largely  reflecting a lending strategy that emphasizes
local loan origination, West View has not had significant non-performing assets.
For the fiscal years ended June 30, 1997, 1996 and 1995, the Company's ratios of
non-performing  assets and  troubled  debt  restructurings  to total assets were
0.09%, 0.38% and 0.86%,  respectively.  Total net charge-offs for the past three
fiscal years have aggregated $46 thousand.

          Non-Interest  Expense  Ratios - For the  fiscal  years  ended June 30,
1997,  1996 and 1995, the Company's  ratios of  non-interest  expense to average
assets  were  2.04%,  1.71% and 2.26%,  respectively.  Excluding  unusual  items
relating  to  shareholder  litigation  and the  one-time  SAIF  recapitalization
charge,  the Company's  ratios of  non-interest  expense to average  assets were
1.63%,  1.88% and 1.91% for the fiscal years ended June 30, 1997, 1996 and 1995,
respectively.

         Traditional  Thrift  Lending - West View has  consistently  focused its
lending activities toward  traditional  thrift loan products.  At June 30, 1997,
$128.9  million or 74.3% of the  Company's  total loans  consisted  of permanent
single-family  mortgage and home equity loans.  At June 30, 1997,  approximately
$171.5 million or 98.8% of the Company's total loan portfolio consisted of loans
secured by real estate.


FINANCIAL CONDITION

          The  Company's  assets  totaled  $294.7  million  at June 30,  1997 as
compared to $259.6  million at June 30, 1996.  The $35.1 million or 13.5% growth
in total assets was primarily  comprised of a $23.7 million or 23.4% increase in
investment and  mortgage-backed  securities,  a $9.1 million or 6.1% increase in
net loans  receivable and a $2.0 million or 105.3% increase in Federal Home Loan
Bank ("FHLB") stock. The Company's total liabilities  increased $36.2 million or
16.0% to $261.8  million as of June 30, 1997 from $225.6  million as of June 30,
1996. The $36.2 million increase in total liabilities was primarily comprised of
a $35.9  million  or 73.7%  increase  in  Federal  Home Loan Bank  advances  and
short-term borrowings. Total stockholders' equity decreased $1.1 million or 3.2%
to $32.9  million as of June 30,  1997 from $34.0  million as of June 30,  1996,
primarily due to the Company's  ongoing  commitment to manage its capital levels
to further enhance stockholder value. The $1.1 million decrease in stockholders'
equity was principally

                                       5
<PAGE>
attributable to $2.9 million of Company net income,  less cash dividends paid to
stockholders totaling $4.9 million for the fiscal year ended June 30, 1997.


          ASSET AND  LIABILITY  MANAGEMENT.  The  Company  continued  a strategy
designed to reduce the interest rate  sensitivity of its financial assets to its
financial  liabilities.  The primary  elements  of this  strategy  include:  (i)
expanding  the  Company's  investment  growth  program in order to  enhance  net
interest  income;  (ii)  maintaining  the Company's  level of short-term  liquid
investments by funding loan  commitments and purchasing  longer-term  investment
securities;  (iii) emphasizing the retention of lower-cost  savings accounts and
other core deposits; (iv) pricing the Company's certificates of deposit and loan
products  nearer to the market  average  rate as  opposed to the upper  range of
market offered rates.

          The Company has expanded its  investment  growth  program,  originally
initiated in the third quarter of fiscal 1994,  throughout  fiscal 1997 in order
to realize  additional net interest income.  Under this strategy,  a longer-term
callable or noncallable  investment security,  or mortgage-backed  security,  is
purchased and funded through the use of short-term non-deposit liabilities, such
as FHLB advances and  short-term  borrowings.  With this  strategy,  the Company
increases its net interest  income,  but also faces the risk,  during periods of
rising market interest  rates,  that it may experience a decline in net interest
income if the rate paid on its various borrowings rises above the rate earned on
the investment security purchased. In order to mitigate this exposure, the Board
has placed certain restrictions on the investment growth program, including: (i)
the average  outstanding daily balance of total borrowings,  computed quarterly,
may not exceed  approximately $85.0 million;  (ii) suitable investments shall be
confined to those meeting the credit quality criteria  outlined in the Company's
investment  policy;  and (iii) each security  purchased  shall initially yield a
minimum  of  seventy-five  basis  points  above  the  incremental  rate  paid on
short-term borrowings, at the time of purchase. In most cases, the initial yield
spread  earned on  investment  security  purchases  exceeded  approximately  two
hundred basis points.

         The Company has continued to aggressively  purchase bonds with optional
principal  redemption features ("callable bonds") in order to capture additional
net interest  income.  Callable bonds  generally  provide  investors with higher
rates of return  than  noncallable  bonds  because  the issuer has the option to
redeem the bonds before  maturity.  While this strategy  affords WVS the current
opportunity  to improve its net  interest  income,  during a period of declining
interest rates,  such as was  experienced  during the first half of fiscal 1997,
the Company  would be exposed to the risk that the  investment  will be redeemed
prior to its final stated maturity.  In order to mitigate this risk, the Company
has  funded a  significant  portion  of its  purchases  of  callable  bonds with
short-term borrowings. Approximately $23.1 million of callable agency bonds with
an estimated  weighted  average rate of 8.0% were called  during the fiscal year
ended June 30, 1997. During the fiscal year


                                       6
<PAGE>
ended June 30,  1997,  the  Company  purchased  approximately  $56.5  million of
callable bonds with an approximate  weighted  average yield to call and maturity
of 8.4% and 8.0%,  respectively.  The callable agency bond  purchases,  totaling
$56.5 million, are summarized by initial term to call as follows:  $25.0 million
within three months,  $5.5 million with greater than three months and within six
months,  $14.0 million with greater than six months and within twelve months and
$12.0 million within twenty-four  months. In addition,  during the twelve months
ended June 30, 1997, the Company sold  approximately  $1.7 million of adjustable
rate  mortgage-backed  securities with an approximate  weighted average yield of
6.6% at a gain of $26 thousand.

          The Company's net interest income could also be adversely  impacted by
a general rise in market  interest  rates,  such as was  experienced  during the
second  half  of  fiscal  1997.  In  order  to  partially  mitigate  this  risk,
approximately $19.0 million or 50.7% of the Company's mortgage-backed securities
portfolio were comprised of floating rate securities. The yields on the floating
rate  securities  adjust  monthly based upon certain  short-term  market indexes
(e.g.  LIBOR,  Prime,   etc.).  The  Company's  floating  rate   mortgage-backed
securities  had an  approximate  weighted  average  yield of 6.9% as of June 30,
1997.

         The Company also makes available for origination  residential  mortgage
loans with interest rates which adjust pursuant to a designated index,  although
customer acceptance has been somewhat limited in the Savings Bank's market area.
The Company will continue to selectively  offer land acquisition and development
and shorter-term  construction loans,  primarily on residential  properties,  to
partially increase its loan asset sensitivity.

         During the fiscal year ended June 30, 1997, the Company  lengthened the
maturity  structure  of a  portion  of its  borrowings  in  order  to  lock in a
favorable  cost  of  funds  on  a  longer  term  basis.   The  Company  borrowed
approximately  $84.3  million  from  the  FHLB  as  follows:  $66.9  million  of
convertible  advances,  with terms  ranging  from three years to five years at a
weighted average rate of 5.69%, $6.4 million of various fixed rate advances with
terms ranging from eighteen to twenty-four  months with a weighted  average rate
of  6.08%,  and  various  short-term  borrowings  totaling  approximately  $11.0
million.  During the twelve months ended June 30, 1997, the Company repaid $44.4
million  of FHLB  advances  and $3.9  million of other  borrowings.  Convertible
advances  generally  provide for a fixed rate of  interest  for a portion of the
term of the advance, an ability for the FHLB to convert the advance from a fixed
rate to an adjustable rate at some  predetermined time during the remaining term
of advance (the  "conversion"  feature),  and a concurrent  opportunity  for the
Company to prepay the advance with no  prepayment  penalty in the event that the
FHLB elects to exercise the conversion feature.

         As of June 30, 1997,  the  implementation  of these asset and liability
management  initiatives  resulted in the  following:  (i) an  aggregate of $49.0
million or 31.0% of the

                                       7
<PAGE>
Company's net loan portfolio had adjustable interest rates or maturities of less
than 12  months;  (ii)  $19.0  million or 50.7% of the  Company's  portfolio  of
mortgage-backed  securities  (including  CMOs)  were  secured by  floating  rate
securities;  (iii) $1.7 million or 1.9% of the Company's  investment  securities
portfolio had scheduled  maturities of one year or less;  and (iv) $81.9 million
or 93.6% of the  Company's  investment  securities  portfolio  was  comprised of
callable bonds.

         The effect of interest rate changes on a financial institution's assets
and liabilities may be analyzed by examining the extent to which such assets and
liabilities  are "interest rate  sensitive"  and by monitoring an  institution's
interest rate  sensitivity  "gap".  An asset or liability is said to be interest
rate sensitive within a specific time period if it will mature or reprice within
a given  time  period.  A gap is  considered  positive  when the  amount of rate
sensitive  assets  exceeds the amount of rate  sensitive  liabilities.  A gap is
considered  negative when the amount of interest sensitive  liabilities  exceeds
the amount of interest  sensitive  assets.  During a period of falling  interest
rates, a positive gap would tend to adversely affect net interest income,  while
a  negative  gap would tend to result in an  increase  in net  interest  income.
During a period of rising interest rates, a positive gap would tend to result in
an increase in net interest income, while a negative gap would tend to adversely
affect net interest income.

          The  Company's  one year  cumulative  interest  rate  sensitivity  gap
amounted to a negative  13.3% of total  assets at June 30, 1997 as compared to a
negative 18.0% at June 30, 1996, in each instance,  based on certain assumptions
by management  with respect to the repricing of certain assets and  liabilities.
At June 30, 1997, the Company's  interest-earning  assets  maturing or repricing
within one year totaled  $103.2  million  while the  Company's  interest-bearing
liabilities  maturing  or  repricing  within one year  totaled  $142.3  million,
providing  a  deficiency  of  interest-earning   assets  over   interest-bearing
liabilities of $39.1 million.  At June 30, 1997, the percentage of the Company's
assets to liabilities maturing or repricing within one year was 72.5%.


                                       8
<PAGE>
          The  following  table  sets  forth  certain  information  at the dates
indicated relating to the Company's interest-earning assets and interest-bearing
liabilities which are estimated to mature or are scheduled to reprice within one
year.
<TABLE>
<CAPTION>
                                                                  June 30,
                                            ---------------------------------------------------
                                               1997          1996         1995           1994
                                            ---------     ---------     ---------     ---------
                                                           (Dollars in Thousands)
<S>                                         <C>           <C>           <C>           <C>      
Interest-earning assets maturing or
    repricing within one year(1) ........   $ 103,161     $  88,530     $  87,294     $ 117,767
Interest-bearing liabilities maturing or
    repricing within one year(2) ........   $ 142,265     $ 135,344     $ 105,486     $  87,816
                                            ---------     ---------     ---------     ---------
Excess (deficiency) of interest-earning
    assets over interest-bearing
    liabilities .........................   $ (39,104)    $ (46,814)    $ (18,192)    $  29,951
                                            =========     =========     =========     =========

Excess (deficiency) of interest-earning
    assets over interest-bearing
    liabilities as a percentage of total
    assets ..............................     (13.3)%       (18.0)%        (8.0)%          13.5%
Percentage of assets to liabilities
    maturing or repricing within one year      72.5 %        65.4 %        82.8 %         134.1%
</TABLE>

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

(1)       Adjustable  and  floating  rate  assets are  included in the period in
          which  interest  rates are next scheduled to adjust rather than in the
          period in which they are contractually  due to mature,  and fixed rate
          loans are  included in the periods in which they are  scheduled  to be
          repaid, based on scheduled  amortization,  in each case as adjusted to
          take into account  estimated  prepayments based on the assumptions set
          forth in the footnotes to the following  table.  The Company  believes
          that the  assumptions  utilized,  which are based on statistical  data
          provided by a federal  regulatory agency in the Company's market area,
          are reasonable.

(2)      Deposit  decay  rates  are  based on the  assumptions  set forth in the
         footnotes to the following table.

 
                                        9
<PAGE>
         The following table summarizes the anticipated  maturities or repricing
of the Company's interest-earning assets and interest-bearing  liabilities as of
June 30, 1997,  based on the information and assumptions set forth in the notes.
The  Company  believes  that  the  assumptions  utilized,  which  are  based  on
statistical data provided by a federal regulatory agency in the Company's market
area, are reasonable.

<TABLE>
<CAPTION>
                                                           More Than     More Than
                                   Within       Six to      One Year       Three        Over
                                    Six         Twelve      to Three      Years to      Five
                                   Months       Months       Years      Five Years      Years      Total
                                  --------     --------     --------     --------     --------    --------
<S>                               <C>          <C>          <C>          <C>          <C>         <C>     
Interest-earning assets:
  Loans receivable (1)(2)(3)(4)   $ 37,754     $ 18,803     $ 31,138     $ 20,455     $ 52,828    $160,978
Mortgage-backed securities ....     19,069        2,816        4,217        3,793        7,732      37,627
  Investments(5) ..............     22,807            9          500        1,500       66,795      91,611
  Interest-bearing deposits ...      1,904         --           --           --           --         1,904
                                  --------     --------     --------     --------     --------    --------
       Total ..................   $ 81,534     $ 21,628     $ 35,855     $ 25,748     $127,355    $292,120
                                  ========     ========     ========     ========     ========    ========
Interest-bearing liabilities:
  Interest-bearing deposits
    and escrows(6)(7)(8) ......   $ 46,893     $ 42,088     $ 47,346     $ 15,870     $ 22,213    $174,410
  Borrowings ..................     36,784       16,500       31,357         --           --        84,641
                                  --------     --------     --------     --------     --------    --------
       Total ..................   $ 83,677     $ 58,588     $ 78,703     $ 15,870     $ 22,213    $259,051
                                  ========     ========     ========     ========     ========    ========
Excess (deficiency) of
  interest-earning assets
  over interest-bearing
  liabilities .................   $ (2,143)    $(36,960)    $(42,848)    $  9,878     $105,142
                                  ========     ========     ========     ========     ========
Cumulative excess of
  interest-earning assets
  over interest-bearing
  liabilities .................   $ (2,143)    $(39,103)    $(81,951)    $(72,073)    $ 33,069
                                  ========     ========     ========     ========     ========
Cumulative excess of
  interest-earning assets
  over interest-bearing
  liabilities as a percentage
  of total assets .............      (0.7)%      (13.3)%      (27.8)%      (24.5)%        11.2%
                                  ========     ========     ========     ========     ========
</TABLE>
<PAGE>
----------------

(1)      Net of undisbursed loan proceeds and does not include net deferred loan
         fees or the allowance for loan losses.

(2)      For single-family  residential loans,  assumes annual  amortization and
         prepayment  rate at 15% for  adjustable  rate loans,  and 8% to 37% for
         fixed rate loans. For multi-family  residential  loans and other loans,
         assumes amortization and prepayment rate of 12%.

(3)      For second mortgage loans,  assumes annual  amortization and prepayment
         rate of 18%.

(4)      Consumer loans assumes amortization and prepayment rate of 13%.

(5)      Totals  include  the  Company's  investment  in Federal  Home Loan Bank
         stock.  Amounts  adjusted  to  reflect  called  investment   securities
         totaling approximately $16,750.

(6)      For regular savings  accounts,  assumes an annual decay rate of 17% for
         three years or less, 16% for more than three through five years and 14%
         for more than five years.

(7)      For NOW  accounts,  assumes an annual decay rate of 37% for one year or
         less,  32% for more than one through  three years and 17% for more than
         three years.

(8)      For money market deposit accounts,  assumes an annual decay rate of 79%
         for one year or less and 31% for more than one year.


                                       10
<PAGE>
         QUANTITATIVE  AND  QUALITATIVE   DISCLOSURES  ABOUT  MARKET  RISK.  The
Company's  primary  market risk  exposure is interest rate risk and, to a lesser
extent,  liquidity  risk. All of the Company's  transactions  are denominated in
U.S. dollars with no specific foreign exchange exposure. The Savings Bank has no
agricultural  loan assets and  therefore  would not have a specific  exposure to
changes in commodity prices.  Any impacts that changes in foreign exchange rates
and  commodity  prices would have on interest  rates are assumed to be exogenous
and will be analyzed on an ex post basis.

         Interest-rate risk ("IRR") is the exposure of a banking  organization's
financial condition to adverse movements in interest rates.  Accepting this risk
can be an important  source of  profitability  and  shareholder  value,  however
excessive levels of IRR can pose a significant  threat to the Company's earnings
and capital base.  Accordingly,  effective risk management that maintains IRR at
prudent levels is essential to the Company's safety and soundness.

         Evaluating  a financial  institution's  exposure to changes in interest
rates includes  assessing  both the adequacy of the  management  process used to
control  IRR  and  the  organization's  quantitative  level  of  exposure.  When
assessing  the  IRR  management  process,  the  Company  seeks  to  ensure  that
appropriate  policies,  procedures  management  information systems and internal
controls are in place to maintain  IRR at prudent  levels with  consistency  and
continuity.  Evaluating  the  quantitative  level of IRR  exposure  requires the
Company  to assess  the  existing  and  potential  future  effects of changes in
interest  rates  on its  consolidated  financial  condition,  including  capital
adequacy, earnings, liquidity, and, where appropriate, asset quality.

         The Federal Reserve Board,  together with the Office of the Comptroller
of the Currency and the Federal Deposit Insurance  Corporation,  adopted a Joint
Agency Policy  Statement on  Interest-Rate  Risk,  effective  June 26, 1996. The
policy statement  provides  guidance to examiners and bankers on sound practices
for  managing  interest  rate  risk,  which  will  form the  basis  for  ongoing
evaluation  of the  adequacy of  interest-rate  risk  management  at  supervised
institutions.  The policy statement also outlines  fundamental elements of sound
management  that have been  identified  in prior  Federal  Reserve  guidance and
discusses  the   importance  of  these  elements  in  the  context  of  managing
interest-rate  risk.  Specifically,  the guidance emphasizes the need for active
board  of  director  and  senior   management   oversight  and  a  comprehensive
risk-management  process that  effectively  identifies,  measures,  and controls
interest-rate  risk.  Financial  institutions derive their income primarily from
the excess of interest  collected  over interest  paid. The rates of interest an
institution  earns on its  assets  and  owes on its  liabilities  generally  are
established  contractually  for a period of time.  Since market  interest  rates
change over time, an  institution is exposed to lower profit margins (or losses)
if it  cannot  adapt to  interest-rate  changes.  For  example,  assume  that an
institution's assets carry intermediate- or long-term fixed rates and that those
assets were funded with short-term liabilities. If market interest rates rise by
the time the  short-term  liabilities  must be  refinanced,  the increase in the
institution's interest

                                       11

<PAGE>
expense on its liabilities may not be sufficiently  offset if assets continue to
earn at the long-term fixed rates.  Accordingly,  an institution's profits could
decrease on existing assets because the  institution  will either have lower net
interest income or,  possibly,  net interest  expense.  Similar risks exist when
assets are subject to  contractual  interest-rate  ceilings,  or rate  sensitive
assets are funded by longer-term,  fixed-rate  liabilities in a  decreasing-rate
environment.  Several  techniques  might be used by an  institution  to minimize
interest-rate risk. One approach used by the Company is to periodically  analyze
its assets and  liabilities and make future  financing and investment  decisions
based on payment streams, interest rates, contractual maturities,  and estimated
sensitivity  to actual or  potential  changes  in market  interest  rates.  Such
activities fall under the broad definition of  asset/liability  management.  The
Company's primary asset/liability management technique is the measurement of the
Company's  asset/liability  gap-that  is, the  difference  between the cash flow
amounts of interest-sensitive assets and liabilities that will be refinanced (or
repriced) during a given period. For example, if the asset amount to be repriced
exceeds the  corresponding  liability amount for a certain day, month,  year, or
longer period,  the institution is in an asset-sensitive  gap position.  In this
situation,  net interest  income would increase if market interest rates rose or
decrease if market interest rates fell. If, alternatively, more liabilities than
assets will  reprice,  the  institution  is in a  liability-sensitive  position.
Accordingly, net interest income would decline when rates rose and increase when
rates fell.  Also, these examples assume that  interest-rate  changes for assets
and liabilities are of the same magnitude,  whereas actual interest-rate changes
generally differ in magnitude for assets and liabilities.

         Several ways an  institution  can manage  interest-rate  risk  include:
selling  existing assets or repaying  certain  liabilities;  matching  repricing
periods for new assets and liabilities for example,  by shortening  terms of new
loans or  investments;  hedging  existing  assets,  liabilities,  or anticipated
transactions.  An  institution  might  also  invest  in more  complex  financial
instruments   intended  to  hedge  or  otherwise  change   interest-rate   risk.
Interest-rate  swaps,  futures  contracts,  options on  futures,  and other such
derivative financial instruments often are used for this purpose.  Because these
instruments  are sensitive to  interest-rate  changes,  they require  management
expertise to be effective. Financial institutions are also subject to prepayment
risk in  falling  rate  environments.  For  example,  mortgage  loans  and other
financial  assets  may be  prepaid by a debtor so that the debtor may refund its
obligations  at new,  lower  rates.  The  Company has not  purchased  derivative
financial instruments in the past and does not presently intend to purchase such
instruments  in the near future.  Prepayments  of assets  carrying  higher rates
reduce the Company's  interest income and overall asset yields.  A large portion
of an institution's  liabilities may be short term or due on demand,  while most
of its assets may be invested in long-term  loans or  investments.  Accordingly,
the Company seeks to have in place sources of cash to meet  short-term  demands.
These  funds can be  obtained  by  increasing  deposits,  borrowing,  or selling
assets.  Also, FHLB advances and wholesale  borrowings have become  increasingly
important sources of liquidity for the Company.



                                       12
<PAGE>
         The following table provides  information about the Company's financial
instruments  that are sensitive to changes in interest rates as of June 30, 1997
based on the information  and  assumptions  set forth in the notes.  The Company
believes that the  assumptions  utilized,  which are based on  statistical  data
provided  by a federal  regulatory  agency in the  Company's  market  area,  are
reasonable.  The Company had no  derivative  financial  instruments,  or trading
portfolio,  as of June 30,  1997.  The expected  maturity  date values for loans
receivable,   mortgage-backed   securities,   and  investment   securities  were
calculated  by  adjusting  the  instrument's   contractual   maturity  date  for
expectations  of  prepayments,  as set forth in the notes.  Similarly,  expected
maturity date values for  interest-bearing  core deposits were calculated  based
upon estimates of the period over which the deposits would be outstanding as set
forth in the notes.  With respect to the Company's  adjustable rate instruments,
expected  maturity  date values  were  measured by  adjusting  the  instrument's
contractual  maturity date for expectations of prepayments,  as set forth in the
notes. From a risk management  perspective,  however,  the Company believes that
repricing  dates, as opposed to expected  maturity dates, may be a more relevant
metric in analyzing the value of such instruments.  Similarly, substantially all
of the  Company's  investment  securities  portfolio  is  comprised  of callable
government agency  securities.  Company borrowings were tabulated by contractual
maturity dates and without regard to any conversion or repricing dates.


                                       13
<PAGE>
<TABLE>
<CAPTION>
                                                             EXPECTED MATURITY DATE-FISCAL YEAR ENDED JUNE 30,
                                   ------------------------------------------------------------------------------------------------
                                                                                                  There-                     Fair
                                     1998        1999        2000        2001         2002        after         Total        value
                                   --------     -------     -------    --------     -------      --------     --------     --------
<S>                                <C>          <C>         <C>        <C>          <C>          <C>          <C>          <C>     
ON-BALANCE SHEET
FINANCIAL INSTRUMENTS

Interest-earning assets:
  Loans receivable (1)(2)(3)(4)
    Fixed rate                      $23,239     $15,089     $11,857     $10,444      $8,170       $48,726     $117,525     $117,087
      Average interest rate           8.37%       8.03%       7.95%       7.91%       7.81%         7.55%

    Adjustable rate                   8,316       7,040       5,951       5,020       4,224        12,627       43,178       43,474
      Average interest rate(5)        8.01%       8.02%       8.03%       8.04%       8.05%         7.71%
  Mortgage-backed securities
    Fixed rate                        1,437       1,110         454       1,619         171        13,907       18,698       18,557
      Average interest rate           6.03%       7.00%       6.35%       7.61%       8.08%         7.02%

    Adjustable rate                     ---         ---         ---         ---         ---        18,929       18,929       19,104
      Average interest rate(6)        0.00%       0.00%       0.00%       0.00%       0.00%         6.92%

  Investments(7)                     18,393         500         ---         500       1,000        71,218       91,611       91,369
      Average interest rate           7.25%       6.40%       0.00%       6.41%       7.02%         7.75%

  Interest-bearing deposits           1,904         ---         ---         ---         ---           ---        1,904        1,904
      Average interest rate           6.26%       0.00%       0.00%       0.00%       0.00%         0.00%
                                   --------     -------     -------    --------     -------      --------     --------     --------
        Total                       $53,289     $23,739     $18,262     $17,583     $13,565      $165,407     $291,845     $291,495

  Interest-bearing liabilities:
    Interest-bearing deposits
     and escrows(8)(9)(10)          $88,981     $23,673     $23,673     $ 7,936     $ 7,936      $ 22,211     $174,410     $174,428
      Average interest rate           4.42%       4.41%       4.41%       3.65%       3.65%         2.22%

    Borrowings                       21,784       1,357       8,000         ---      53,500           ---       84,641       83,991
      Average interest rate           5.74%       6.19%       5.89%       0.00%       5.74%         0.00%
                                   --------     -------     -------    --------     -------      --------     --------     --------
        Total                      $110,765     $25,030     $31,673    $  7,936     $61,436      $ 22,211     $259,051     $258,419
</TABLE>

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

(1)      Net of undisbursed loan proceeds and does not include net deferred loan
         fees or the allowance for loan losses.

(2)      For single-family  residential loans,  assumes annual  amortization and
         prepayment  rate at 15% for  adjustable  rate loans,  and 8% to 37% for
         fixed rate loans. For multi-family  residential  loans and other loans,
         assumes amortization and prepayment rate of 12%.

(3)      For second mortgage loans,  assumes annual  amortization and prepayment
         rate of 18%.

(4)      Consumer loans assumes amortization and prepayment rate of 13%.

(5)      Substantially all of the Company's  adjustable rate loans reprice on an
         annual  basis  based upon  changes in the  one-year  constant  maturity
         treasury index with various  market based annual and lifetime  interest
         rate caps and floors.

(6)      Substantially  all of the  Company's  adjustable  rate  mortgage-backed
         securities  reprice on a monthly  basis  based upon  changes in the one
         month LIBOR index with various lifetime caps and floors.

(7)      Totals  include  the  Company's  investment  in Federal  Home Loan Bank
         stock.  Amounts  adjusted  to  reflect  called  investment   securities
         totaling approximately $16,750.

(8)      For regular savings  accounts,  assumes an annual decay rate of 17% for
         three years or less, 16% for more than three through five years and 14%
         for more than five years.

(9)      For NOW  accounts,  assumes an annual decay rate of 37% for one year or
         less,  32% for more than one though  three  years and 17% for more than
         three years.

(10)     For money market deposit accounts,  assumes an annual decay rate of 79%
         for one year or less and 31% for more than one year.



                                       14
<PAGE>
         The table below provides  information  about the Company's  anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed  letters  and  lines  of  credit.  The  Company  used no  derivative
financial  instruments  to hedge such  anticipated  transactions  as of June 30,
1997.


                    Anticipated Transactions
----------------------------------------------------------------

Undisbursed construction and
    land development loans
      Fixed rate                                        $  7,494
                                                           9.43%

      Adjustable rate                                      5,011
                                                           8.78%
Undisbursed lines of credit
      Adjustable rate                                      6,108
                                                           8.56%
Loan origination commitments
      Fixed rate                                           1,109
                                                           8.34%

      Adjustable rate                                      1,966
                                                           8.11%
Letters of credit
      Adjustable rate                                         82
                                                          11.50%
                                                         -------
                                                         $21,770



                                       15
<PAGE>
RESULTS OF OPERATIONS

         GENERAL. WVS reported net income of $3.0 million, $3.6 million and $1.8
million for the fiscal  years ended June 30, 1997,  1996 and 1995  respectively.
Net income for the fiscal year ended June 30, 1997 totaled $3.0 million or $1.69
per share on both a primary and fully diluted basis as compared to net income of
$3.6  million or $2.06 per share on both a primary and fully  diluted  basis for
the same period in 1996.  The $600 thousand or 16.7%  decrease in net income was
the  result  of a $1.6  million  increase  in  non-interest  expense,  which was
partially  offset by a $764  thousand  increase in net interest  income,  a $136
thousand  decrease in income tax  expense,  and a $90  thousand  decrease in the
provision  for the loan  losses.  The  $1.6  million  increase  in  fiscal  year
non-interest expense was principally  attributable to one-time items including a
$1.0 net  increase  in federal  deposit  premiums  to  recapitalize  the Savings
Association  Insurance Fund ("SAIF").  Fiscal 1996 net income  increased by $1.8
million  or 100%  primarily  as the  result of a $1.3  million  increase  in net
interest  income,  an $827  thousand  decrease in  non-interest  expense,  a $76
thousand  increase in  non-interest  income and a $61  thousand  decrease in the
provision  for loan  losses,  which  was  partially  offset  by a $414  thousand
increase in income tax expense.

         NET INTEREST INCOME. Net interest income is determined by the Company's
interest  rate spread  (i.e.  the  difference  between the yields  earned on its
interest-earning assets and the rates paid on its interest-bearing  liabilities)
and  the  relative  amounts  of  interest-earning  assets  and  interest-bearing
liabilities.




                                       16
<PAGE>
         Average Balances, Net Interest Income and Yields Earned and Rates Paid.
The  following  average  balance  sheet  table sets forth at and for the periods
indicated, information on the Company regarding: (i) the total dollar amounts of
interest  income on  interest-earning  assets and the resulting  average yields;
(ii)  the  total  dollar  amounts  of  interest   expense  on   interest-bearing
liabilities and the resulting  average costs;  (iii) net interest  income;  (iv)
interest  rate  spread;  (v)  net  interest-earning   assets   (interest-bearing
liabilities);  (vi) the net yield earned on  interest-earning  assets; and (vii)
the  ratio  of  total   interest-earning   assets   to  total   interest-bearing
liabilities.  Average balances are derived from month-end  balances.  Management
does not believe that the use of  month-end  balances  instead of daily  average
balances has caused any material differences in the information presented.

<TABLE>
<CAPTION>
                                                                             For the Years Ended June 30,
                              At June 30,    ---------------------------------------------------------------------------------------
                                 1997                    1997                         1996                          1995
                              -----------    --------------------------- ----------------------------- -----------------------------
                               Period End    Average            Average   Average             Average   Average             Average
                               Rate/Cost     Balance Interest  Yield/Rate Balance   Interest Yield/Rate Balance  Interest Yield/Rate
                               ---------     ------- --------  ---------- -------   -------- ---------- -------  -------- ----------
                                                                       (Dollars in Thousands)
<S>                               <C>       <C>       <C>      <C>       <C>         <C>      <C>      <C>         <C>      <C>  
Interest-earning assets:
   Net loans receivable(1)          7.89%   $153,726  $12,440     8.09%  $141,643    $11,756     8.30% $133,516    $11,152    8.35%
   Mortgage-backed securities       6.96%     39,451    2,724     6.90%    25,384      1,638     6.45%   22,852      1,326    5.80%
   Investments                      7.70%     79,128    5,881     7.43%    64,679      4,831     7.47%   53,765      3,000    5.58%
   Interest-bearing deposits        6.26%      2,335       80     3.43%     2,288         92     4.02%    2,896        134    4.63%
                                            --------  -------            --------    -------           --------    -------
   Total interest-earning assets    7.70%    274,640   21,125     7.69%   233,994     18,317     7.83%  213,029     15,612    7.33%
                                    =====              ------    ======              -------    ======              ------   ======
   Non-interest-earning assets                 3,331                        3,140                         3,516
                                            --------                     --------                      --------
      Total assets                          $277,971                     $237,134                      $216,545
                                            ========                     ========                      ========
Interest-bearing liabilities:
   Interest-bearing deposits 
      and escrows                   4.30%   $165,017   $7,086     4.29%  $168,280     $7,431     4.42% $171,980    $ 7,146    4.16%
   Borrowings                       5.76%     62,522    3,798     6.07%    24,814      1,409     5.68%    3,947        226    5.73%
                                            --------  -------            --------    -------           --------    -------
   Total interest-bearing
      liabilities                   4.79%    227,539   10,884     4.78%   193,094      8,840     4.58%  175,927      7,372    4.19%
                                    =====              ------    ======              -------    ======              ------   ======
   Non-interest-bearing accounts               6,459                        4,559                         3,583
                                            --------                      -------                      --------
   Total interest-bearing 
      liabilities
      and non-interest-bearing
      accounts                               233,998                      197,653                       179,510
   Non-interest-bearing
      liabilities                              9,686                        4,361                         3,524
                                             -------                     --------                      --------
      Total liabilities                      243,684                      202,014                       183,034
Retained income                               34,287                       35,120                        33,511
                                            --------                     --------                      --------
Total liabilities and retained
   income                                   $277,971                     $237,134                      $216,545
                                            ========                     ========                      ========
<PAGE>
<CAPTION>
                                                                             For the Years Ended June 30,
                              At June 30,    ---------------------------------------------------------------------------------------
                                 1997                    1997                         1996                          1995
                              -----------    --------------------------- ----------------------------- -----------------------------
                               Period End    Average            Average   Average             Average   Average             Average
                               Rate/Cost     Balance Interest  Yield/Rate Balance   Interest Yield/Rate Balance  Interest Yield/Rate
                               ---------     ------- --------  ---------- -------   -------- ---------- -------  -------- ----------
                                                                       (Dollars in Thousands)
<S>                               <C>       <C>       <C>      <C>       <C>         <C>      <C>      <C>         <C>      <C>  

Net interest income                                   $10,241                        $ 9,477                       $ 8,240
                                                      =======                        =======                       =======
Interest rate spread                2.91%                         2.91%                          3.25%                        3.14%
                                   ======                        ======                         ======                       ======
Net yield on interest-earning
   assets(2)                        3.54%                         3.73%                          4.05%                        3.87%
                                   ======                        ======                         ======                       ======
Ratio of interest-earning
   assets to interest-bearing
   liabilities                    114.79%                       120.70%                        121.18%                      121.09%
                                  =======                       =======                        =======                      =======

</TABLE>
---------------

(1)      Includes non-accrual loans.

(2)      Net interest income divided by interest-earning assets.


                                       17
<PAGE>
         Rate/Volume Analysis. The following table describes the extent to which
changes in interest rates and changes in volume of  interest-related  assets and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume  (change in volume  multiplied  by prior year rate),  (ii)
changes in rate  (change in rate  multiplied  by prior year  volume),  and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume  has been  allocated  proportionately  to the  change due to rate and the
change due to volume.

<TABLE>
<CAPTION>
                                                                Year Ended June 30,
                                    --------------------------------------------------------------------------
                                                1997 vs. 1996                        1996 vs. 1995
                                    ----------------------------------     -----------------------------------
                                    Increase  (Decrease)       Total       Increase  (Decrease)       Total
                                          Due to              Increase           Due to              Increase
                                    --------------------                   --------------------                
                                    Volume       Rate        (Decrease)    Volume       Rate        (Decrease)
                                    ------       ----        ----------    ------       ----        ----------
                                                                  (In Thousands)
<S>                                 <C>          <C>          <C>          <C>          <C>          <C>    
Interest-earning assets:
 Net loans receivable .........     $   987      $  (303)     $   684      $   671      $   (67)     $   604
 Mortgage-backed securities ...         965          121        1,086          155          157          312
 Investments ..................       1,076          (26)       1,050          686        1,145        1,831
 Interest-bearing deposits ....           1          (13)         (12)         (26)         (16)         (42)
                                    -------      -------      -------      -------      -------      -------
  Total interest-earning assets       3,029         (221)       2,808        1,486        1,219        2,705
Interest-bearing liabilities:
 Interest-bearing deposits
    and escrows ...............        (156)        (189)        (345)         135          150          285
 Other borrowings .............       2,286          103        2,389        1,185           (2)       1,183
                                    -------      -------      -------      -------      -------      -------
 Total interest-bearing
   liabilities ................       2,130          (86)       2,044        1,320          148        1,468
                                    -------      -------      -------      -------      -------      -------

Increase (decrease) in net
 interest income ..............     $   899      $  (135)     $   764      $   166      $ 1,071      $ 1,237
                                    =======      =======      =======      =======      =======      =======
</TABLE>

          INTEREST  INCOME.  Total interest income  increased by $2.8 million or
15.3% during  fiscal 1997 and  increased by $2.7 million or 17.3% during  fiscal
1996,  primarily  as a result of changes  in  interest  income on the  Company's
investment and mortgage-backed  securities portfolio,  and net loans receivable,
during the periods.

          Interest  income on net loans  receivable  increased  $684 thousand or
5.8% during fiscal 1997 and increased  $604 thousand or 5.4% during fiscal 1996.
The increase in fiscal 1997 was  attributable to a $12.1 million increase in the
average balance of net loans outstanding which more than offset a decrease of 21
basis  points  in the  weighted  average  yield  earned  on the  Company's  loan
portfolio.  The  increase in fiscal  1996 was  attributable  to an $8.1  million
increase in the average balance of net loans outstanding, which more than offset
a  decrease  of 5 basis  points  in the  weighted  average  yield  earned on the
Company's loan portfolio.

         Interest income on mortgage-backed securities increased $1.1 million or
68.8% during  fiscal 1997 and  increased  $312  thousand or 23.5% during  fiscal
1996. The increase


                                       18
<PAGE>
in  fiscal  1997 was  attributable  to an  increase  of 45 basis  points  in the
weighted  average  yield  earned  on the  Company's  mortgage-backed  securities
portfolio and a $14.1 million increase in the average balance of mortgage-backed
securities  outstanding.  The  increase  in fiscal 1996 was  attributable  to an
increase  of 65  basis  points  in the  weighted  average  yield  earned  on the
Company's  mortgage-backed  securities  portfolio and a $2.5 million increase in
the average balance of mortgage-backed securities outstanding.

          Interest income on investment securities and FHLB stock increased $1.1
million or 22.9%  during  fiscal 1997 and $1.8  million or 60.0%  during  fiscal
1996. The increase in fiscal 1997 was  attributable to a $14.4 million  increase
in the average  balance of  investment  securities  and FHLB stock  outstanding,
which more than  offset a decrease  of 4 basis  points in the  weighted  average
yield earned on the Company's investment and FHLB stock portfolio.  The increase
in fiscal  1996 was  attributable  to a $10.9  million  increase  in the average
balance of investment  securities and FHLB stock  outstanding and to an increase
of 189 basis  points  in the  weighted  average  yield  earned on the  Company's
investment securities and FHLB stock portfolio.

          Interest income on interest-bearing deposits decreased $12 thousand or
13.0% during fiscal 1997 and decreased $42 thousand or 31.3% during fiscal 1996.
The decrease in fiscal 1997 was primarily due to a $47 thousand  decrease in the
average balance of  interest-earning  deposits  outstanding and a decrease of 59
basis  points  in  the   weighted   average   yield  earned  on  the   Company's
interest-earning  deposits.  The decrease in fiscal 1996 was  attributable  to a
$608  thousand  decrease in the  average  balance of  interest-bearing  deposits
outstanding  and a decrease of 61 basis  points in the  weighted  average  yield
earned on the Company's interest-earning deposits.

          Throughout  the  first  half of fiscal  1997,  market  interest  rates
continued to decrease primarily due to reduced inflationary  expectations in the
capital  markets.  During the second half of fiscal 1997,  market interest rates
began to  increase  in  response  to  inflationary  expectations  in the capital
markets due to continued  economic  expansion  and the Federal  Reserve  Board's
predilection  to tighten  the  Federal  Funds rate.  The  Company  continued  to
restructure  its balance  sheet by  lengthening  the  maturity of its  financial
assets,  particularly its investment securities  portfolio,  and lengthening the
maturities  of its financial  liabilities  by  emphasizing  the use of FHLB term
borrowings. The Company believes that this strategy has contributed to increased
net interest income during fiscal 1997.

         INTEREST  EXPENSE.  Total  interest  expense  increased $2.1 million or
23.9% during  fiscal 1997 and  increased by $1.4 million or 18.9% during  fiscal
1996.

          Interest expense on  interest-bearing  deposits and escrows  decreased
$345  thousand or 4.6% in fiscal  1997 and  increased  $285  thousand or 4.0% in
fiscal  1996.  The  decrease  in fiscal  1996 was  primarily  attributable  to a
decrease of 13 basis points in the weighted  average rate paid on the  Company's
deposits and a $3.2 million decrease in the average balance of  interest-bearing
deposits and escrows outstanding. The increase in



                                       19
<PAGE>
fiscal 1996 was primarily  attributable to an increase of 26 basis points in the
weighted average rate paid on the Company's deposits and a $7.9 million increase
in the  proportion  of time  deposits to the average  total of  interest-bearing
deposits and escrows outstanding.

          Interest expense on borrowings increased $2.4 million or 171.4% during
fiscal  1997 and  increased  $1.2  million or 523.6%  during  fiscal  1996.  The
increases for both fiscal 1997 and 1996 were primarily attributable to increases
in the average  balance of  borrowings  outstanding  totaling  $37.7 million and
$20.9 million,  respectively.  In order to better match investment opportunities
and resources,  enhance its net interest  income and reduce the amount of excess
cash invested at the FHLB of Pittsburgh,  the Company continues to utilize short
and  intermediate  term  borrowings to purchase  investment  securities and fund
other commitments.

          PROVISION  FOR LOAN LOSSES.  A provision for loan losses is charged to
earnings  to  bring  the  total  allowance  to a level  considered  adequate  by
management  to  absorb   potential   losses  in  the   portfolio.   Management's
determination of the adequacy of the allowance is based on periodic  evaluations
of the loan portfolio considering past experience,  current economic conditions,
volume, growth, composition of the loan portfolio and other relevant factors.

          The Company established provisions for possible losses on loans of $60
thousand,  $150 thousand and $211 thousand,  for the fiscal years ended June 30,
1997, 1996 and 1995, respectively.  The provisions for fiscal 1997 and 1996 were
primarily  due to increases in the  Company's  general  allowance  for losses on
loans.

         NON-INTEREST INCOME. Total non-interest income decreased by $9 thousand
or 2.3% in fiscal 1997 and increased $76 thousand or 24.8% in fiscal 1996.

          Service charges on deposits increased by $7 thousand or 3.6% in fiscal
1997 and  increased  $20 thousand or 11.4% in fiscal 1996.  The increase in both
fiscal years was principally attributable to service charges applied to a larger
number of transaction  accounts  opened during the  respective  fiscal year. The
Company has continued to aggressively  pursue  transaction  accounts in order to
enhance its level of core  deposits and to increase its  relationship  base with
new and existing customers.

          Other  non-interest  income (e.g.  safe deposit box fees,  income from
loan late charges,  automated teller machine (ATM) fee income, profit on sale of
real estate owned,  miscellaneous  income, and money order fee income) increased
$8 thousand in fiscal 1997 and increased $2 thousand in fiscal 1996.


                                       20
<PAGE>
          NON-INTEREST  EXPENSE.   Total  non-interest  expense  increased  $1.6
million or 39.0% during fiscal 1997 and decreased  $827 thousand or 16.9% during
fiscal  1996.  The  decrease  in  non-interest  expense  during  fiscal 1996 was
primarily  attributable  to a $748 thousand  decrease in litigation  defense and
settlement charges, $391 thousand of insurance reimbursements related to a class
action  lawsuit,  partially  offset by a $227 thousand  increase in compensation
expense and a $96 thousand increase in other non-interest  expense. The increase
in non-interest  expense during the fiscal 1997 was principally  attributable to
an $893 increase in deposit insurance premiums,  the absence of $382 thousand of
non-taxable  insurance  settlement proceeds resulting from previously  disclosed
and  settled  shareholder  litigation  and  defense  costs  and a $337  thousand
increase in compensation expense.

          Salaries and employee benefits increased $337 thousand or 12.8% during
fiscal 1997 and increased $227 thousand or 9.5% during fiscal 1996. The increase
in fiscal 1997 was principally  attributable to a $195 thousand increase related
to the Company's Employee Stock Ownership Plan ("ESOP"), a $75 thousand increase
in employee  wages and salaries and a $57  thousand  increase in profit  sharing
plan expense.  The increase in fiscal 1996 was primarily  attributable to a $134
thousand increase related to the ESOP, a $51 thousand increase in employee wages
and salaries, a $23 thousand increase in the Company's recognition and retention
plan expense and a $15 thousand increase in federal unemployment tax expense.

          Occupancy  and  equipment  expense  increased  $8  thousand or 2.0% in
fiscal 1997 and declined $3 thousand or 0.7% in fiscal 1996.  The change in both
fiscal  years was due to  changes  in the  amount  of  equipment  purchases  and
depreciation expense.

          Federal deposit insurance  premiums  increased $893 thousand or 222.7%
during  fiscal 1997 and  decreased  $17 thousand or 4.1% during  fiscal 1996. On
September 30, 1996 the President signed the Deposit  Insurance Funds Act of 1996
(the  "Funds  Act") into law.  The Funds Act calls for a Special  Assessment  on
SAIF-assessable  deposits  as of March 31,  1995 to  capitalize  the SAIF to its
designated  reserve  ratio of 1.25%.  The Company  recorded a pre-tax  charge of
approximately  $1.1 million during the quarter ended September 30, 1996 using an
FDIC estimated  assessment rate of $0.657 for every $100 of assessable deposits.
During the quarter ended December 31, 1996, the Company  accrued a $102 thousand
refund  of  prepaid  federal  deposit  insurance  premiums  as a  result  of the
capitalization of the SAIF. Federal insurance premiums are dependent on the size
of the  Company's  deposit  base and  premiums  which were  assessed by the FDIC
during the respective years.

          Data  processing  expense  increased $3 thousand or 1.8% during fiscal
1997 and  declined  $3  thousand or 1.8% during  fiscal  1996.  Data  processing
expense is directly  related to processing  volumes and certain pricing features
associated with the Company's third party data processor.


                                       21
<PAGE>
          Correspondent  bank service  charges  increased $2 thousand or 1.8% in
fiscal 1997 and increased $12 thousand or 12.1% in fiscal 1996.  The increase in
correspondent  bank service charges for both periods is due to higher volumes of
check  and  deposit  processing  and  coin  and  currency  service  charges  and
investment security safekeeping costs.

          Other  non-interest  expense (e.g.  director's  compensation  expense,
advertising,  Pennsylvania  capital  stock tax  expense,  ATM  network  expense,
provision for loss on real estate owned, legal expense,  transfer agent expense,
etc.)  decreased  $15  thousand or 2.0% during  fiscal  1997 and  decreased  $96
thousand or 15.0% during fiscal 1996.  The decrease in fiscal 1997 was primarily
attributable  to the absence of  foreclosed  real estate  disposition  costs and
related expenses. The increase in fiscal 1996 was principally  attributable to a
$52 thousand increase in Pennsylvania  capital stock tax expense, a $25 thousand
increase  in real  estate  owned  charges  relating  to the  disposition  of two
foreclosed properties, a $10 thousand increase in supervisory assessment charges
imposed by the Pennsylvania Department of Banking, and a $9 thousand increase in
advertising expense to attract new core deposit and loan business.

          INCOME  TAXES.  Income taxes  decreased  $136  thousand or 6.6% during
fiscal  1997 and  increased  $414  thousand or 25.1%  during  fiscal  1996.  The
decrease in fiscal 1997 was principally attributable to a $754 or 13.4% decrease
in taxable income.  The increase in fiscal 1996 was primarily  attributable to a
$2.2  million or 64.7%  increase in taxable  income  partially  offset by a $123
thousand   benefit   associated  with  the  shareholder   litigation   insurance
reimbursement.  The Company's  effective tax rate was 39.4%,  36.6% and 48.0% at
June 30, 1997,  1996 and 1995  respectively.  The decrease in the effective rate
for fiscal 1996 was due primarily to a one-time  adjustment for the  non-taxable
litigation and settlement insurance settlement previously discussed.


LIQUIDITY AND CAPITAL RESOURCES

          Net cash provided by operating activities totaled $3.7 million with no
significant change during the fiscal year ended June 30, 1997 when compared with
the same period in 1996. Net cash provided by operating activities was primarily
comprised of $3.0 million in net income.

          Funds used by investing  activities  totaled $34.8 million  during the
fiscal year ended June 30,  1997.  Primary  uses of funds during the fiscal year
ended June 30, 1997 include $23.3  million in net  purchases of  investment  and
mortgage-backed securities, a $9.5 million increase in net loan receivables, and
a $2.0 million increase in FHLB stock.




                                       22
<PAGE>
          Funds provided by financing  activities  totaled $31.0 million for the
fiscal  year ended June 30,  1997.  Primary  sources  of funding  include  $40.0
million in FHLB advances used to fund loan  commitments and investment  security
purchases,  which was partially  offset by $4.9 million in cash dividends  paid,
and  a  $3.9  million  decrease  in  other  borrowings.  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.  As of June 30, 1997, $71.2 million or 41.7% of the
Company's total deposits  consisted of core deposits.  Management has determined
that it currently is  maintaining  adequate  liquidity  and  continues to better
match funding sources with lending and investment opportunities.

         The  Company's  primary  sources of funds are  deposits,  amortization,
prepayments  and maturities of existing  loans,  mortgage-backed  securities and
investment securities, funds from operations, and funds obtained through Federal
Home Loan  Bank  advances  and other  borrowings.  At June 30,  1997,  the total
approved loan  commitments  outstanding  amounted to $3.1  million.  At the same
date,  commitments  under  unused  letters and lines of credit  amounted to $6.6
million,  the  unadvanced  portion  of  construction  loans  approximated  $12.5
million,  and  commitments  to purchase  when-issued  investments  totaled  $1.1
million. Certificates of deposit scheduled to mature in one year or less at June
30, 1997 totaled $70.0 million.  Management  believes that a significant portion
of maturing deposits will remain with the Company.

         Historically,  the Company used its sources of funds  primarily to meet
its ongoing  commitments  to pay  maturing  certificates  of deposit and savings
withdrawals,  fund loan  commitments  and  maintain a  substantial  portfolio of
investment  securities.  The Company has been able to generate  sufficient  cash
through the retail deposit market,  its traditional  funding source, and through
FHLB  advances and other  borrowings,  to provide the cash utilized in investing
activities.  The Company has established a $15.0 million line of credit with the
FHLB,  which is  scheduled to mature on March 25, 1998 and is subject to various
conditions,  including the pledging and delivery of acceptable  collateral.  The
primary  purpose  of the  line of  credit  is to serve  as a  back-up  liquidity
facility for the Company, however, the Company may from time to time utilize the
line of credit to purchase investment securities and fund other commitments.  In
addition,  the Company has access to the Federal  Reserve Bank discount  window.
Management  believes that the Company currently has adequate liquidity available
to respond to liquidity demands.

          On July 29,  1997 the  Company's  Board of  Directors  declared a cash
dividend of $0.20 per share payable on August 21, 1997 to shareholders of record
at the close of



                                       23
<PAGE>
business  on August  11,  1997.  Dividends  are  subject  to  determination  and
declaration  by the Board of  Directors,  which take into account the  Company's
financial  condition,  statutory and regulatory  restrictions,  general economic
conditions and other  factors.  There can be no assurance that dividends will in
fact be paid on the Common Stock in the future or that, if paid,  such dividends
will not be reduced or eliminated in future periods.

         As of June 30,  1997,  WVS  Financial  Corp.  exceeded  all  regulatory
capital requirements and maintained Tier I and total risk-based capital equal to
$33.1  million  or 24.5% and $34.8  million  or  25.8%,  respectively,  of total
risk-weighted  assets,  and Tier I leverage capital of $33.1 million or 11.4% of
average total assets.

         Nonperforming assets consist of nonaccrual loans and real estate owned.
A loan is placed on nonaccrual  status when, in the judgment of management,  the
probability of collection of interest is deemed  insufficient to warrant further
accrual.  When a loan is placed on  nonaccrual  status,  previously  accrued but
uncollected interest is deducted from interest income. The Company normally does
not accrue interest on loans past due 90 days or more, however,  interest may be
accrued if management believes that it will collect on the loan.

         The   Company's   nonperforming   assets  at  June  30,  1997   totaled
approximately  $274  thousand  or 0.09%  of total  assets  as  compared  to $377
thousand or 0.15% of total assets as of June 30, 1996.  Nonperforming  assets at
March 31, 1997  consisted of $274  thousand in a single  commercial  real estate
loan.  Approximately $15 thousand of additional  interest income would have been
recorded during the fiscal year ended June 30, 1997, if the Company's nonaccrual
and  restructured  loans had been current in accordance with their original loan
terms and outstanding throughout the fiscal year ended June 30, 1997.


                                       24
<PAGE>
SNODGRASS
Certified Public Accountants and Consultants




                         REPORT OF INDEPENDENT AUDITORS


Board of Directors and Stockholders
WVS Financial Corp.

We have audited the accompanying  consolidated statements of financial condition
of WVS Financial  Corp.  and  subsidiary as of June 30, 1997,  and 1996, and the
related consolidated  statements of income,  stockholders' equity and cash flows
for each of the  years in the three  year  period  ended  June 30,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of WVS Financial Corp.
and subsidiary as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for each of the years in the three year  period  ended June
30, 1997, in conformity with generally accepted accounting principles.

As discussed in the notes to the consolidated  financial  statements,  in fiscal
1996,  the Company  changed its method of accounting for the impairment of loans
and the related allowance for loan losses.


/s/S.R. Snodgrass, A.C.


Wexford, PA
August 1, 1997


S.R. Snodgrass, A.C.
101 Bradford Road    Wexford, PA 15090-6909
Phone: 412-934-0344    Facsimile: 412-934-0345

                                       25
<PAGE>
                               WVS FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         June 30,
                                                                   1997         1996
                                                                 ---------    ---------
<S>                                                              <C>          <C>      
ASSETS
Cash and due from banks ......................................   $     667    $     508
Interest - earning demand deposits ...........................       1,904        2,219
Investment securities available for sale (amortized
      cost of $3,689 and $2,193) (Note 2) ....................       3,553        1,981
Investment securities held to maturity (market value of
      $83,889 and $56,671) (Note 2) ..........................      83,995       57,237
Mortgage - backed securities available for sale (amortized
      cost of $18,417 and $22,775) (Note 3) ..................      18,280       22,428
Mortgage - backed securities held to maturity (market value
      of $19,381 and $19,735) (Note 3) .......................      19,210       19,690
Net loans receivable (Notes 4 and 5) .........................     158,134      149,011
Accrued interest receivable ..................................       2,809        2,373
Federal Home Loan Bank stock, at cost ........................       3,927        1,900
Premises and equipment .......................................       1,298        1,327
Deferred taxes and other assets ..............................         916          948
                                                                 ---------    ---------
TOTAL ASSETS .................................................   $ 294,693    $ 259,622
                                                                 =========    =========
LIABILITIES
Deposits (Note 9) ............................................   $ 170,879    $ 170,843
Federal Home Loan Bank Advances (Note 10) ....................      77,857       38,000
Other borrowings (Note 11) ...................................       6,784       10,652
Advance payments by borrowers for taxes and insurance ........       3,531        3,772
Accrued interest payable .....................................       1,768        1,425
Other liabilities ............................................         985          892
                                                                 ---------    ---------
TOTAL LIABILITIES ............................................     261,804      225,584
                                                                 ---------    ---------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares authorized;
      none outstanding .......................................        --           --   
Common stock, par value $.01; 10,000,000 shares authorized;
      1,747,280 and 1,736,760 shares issued and outstanding ..          17           17
Additional paid - in capital .................................      17,236       16,947
Retained earnings - substantially restricted (Note 13) .......      16,900       18,861
Net unrealized loss on securities ............................        (180)        (368)
Unallocated shares - Employee Stock Ownership Plan (Note 14) .        (453)        (584)
Unallocated shares - Recognition and Retention Plans (Note 14)        (631)        (835)
                                                                 ---------    ---------
TOTAL STOCKHOLDERS' EQUITY ...................................      32,889       34,038
                                                                 ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................   $ 294,693    $ 259,622
                                                                 =========    =========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       26
<PAGE>
                               WVS FINANCIAL CORP.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                       Year Ended June 30,
                                                               1997           1996           1995
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>        
INTEREST AND DIVIDEND INCOME
Loans ..................................................   $    12,440    $    11,756    $    11,152
Investment securities ..................................         5,696          4,747          2,931
Mortgage - backed securities ...........................         2,724          1,638          1,326
Interest - earning demand deposits .....................            80             92            134
Federal Home Loan Bank stock ...........................           185             84             69
                                                           -----------    -----------    -----------
Total interest and dividend income .....................        21,125         18,317         15,612
                                                           -----------    -----------    -----------

INTEREST EXPENSE
Deposits (Note 9) ......................................         7,041          7,385          7,107
Borrowings (Notes 10 and 11) ...........................         3,798          1,409            226
Advance payments by borrowers for
      taxes and insurance ..............................            45             46             39
                                                           -----------    -----------    -----------
Total interest expense .................................        10,884          8,840          7,372
                                                           -----------    -----------    -----------

NET INTEREST INCOME ....................................        10,241          9,477          8,240
Provision for loan losses (Note 5) .....................            60            150            211
                                                           -----------    -----------    -----------
NET INTEREST INCOME AFTER PROVISION
      FOR LOAN LOSSES ..................................        10,181          9,327          8,029
                                                           -----------    -----------    -----------

NONINTEREST INCOME
Service charges on deposits ............................           203            196            176
Investment securities gains ............................            30             54           --
Other ..................................................           141            133            131
                                                           -----------    -----------    -----------
Total noninterest income ...............................           374            383            307
                                                           -----------    -----------    -----------
<PAGE>
<CAPTION>
                                                                       Year Ended June 30,
                                                               1997           1996           1995
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>        
NONINTEREST EXPENSE
   Unusual items:
         Shareholder litigation settlement (Note 12) ...           (11)          (245)           491
         Shareholder litigation costs (Note 12) ........          --             (137)           266
Salaries and employee benefits .........................         2,962          2,625          2,398
Occupancy and equipment ................................           416            408            411
Deposit insurance premium (Note 19) ....................         1,294            401            418
Data processing ........................................           171            168            171
Correspondent bank service charges .....................           113            111             99
Other ..................................................           721            736            640
                                                           -----------    -----------    -----------
Total noninterest expense ..............................         5,666          4,067          4,894
                                                           -----------    -----------    -----------


Income before income taxes .............................         4,889          5,643          3,442

Income taxes (Note 16) .................................         1,930          2,066          1,652
                                                           -----------    -----------    -----------

NET INCOME .............................................   $     2,959    $     3,577    $     1,790
                                                           ===========    ===========    ===========

EARNINGS PER SHARE:
Primary and Fully Diluted ..............................   $      1.69    $      2.06    $      1.05

AVERAGE SHARES OUTSTANDING:
Primary ................................................     1,752,216      1,732,348      1,709,243
Fully Diluted ..........................................     1,754,442      1,734,467      1,710,696

</TABLE>
See accompanying notes to the consolidated financial statements.

                                       27
<PAGE>
                               WVS FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                                               Net           
                                                          Additional        Unallocated      Unallocated       Unrealized    
                                         Common           Paid-in           Shares Held      Shares Held       Loss on       
                                         Stock            Capital           by ESOP          by RRP            Securities    
                                         -------------    --------------    -------------    --------------    ------------- 
<S>                                      <C>              <C>               <C>              <C>               <C>           
Balance, June 30, 1994                            $17           $16,795           $(765)          $(1,194)          $ --     
                                                                                                                
Release of earned Employee
Stock Ownership Plan shares                                          44              101                                     

Accrued compensation expense
for Recognition and Retention Plans                                                                    181                   

Market value adjustment for
additional stock grant issued                                        27                               (27)
                                                                                                                             
Exercise of Stock Options                                             1                                                      

Cash dividends declared
($.42 per share)                                                                                                             

Net income                                                                                                                   
                                         -------------    --------------    -------------    --------------    ------------- 
Balance, June 30, 1995                             17            16,867            (664)           (1,040)            --     
                                                                                                                

Release of earned Employee
Stock Ownership Plan shares                                          76               80                                     

Accrued compensation expense
for Recognition and Retention Plans                                                                    205                   


Exercise of Stock Options                                             4                                                      

Cash dividends declared
($2.06 per share)                                                                                                            

Net unrealized loss on securities                                                                                     (368)  

Net income                                                                                                                   
                                         -------------    --------------    -------------    --------------    ------------- 
Balance, June 30, 1996                             17            16,947            (584)             (835)            (368)  
<PAGE>
<CAPTION>
                                             Retained
                                             Earnings-
                                             Substantially
                                             Restricted        Total
                                             --------------    -------------
<S>                                          <C>               <C>
Balance, June 30, 1994                             $17,517          $32,370
                                         
Release of earned Employee
Stock Ownership Plan shares                                             145

Accrued compensation expense
for Recognition and Retention Plans                                     181

Market value adjustment for
additional stock grant issued            
                                                                           
Exercise of Stock Options                                                 1

Cash dividends declared
($.42 per share)                                     (678)            (678)

Net income                                           1,790            1,790
                                             --------------    -------------
Balance, June 30, 1995                               18,629           33,809
                                         

Release of earned Employee
Stock Ownership Plan shares                                             156

Accrued compensation expense
for Recognition and Retention Plans                                     205


Exercise of Stock Options                                                 4

Cash dividends declared
($2.06 per share)                                  (3,345)          (3,345)

Net unrealized loss on securities                                     (368)

Net income                                           3,577            3,577
                                             --------------    -------------
Balance, June 30, 1996                              18,861           34,038
<PAGE>
<CAPTION>
                                                                                                               Net          
                                                          Additional        Unallocated      Unallocated       Unrealized   
                                         Common           Paid-in           Shares Held      Shares Held       Loss on      
                                         Stock            Capital           by ESOP          by RRP            Securities   
                                         -------------    --------------    -------------    --------------    -------------
<S>                                      <C>              <C>               <C>              <C>               <C>          
Release of earned Employee
Stock Ownership Plan shares                                         184              131                                    

Accrued compensation expense
for Recognition and Retention Plans                                                                    204                  

Exercise of Stock Options                                           105                                                     

Cash dividends declared
($3.00 per share)                                                                                                           

Net unrealized gain on securities                                                                                       188 

Net income                                                                                                                  
                                         -------------    --------------    -------------    --------------    -------------
Balance June 30, 1997                             $17           $17,236           $(453)            $(631)           $(180) 
                                         =============    ==============    =============    ==============    =============
<PAGE>
<CAPTION>
                                         Retained
                                         Earnings-
                                         Substantially
                                         Restricted        Total
                                         --------------    -------------
<S>                                      <C>               <C>
Release of earned Employee
Stock Ownership Plan shares                                         315

Accrued compensation expense
for Recognition and Retention Plans                                 204

Exercise of Stock Options                                           105

Cash dividends declared
($3.00 per share)                              (4,920)          (4,920)

Net unrealized gain on securities                                   188

Net income                                       2,959            2,959
                                         --------------    -------------
Balance June 30, 1997                          $16,900           $32,889
                                         ==============    =============

</TABLE>

See accompanying notes to the consolidated financial statements.


                                       28
<PAGE>
                              WVS FINANCIAL CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                    Year Ended June 30,
                                                                                           1997             1996             1995
                                                                                         --------         --------         --------
<S>                                                                                      <C>              <C>              <C>     
OPERATING ACTIVITIES
Net income ......................................................................        $  2,959         $  3,577         $  1,790
Adjustments to reconcile net income to net cash provided
      by operating activities:
Provision for loan and real estate owned losses .................................              60              161              211
Provision for litigation settlement .............................................            --               --                491
Depreciation and amortization, net ..............................................             134              133              145
Amortization of discounts, premiums and deferred loan fees ......................             111             (203)             883
Amortization of ESOP and RRP deferred and unearned
      compensation ..............................................................             519              361              326
Investment securities gains .....................................................             (30)             (54)            --
Deferred income taxes ...........................................................             (52)              95              148
(Increase) decrease in accrued interest receivable ..............................            (436)            (288)             346
Increase in accrued interest payable ............................................             343              159              278
Other, net ......................................................................              71             (192)            (164)
                                                                                         --------         --------         --------
Net cash provided by operating activities .......................................           3,679            3,749            4,454
                                                                                         --------         --------         --------

INVESTING ACTIVITIES
Decrease in certificates of deposit with other institutions, net ................            --               --                648
Available for sale:
      Purchase of investment and mortgage-backed securities .....................          (1,508)         (13,470)            --
      Proceeds from repayments of investment and
          mortgage-backed securities ............................................           2,711            4,135             --
      Proceeds from sale of investment and
          mortgage-backed securities ............................................           1,678              301             --
Held to maturity:
      Purchase of investment and mortgage-backed securities .....................         (75,006)         (71,399)         (53,526)
      Proceeds from repayments of investment and
          mortgage - backed securities ..........................................          48,856           62,705           57,497
Increase in net loans receivable ................................................          (9,476)         (15,637)          (9,706)
Proceeds from sale of real estate owned .........................................              73               24               41
Increase in Federal Home Loan Bank Stock ........................................          (2,027)            (747)             (96)
Acquisition of premises and equipment ...........................................            (105)              (6)             (15)
                                                                                         --------         --------         --------
Net cash used by investing activities ...........................................         (34,804)         (34,094)          (5,157)
                                                                                         --------         --------         --------
<PAGE>
<CAPTION>
                                                                                                    Year Ended June 30,
                                                                                           1997             1996             1995
                                                                                         --------         --------         --------
<S>                                                                                      <C>              <C>              <C>     
FINANCING ACTIVITIES
Net increase (decrease) in deposits .............................................              36            2,057          (11,543)
Net increase in Federal Home Loan Bank Advances .................................          39,857           23,016           10,984
Net increase (decrease) in other borrowings .....................................          (3,868)           6,604            4,048
Net increase (decrease) in advance payments by
      borrowers for taxes and insurance .........................................            (241)             518              150
Net proceeds from issuance of common stock ......................................             105                4                1
Cash dividends paid .............................................................          (4,920)          (3,345)            (678)
                                                                                         --------         --------         --------
Net cash provided by financing activities .......................................          30,969           28,854            2,962
                                                                                         --------         --------         --------

Increase (decrease) in cash and cash equivalents ................................            (156)          (1,491)           2,259
CASH AND CASH EQUIVALENTS AT BEGINNING
      OF YEAR ...................................................................           2,727            4,218            1,959
                                                                                         --------         --------         --------

            CASH AND CASH EQUIVALENTS AT END OF YEAR ............................        $  2,571         $  2,727         $  4,218
                                                                                         ========         ========         ========

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
      Interest ..................................................................        $ 10,541         $  8,681         $  7,129
      Taxes .....................................................................           2,118            1,869            1,506

</TABLE>

See accompanying notes to the consolidated financial statements.


                                       29
<PAGE>
                              WVS FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WVS Financial  Corp.  ("WVS" or the "Company") was organized in July,  1993 as a
Pennsylvania-  chartered  unitary bank holding  company and acquired 100% of the
common stock of West View  Savings  Bank ("West View" or the "Savings  Bank") in
November,  1993. The operating  results of the Company depend primarily upon the
operating  results of the  Savings  Bank and,  to a lesser  extent,  income from
interest-earning assets such as investment securities.

West  View  is  a   Pennsylvania-chartered,   SAIF-insured  stock  savings  bank
conducting  business from six offices in the North Hills suburbs of  Pittsburgh.
The Savings Bank's  principal  sources of revenue  emanate from its portfolio of
residential  real estate and commercial  mortgage  loans, as well as income from
investment and mortgage-backed securities.

The Company is  supervised  by the Board of  Governors  of the  Federal  Reserve
System,  while the Savings Bank is subject to regulation and  supervision by the
Federal Deposit Insurance Corporation (FDIC) and the Pennsylvania  Department of
Banking.

Basis of Presentation

The  consolidated  financial  statements  include  the  accounts  of WVS and its
wholly-owned subsidiary,  West View Savings Bank. All intercompany  transactions
have been eliminated in consolidation.  The accounting and reporting policies of
WVS and its wholly-owned  subsidiary conform with generally accepted  accounting
principles.  The Company's  fiscal year end for financial  reporting is June 30.
For regulatory and income tax reporting  purposes,  WVS reports on a December 31
calendar year basis.

In preparing the consolidated  financial  statements,  management is required to
make estimates and  assumptions  that effect the reported  amounts of assets and
liabilities  as of the balance  sheet date and  revenues  and  expenses for that
period. Actual results could differ significantly from those estimates.

Investment and Mortgage-Backed Securities

Debt and mortgage-backed securities acquired with the intent to hold to maturity
are stated at cost  adjusted  for  amortization  of  premium  and  accretion  of
discount,  which are  computed  using the  interest  method  and  recognized  as
adjustments  of  interest  income.   Amortization   rates  for   mortgage-backed
securities are periodically adjusted to reflect changes in the prepayment speeds
of the underlying mortgages.  Certain other debt and mortgage-backed  securities
have been  classified as available for sale to serve  principally as a source of
liquidity. Unrealized holding gains and losses for available for sale securities
are reported as a separate component of stockholders'  equity, net of tax, until
realized.  Realized  securities gains and losses are computed using the specific
identification method.  Interest and dividends on investment and mortgage-backed
securities are recognized as income when earned.

Common stock of the Federal Home Loan Bank (the "FHLB") represents  ownership in
an institution  which is  wholly-owned  by other  financial  institutions.  This
equity  security  is  accounted  for at  cost  and  reported  separately  on the
accompanying statement of financial condition.

In December,  1995, in accordance with the Financial  Accounting Standards Board
Special Report,  "A Guide to  Implementation  of Statement No. 115 on Accounting
for Certain Investments in Debt and Equity Securities", the Company reclassified
certain mortgage-backed  securities, with an amortized cost of $15.9 million and
an  estimated  market  value  of  $16.1  million,  from  the  held  to  maturity
classification to the available for sale classification. The net appreciation of
these  securities,  at the time of transfer,  was recorded net of federal income
taxes to an unrealized  securities  gain (loss)  account which is a component of
stockholders' equity.

                                       30
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Net Loans Receivable

Loans  receivable are reported at their principal  amount,  net of the allowance
for loan losses and deferred  loan fees.  Interest on mortgage  loans,  consumer
loans,  financing  leases and  commercial  loans is  recognized  on the  accrual
method. The Company's general policy is to stop accruing interest on loans when,
based upon  relevant  factors,  the  collection  of  principal  or  interest  is
doubtful, regardless of the contractual status.

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.

Allowance for Loan Losses

Effective  January  1, 1995,  WVS  adopted  Statement  of  Financial  Accounting
Standards  No. 114,  "Accounting  by  Creditors  for  Impairment  of a Loan," as
amended by Statement No. 118.  Under this Standard,  the Bank  estimates  credit
losses on impaired  loans based on the present  value of expected  cash flows or
fair value of the  underlying  collateral  if the loan  repayment is expected to
come  from the sale or  operation  of such  collateral.  The  adoption  of these
statements  did  not  have a  material  effect  on WVS'  consolidated  financial
position or results of operation.

Impaired loans are  commercial and commercial  real estate loans for which it is
probable  that WVS will not be able to collect all amounts due  according to the
contractual terms of the loan agreement.  WVS individually  evaluates such loans
for impairment and does not aggregate loans by major risk  classifications.  The
definition of "impaired  loans" is not the same as the definition of "nonaccrual
loans," although the two categories  overlap.  WVS may choose to place a loan on
nonaccrual status due to payment delinquency or uncertain collectibility,  while
not  classifying  the  loan  as  impaired  if the  loan is not a  commercial  or
commercial  real estate loan.  Factors  considered by management in  determining
impairment include payment status and collateral value. The amount of impairment
for these types of loans is  determined  by the  difference  between the present
value of the  expected  cash  flows  related  to the loan,  using  the  original
interest rate, and its recorded value, or, as a practical  expedient in the case
of collateralized loans, the difference between the fair value of the collateral
and the recorded amount of the loans.  When foreclosure is probable,  impairment
is measured based on the fair value of the collateral.

Mortgage loans on one-to-four family properties and all consumer loans represent
large  groups  of  smaller  balance  homogeneous  loans  and  are  measured  for
impairment  collectively.  Loans that experience  insignificant  payment delays,
which are defined as 90 days or less,  generally are not classified as impaired.
Management  determines  the  significance  of payment  delays on a  case-by-case
basis,  taking into consideration all of the circumstances  surrounding the loan
and the  borrower,  including  the length of the  delay,  the  borrower's  prior
payment  record,  and the amount of shortfall in relation to the  principal  and
interest owed.

The allowance for loan losses is established through a provision 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 in the
near term.

                                       31
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Owned

Real estate owned acquired  through  foreclosure is carried at the lower of cost
or fair value minus estimated  costs to sell.  Costs relating to development and
improvement of the property are capitalized,  whereas costs of holding such real
estate are expensed as incurred.  Valuation  allowances for estimated losses are
provided when the carrying  value of the real estate  acquired  exceeds the fair
value.

Premises and Equipment

Premises  and  equipment  are  stated at cost,  less  accumulated  depreciation.
Depreciation  is  principally  computed  on the  straight-line  method  over the
estimated  useful  lives  of the  related  assets.  Leasehold  improvements  are
amortized over their  estimated  useful lives or their  respective  lease terms,
whichever  is  shorter.  Expenditures  for  maintenance  and repairs are charged
against  income as  incurred.  Costs of major  additions  and  improvements  are
capitalized.

Income Taxes

Deferred tax assets or liabilities are computed based on the difference  between
the financial statement and the income tax basis of assets and liabilities using
the enacted  marginal tax rates.  Deferred income taxes or benefits are based on
the changes in the deferred tax asset or liability from period to period.

The Company files a consolidated federal income tax return.  Deferred tax assets
and liabilities are reflected at currently  enacted income tax rates  applicable
to the period in which the deferred tax assets or liabilities are expected to be
realized or settled.  As changes in tax rates are  enacted,  deferred tax assets
and liabilities are adjusted through the provision for income taxes.

Cash Flow Information

Cash and cash equivalents  include cash and due from banks and  interest-earning
demand deposits, as noted on the consolidated statements of financial condition.

Earnings Per Share

Earnings per share for the years ended June 30, 1997,  1996,  and 1995 have been
calculated  based upon the  weighted  average  number of issued and  outstanding
common shares, including common stock equivalents, if such items have a dilutive
effect.

Reclassification of Comparative Figures

Certain  comparative amounts for 1996 and 1995 have been reclassified to conform
to 1997 presentations. Such reclassifications did not affect net income.

                                       32
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

In June 1996,  the  Financial  Accounting  Standards  Board issued  Statement of
Accounting  Standards  No. 125,  "Accounting  for  Transfers  and  Servicing  of
Financial Assets and Extinguishment of Liabilities",  which provides  accounting
and reporting  standards  for  transfers  and servicing of financial  assets and
extinguishment of liabilities.  This statement  applies  prospectively in fiscal
years  beginning  after  December 31, 1996, and  establishes  new standards that
focus on control,  whereas,  after a transfer  of  financial  assets,  an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred,  derecognizes  financial assets when control has been surrendered,
and derecognizes liabilities when extinguished.

In December 1996, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 127,  "Deferral of the  Effective  Date of
Certain Provisions of FASB Statement No. 125". Statement 127 defers for one year
the effective date of certain portions of Statement No. 125 that address secured
borrowings and collateral for all transactions.  Additionally, Statement No. 127
defers for one year the effective date of transfers of financial assets that are
part of repurchase agreements,  securities lending and similar transactions. WVS
does not expect the adoption of Statement 125 and 127 to have a material  impact
on the Company's consolidated financial condition or results of operations.

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128,  "Earnings  Per Share",  effective for
financial  statements issued for periods ending after December 15, 1997. The new
standard specifies the computation,  presentation,  and disclosure  requirements
for earnings per share for entities with  publicly  held common stock.  WVS does
not anticipate adoption to have a material impact on presentation and disclosure
for earnings per share.

In July 1997 the  Financial  Accounting  Standards  Board  issued  Statement  of
Financial  Accounting  Standards  No.  130,  "Reporting  Comprehensive  Income".
Statement No. 130 is effective  for fiscal years  beginning  after  December 15,
1997.  This statement  establishes  standards for reporting and  presentation of
comprehensive income and its components (revenues,  expenses,  gains and losses)
in a full set of general  purpose  financial  statements.  It requires  that all
items  that  are  required  to  be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
presented with the same prominence as other financial statements.  Statement No.
130 requires that companies (i) classify items of other comprehensive  income by
their nature in a financial  statement and (ii) display the accumulated  balance
of other  comprehensive  income separately from retained earnings and additional
paid-in  capital in the equity section of the statement of financial  condition.
Reclassification  of  financial  statements  for earlier  periods  provided  for
comprehensive purposes is required.

                                       33
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

2. INVESTMENT SECURITIES

The amortized cost and estimated market values of investments are as follows:
<TABLE>
<CAPTION>
                                                                    1997                          
                                             ---------------------------------------------------- 
                                                           Gross         Gross          Estimated 
                                             Amortized     Unrealized    Unrealized     Market    
                                             Cost          Gains         Losses         Value     
                                             ---------     ----------    ----------     --------- 
<S>                                          <C>           <C>           <C>            <C>       
AVAILABLE FOR SALE                                                                                
U.S. Government securities .........         $2,192        $ --          $ (185)        $2,007    
Equity securities ..................          1,497            49          --            1,546    
                                             ------        ------        ------         ------    
                                                                                                  
      Total ........................         $3,689        $   49        $ (185)        $3,553    
                                            ======        ======        ======         ======    
                                                                                                  
<CAPTION>                                                                                         
                                                                    1997                          
                                             ---------------------------------------------------- 
                                                           Gross         Gross          Estimated 
                                             Amortized     Unrealized    Unrealized     Market    
                                             Cost          Gains         Losses         Value     
                                             ---------     ----------    ----------     --------- 
<S>                                          <C>           <C>           <C>            <C>       
HELD TO MATURITY                                                                                  
U.S. Government agency securities ..         $81,850       $  134        $ (241)        $81,743   
Corporate securities ...............          2,145             3            (2)         2,146    
                                             ------        ------        ------         ------    
                                                                                                  
      Total ........................         $83,995       $  137        $ (243)        $83,889   
                                             ======        ======        ======         ======    
                                                                                                  
<PAGE>
<CAPTION>                                                                                         
                                                                    1996                          
                                             ---------------------------------------------------- 
                                                           Gross         Gross          Estimated 
                                             Amortized     Unrealized    Unrealized     Market    
                                             Cost          Gains         Losses         Value     
                                             ---------     ----------    ----------     --------- 
<S>                                          <C>           <C>           <C>            <C>       
AVAILABLE FOR SALE                                                                                
U.S. Government securities .........         $2,193        $ --          $ (212)        $1,981    
                                             ======        ======        ======         ======    
                                                                                                  
<CAPTION>                                                                                         
                                                                    1996                          
                                             ---------------------------------------------------- 
                                                           Gross         Gross          Estimated 
                                             Amortized     Unrealized    Unrealized     Market    
                                             Cost          Gains         Losses         Value     
                                             ---------     ----------    ----------     --------- 
<S>                                          <C>           <C>           <C>            <C>       
HELD TO MATURITY                                                                                  
U.S. Government agency securities ..         $51,981       $   42        $ (610)        $51,413   
Obligations of state and                                                                          
      political subdivisions .......            300          --            --              300    
Corporate securities ...............          4,956            25           (23)         4,958    
                                             ------        ------        ------         ------    
                                                                                                  
      Total ..............                   $57,237       $   67        $ (633)        $56,671   
                                             ======        ======        ======         ======    
</TABLE>


                                       34
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

2. INVESTMENT SECURITIES (Continued)

The amortized  cost and estimated  market values of debt  securities at June 30,
1997, by contractual  maturity,  are shown below. Expected maturities may differ
from the  contractual  maturities  because  issuers  may have the  right to call
securities prior to their final maturities.

<TABLE>
<CAPTION>
                                   Due in             Due after          Due after
                                   one year           one through        five through       Due after
                                   or less            five years         ten years          ten years           Total
                                   -------            -----------        ------------       ----------         -------
<S>                                <C>                <C>                <C>                <C>                <C>    
AVAILABLE FOR SALE
     Amortized Cost .........      $  --              $  --              $  --              $ 2,192            $ 2,192
 Estimated Market Value .....         --                 --                 --                2,007              2,007

HELD TO MATURITY
     Amortized Cost .........      $ 1,644            $ 2,000            $47,733            $32,618            $83,995

 Estimated Market Value .....        1,647              1,991             47,520             32,731             83,889
</TABLE>

Proceeds from the sale of securities  available for sale were $1,678 and $301 in
1997  and  1996.  The  gains  resulting  from  these  sales  were  $30 and  $54,
respectively. There were no sales of investment securities during 1995.

Investment  securities  with carrying values of $9,256 and $11,479 and estimated
market  values of $9,144 and  $11,158 at June 30,  1997 and 1996,  respectively,
were pledged to secure  public  deposits,  repurchase  agreements  and for other
purposes as required by law.


                                       35
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

3. MORTGAGE-BACKED SECURITIES

The amortized cost and estimated market values of mortgage-backed securities are
as follows:
<TABLE>
<CAPTION>
                                                                                   1997
                                                   -----------------------------------------------------------------------
                                                                      Gross              Gross              Estimated
                                                   Amortized          Unrealized         Unrealized         Market
                                                   Cost               Gains              Losses             Value
                                                   --------------     --------------     --------------     --------------
<S>                                                   <C>                <C>                <C>                 <C>    
AVAILABLE FOR SALE
Federal National Mortgage
      Association certificates ...........            $10,708            $     6            $  (265)            $10,449
Government National Mortgage
      Association Certificates ...........              1,306                 38               --                 1,344
Federal Home Loan Mortgage
      Corporation Certificates ...........                931                 19               --                   950
Collateralized mortgage obligations issued
      by agencies of the U.S. Government .              5,472                 74                 (9)              5,537
                                                      -------            -------            -------             -------

     Total ...............................            $18,417            $   137            $  (274)            $18,280
                                                      =======            =======            =======             =======
<PAGE>
<CAPTION>
                                                                                   1997
                                                   -----------------------------------------------------------------------
                                                                      Gross              Gross              Estimated
                                                   Amortized          Unrealized         Unrealized         Market
                                                   Cost               Gains              Losses             Value
                                                   --------------     --------------     --------------     --------------
<S>                                                   <C>                <C>                <C>                 <C>    
HELD TO MATURITY
Federal National Mortgage
      Association certificates ...........            $   194            $    11            $  --               $   205
Government National Mortgage
      Association certificates ...........              1,219                 14                (13)              1,220
Federal Home Loan Mortgage
      Corporation certificates ...........                350                 30               --                   380
Collateralized mortgage obligations issued
      by agencies of the U.S. Government .             16,728                115               --                16,843
Collateralized mortgage obligations backed
      by securities issued by U.S. Government
      agencies ...........................                719                 14               --                   733
                                                      -------            -------            -------             -------

     Total ...............................            $19,210            $   184            $   (13)            $19,381
                                                      =======            =======            =======             =======
</TABLE>


                                       36
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

3. MORTGAGE-BACKED SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                                   1996
                                                   -----------------------------------------------------------------------
                                                                      Gross              Gross              Estimated
                                                   Amortized          Unrealized         Unrealized         Market
                                                   Cost               Gains              Losses             Value
                                                   --------------     --------------     --------------     --------------
<S>                                                   <C>                <C>                <C>                 <C>    
AVAILABLE FOR SALE
Federal National Mortgage
      Association certificates ...........            $11,359            $     8            $  (443)            $10,924
Government National Mortgage
      Association certificates ...........              1,580                 28               --                 1,608
Federal Home Loan Mortgage
      Corporation certificates ...........              2,880                 31                 (2)              2,909
Collateralized mortgage obligations issued
      by agencies of the U.S. Government .              6,956                 57                (26)              6,987
                                                      -------            -------            -------             -------

     Total ...............................            $22,775            $   124            $  (471)            $22,428
                                                      =======            =======            =======             =======
<CAPTION>
                                                                                   1996
                                                   -----------------------------------------------------------------------
                                                                      Gross              Gross              Estimated
                                                   Amortized          Unrealized         Unrealized         Market
                                                   Cost               Gains              Losses             Value
                                                   --------------     --------------     --------------     --------------
<S>                                                   <C>                <C>                <C>                 <C>    
HELD TO MATURITY
Federal National Mortgage
      Association certificates ...........            $   269            $    11            $  --               $   280
Government National Mortgage
      Association certificates ...........              1,268                 18                (31)              1,255
Federal Home Loan Mortgage
      Corporation certificates ...........                450                 32               --                   482
Collateralized mortgage obligations issued
      by agencies of the U.S. Government .             16,878                 29                (18)             16,889
Collateralized mortgage obligations backed
      by securities issued by U.S. Government
      agencies ...........................                825                  5                 (1)                829
                                                      -------            -------            -------             -------

     Total ...............................            $19,690            $    95            $   (50)            $19,735
                                                      =======            =======            =======             =======
</TABLE>
<PAGE>
The amortized cost and estimated market values of mortgage-backed  securities at
June 30, 1997, by contractual maturity, are shown below. Expected maturities may
differ from the contractual  maturities  because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                       Due in             Due after          Due after
                                       one year           one through        five through       Due after
                                       or less            five years         ten years          ten years           Total
                                       -------            -----------        ------------       ---------          -------
<S>                                    <C>                <C>                <C>                <C>                <C>    
AVAILABLE FOR SALE
     Amortized Cost ...............    $   103            $ 1,811            $ 2,782            $13,721            $18,417
     Estimated Market Value .......        103              1,807              2,702             13,668             18,280

HELD TO MATURITY
     Amortized Cost ...............    $  --              $    75            $  --              $19,135            $19,210
     Estimated Market Value .......       --                   78               --               19,303             19,381
</TABLE>

                                       37
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

4. NET LOANS RECEIVABLE

Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
                                                              1997        1996
                                                            --------    --------
<S>                                                         <C>         <C>     
First mortgage loans:
      1 - 4 family dwellings ...........................    $116,663    $109,776
      Construction and land development ................      24,381      28,273
      Multi-family dwellings ...........................       3,499       3,235
      Commercial .......................................      14,669      13,088
                                                            --------    --------
                                                             159,212     154,372
                                                            --------    --------
Consumer loans:
      Home equity ......................................       6,701       6,619
      Home equity lines of credit ......................       5,557       5,344
      Education loans ..................................         516         590
      Other ............................................       1,403       1,484
                                                            --------    --------
                                                              14,177      14,037
                                                            --------    --------

Commercial loans and leases ............................          93          54
                                                            --------    --------

Less:
      Undisbursed construction and land development ....      12,505      16,651
      Net deferred loan fees ...........................         834         837
      Allowance for loan losses ........................       2,009       1,964
                                                            --------    --------
                                                              15,348      19,452
                                                            --------    --------

Net loans receivable ...................................    $158,134    $149,011
                                                            ========    ========
</TABLE>

The Company's  primary  business  activity is with customers  located within its
local trade area of Northern Allegheny and Southern Butler counties. The Company
has  concentrated  its lending efforts by granting  residential and construction
mortgage  loans to customers  throughout  its immediate  trade area. The Company
also selectively  funds and participates in commercial and residential  mortgage
loans  outside  of its  immediate  trade  area,  provided  such  loans  meet the
Company's  credit policy  guidelines.  In general,  the Company's loan portfolio
performance is dependent upon the local economic conditions.
<PAGE>
Total nonaccrual loans and troubled debt restructurings and the related interest
for the years ended June 30, are as follows:
<TABLE>
<CAPTION>
                                                   1997        1996        1995
                                                  ------      ------      ------
<S>                                               <C>         <C>         <C>   
Principal outstanding ......................      $  274      $  980      $1,959
Interest income that would
      have been recognized .................      $   35      $   84      $  186
Interest income recognized .................          20          75         144
                                                  ------      ------      ------

      Interest income foregone .............      $   15      $    9      $   42
                                                  ======      ======      ======
</TABLE>

At June 30, 1996,  the recorded  investment in loans which are  considered to be
impaired in accordance  with SFAS No. 114 was $877 of which $274 was  considered
to be nonaccrual. In addition, $131 of the related allowance for loan losses has
been  allocated for these impaired  loans.  The average  recorded  investment in
impaired loans during the year ended June 30, 1996 was  approximately  $871. For
the year ended June 30, 1996,  interest  income  totaling $73 was  recognized on
impaired loans both on the accrual and cash basis of income  recognition.  There
were no material impaired loans at June 30, 1997.

                                       38
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

4. NET LOANS RECEIVABLE (Continued)

Certain  officers,  directors,  and their  associates were customers of, and had
transactions with the Company in the ordinary course of business. All loans were
made on substantially the same terms,  including  interest rates and collateral,
as  those  prevailing  at  the  time  for  comparable  transactions  with  other
customers.  A summary of loan activity for those directors,  executive officers,
and their  associates  with aggregate loan balances in excess of $60,000 for the
years ended June 30 are as follows:
<TABLE>
<CAPTION>
                                                       1997              1996
                                                     -------            -------
<S>                                                  <C>                <C>    
Balance, July 1 ..........................           $ 1,635            $ 1,499
    Additions ............................               240                392
    Amounts collected ....................              (417)              (256)
                                                     -------            -------

Balance, June 30 .........................           $ 1,458            $ 1,635
                                                     =======            =======
</TABLE>

5. ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
                                                   1997        1996        1995
                                                  ------      ------      ------
<S>                                               <C>         <C>         <C>   
Balance, July 1 ............................      $1,964      $1,836      $1,634
Add:
      Provision charged to operations ......          60         150         211
      Recoveries ...........................           3           7           3
Less loans charged off .....................          18          29          12
                                                  ------      ------      ------

Balance, June 30 ...........................      $2,009      $1,964      $1,836
                                                  ======      ======      ======
</TABLE>
<PAGE>
6. ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following:
<TABLE>
<CAPTION>
                                                              1997         1996
                                                             ------       ------
<S>                                                          <C>          <C>   
Investment and mortgage-backed securities ............       $1,820       $1,453
Loans receivable .....................................          989          920
                                                             ------       ------

      Total ..........................................       $2,809       $2,373
                                                             ======       ======
</TABLE>

7. FEDERAL HOME LOAN BANK STOCK

The Savings Bank is a member of the Federal Home Loan Bank System.  As a member,
West View  maintains an investment in the capital stock of the Federal Home Loan
Bank of  Pittsburgh  in an amount not less than one  percent of its  outstanding
qualifying  assets  as  defined  by the  FHLB or 1/20  of its  outstanding  FHLB
borrowings, whichever is greater, as calculated throughout the year.

                                       39
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

8. PREMISES AND EQUIPMENT

Major classifications of premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
                                                            1997           1996
                                                           ------         ------
<S>                                                        <C>            <C>   
Land and improvements ............................         $  226         $  226
Buildings and improvements .......................          1,930          1,948
Furniture, fixtures, and equipment ...............          1,041            967
                                                           ------         ------
                                                            3,197          3,141
Less accumulated depreciation ....................          1,899          1,814
                                                           ------         ------

     Total .......................................         $1,298         $1,327
                                                           ======         ======
</TABLE>

Depreciation  charged to operations was $134, $133 and $145, for the years ended
June 30, 1997, 1996, and 1995, respectively.

9. DEPOSITS

Deposit accounts are summarized as follows:
<TABLE>
<CAPTION>
                                              1997                          1996
                                     ------------------------      ------------------------
                                                   Percent of                    Percent of
                                     Amount        Portfolio       Amount        Portfolio
                                     ------        ---------       ------        ---------
<S>                                 <C>             <C>           <C>             <C> 
Noninterest-earning checking        $  7,283          4.3%        $  6,259          3.7%
Interest-earning checking ..          15,177          8.9           14,252          8.3
Savings accounts ...........          36,591         21.4           37,976         22.2
Money market accounts ......          12,103          7.1           11,682          6.8
                                    --------        -----         --------        -----
                                      71,154         41.7           70,169         41.0
                                    --------        -----         --------        -----

Savings Certificates:
      5.00% or less ........          15,321          9.0           28,009         16.4
      5.01 - 6.00% .........          67,858         39.7           53,622         31.4
      6.01 - 7.00% .........           8,930          5.2           10,756          6.3
      7.01 or more .........           7,616          4.4            8,287          4.9
                                    --------        -----         --------        -----
                                      99,725         58.3          100,674         59.0
                                    --------        -----         --------        -----

      Total ................        $170,879        100.0%        $170,843        100.0%
                                    ========        =====         ========        =====
</TABLE>
<PAGE>
The  maturities  of savings  certificates  at June 30,  1997 are  summarized  as
follows:

Within one year ...............................................          $60,994
Beyond one year but within two years ..........................           20,110
Beyond two years but within three years .......................           10,329
Beyond three years ............................................            8,292
                                                                         -------

     Total ....................................................          $99,725
                                                                         =======

Savings  certificates with balances of $100 thousand or more amounted to $11,061
and $9,664 on June 30,  1997 and 1996.  The Company  does not have any  brokered
deposits.

                                       40
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

9. DEPOSITS (Continued)

Interest  expense  by  deposit  category  for the years  ended  June 30,  are as
follows:
<TABLE>
<CAPTION>
                                             1997           1996           1995
                                            ------         ------         ------
<S>                                         <C>            <C>            <C>   
Checking accounts .................         $  127         $  195         $  262
Savings accounts ..................            940            998          1,248
Money market accounts .............            327            302            354
Savings certificates ..............          5,647          5,890          5,243
                                            ------         ------         ------

     Total ........................         $7,041         $7,385         $7,107
                                            ======         ======         ======
</TABLE>

10. FEDERAL HOME LOAN BANK ADVANCES

         The following table presents  information  regarding FHLB term advances
as of June 30:
<TABLE>
<CAPTION>
 Maturing during                              Weighted                             Weighted
fiscal year ended                             Interest                             Interest
    June 30:                1997                Rate              1996               Rate
-------------------     --------------     --------------     --------------     --------------
<S>                     <C>                <C>                <C>                <C>
      1997                $    --                 --%             $10,000            5.50%
      1998                  5,000               6.05                   --              -- 
      1999                  1,357               6.19                   --              --
      2000                  8,000               5.89                   --              --
      2001                     --                 --                   --              --
      2002                 53,500               5.74                   --              --
                        --------------                        --------------
                          $67,857                                 $10,000
                        ==============                        ==============
</TABLE>
<PAGE>
WVS also utilized  revolving  and  short-term  FHLB  advances.  Short-term  FHLB
advances  generally mature within ninety days, while revolving FHLB advances may
be repaid without penalty.  The following table presents  information  regarding
such advances as of June 30:
<TABLE>
<CAPTION>
                                                              1997         1996
                                                            -------      -------
<S>                                                         <C>          <C>    
FHLB revolving and short-term advances:
    Ending Balance ...................................      $10,000      $28,000
    Average balance during the year ..................        8,800       19,340
    Maximum month-end balance during the year ........       25,000       28,000
    Average interest rate during the year ............         5.15%        5.63%
    Weighted average rate at year end ................         5.64%        5.40%
</TABLE>

At June 30, 1997, WVS had unused revolving  borrowing  capacity of approximately
$15,000.

Although no specific  collateral  is required to be pledged,  Federal  Home Loan
Bank  advances are secured by a blanket  security  agreement  that  includes the
Company's  FHLB  stock,  investment  and  mortgage-backed   securities  held  in
safekeeping at the FHLB, and certain qualifying first mortgage loans.

                                       41
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

11. OTHER BORROWINGS

Other  borrowings  include  Treasury,  Tax, and Loan  ("TT&L")  demand notes and
securities sold under  agreements to repurchase with  securities  brokers.  TT&L
notes amounted to $848 and $671 at June 30, 1997 and 1996. Repurchase agreements
amounted  to $5,936 and  $9,981 as of June 30,  1997 and 1996.  The  outstanding
repurchase  agreements  generally  mature within one to ninety-two days from the
transaction date and qualifying  collateral has been delivered.  The Company has
pledged investment securities with a carrying value of $6,006 and $9,979 at June
30, 1997 and 1996, as collateral for the  repurchase  agreements as explained in
Note 2. The following table presents information regarding repurchase agreements
as of June 30:
<TABLE>
<CAPTION>
                                                           1997           1996
                                                          -------       -------
<S>                                                       <C>           <C>    
Ending Balance .....................................      $ 5,936       $ 9,981
Average balance during the year ....................        9,165         3,995
Maximum month-end balance during the year ..........       17,196         9,981
Average interest rate during the year ..............         5.19%         5.57%
Weighted average rate at year end ..................         5.60%         5.12%
</TABLE>

12. COMMITMENTS AND CONTINGENT LIABILITIES

Loan commitments

In the normal course of business,  there are various outstanding commitments and
certain  contingent  liabilities  which are not  reflected  in the  accompanying
consolidated financial statements. Various loan commitments totaling $21,686 and
$26,440 at June 30, 1997 and 1996, respectively, represent financial instruments
with off-balance-sheet risk.

Loan commitments  involve,  to varying degrees,  elements of credit and interest
rate risk in excess of the  amount  recognized  in the  statement  of  financial
condition.  The  same  credit  policies  are  used  in  making  commitments  and
conditional   obligations  as  for  on-balance-sheet   instruments.   Generally,
collateral, usually in the form of real estate, is required to support financial
instruments with credit risk.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the loan agreement.  These
commitments are comprised  primarily of the undisbursed  portion of construction
and land development loans (Note 4),  residential,  commercial real estate,  and
consumer loan originations.

The exposure to loss under these  commitments  is limited by subjecting  them to
credit approval and monitoring procedures.  Substantially all of the commitments
to extend credit are  contingent  upon  customers  maintaining  specific  credit
standards at the time of the loan funding.  Management  assesses the credit risk
associated with certain commitments to extend credit in determining the level of
the allowance for loan losses.

                                       42
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

12. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

Litigation

A settlement agreement was entered into during the fourth quarter of fiscal 1995
in connection with the class action lawsuit filed by Jeffrey Carberry,  et. al.,
in the United States  District  Court for the Western  District of  Pennsylvania
against  the  Company and the Savings  Bank.  The lawsuit  alleged,  among other
things,  antitrust and securities laws violations in connection with the Savings
Bank's mutual-to-stock  conversion.  The Company entered into the settlement to,
among  other  reasons,  avoid  the  cost  of and  disruption  of the  continuing
litigation.  During the quarter and fiscal year ended June 30, 1995, the Company
established a provision for the settlement of litigation  totaling $491,000.  On
January  16,  1996,  the Company  received  an  executed  Release of Claims (the
"Release")  in  connection  with this  lawsuit.  The  Release  fully and finally
discharged all Defendants from all claims,  causes of action and disputes of any
kind that the class  members  directly  or  indirectly  had with  respect to the
Plaintiff's  claims.  Also on January 16, 1996, the Company's  insurance carrier
entered  into a  settlement  with  regard to  coverage  for  claims and costs of
defense arising from the previously settled class action lawsuit.  The insurance
carrier  agreed  to pay the  Savings  Bank,  as  designee  of the  officers  and
directors,  the sum of  approximately  $391,000 to reimburse the Company and the
Savings Bank for  litigation  defense and  settlement  costs incurred or accrued
through December 1, 1995. In addition,  the insurance  carrier agreed to pay 50%
of the amount of future  defense  costs and  expenses  relating to the  Carberry
lawsuit that may arise after December 1, 1995,  for a one year period  beginning
January 15, 1996.

On March 27, 1995, the United States District Court for the Western  District of
Pennsylvania  entered an Opinion and Orders dismissing in its entirety a lawsuit
brought by Plaintiff William S. Karn, who is a depositor of the Savings Bank and
a shareholder of the Company, which alleged,  among other things,  antitrust and
securities laws violations in connection with the Savings Bank's mutual-to-stock
conversion.  The court also dismissed this same Plaintiff's  federal claims in a
second and substantially  similar lawsuit while remanding to the court of Common
Pleas of Allegheny  County any cognizable  state law claims.  This Plaintiff has
filed  Motion to Amend  Judgment  with the Court on the Opinion and Orders and a
Memorandum  Response in Opposition has been filed. On August 28, 1995, the Court
denied the Plaintiff's motion to Amend Judgment.

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

13. REGULATORY CAPITAL

Federal  regulations  require the Company and Savings  Bank to maintain  minimum
amounts of capital.  Specifically,  each is required to maintain certain minimum
dollar  amounts and ratios of total and Tier I capital to  risk-weighted  assets
and of Tier I capital to average total assets.

In  addition  to  the  capital  requirements,   the  Federal  Deposit  Insurance
Corporation Improvement Act (FDICIA) established five capital categories ranging
from "well capitalized" to "critically undercapitalized." Should any institution
fail  to  meet  the  requirements  to be  considered  "adequately  capitalized,"
respectively,  it would become subject to a series of  increasingly  restrictive
regulatory actions.

As of June 30, 1997 and 1996,  the FDIC  categorized  the  Savings  Bank as well
capitalized under the regulatory  framework for prompt corrective  action. To be
classified as a well capitalized financial institution, total risk-based, Tier 1
risk-based and Tier 1 leverage  capital ratios must be at least 10%, 6%, and 5%,
respectively.

                                       43
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

13. REGULATORY CAPITAL (Continued)

The  Company and Savings  Bank's  actual  capital  ratios are  presented  in the
following tables, which shows that both met all regulatory capital requirements.
<TABLE>
<CAPTION>
                                                                        June 30, 1997
                                            -----------------------------------------------------------------------
                                                  WVS Financial Corp.                  West View Savings Bank
                                            ---------------------------------     ---------------------------------
                                                Amount             Ratio              Amount             Ratio
                                            --------------     --------------     --------------     --------------
<S>                                             <C>                 <C>                <C>                 <C> 
Total Capital (to Risk-Weighted Assets)

   Actual                                       $34,759             25.8%              $26,259             19.9%
   To be "Well Capitalized"                      13,487             10.0                13,215             10.0 
   For Capital Adequacy Purposes                 10,790              8.0                10,572              8.0 
                                                                                                                
Tier I Capital (to Risk-Weighted Assets)                                                                        
                                                                                                                
   Actual                                       $33,069             24.5%              $24,603             18.6%
   To be "Well Capitalized"                       8,092              6.0                 7,929              6.0 
   For Capital Adequacy Purposes                  5,395              4.0                 5,286              4.0 
                                                                                                                
Tier I Capital (to Average Total Assets)                                                                        
                                                                                                                
   Actual                                       $33,069             11.4%              $24,603              8.8%
   To be "Well Capitalized"                      14,454              5.0                14,016              5.0 
   For Capital Adequacy Purposes                 11,563              4.0                11,213              4.0 
<PAGE>                                                                                                           
<CAPTION>
                                                                        June 30, 1996
                                            -----------------------------------------------------------------------
                                                  WVS Financial Corp.                  West View Savings Bank
                                            ---------------------------------     ---------------------------------
                                                Amount             Ratio              Amount             Ratio
                                            --------------     --------------     --------------     --------------
<S>                                           <C>                   <C>              <C>                  <C>  
Total Capital (to Risk-Weighted Assets)

   Actual                                     $35,994               28.4%            $27,065              21.9%
   To be "Well Capitalized"                    12,656               10.0              12,351              10.0 
   For Capital Adequacy Purposes               10,125                8.0               9,881               8.0 
                                                                                                               
Tier I Capital (to Risk-Weighted Assets)                                                                       
                                                                                                               
   Actual                                     $34,406               27.2%            $25,516              20.7%
   To be "Well Capitalized"                     7,594                6.0               7,411               6.0 
   For Capital Adequacy Purposes                5,062                4.0               4,941               4.0 
                                                                                                               
Tier I Capital (to Average Total Assets)                                                                       
                                                                                                               
   Actual                                     $34,406               13.9%            $25,516              10.7%
   To be "Well Capitalized"                    12,376                5.0              11,887               5.0 
   For Capital Adequacy Purposes                9,901                4.0               9,509               4.0 
</TABLE>

                                       44
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

14. STOCK BENEFIT PLANS

Stock Option and Stock Appreciation Plans

In November  1993,  the Board of  Directors  adopted  Stock Option Plans for the
Company's   directors,   officers,   and  employees,   which  were  approved  by
stockholders  at a special  meeting held on February  22, 1994.  An aggregate of
173,629 shares of authorized but unissued  common stock of WVS were reserved for
future  issuance  under  these  plans.  The  stock  options  typically  have  an
expiration  term  of  ten  years,   subject  to  certain  extensions  and  early
terminations. The per share exercise price of an incentive stock option shall at
a minimum equal the fair market value of a share of common stock on the date the
option is granted.  The per share exercise price of a compensatory  stock option
granted  shall at least equal the greater of par value or 85% of the fair market
value of a share of common  stock on the date the  option is  granted.  Proceeds
from the  exercise  of the stock  options are  credited to common  stock for the
aggregate par value and the excess is credited to paid in capital.

Stock  appreciation  rights (SARs) were also authorized under the Plans, and may
be granted in  conjunction  with stock options or in lieu of exercising all or a
portion of a stock option.  An SAR entitles the holder to receive cash or shares
of WVS common stock, or combinations thereof, at a value equal to the difference
between the fair market value of all or part of the shares  subject to option on
the date the right is exercised and the options  exercise price.  Exercise of an
option or companion SAR  automatically  cancels the related option or right.  No
SARs have been issued under the Plans.
<PAGE>
The following table presents share data related to the outstanding options:
<TABLE>
<CAPTION>
                                             Officers' and                           Weighted
                                             Employees'         Directors'            Average
                                             Stock              Stock                Exercise
                                             Options            Options                Price
                                             --------------     --------------     --------------
<S>                                          <C>                <C>                <C>
  Outstanding, June 30, 1995                    85,400             36,400             10.0445

               Granted                              --              1,400             18.6250
              Exercised                           (360)                --             10.0000
              Forfeited                           (320)                --                  --
                                             --------------     --------------

  Outstanding, June 30, 1996                    84,720             37,800             10.1428

               Granted                              --              1,400             23.1875
              Exercised                        (10,520)                --             10.0000
              Forfeited                           (500)                --                  --
                                             --------------     --------------

  Outstanding, June 30, 1997                    73,700             39,200             10.3185
                                             ==============     ==============

Exercisable at year end                         54,512             39,200             10.3838
                                             ==============     ==============

Available for future grant                      45,542              4,207
                                             ==============     ==============
</TABLE>

                                       45
<PAGE>
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    (In thousands, except per share data)

14. STOCK BENEFIT PLANS (Continued)

Stock Option and Stock Appreciation Plans (Continued)

Effective July 1, 1996, the Company  adopted  Statement of Financial  Accounting
Standards  Statement No. 123,  "Accounting  for  Stock-based  Compensation".  As
permitted  under  Statement  123, the Company has elected to continue  following
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"   ("APB  25"),  and  related   Interpretations,   in  accounting  for
stock-based awards to employees. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant,  no  compensation  expense is  recognized in the Company's
financial  statements.  Had the fair  value  method of  Statement  No.  123 been
applied, the pro forma net income and earnings per share would not be materially
different than that presented on the consolidated statements of income.

Retention and Recognition Plans (RRP)

The Board of  Directors  adopted  and  shareholders  subsequently  approved at a
special meeting on February 22, 1994, RRP's for selected officers, employees and
directors of the Company. The objective of the RRP's is to enable the Company to
retain  its  corporate  officers,  key  employees  and  directors  who  have the
experience  and ability  necessary to manage WVS and the Savings Bank.  Officers
and key  employees  of the  Company  who were  selected  by  members  of a Board
appointed   committee  are  eligible  to  receive   benefits  under  the  RRP's.
Non-employee directors of the Company are eligible to participate in the RRP for
directors.  WVS has appointed an  independent  fiduciary to serve as trustee for
the RRP Trusts.

An  aggregate  of  150,000  shares  of  common  stock  of WVS were  acquired  at
conversion  for future  issuance  under these plans,  of which 30,000 shares are
subject to the RRP for directors  and 120,000  shares are subject to the RRP for
officers and key  employees.  Officers,  employees,  and directors who terminate
their  association  with the Company shall forfeit the right to any shares which
were awarded but not earned.

As of June 30, 1997,  48,350 RRP shares were available for future issuance.  RRP
costs are accrued to operations,  and added back to stockholders' equity, over a
four to ten year vesting period.

Employee Stock Ownership Plan ("ESOP")

During the year  ended June 30,  1994,  WVS  adopted an ESOP for the  benefit of
officers and employees who have met certain eligibility  requirements related to
age and length of service. An ESOP Trust was created, and acquired 80,500 shares
of common  stock in WVS'  initial  public  offering,  using  proceeds  of a loan
obtained  from WVS,  which bears  interest  at one quarter  point over the prime
rate,  adjusted  quarterly.  The loan,  which is  secured by the shares of stock
purchased,  calls for quarterly  interest and principal payments over a ten year
term.

The Company  makes  quarterly  contributions  to the Trust to allow the Trust to
make the required  loan  payments to WVS.  Shares are released  from  collateral
based upon the  proportion  of annual  principal  payments made on the loan each
year  and  allocated  to  qualified  employees.  As  shares  are  released  from
collateral,  the Company  reports  compensation  expense  based upon the amounts
contributed  or  committed  to be  contributed  each year and the shares  become
outstanding  for earnings per share  computations.  Dividends  paid on allocated
ESOP shares are recorded as a reduction of retained earnings.  Dividends paid on
unallocated   shares  are  added  to   participant   accounts  and  reported  as
compensation.  Compensation expense for the ESOP was $487, $291 and $156 for the
years ended June 30, 1997, 1996 and 1995, respectively.

                                       46
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

14. STOCK BENEFIT PLANS (Continued)

Employee Stock Ownership Plan ("ESOP") (Continued)

The following table presents the components of the ESOP shares at June 30:
<TABLE>
<CAPTION>
                                           1997          1996            1995
                                       -----------    -----------    -----------
<S>                                         <C>            <C>             <C>  
Allocated shares ...................        22,604         14,087          6,037

Shares released for allocation .....         8,050          8,050          8,050

Shares distributed .................          (468)          (133)          --

Unallocated shares .................        50,313         58,363         66,413
                                       -----------    -----------    -----------

    Total ESOP shares ..............        80,499         80,367         80,500
                                       ===========    ===========    ===========

Fair value of ESOP shares ..........   $ 2,082,912    $ 1,667,615    $ 1,102,057
                                       ===========    ===========    ===========
</TABLE>

During fiscal 1997,  the ESOP  purchased an additional  600 shares of WVS stock,
which is included in the allocated  share  balance as of June 30, 1997.  The 600
shares were purchased using vested participant funds.

15. DIRECTOR, OFFICER AND EMPLOYEE BENEFITS

Profit Sharing Plan

The Company  maintains a  non-contributory  pension  plan for its  officers  and
employees who have met the age and length of service requirements. The plan is a
defined  contribution  plan  with the  contributions  based on a  percentage  of
salaries  of the plan  participants.  The  Company's  contributions,  which were
charged to expense, were $150, $115, and $110 for the years ended June 30, 1997,
1996 and 1995, respectively.

Directors' Deferred Compensation Plan

The Company  maintains a deferred  compensation  plan (the "plan") for directors
who elect to defer all or a portion of their directors' fees.  Deferred fees are
paid to the  participants in  installments  commencing in the year following the
year the individual is no longer a member of the Board of Directors.

The plan allows for the deferred amounts to be paid in shares of common stock at
the  prevailing  market  price on the date of  payment.  In  addition,  the plan
permits  directors of the Company,  who are also employees to defer receipt of a
portion of their other  compensation,  including salary and bonuses.  For fiscal
years  ended June 30,  1997,  1996,  and 1995,  20,399  shares  were held by the
Deferred Compensation Plan.

                                       47
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

16. INCOME TAXES

The provision for income taxes consists of:
<TABLE>
<CAPTION>
                                           1997            1996           1995
                                          -------         -------        -------
<S>                                       <C>             <C>            <C>    
Currently payable:
Federal ..........................        $ 1,747         $ 1,687        $ 1,265
State ............................            235             291            233
                                          -------         -------        -------
                                            1,982           1,978          1,498
Deferred .........................            (52)             88            154
                                          -------         -------        -------

      Total ......................        $ 1,930         $ 2,066        $ 1,652
                                          =======         =======        =======
</TABLE>

The following temporary  differences gave rise to the net deferred tax assets at
June 30:
<TABLE>
<CAPTION>
                                                                  1997     1996
                                                                 ------   ------
<S>                                                              <C>      <C>   
Deferred tax assets:
      Allowance for loan and real estate owned losses ........   $  685   $  671
      Deferred origination fees, net .........................       68      124
      Deferred directors compensation ........................      158      115
      Net unrealized loss on securities available for sale ...       93      190
      Other ..................................................       26       41
                                                                 ------   ------

          Total gross deferred tax assets ....................    1,030    1,141
                                                                 ------   ------

Deferred tax liabilities:
      Bad debt reserve for tax reporting purposes ............      393      458
      Retention and recognition plans ........................       83       86
      Depreciation ...........................................       15       13
                                                                 ------   ------
          Total gross deferred tax liabilities ...............      491      557
                                                                 ------   ------

      Net deferred tax assets ................................   $  539   $  584
                                                                 ======   ======
</TABLE>

On August 20, 1996, the Small Business Job Protection Act (the "Act") was signed
into law. The Act eliminated the percentage of taxable income bad debt deduction
for thrift institutions for tax years beginning after December 31, 1995. The Act
provides  that bad  debt  reserves  accumulated  prior  to 1988 be  exempt  from
recapture.  Bad debt reserves  accumulated  after 1987 are subject to recapture.
The recapture tax will be paid over six years  beginning with the 1998 tax year.
At December 31, 1995, the Savings Bank had $1,174 in bad debt reserves in excess
of the base year.  Subject to prevailing  corporate tax rates,  the Savings Bank
owes approximately $393 in federal income taxes which is reflected as a deferred
tax liability.

No valuation  allowance  was  established  at June 30, 1997 and 1996, in view of
WVS' ability to carryback to taxes paid in previous  years,  future  anticipated
taxable income, which is evidenced by WVS' earnings potential,  and deferred tax
liabilities at June 30.

                                       48
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                     (In thousands, except per share data)

16. INCOME TAXES (Continued)

The following is a reconciliation  between the actual provision for income taxes
and the  amount of income  taxes  which  would  have been  provided  at  federal
statutory rates for the years ended June 30:
<TABLE>
<CAPTION>
                                                      1997                  1996                   1995
                                              -------------------   --------------------    -------------------
                                                           % of                   % of                   % of
                                                           Pretax                 Pretax                 Pretax
                                              Amount       Income   Amount        Income    Amount       Income
                                              -------      ------   -------       ------    -------      ------
<S>                                           <C>           <C>     <C>            <C>      <C>           <C>  
Provision at statutory rate .............     $ 1,662       34.0%   $ 1,918        34.0%    $ 1,170       34.0%
State income tax, net of federal
  tax benefit ...........................         155        3.2        192         3.4         154        4.5
Non - deductible (taxable) litigation and
settlement costs (reimbursements) .......          --         --       (123)       (2.2)        248        7.2
    Other, net ..........................         113        2.2         79         1.4          80        2.3
                                              -------       ----    -------        ----     -------       ---- 
Actual tax expense and
  effective rate ........................     $ 1,930       39.4%   $ 2,066        36.6%    $ 1,652       48.0%
                                              =======       ====    =======        ====     =======       ==== 
</TABLE>

17. REGULATORY RESTRICTIONS

Cash and Due from Banks

The Federal  Reserve  requires  the Savings  Bank to  maintain  certain  reserve
balances.  The required  reserves are computed by applying  prescribed ratios to
the Savings Bank's average deposit transaction account balances.  As of June 30,
1997  and  1996,  the  Savings  Bank had  required  reserves  of $560 and  $502,
respectively.  The  required  reserves  are held in the form of vault cash and a
non-interest  bearing depository  balance  maintained  directly with the Federal
Reserve.

Loans

Federal law  prohibits the Company from  borrowing  from the Savings Bank unless
the loans are secured by specific  obligations.  Further, such secured loans are
limited in amount to ten percent of the Savings Bank's capital surplus.

Regulatory Restrictions

The Savings Bank is subject to the Pennsylvania Banking Code which restricts the
availability of surplus for dividend  purposes.  At June 30, 1997, surplus funds
of $3,363 were not available for dividends.


                                       49
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

18. CONVERSION AND REORGANIZATION

WVS was formed July,  1993, as a bank holding  company to acquire 100 percent of
the common  stock of the  Savings  Bank in a  conversion  from the mutual to the
stock form of  ownership.  A public  offering of WVS' common stock was completed
November  29,  1993,  through  the sale of  1,763,300  shares of $ .01 par value
common  stock at $10 per share.  WVS  acquired  the Savings  Bank by  exchanging
$3,363 of the  proceeds  received in the public  offering  for all of the common
stock of the Savings Bank.

In accordance with  regulations at the time that the Savings Bank converted from
a mutual  savings bank to a stock savings  bank, a portion of retained  earnings
was restricted by establishing a liquidation  account.  The liquidation  account
will be maintained for the benefit of eligible  account  holders who continue to
maintain  their  accounts  at  the  Savings  Bank  after  the  conversion.   The
liquidation account will be reduced annually to the extent that eligible account
holders have reduced their qualifying  deposits.  Subsequent  increases will not
restore an eligible account holder's interest in the liquidation account. In the
unlikely  event of a complete  liquidation  of the Savings  Bank,  each  account
holder will be entitled to receive a distribution  from the liquidation  account
in an amount  proportionate to the current adjusted  qualifying balances for the
accounts then held.

19. SAVINGS ASSOCIATION INSURANCE FUND RECAPITALIZATION

On September 30, 1996, the President signed into law legislation  which included
recapitalization  of the  Savings  Association  Insurance  Fund  ("SAIF") of the
Federal  Deposit  Insurance   Corporation  ("FDIC")  by  a  one-time  charge  to
SAIF-insured  institutions  of 65.7  basis  points  per one  hundred  dollars of
insurable  deposits.  The gross effect to the Savings  Bank  amounted to $1,138,
which is reflected in the consolidated  results of operations for the year ended
June 30, 1997.
<PAGE>
20. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values at June 30 are as follows:
<TABLE>
<CAPTION>
                                                                1997                                  1996
                                                   ---------------------------------     ---------------------------------
                                                   Carrying           Fair               Carrying           Fair
                                                   Amount             Value              Amount             Value
                                                   --------------     --------------     --------------     --------------
<S>                                                <C>                <C>                <C>                <C>          
Financial Assets
Cash, due from banks and interest-earning
      demand deposits                              $       2,571      $       2,571      $       2,727      $       2,727
Investment securities                                     87,548             87,442             59,218             58,652
Mortgage - backed securities                              37,490             37,661             42,118             42,161
Net loans receivable                                     158,134            160,835            149,011            149,479
Accrued interest receivable                                2,809              2,809              2,373              2,373
Federal Home Loan Bank stock                               3,927              3,927              1,900              1,900
                                                   -------------      -------------      -------------      -------------

      Total financial assets                       $     292,479      $     295,245      $     257,347      $     257,292
                                                   =============      =============      =============      =============

Financial Liabilities
Deposits                                           $     170,879      $     170,897 $          170,843      $     170,835
FHLB Advances                                             77,857             77,207             38,000             38,000
Other borrowings                                           6,784              6,784             10,652             10,652
Advance payments by borrowers
      for taxes and insurance                              3,531              3,531              3,772              3,772
Accrued interest payable                                   1,768              1,768              1,425              1,425
                                                   -------------      -------------      -------------      -------------

      Total financial liabilities                  $     260,819      $     260,187      $     224,692      $     224,684
                                                   =============      =============      =============      =============
</TABLE>

                                       50
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

20. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Financial  instruments are defined as cash, evidence of an ownership interest in
an entity,  or a contract  which  creates an  obligation  or right to receive or
deliver  cash or  another  financial  instrument  from or to a second  entity on
potentially favorable or unfavorable terms.

Fair value is defined as the  amount at which a  financial  instrument  could be
exchanged in a current  transaction  between  willing  parties,  other than in a
forced  or  liquidation  sale.  If a  quoted  market  price is  available  for a
financial  instrument,  the estimated fair value would be calculated  based upon
the market price per trading unit of the instrument.

If no readily  available  market exists,  the fair value estimates for financial
instruments  should  be  based  upon  management's  judgment  regarding  current
economic  conditions,  interest rate risk, expected cash flows, future estimated
losses and other factors,  as determined through various option pricing formulas
or simulation modeling.  As many of these assumptions result from judgments made
by management based upon estimates which are inherently uncertain, the resulting
estimated values may not be indicative of the amount realizable in the sale of a
particular  financial  instrument.  In addition,  changes in the  assumptions on
which  the  estimated  values  are based  may have a  significant  impact on the
resulting estimated values.

As certain  assets and  liabilities,  such as deferred tax assets,  premises and
equipment,  and  many  other  operational  elements  of WVS are  not  considered
financial  instruments,  but have value,  this estimated fair value of financial
instruments would not represent the full market value of WVS.

Estimated fair values have been determined by WVS using the best available data,
as generally  provided in internal Savings Bank reports and regulatory  reports,
using  an  estimation  methodology  suitable  for  each  category  of  financial
instruments. The estimation methodologies used are as follows:


Cash, Due from Banks, Interest-Earning Demand Deposits, Accrued Interest
Receivable and Payable, Advance Payments by Borrowers for Taxes and Insurance,
and Other Borrowings

The fair value approximates the current book value.


Investment Securities,  Mortgage-backed Securities and FHLB stock

The fair value of investment and mortgage-backed  securities held to maturity is
equal to the  available  quoted  market  price.  If no  quoted  market  price is
available,  fair value is  estimated  using the quoted  market price for similar
securities.  The fair  value of  securities  available  for sale is equal to the
current  carrying  value.  Since  the FHLB  stock is not  actively  traded  on a
secondary  market and held  exclusively by member  financial  institutions,  the
estimated fair market value approximates the carrying amount.


Net Loans Receivable and Deposits

Fair value for  consumer  mortgage  loans is estimated  using  market  quotes or
discounting contractual cash flows for prepayment estimates. Discount rates were
obtained from  secondary  market  sources,  adjusted to reflect  differences  in
servicing, credit, and other characteristics.

The estimated fair values for consumer,  fixed rate commercial and  multi-family
real  estate  loans are  estimated  by  discounting  contractual  cash flows for
prepayment estimates.  Discount rates are based upon rates generally charged for
such loans with similar credit characteristics.

The estimated fair value for  nonperforming  loans is the appraised value of the
underlying collateral adjusted for estimated credit risk.

                                       51
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

20. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Net Loans Receivable and Deposits (Continued)

Demand,  savings,  and money market deposit accounts are reported at book value.
The fair value of certificates of deposit is based upon the discounted  value of
the contractual  cash flows. The discount rate is estimated using average market
rates for deposits with similar average terms.

FHLB Advances

The fair value of fixed rate advances are estimated using discounted cash flows,
based on current  incremental  borrowing  rates for similar  types of  borrowing
arrangements.  The carrying amount on variable rate advances  approximates their
fair value.

Commitments to Extend Credit

These financial instruments are generally not subject to sale and estimated fair
values are not readily  available.  The carrying  value,  represented by the net
deferred  fee  arising  from the  unrecognized  commitment,  and the fair  value
determined by  discounting  the remaining  contractual  fee over the term of the
commitment  using fees currently  charged to enter into similar  agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded  commitments  are  presented  in Note 12 to these  financial
statements.
<PAGE>
21. PARENT COMPANY

Condensed financial information of WVS Financial Corp. is as follows:
<TABLE>
<CAPTION>
                             CONDENSED BALANCE SHEET

                                                                  June 30,
                                                               1997     1996
                                                             -------   -------
<S>                                                          <C>       <C>    
ASSETS
Interest-earning deposits with subsidiary bank ...........   $   404   $   386
Investment securities available for sale .................     1,286      --
Investment and mortgage-backed securities held-to-maturity     7,169     9,202
Investment in subsidiary bank ............................    23,273    23,710
Loan receivable from ESOP ................................       493       604
Accrued interest receivable and other assets .............       282       182
                                                             -------   -------

TOTAL ASSETS .............................................   $32,907   $34,084
                                                             =======   =======

LIABILITIES AND STOCKHOLDERS' EQUITY
      Other liabilities ..................................   $    18   $    46
      Stockholders' equity ...............................    32,889    34,038
                                                             -------   -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............   $32,907   $34,084
                                                             =======   =======
</TABLE>

                                       52
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

21. PARENT COMPANY (Continued)

<TABLE>
<CAPTION>
                          CONDENSED STATEMENT OF INCOME


                                                                     Year Ended June 30,
                                                                 1997       1996       1995
                                                               -------    -------    -------
<S>                                                            <C>        <C>        <C>    
INCOME
Loans ......................................................   $    47    $    56    $    60
Investment and mortgage-backed securities ..................       627        671        595
Dividend from subsidiary ...................................     3,500       --         --
Interest-earning deposits with subsidiary bank .............        16         51         34
Investment securities gain .................................         4         54       --
                                                               -------    -------    -------

Total income ...............................................     4,194        832        689
                                                               -------    -------    -------

OPERATING EXPENSE
Unusual items:
      Shareholder litigation settlement ....................        (5)      (123)       245
      Shareholder litigation costs .........................       --         (20)      --
Other ......................................................        91        100         56
                                                               -------    -------    -------
Total operating expense ....................................        86        (43)       301
                                                               -------    -------    -------

Income before equity in undistributed earnings of subsidiary     4,108        875        388
Equity in undistributed earnings of subsidiary .............      (913)     2,994      1,665
                                                               -------    -------    -------

Income before income taxes .................................     3,195      3,869      2,053
Income taxes ...............................................       236        292        263
                                                               -------    -------    -------

NET INCOME .................................................   $ 2,959    $ 3,577    $ 1,790
                                                               =======    =======    =======
</TABLE>


                                       53
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

21. PARENT COMPANY (Continued)
<TABLE>
<CAPTION>
                        CONDENSED STATEMENT OF CASH FLOWS

                                                                      Year Ended June 30,
                                                                 1997        1996        1995
                                                               --------    --------    --------
<S>                                                            <C>         <C>         <C>     
OPERATING ACTIVITIES
Net income .................................................   $  2,959    $  3,577    $  1,790
Adjustments to reconcile net income to net cash provided
      by operating activities:
Undistributed net income of subsidiary .....................        913      (2,994)     (1,665)
Provision for litigation settlement ........................       --          --           245
Amortization of investment discounts and premiums ..........         16          34         221
Amortization of ESOP and RRP deferred and
     unearned compensation .................................        184          76          71
Investment securities gains ................................         (4)        (54)       --   
(Increase) decrease in accrued interest receivable .........          8          76         (10)
Other ......................................................       (130)       (168)       (130)
                                                               --------    --------    --------
Net cash provided by operating activities ..................      3,946         547         522
                                                               --------    --------    --------

INVESTING ACTIVITIES
Available for sale:
      Purchase of investment and mortgage-backed securities      (1,258)       (247)       --
      Proceeds from sale of investment securities ..........         13         301        --
Held to maturity:
      Purchases of investment and mortgage-backed securities       --       (11,403)     (4,732)
      Proceeds from repayments of investment and
          mortgage-backed securities .......................      2,021      12,148       6,511
ESOP loan repayments .......................................        111          80          80
                                                               --------    --------    --------
Net cash provided by investing activities ..................        887         879       1,859
                                                               --------    --------    --------

FINANCING ACTIVITIES
Net proceeds from issuance of common stock .................        105           4           1
Cash dividends paid ........................................     (4,920)     (3,344)       (677)
                                                               --------    --------    --------
Net cash used by financing activities ......................     (4,815)     (3,340)       (676)
                                                               --------    --------    --------

Increase (decrease) in cash and cash equivalents ...........         18      (1,914)      1,705

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD ..............        386       2,300         595
                                                               --------    --------    --------

CASH AND CASH EQUIVALENTS END OF PERIOD ....................   $    404    $    386    $  2,300
                                                               ========    ========    ========
</TABLE>

                                       54
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                      (In thousands, except per share data)

22. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                   -----------------------------------------------------------------------
                                                   September          December           March              June
                                                   1996               1996               1997               1997
                                                   --------------     --------------     --------------     --------------
<S>                                                <C>                <C>                <C>                <C>          
Total interest income                              $       5,065      $       5,298      $       5,221      $       5,541
Total interest expense                                     2,528              2,780              2,662              2,914
                                                   --------------     --------------     --------------     --------------

Net interest income                                        2,537              2,518              2,559              2,627
Provision for loan losses                                     30                 30                 --                 --
                                                   --------------     --------------     --------------     --------------

Net interest income after
      provision for loan losses                            2,507              2,488              2,559              2,627

Security gains, net                                           26                 --                 --                  4
Total noninterest income                                      84                 97                 78                 85
Total noninterest expense                                  2,203              1,079              1,126              1,258
                                                   --------------     --------------     --------------     --------------

Income before income taxes                                   414              1,506              1,511              1,458
Income taxes                                                 164                594                597                575
                                                   --------------     --------------     --------------     --------------

Net income                                         $         250      $         912      $         914      $         883
                                                   ==============     ==============     ==============     ==============

Per Share Data:
Average shares outstanding
      Primary                                          1,741,995          1,749,039          1,756,228          1,761,689
      Fully diluted                                    1,743,938          1,753,025          1,757,428          1,763,465
Net Income
      Primary and fully diluted                    $        0.14      $        0.52      $        0.52      $        0.51
</TABLE>

                                       55
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                (In thousands, except shares and per share data)

22. SELECTED QUARTERLY FINANCIAL DATA (unaudited) (Continued)

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                   -----------------------------------------------------------------------
                                                   September          December           March              June
                                                   1995               1995               1996               1996
                                                   --------------     --------------     --------------     --------------
<S>                                                <C>                <C>                <C>                <C>          
Total interest income                              $       4,510      $       4,624      $       4,455      $       4,728
Total interest expense                                     2,194              2,269              2,108              2,270
                                                   --------------     --------------     --------------     --------------

Net interest income                                        2,316              2,355              2,347              2,458
Provision for loan losses                                     37                 38                 37                 38
                                                   --------------     --------------     --------------     --------------

Net interest income after
      provision for loan losses                            2,279              2,317              2,310              2,420

Security gains, net                                           --                 --                 --                 54
Total noninterest income                                      80                 87                 81                 81
Total noninterest expense                                  1,031                723              1,094              1,218
                                                   --------------     --------------     --------------     --------------

Income before income taxes                                 1,328              1,681              1,297              1,337
Income taxes                                                 553                448                504                561
                                                   --------------     --------------     --------------     --------------

Net income                                         $         775      $       1,233      $         793      $         776
                                                   ==============     ==============     ==============     ==============

Per Share Data:
Average shares outstanding
      Primary                                          1,722,803          1,729,776          1,737,602          1,739,258
      Fully diluted                                    1,728,920          1,730,561          1,739,105          1,739,327
Net Income
      Primary and fully diluted                    $        0.45      $        0.71      $        0.46       $       0.45
</TABLE>

                                       56
<PAGE>
               COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION

          WVS Financial  Corp.'s common stock is traded on the  over-the-counter
market and quoted on the National  Association of Securities  Dealers  Automated
Quotation ("NASDAQ") National Market System under the symbol "WVFC".
The bid and ask quotations for the common stock on September 16, 1997 were:

                           Bid             Ask
                           ---             ---

                         $27 1/4         $28 1/4

          The following  table sets forth the high and low market prices for the
periods indicated.
<TABLE>
<CAPTION>
                                                   Market Price
                                               -------------------             Cash Dividends
          Quarter Ended                         High          Low                 Declared
          -------------                        ------       ------             -----------
<S>                                            <C>          <C>                    <C>     
          June 97                              $27 1/4      $23 1/2                $2.50(1)
          March 97                              26 1/2       24                     0.20
          December 96                           25           21 1/2                 0.20
          September 96                          22 1/2       20 1/4                 0.10

          Quarter Ended
          June 96                              $22          $19 1/2                $1.80(1)
          March 96                              22 1/4       18 3/4                 0.10
          December 95                           19 1/4       18 1/4                 0.10
          September 95                          19 1/4       16                     0.06
</TABLE>

-----------

(1)      Includes  special  cash  dividends  of $2.30 and $1.70 per share,  paid
         during the quarter ended June 30, 1997 and 1996, respectively.


          The Company's stock commenced trading on November 29, 1993. There were
seven NASDAQ Market Makers in the Company's common stock as of June 30, 1997: F.
J.  Morrissey & Co.,  Inc.;  Legg Mason Wood  Walker,  Inc.;  Sandler  O'Neill &
Partners;  Capital Resources,  Inc.; Herzog,  Heine,  Geduld, Inc.; Ryan, Beck &
Co., Inc.; and Parker/Hunter, Inc.

          According to the records of the Company's  transfer agent,  there were
approximately  998  shareholders  of record at September 12, 1997. This does not
include any persons or entities who hold their stock in nominee or "street name"
through various brokerage firms.

          Dividends are subject to determination and declaration by the Board of
Directors, which takes into account the Company's financial condition, statutory
and regulatory restrictions, general economic condition and other factors.


                                       57
<PAGE>
                               WVS FINANCIAL CORP.
                              CORPORATE INFORMATION

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

                                CORPORATE OFFICES
                  WVS FINANCIAL CORP. -- WEST VIEW SAVINGS BANK
                     9001 Perry Highway Pittsburgh, PA 15237
                                  (412)364-1911

                                  COMMON STOCK
         The Common Stock of WVS Financial Corp. is traded on the NASDAQ
                 National Market System under the symbol "WVFC".
                                                                                
                           TRANSFER AGENT & REGISTRAR
                         Registrar and Transfer Company
                                10 Commerce Drive
                               Cranford, NJ 07016
                                 1-800-368-5948
                                                                                
                               INVESTOR RELATIONS
                               Janet L. Campisino
                                  (412)364-1911
                                                                                
                                     COUNSEL
                                Bruggeman & Linn
                                                                                
                                 SPECIAL COUNSEL
                      Elias, Matz, Tiernan & Herrick L.L.P.
                                                                                
                             WEST VIEW SAVINGS BANK
                               9001 Perry Highway
                              Pittsburgh, PA 15237
                                  (412)364-1911
                                                                                
                                WEST VIEW OFFICE
                                456 Perry Highway
                                    931-2171
                                                                                
                                CRANBERRY OFFICE
                               20531 Perry Highway
                                931-6080/776-3480
                                                                                
                              FRANKLIN PARK OFFICE
                             2566 Brandt School Road
                                    935-7100
                                                                                
                                 BELLEVUE OFFICE
                               572 Lincoln Avenue
                                    761-5595
                                                                                
                              SHERWOOD OAKS OFFICE
                              Serving Sherwood Oaks
                                 Cranberry Twp.
                                                                                
                                LENDING DIVISION
                             2566 Brandt School Road
                            Route 19 at Richard Road
                                    935-7400
<PAGE>
                               BOARD OF DIRECTORS
                                                            
                                David L. Aeberli
                                    President
                       McDonald-Aeberli Funeral Home, Inc.
                                Arthur H. Brandt
                                President and CEO
                             Brandt Paving, Inc. and
                             Brandt Excavating, Inc.
                                William J. Hoegel
                                 Sole Proprietor
                         William J. Hoegel & Associates
                                 Donald E. Hook
                                    Chairman
                            Pittsburgh Cut Flower Co.
                              James S. McKain, Jr.
                      Retired - Former Chairman & President
                          Barden McKain Ford, Inc. and
                     Jim McKain Car and Truck Leasing, Inc.
                                James H. Ritchie
                             Retired - Former Owner
                                Ingomar Pharmacy
                                John M. Seifarth
                          Senior Engineer - Consultant
                       Nichols & Slagle Engineering, Inc.
                                Robert C. Sinewe
                      President and Chief Executive Officer
                             WVS Financial Corp. and
                             West View Savings Bank
                                Margaret VonDerau
                       Senior Vice President and Secretary
                             WVS Financial Corp. and
                             West View Savings Bank
                                                            
                               EXECUTIVE OFFICERS
                                                            
                              James S. McKain, Jr.
                                    Chairman
                                Robert C. Sinewe
                                  President and
                             Chief Executive Officer
                                Margaret VonDerau
                            Senior Vice President and
                               Corporate Secretary
                                 David J. Bursic
                          Vice President, Treasurer and
                             Chief Financial Officer
                                Edward M. Wielgus
                               Vice President and
                              Chief Lending Officer
                                                            

    The members of the Board of Directors serve in that capacity for both the
                         Company and the Savings Bank.



                                       58
<PAGE>












                         A Tradition of Quality Banking





                              WVS FINANCIAL CORP.