UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: June 30, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File No.: 0-22444





WVS Financial Corp.

(Exact name of registrant as specified in its charter)







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



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

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





Securities registered pursuant to Section 12(b) of the Act:



|                                       |  |                                       
|-------------------------------------- |  | --------------------------------------
|Common Stock, par value $.01 per share |  | The NASDAQ Global MarketSM            
|(Title of Class)                       |  | (Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None





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

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

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

Indicate by
check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

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

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



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

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

As of December 31, 2008, the aggregate value of the 1,788,169 shares of Common Stock of the registrant issued and outstanding on such date, which excludes 343,616 shares held by all directors and officers of the
registrant as a group, was approximately $28.6 million. This figure is based on the last known trade price of $15.98 per share of the registrants Common Stock on December 31, 2008.

Number of shares of Common Stock outstanding as of September 10, 2009: 2,070,085

DOCUMENTS INCORPORATED BY REFERENCE

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



|(1) | Portions of the Annual Report to Stockholders for the fiscal year ended June 30, 2009 are incorporated into Part II.
|--- | --------------------------------------------------------------------------------------------------------------------



|(2) | Portions of the definitive proxy statement for the 2009 Annual Meeting of Stockholders are incorporated into Part III.
|--- | ----------------------------------------------------------------------------------------------------------------------









---

FORWARD-LOOKING STATEMENTS

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

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



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



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



| |  |  | changes in the interest rate environment could reduce net interest income and could increase credit losses;
| | - |  | -----------------------------------------------------------------------------------------------------------



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



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



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



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



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



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

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



2



---

PART I.



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

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

West View Savings Bank is a
Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from six offices in the North Hills suburbs of Pittsburgh. The Savings Bank converted from the mutual to the stock form of ownership in November 1993. The Savings Bank had
no subsidiaries at June 30, 2009.

Lending Activities

General. At June 30, 2009, the Companys net portfolio of loans receivable totaled $58.1 million, as compared to $56.5 million at June 30, 2008. Net loans receivable
comprised 13.9% of the Companys total assets at June 30, 2009, as compared to 13.3% at June 30, 2008. The principal categories of loans in the Companys portfolio are single-family and multi-family residential real estate loans,
commercial real estate loans, construction loans, consumer loans, land acquisition and development loans and commercial loans. Substantially all of the Companys mortgage loan portfolio consists of conventional mortgage loans, which are loans
that are neither insured by the Federal Housing Administration (FHA) nor partially guaranteed by the Department of Veterans Affairs (VA). Historically, the Companys lending activities have been concentrated in
single-family residential and land development and construction loans secured by properties located in its primary market area of northern Allegheny County, southern Butler County and eastern Beaver County, Pennsylvania.

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

Federal regulations
impose limitations on the aggregate amount of loans that a savings institution can make to any one borrower, including related entities. The permissible amount of loans-to-one borrower follows the national bank standard for all loans made by savings
institutions, which generally does not permit loans-to-one borrower to exceed 15% of unimpaired capital and surplus. Loans in an amount equal to an additional 10% of unimpaired capital and surplus also may be made to a borrower if the loans are
fully secured by readily marketable securities. At June 30, 2009, the Savings Banks limit on loans-to-one borrower was approximately $4.7 million. The Companys general policy has been to limit loans-to-one borrower, including
related entities, to $2.0 million although this general limit may be exceeded based on the merit of a particular credit. At June 30, 2009, the Companys five largest loans or groups of loans-to-one borrower, including related entities,
ranged from an aggregate of $2.1 million to $4.2 million, with a $4.2 million group of loans-to-one borrower secured by real estate located in the Companys primary market area and investments pledged by the borrower. The remainder of the
groups of loans-to-one borrower are secured primarily by real estate located in the Companys primary market area. Related outstanding principal balances on the Companys five largest loans or group of loans-to-one borrower, including
related entities, ranged from an aggregate of $1.1 million to $3.8 million.



3



---

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



|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|---------------------------------- | ---------------------- | ----------- | ------ | ---- |  | ------ | ------ |  | - | ------- | - |  | ------ | - |  | - | ------- | - | ------ | ------ | - | - | - | ------ | ------ |  | ------ | - |  | - | ------- | - |  | ------ | -
|                                   |                        | At June 30, |       
|                                   | 2009                   |             |        | 2008 |  |        | 2007   |  |   | 2006    |   |  | 2005   |  
|                                   | Amount                 |             |        | %    |  |        | Amount |  |   | %       |   |  | Amount |   |  | % |         |   | Amount |        |   | % |   |        | Amount |  |        | % | 
|                                   | (Dollars in Thousands) |            
|Real estate loans:                 |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Single-family                      |                        | $           | 14,989 |      |  | 22.10  | %      |  | $ | 16,020  |   |  | 23.45  | % |  | $ | 17,102  |   |        | 23.26  | % |   | $ | 17,702 |        |  | 26.72  | % |  | $ | 20,680  |   |  | 27.86  | %
|Multi-family                       |                        |             | 5,070  |      |  | 7.48   |        |  |   | 6,897   |   |  | 10.09  |   |  |   | 6,458   |   |        | 8.78   |   |   |   | 4,339  |        |  | 6.55   |   |  |   | 4,960   |   |  | 6.68   |  
|Commercial                         |                        |             | 9,179  |      |  | 13.54  |        |  |   | 6,622   |   |  | 9.69   |   |  |   | 7,699   |   |        | 10.47  |   |   |   | 7,574  |        |  | 11.43  |   |  |   | 8,561   |   |  | 11.53  |  
|Construction                       |                        |             | 23,581 |      |  | 34.78  |        |  |   | 23,012  |   |  | 33.67  |   |  |   | 25,679  |   |        | 34.92  |   |   |   | 20,964 |        |  | 31.64  |   |  |   | 22,065  |   |  | 29.72  |  
|Land acquisition and development   |                        |             | 1,440  |      |  | 2.12   |        |  |   | 1,992   |   |  | 2.91   |   |  |   | 2,195   |   |        | 2.99   |   |   |   | 3,221  |        |  | 4.86   |   |  |   | 5,884   |   |  | 7.93   |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Total real estate Loans            |                        |             | 54,259 |      |  | 80.02  |        |  |   | 54,543  |   |  | 79.81  |   |  |   | 59,133  |   |        | 80.42  |   |   |   | 53,800 |        |  | 81.20  |   |  |   | 62,150  |   |  | 83.72  |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Consumer loans:                    |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Home equity                        |                        |             | 8,413  |      |  | 12.41  |        |  |   | 8,732   |   |  | 12.78  |   |  |   | 9,858   |   |        | 13.41  |   |   |   | 9,444  |        |  | 14.26  |   |  |   | 10,082  |   |  | 13.58  |  
|Other                              |                        |             | 1,034  |      |  | 1.52   |        |  |   | 737     |   |  | 1.08   |   |  |   | 551     |   |        | 0.75   |   |   |   | 962    |        |  | 1.45   |   |  |   | 1,089   |   |  | 1.47   |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Total consumer Loans               |                        |             | 9,447  |      |  | 13.93  |        |  |   | 9,469   |   |  | 13.86  |   |  |   | 10,409  |   |        | 14.16  |   |   |   | 10,406 |        |  | 15.71  |   |  |   | 11,171  |   |  | 15.05  |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Commercial loans                   |                        |             | 4,102  |      |  | 6.05   |        |  |   | 4,328   |   |  | 6.33   |   |  |   | 3,988   |   |        | 5.42   |   |   |   | 2,050  |        |  | 3.09   |   |  |   | 915     |   |  | 1.23   |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Commercial lease Financings        |                        |             |       |      |  | 0.00   |        |  |   |        |   |  | 0.00   |   |  |   |        |   |        | 0.00   |   |   |   |       |        |  | 0.00   |   |  |   |        |   |  | 0.00   |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|                                   |                        |             | 67,808 |      |  | 100.00 | %      |  |   | 68,340  |   |  | 100.00 | % |  |   | 73,530  |   |        | 100.00 | % |   |   | 66,256 |        |  | 100.00 | % |  |   | 74,236  |   |  | 100.00 | %
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Less:                              |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Undisbursed loan Proceeds          |                        |             | (8,896 | )    |  |        |        |  |   | (10,813 | ) |  |        |   |  |   | (12,090 | ) |        |        |   |   |   | (9,512 | )      |  |        |   |  |   | (12,882 | ) |  |        |  
|Net deferred loan Origination fees |                        |             | (102   | )    |  |        |        |  |   | (94     | ) |  |        |   |  |   | (104    | ) |        |        |   |   |   | (85    | )      |  |        |   |  |   | (82     | ) |  |        |  
|Allowance for loan Losses          |                        |             | (662   | )    |  |        |        |  |   | (956    | ) |  |        |   |  |   | (986    | ) |        |        |   |   |   | (957   | )      |  |        |   |  |   | (1,121  | ) |  |        |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  
|Net loans Receivable               |                        | $           | 58,148 |      |  |        |        |  | $ | 56,477  |   |  |        |   |  | $ | 60,350  |   |        |        |   |   | $ | 55,702 |        |  |        |   |  | $ | 60,151  |   |  |        |  
|                                   |                        |             |        |      |  |        |        |  |   |         |   |  |        |   |  |   |         |   |        |        |   |   |   |        |        |  |        |   |  |   |         |   |  |        |  

Contractual Maturities. The following table sets forth the scheduled
contractual maturities of the Companys loans and mortgage-backed securities at June 30, 2009. The amounts shown for each period do not take into account loan prepayments and normal amortization of the Companys loan portfolio.



|                                                   |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        
|-------------------------------------------------- |  | ---------------------- | ------ | ------------ | - | ---------- |  | ------------ | ----- | ----------------------------- | - | -------------------------------- |  | ------------------------- | ----- | ----- | - | ------ |  | - | ------- |  | - | -------
|                                                   |  | Real Estate Loans      |        |              |   |            |  |             
|                                                   |  | Single-family          |        | Multi-family |   | Commercial |  | Construction |       | Landacquisitionanddevelopment |   | Consumerloans andcommercialloans |  | Mortgage-backedsecurities |       | Total
|                                                   |  | (Dollars in Thousands)
|Amounts due in:                                    |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        
|One year or less                                   |  | $                      | 238    |              | $ | 1,061      |  | $            | 972   |                               | $ | 16,661                           |  | $                         | 725   |       | $ | 1,748  |  | $ |        |  | $ | 21,405 
|After one year through five years                  |  |                        | 584    |              |   | 106        |  |              | 95    |                               |   | 5,497                            |  |                           | 715   |       |   | 2,552  |  |   |        |  |   | 9,549  
|After five years                                   |  |                        | 14,167 |              |   | 3,903      |  |              | 8,112 |                               |   | 1,423                            |  |                           |      |       |   | 9,249  |  |   | 176,204 |  |   | 213,058
|                                                   |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        
|Total(1)                                           |  | $                      | 14,989 |              | $ | 5,070      |  | $            | 9,179 |                               | $ | 23,581                           |  | $                         | 1,440 |       | $ | 13,549 |  | $ | 176,204 |  | $ | 244,012
|                                                   |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        
|                                                   |  |                        |        |             
|Interest rate terms on amounts due after one year: |  |                        |        |              |   |            |  |              |       |                               |   |                                 
|Fixed                                              |  | $                      | 11,841 |              | $ | 340        |  | $            | 5,233 |                               | $ | 2,037                            |  | $                         | 83    |       | $ | 7,082  |  | $ | 2,075   |  | $ | 28,691 
|Adjustable                                         |  |                        | 2,910  |              |   | 3,669      |  |              | 2,974 |                               |   | 4,883                            |  |                           | 632   |       |   | 4,719  |  |   | 174,129 |  |   | 193,916
|                                                   |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        
|Total                                              |  | $                      | 14,751 |              | $ | 4,009      |  | $            | 8,207 |                               | $ | 6,920                            |  | $                         | 715   |       | $ | 11,801 |  | $ | 176,204 |  | $ | 222,607
|                                                   |  |                        |        |              |   |            |  |              |       |                               |   |                                  |  |                           |       |       |   |        |  |   |         |  |   |        



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

Scheduled contractual principal repayments do not reflect the actual maturities of loans. The average
maturity of loans is substantially less than their average contractual terms because of prepayments



4



---

and due-on-sale clauses. The average life of mortgage loans tends to increase when current mortgage loan rates are substantially higher than rates on
existing mortgage loans and, conversely, decrease when rates on existing mortgages are substantially higher than current mortgage loan rates (due to refinancings of adjustable-rate and fixed-rate loans at lower rates).

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

At June 30, 2009, the Company had approximately $7.1 million of renewed commercial real estate and construction loans. The $7.1 million in aggregate disbursed principal that has been renewed
is comprised of: single-family speculative construction loans totaling $5.3 million, land acquisition and development loans totaling $802 thousand and multi-family construction loans totaling $1.0 million. Management believes that the previously
discussed whole loans will self-liquidate during the normal course of business, though some additional rollovers may be necessary. All but one of the loans that have been rolled over are in compliance with all loan terms, including the receipt of
all required payments, and are considered performing loans. The one loan not in compliance with all loan terms was considered non-performing as of June 30, 2008, and totaled $235 thousand.

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

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

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

The Company has not been an aggressive purchaser of loans. However, the Company may purchase whole loans or loan participations in those
instances where demand for new loan originations in the Companys market area is insufficient or to increase the yield earned on the loan portfolio. Such loans are generally presented to the Company from contacts primarily at other financial
institutions, particularly those which have previously done business with the Company. At June 30, 2009, $529 thousand or 0.9% of the Companys net loans receivable consisted of single-family mortgage whole loans purchased from another
financial institution.



5



---

The Company requires that all purchased loans be underwritten in accordance with its
underwriting guidelines and standards. The Company reviews loans, particularly scrutinizing the borrowers ability to repay the obligation, the appraisal and the loan-to-value ratio. Servicing of loans or loan participations purchased by the
Company generally is performed by the seller, with a portion of the interest being paid by the borrower retained by the seller to cover servicing costs. At June 30, 2009, $529 thousand or 0.9% of the Companys net loans receivable were
being serviced for the Company by others.

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



|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|--------------------------------------------- | ---------------------- | --------------------------------- | ------ | ---- |  | - | ------ | - |  | - | ------
|                                              |                        | At or For the Year Ended June 30,
|                                              | 2009                   |                                   |        | 2008 |  |   | 2007  
|                                              | (Dollars in Thousands)
|                                              |                        |                                   |       
|Net loans receivable beginning balance        |                        | $                                 | 56,477 |      |  | $ | 60,350 |   |  | $ | 55,702
|Real estate loan originations                 |                        |                                   |        |      |  |   |        |   |  |   |       
|Single-family(1)                              |                        |                                   | 2,709  |      |  |   | 746    |   |  |   | 1,366 
|Multi-family(2)                               |                        |                                   | 491    |      |  |   | 160    |   |  |   | 766   
|Commercial                                    |                        |                                   | 576    |      |  |   | 136    |   |  |   | 984   
|Construction                                  |                        |                                   | 6,494  |      |  |   | 9,504  |   |  |   | 12,910
|Land acquisition and development              |                        |                                   | 1,560  |      |  |   | 640    |   |  |   | 3,107 
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Total real estate loan originations           |                        |                                   | 11,830 |      |  |   | 11,186 |   |  |   | 19,133
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|                                              |                        |                                   |       
|Home equity                                   |                        |                                   | 1,306  |      |  |   | 871    |   |  |   | 2,319 
|Commercial                                    |                        |                                   | 150    |      |  |   |       |   |  |   | 1,205 
|Other                                         |                        |                                   | 45     |      |  |   | 109    |   |  |   | 227   
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Total loan originations                       |                        |                                   | 13,331 |      |  |   | 12,166 |   |  |   | 22,884
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Disbursements against available credit lines: |                        |                                   |        |      |  |   |        |   |  |   |       
|Home equity                                   |                        |                                   | 1,898  |      |  |   | 2,571  |   |  |   | 2,530 
|Other                                         |                        |                                   | 1      |      |  |   | 10     |   |  |   | 6     
|Commercial                                    |                        |                                   | 596    |      |  |   | 1,518  |   |  |   | 2,195 
|Purchase of whole loans and participations    |                        |                                   |       |      |  |   |       |   |  |   |      
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Total originations and purchases              |                        |                                   | 15,826 |      |  |   | 16,265 |   |  |   | 27,615
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Less:                                         |                        |                                   |        |      |  |   |        |   |  |   |       
|Loan principal repayments                     |                        |                                   | 16,358 |      |  |   | 21,455 |   |  |   | 20,636
|Sales of whole loans (3)                      |                        |                                   |       |      |  |   |       |   |  |   |      
|Sales of participation interests (4)          |                        |                                   |       |      |  |   |       |   |  |   |      
|Transferred to real estate owned              |                        |                                   |       |      |  |   |       |   |  |   |      
|Change in loans in process                    |                        |                                   | (1,917 | )    |  |   | (1,277 | ) |  |   | 2,282 
|Other, net(5)                                 |                        |                                   | (286   | )    |  |   | (40    | ) |  |   | 49    
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|Net increase(decrease)                        |                        | $                                 | 1,671  |      |  | $ | (3,873 | ) |  | $ | 4,648 
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       
|                                              |                        |                                   |       
|Net loans receivable ending balance           |                        | $                                 | 58,148 |      |  | $ | 56,477 |   |  | $ | 60,350
|                                              |                        |                                   |        |      |  |   |        |   |  |   |       



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

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

|(3) | Loans sold included servicing rights.
|--- | -------------------------------------

|(4) | As of June 30, 2009, loans serviced for others totaled approximately $719 thousand.
|--- | -----------------------------------------------------------------------------------

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



6



---

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

The policies must address certain lending considerations set forth in the Guidelines, including loan-to-value (LTV) limits,
loan administration procedures, underwriting standards, portfolio diversification standards, and documentation, approval and reporting requirements. These policies must also be appropriate to the size of the institution and the nature and scope of
its operations, and must be reviewed and approved by the Board of Directors at least annually. The LTV ratio framework, with a LTV ratio being the total amount of credit to be extended divided by the appraised value of the property at the time the
credit is originated, must be established for each category of real estate loans. If not a first lien, the lender must combine all senior liens when calculating this ratio. The Guidelines, among other things, establish the following supervisory LTV
limits: raw land (65%); land development (75%); construction (commercial, multi-family and non-residential) (80%); improved property (85%); and one-to-four family residential (owner-occupied) (no maximum ratio; however any LTV ratio in excess of 90%
should require appropriate mortgage insurance or readily marketable collateral). Consistent with its conservative lending philosophy, the Companys LTV limits are generally more restrictive than those in the Guidelines: raw land (60%); land
development (70%); construction (commercial - 75%; multi-family  75%; speculative residential - 80%); 1  2 family residential properties (80%); multi-family residential (75%); and commercial real estate (75%).

Single-Family Residential Real Estate Loans. Historically, savings institutions such as the Company have concentrated their
lending activities on the origination of loans secured primarily by first mortgage liens on existing single-family residences. At June 30, 2009, $15.0 million or 22.1% of the Companys total loan portfolio consisted of single-family
residential real estate loans, substantially all of which are conventional loans. Single-family loan originations totaled $2.7 million and increased $2.0 million or 263.1% during the fiscal year ended June 30, 2009, when compared to fiscal
2008. The Company believes that overall loan originations increased in fiscal 2009 due to low levels of market interest rates, and higher levels of refinancings. Due to low levels of market interest rates, the Company continued to offer shorter
duration consumer, home equity, construction loans, land acquisition and development loans and commercial loans.

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

At June 30, 2009, approximately $12.1 million or 80.6% of the single-family residential loans in the
Companys loan portfolio consisted of loans which provide for fixed rates of interest. Although these loans generally provide for repayments of principal over a fixed period of 15 to 30 years, it is the Companys experience that because of
prepayments and due-on-sale clauses, such loans generally remain outstanding for a substantially shorter period of time.

The Company is permitted to lend up to 100% of the appraised value of real property securing a residential loan; however, if the amount of a residential loan originated or refinanced exceeds 90% of the appraised value, the Company is
required by state banking regulations to obtain private mortgage insurance on the portion of the principal amount that exceeds 75% of the appraised value of the security property. Prior to the global financial crisis experienced during fiscal 2009,
and pursuant to underwriting guidelines adopted by the Board of Directors, private mortgage insurance was obtained on residential loans for which loan-to-value ratios exceed 80% according to the following schedule: loans exceeding 80% but less than
90% - 25% coverage; loans exceeding 90% but less than 95% - 30% coverage; and loans exceeding 95% through 100%



7



---

- 35% coverage. During the global financial crisis of fiscal 2009, the major PMI companies were downgraded by the rating agencies with respect to financial
capacity and claims payment ability. Accordingly, the Board of Directors amended our underwriting guidelines to preclude the use of PMI until the PMI companies regain their financial footing. No loans are made in excess of 100% of appraised value.

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

Multi-Family Residential and Commercial Real Estate Loans. The
Company originates mortgage loans for the acquisition and refinancing of existing multi-family residential and commercial real estate properties. At June 30, 2009, $5.1 million or 7.5% of the Companys total loan portfolio consisted of
loans secured by existing multi-family residential real estate properties, which represented a decrease of $1.8 million or 26.5% from fiscal 2008. Of the $5.1 million, approximately $3.7 million or 72.3% provide for an adjustable rate of interest,
while approximately $1.4 million or 27.7% are fixed rate loans.

At June 30, 2009, $9.2 million or 13.5% of the
Companys loan portfolio consisted of loans secured by existing commercial real estate properties, which represented an increase of $2.6 million or 38.6% from fiscal 2008. Of the $9.2 million, approximately $3.0 million or 32.4% provide for an
adjustable rate of interest, while approximately $6.2 million or 67.6% are fixed rate loans.

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

Although terms vary, multi-family residential and commercial real estate loans generally are amortized over a
period of up to 15 years (although some loans amortize over a 20 year period) and mature in 5 to 15 years. The Company will originate these loans either with fixed or adjustable interest rates which generally is negotiated at the time of
origination. Loan-to-value ratios on the Companys commercial real estate loans are currently limited to 75% or lower. As part of the criteria for underwriting multi-family residential and commercial real estate loans, the Company generally
imposes a debt coverage ratio (the ratio of net cash from operations before payment of the debt service to debt service) of at least 125%. If the borrower has insufficient stand-alone financial capacity, the Savings Bank will either obtain personal
guarantees on its multi-family residential and commercial real estate loans from the principals of the borrower and, if these cannot be obtained, to impose more stringent loan-to-value, debt service and other underwriting requirements.

At June 30, 2009 the Companys multi-family residential and commercial real estate loan portfolio consisted of approximately
40 loans with an average principal balance of $356 thousand. At June 30, 2009, the Company had one multi-family residential real estate loan totaling $465 thousand that was classified as a non-accrual loan. This loan was brought current in
August 2009. During the year ended June 30, 2009, $28 thousand of interest was collected and recognized on this non-accrual loan.

Construction Loans. For many years, the Company has been active in originating loans to construct primarily single-family residences, and, to a much lesser extent, loans to acquire and develop real
estate for construction of residential properties. These construction lending activities generally are limited to the Companys primary market area. At June 30, 2009, construction loans amounted to approximately $23.6 million or 34.8% of the
Companys total loan portfolio, which represented an increase of $569 thousand or 2.5% from fiscal 2008. The increase was principally due to increased levels of speculative construction loans. During fiscal 2009, we also picked up several
seasoned builders as customers who were no longer able to obtain financing from their previous banks due to the credit crisis. As of June 30, 2009, the



8



---

Companys portfolio of construction loans consisted primarily of $21.2 million of loans for the construction of single-family residential real estate.
Construction loan originations totaled $6.5 million and decreased by $3.0 million or 31.7% during the fiscal year ended June 30, 2009, when compared to the same period in 2008. The Company attributes the decrease in construction loan
originations to higher levels of unsold new and existing homes available for sale nationally and in its primary market area.

Construction loans are made for the purpose of constructing a single-family residence. The Company will underwrite such loans to individuals on a construction/permanent mortgage loan basis or to a builder/developer on a speculative (not
pre-sold) construction mortgage loan basis. At June 30, 2009, approximately 86.9% of total outstanding construction loans were made to local real estate builders and developers with whom the Company has worked for a number of years for the
purpose of constructing primarily single-family residences. Upon application, credit review and analysis of personal and corporate financial statements, the Company may grant local builders lines of credit up to designated amounts. These credit
lines may be used for the purpose of construction of speculative residential properties. In some instances, lines of credit will also be granted for purposes of acquiring finished residential lots and developing speculative residential properties
thereon. Such lines generally have not exceeded $1.0 million, with the largest line totaling approximately $3.0 million. Once approved for a construction line, a developer must still submit plans and specifications and receive the Companys
authorization, including an appraisal of the collateral satisfactory to the Company, in order to begin utilizing the line for a particular project. As of June 30, 2009, the Company also had $1.4 million or 2.1% of the total loan portfolio
invested in land development loans, which consisted of 9 loans to 9 developers.

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

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

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

Consumer Loans.
The Company offers consumer loans, although such lending activity has not historically been a large part of its business. At June 30, 2009, $9.4 million or 13.9% of the Companys total loan portfolio consisted of consumer loans, which
represented a decrease of $22 thousand or 0.2% from fiscal 2008. The consumer loans offered by the Company include home equity loans, home equity lines of credit, automobile loans, loans secured by deposit accounts and personal loans. Approximately
89.1% of the Companys consumer loans are secured by real estate and are primarily obtained through existing and walk-in customers.

The Company will originate either a fixed-rate, fixed term home equity loan, or a home equity line of credit with a variable rate. At June 30, 2009, approximately 69.0% of the Companys home equity loans
were at a fixed rate for a fixed term. Although there have been a few exceptions with greater loan-to-value ratios, substantially all of such loans are originated with a loan-to-value ratio which, when coupled with the outstanding first mortgage
loan, does not exceed 80%.



9



---

Commercial Loans. At June 30, 2009, $4.1 million or 6.0% of the
Companys total loan portfolio consisted of commercial loans, which include loans secured by accounts receivable, marketable investment securities, business inventory and equipment, and similar collateral. The $226 thousand or 5.2% decrease
from fiscal 2008 was principally due to the repayments on the Companys commercial loan portfolio. The Company is continuing to develop this line of business in order to increase interest income and to attract compensating deposit account
balances.

Loan Fee Income. In addition to interest earned on loans, the Company may receive income from fees
in connection with loan originations, loan modifications, late payments, prepayments and for miscellaneous services related to its loans. Income from these activities varies from period to period with the volume and type of loans made and
competitive conditions.

The Companys loan origination fees are generally calculated as a percentage of the amount
borrowed. Loan origination and commitment fees and all incremental direct loan origination costs are deferred and recognized over the contractual remaining lives of the related loans on a level yield basis. Discounts and premiums on loans purchased
are accreted and amortized in the same manner. In accordance with Statement of Financial Accounting Standards (SFAS) No. 91, the Company has recognized $23 thousand, $35 thousand and $20 thousand of deferred loan fees during fiscal 2009, 2008
and 2007, respectively, in connection with loan refinancings, payoffs and ongoing amortization of outstanding loans. The decreased levels of loan origination fee income for fiscal year 2009, was principally attributable to a lower volume of mortgage
loan payoffs with outstanding deferred loan origination fees. Loans previously originated with lower or no loan origination fees will reduce the recognition of associated deferred fee balances while loans originated with higher loan origination fees
will increase the recognition of associated deferred fee balances.

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

Loans are placed on non-accrual status when, in the judgment of management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. The Company normally does not accrue interest on loans past due 90 days or more. The
Company may continue to accrue interest if, in the opinion of management, it believes it will collect on the loan. At June 30, 2009, the Company had one commercial real estate loan totaling $972 thousand that was 90 days or more past due on
which we accrued $65 thousand in interest. This loan was totally paid off in July 2009.

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

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



10



---

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



|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | ----------- | ---- | ---- |  | - | ----- | - |  | ---- | ----- | - | ---- | - | ----- | - |  | - | ----- | -
|                                                                                                                                |                        | At June 30, |     
|                                                                                                                                | 2009                   |             |      | 2008 |  |   | 2007  |   |  | 2006 |       |   | 2005 |  
|                                                                                                                                | (Dollars in Thousands) |            
|Non-accruing loans:                                                                                                             |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Real estate:                                                                                                                    |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Single-family (1)                                                                                                               |                        | $           | 226  |      |  | $ | 232   |   |  | $    | 214   |   |      | $ | 291   |   |  | $ | 58    |  
|Commercial                                                                                                                      |                        |             |     |      |  |   | 972   |   |  |      | 972   |   |      |   |      |   |  |   |      |  
|Multi-family (2)                                                                                                                |                        |             | 465  |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Construction (3)                                                                                                                |                        |             | 235  |      |  |   | 355   |   |  |      |      |   |      |   |      |   |  |   | 456   |  
|Land Acquisition and Development                                                                                                |                        |             |     |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   | 387   |  
|Consumer (4)                                                                                                                    |                        |             | 21   |      |  |   | 23    |   |  |      | 18    |   |      |   | 17    |   |  |   | 86    |  
|Commercial loans and leases (5)                                                                                                 |                        |             | 6    |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-accrual loans                                                                                                         |                        |             | 953  |      |  |   | 1,582 |   |  |      | 1,204 |   |      |   | 308   |   |  |   | 987   |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Accruing loans greater than 90 days                                                                                             |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Delinquent                                                                                                                      |                        |             |     |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-performing loans                                                                                                      |                        | $           | 953  |      |  | $ | 1,582 |   |  | $    | 1,204 |   |      | $ | 308   |   |  | $ | 987   |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Real estate owned                                                                                                               |                        |             |     |      |  |   |      |   |  |      | 2     |   |      |   | 10    |   |  |   | 70    |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-performing assets                                                                                                     |                        | $           | 953  |      |  | $ | 1,582 |   |  | $    | 1,206 |   |      | $ | 318   |   |  | $ | 1,057 |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Troubled debt restructurings                                                                                                    |                        | $           |     |      |  | $ |      |   |  | $    |      |   |      | $ |      |   |  | $ | 1,114 |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Potential problem loans (6)                                                                                                     |                        | $           | 315  |      |  | $ | 342   |   |  | $    | 368   |   |      | $ | 1,377 |   |  | $ |      |  
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-performing loans and potential problem loans and troubled debt restructurings as a percentage of net loans
receivable |                        |             | 2.18 | %    |  |   | 3.41  | % |  |      | 2.60  | % |      |   | 3.03  | % |  |   | 3.49  | %
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-performing assets to total assets                                                                                     |                        |             | 0.23 | %    |  |   | 0.37  | % |  |      | 0.30  | % |      |   | 0.08  | % |  |   | 0.25  | %
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Total non-performing assets, troubled debt restructurings and potential problem loans as a percentage of total assets           |                        |             | 0.30 | %    |  |   | 0.45  | % |  |      | 0.39  | % |      |   | 0.40  | % |  |   | 0.52  | %
|                                                                                                                                |                        |             |      |      |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  



|(1) | At June 30, 2009, non-accrual single-family residential real estate loans consisted of three loans.
|--- | ---------------------------------------------------------------------------------------------------

|(2) | At June 30, 2009, non-accrual multi-family real estate loans consisted of one loan. This loan was paid current in August 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(3) | At June 30, 2009, non-accrual construction loans consisted of one loan.
|--- | -----------------------------------------------------------------------

|(4) | At June 30, 2009, non-accrual consumer loans consisted of one loan.
|--- | -------------------------------------------------------------------

|(5) | At June 30, 2009, non-accrual commercial loans consisted of one loan.
|--- | ---------------------------------------------------------------------

|(6) | At June 30, 2009, potential problem loans consisted of one loan.
|--- | ----------------------------------------------------------------

The $629 thousand decrease in nonperforming assets during twelve months ended June 30, 2009 was primarily attributable to the reclassification of one non-performing commercial real estate
loan totaling $972 thousand (which was paid off in full in July 2009) to performing, the payoff of one speculative construction loan totaling $356 thousand, the payoff of one single-family real estate loan totaling $3 thousand, the payoff of one
consumer line of credit totaling $17 thousand, and the reclassification of one non-performing home equity line of credit totaling $5 thousand to performing, which were partially offset by the classification to non-performing of one multi-family real
estate loan totaling $465 thousand (this loan was brought current in August 2009), one speculative construction loan totaling $235 thousand, one home equity loan totaling $21 thousand, one commercial loan totaling $6 thousand, and paydowns on
non-performing loans of $2 thousand.

The Company had three non-accrual single-family real estate loans totaling
approximately $226 thousand at June 30, 2009. One loan totaling approximately $55 thousand is being serviced by another financial institution, who is proceeding with collection activities, while the other two are in various stages of
collection.

At June 30, 2009, the Company had one previously restructured commercial real estate loan to a retirement
village located in the North Hills totaling $972 thousand. The Savings Banks outstanding principal balance on this loan totaled $2.0 million at June 30, 2003. During the quarter ended September 30, 2003, the Savings Bank redeemed $388 thousand
of participating interests. During the quarter ended December 31,



11



---

2003, the Bank sold a forty percent participating interest to another financial institution at par resulting in proceeds totaling $979 thousand. The Company
had recorded interest received on this credit on a cost recovery basis until September 30, 2003 and is now recording interest income on a cash basis. At March 31, 2007, this credit was classified as non-performing. At June 30, 2009,
the loan was reclassified to performing, and was paid off in full in July 2009.

At June 30, 2009, the Company had one
multi-family real estate loan totaling $465 thousand, which was paid current in August 2009.

At June 30, 2009, the
Company had one non-accrual speculative single-family construction loan totaling approximately $235 thousand.

At
June 30, 2009, the Company had two potential problem loans consisting of one previously restructured loan secured by undeveloped land totaling $307 thousand and one previously restructured unsecured loan totaling $8 thousand to two borrowers.
During the fourth quarter of fiscal 2004, the Bankruptcy court approved a secured claim totaling $440 thousand and an unsecured claim totaling $76 thousand be paid on these loans in accordance with a Bankruptcy Plan of Reorganization. All Court
ordered plan payments have been received in a timely manner. In accordance with generally accepted accounting principles, the Company had recorded interest payments received on a cost recovery basis until June 30, 2006 and is now recording
interest income.

During fiscal 2009, 2008 and 2007, approximately $26 thousand, $117 thousand and $82 thousand,
respectively, of interest would have been recorded on loans accounted for on a non-accrual basis and troubled debt restructurings if such loans had been current according to the original loan agreements for the entire period. These amounts were not
included in the Companys interest income for the respective periods. The amount of interest income on loans accounted for on a non-accrual basis and troubled debt restructurings that was included in income during the same periods amounted to
approximately $51 thousand, $70 thousand and $81 thousand, respectively.

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

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

Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners
have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: substandard, doubtful and loss. Substandard assets have one or more defined
weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of those classified as substandard with the added
characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible
and of such little value that continuance as an asset of the institution is not warranted. Another category designated asset watch is also utilized by the Bank for assets which do not currently expose an insured institution to a
sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general



12



---

allowances for loan losses. If an asset or portion thereof is classified as loss, the insured institution must either establish specific allowances for loan
losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an
institutions regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital.

The Companys general policy is to internally classify its assets on a regular basis and establish prudent general valuation allowances that are adequate to absorb losses that have not been identified but that are inherent in the loan
portfolio. The Company maintains general valuation allowances that it believes are adequate to absorb losses in its loan portfolio that are not clearly attributable to specific loans. The Companys general valuation allowances are within the
following general ranges: (1) 0% to 5% of assets subject to special mention; (2) 5.00% to 100% of assets classified substandard; and (3) 50% to 100% of assets classified doubtful. Any loan classified as loss is charged-off. To further
monitor and assess the risk characteristics of the loan portfolio, loan delinquencies are reviewed to consider any developing problem loans. Based upon the procedures in place, considering the Companys past charge-offs and recoveries and
assessing the current risk elements in the portfolio, management believes the allowance for loan losses at June 30, 2009, is adequate.

The allowance for loan losses at June 30, 2009 decreased $294 thousand to $662 thousand. The decrease in the allowance for loan losses was primarily the result of $340 thousand in recoveries during fiscal 2009 on
a commercial real estate loan reclassified to performing, which was partially offset by provision for loan losses on new classified non-accrual loans. The Company believes that the loan loss reserve levels are prudent and warranted at this time due
to the weakness of the national economy. The changes in prior years reflected a number of factors, the most significant of which were the changes in the Companys level of non-performing assets and the industry trend towards greater emphasis on
the allowance method of providing for loan losses.



13



---

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



|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|---------------------------------------------------------------------- | ---------------------- | ----------- | ------ | ---- |  | - | ------ | -- |  | ---- | ------ | -- | ---- | - | ------ | - |  | - | ------ | -
|                                                                       |                        | At June 30, |       
|                                                                       | 2009                   |             |        | 2008 |  |   | 2007   |    |  | 2006 |        |    | 2005 |  
|                                                                       | (Dollars in Thousands) |            
|                                                                       |                        |             |        |      | 
|Average net loans                                                      |                        | $           | 57,776 |      |  | $ | 58,458 |    |  | $    | 58,062 |    |      | $ | 55,881 |   |  | $ | 62,410 |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Allowance balance (at beginning of period)                             |                        | $           | 956    |      |  | $ | 986    |    |  | $    | 957    |    |      | $ | 1,121  |   |  | $ | 1,370  |  
|Provision for (Recovery of) loan losses                                |                        |             | (294   | )    |  |   | (123   | )  |  |      | 13     |    |      |   | (161   | ) |  |   | (46    | )
|Charge-offs:                                                           |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Real estate:                                                           |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Single-family                                                          |                        |             |       |      |  |   |       |    |  |      |       |    |      |   | 7      |   |  |   | 15     |  
|Multi-family                                                           |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Commercial                                                             |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   | 186    |  
|Construction                                                           |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Land acquisition and development                                       |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Consumer:                                                              |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Home equity                                                            |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   | 25     |  
|Education                                                              |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Other                                                                  |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Commercial loans and leases                                            |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   | 11     |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Total charge-offs                                                      |                        |             |       |      |  |   |       |    |  |      |       |    |      |   | 7      |   |  |   | 237    |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Recoveries:                                                            |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Real estate:                                                           |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Single-family                                                          |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Multi-family                                                           |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Commercial                                                             |                        |             |       |      |  |   | 93     |    |  |      |       |    |      |   | 4      |   |  |   | 4      |  
|Construction                                                           |                        |             |       |      |  |   |       |    |  |      | 15     |    |      |   |       |   |  |   | 30     |  
|Land acquisition and development                                       |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Consumer:                                                              |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Home equity                                                            |                        |             |       |      |  |   |       |    |  |      | 1      |    |      |   |       |   |  |   |       |  
|Education                                                              |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Other                                                                  |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|Commercial loans and leases                                            |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Total recoveries                                                       |                        |             |       |      |  |   | 93     |    |  |      | 16     |    |      |   | 4      |   |  |   | 34     |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Net loans charged-off                                                  |                        |             |       |      |  |   | (93    | )  |  |      | (16    | )  |      |   | 3      |   |  |   | 203    |  
|Transfer to real estate owned loss reserve                             |                        |             |       |      |  |   |       |    |  |      |       |    |      |   |       |   |  |   |       |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Allowance balance (at end of period)                                   |                        | $           | 662    |      |  | $ | 956    |    |  | $    | 986    |    |      | $ | 957    |   |  | $ | 1,121  |  
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Allowance for loan losses as a percentage of total loans receivable    |                        |             | 1.12   | %    |  |   | 1.66   | %  |  |      | 1.60   | %  |      |   | 1.69   | % |  |   | 1.83   | %
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Net loans charged-off (recovered) as a percentage of average net loans |                        |             | 0.00   | %    |  |   | (0.16  | )% |  |      | (0.03  | )% |      |   | 0.01   | % |  |   | 0.33   | %
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Allowance for loan losses to non-performing loans                      |                        |             | 69.46  | %    |  |   | 60.43  | %  |  |      | 81.89  | %  |      |   | 310.71 | % |  |   | 113.58 | %
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Net loans charged-off (recovered) to allowance for loan losses         |                        |             | 0.00   | %    |  |   | (9.73  | )% |  |      | (1.62  | )% |      |   | 0.31   | % |  |   | 18.11  | %
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  
|Recoveries to charge-offs                                              |                        |             | 0.00   | %    |  |   | 0.00   | %  |  |      | 0.00   | %  |      |   | 57.14  | % |  |   | 14.35  | %
|                                                                       |                        |             |        |      |  |   |        |    |  |      |        |    |      |   |        |   |  |   |        |  



14



---

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



|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|-------------------------------- |  | ---------------------- | --- | -------- | ------------------- | - | ------ | ------------------- | -------- |  | ------------------- | ------ |  | ------------------- | --- |  | ------ | - | -------- | - | --- | ------ | ------ | -------- |  | - | ----- |  | ------ | -
|                                 |  | At June 30,            |    
|                                 |  | 2009                   |     |          | 2008                |   |        | 2007                |          |  | 2006                |        |  | 2005                |    
|                                 |  | % of Total Loans by    |     |          | % of Total Loans by |   |        | % of Total Loans by |          |  | % of Total Loans by |        |  | % of Total Loans by |    
|                                 |  | Amount                 |     | Category |                     |   | Amount |                     | Category |  |                     | Amount |  | Category            |     |  | Amount |   | Category |   |     | Amount |        | Category | 
|                                 |  | (Dollars in Thousands) |    
|Real estate loans:               |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Single-family                    |  | $                      | 79  |          | 22.10               | % |        | $                   | 50       |  | 23.45               | %      |  | $                   | 83  |  | 23.26  | % |          | $ | 54  |        | 26.72  | %        |  | $ | 52    |  | 27.86  | %
|Multi-family                     |  |                        | 45  |          | 7.48                |   |        |                     | 28       |  | 10.09               |        |  |                     | 39  |  | 8.78   |   |          |   | 22  |        | 6.55   |          |  |   | 26    |  | 6.68   |  
|Commercial                       |  |                        | 81  |          | 13.54               |   |        |                     | 396      |  | 9.69                |        |  |                     | 409 |  | 10.47  |   |          |   | 420 |        | 11.43  |          |  |   | 465   |  | 11.53  |  
|Construction                     |  |                        | 80  |          | 34.78               |   |        |                     | 67       |  | 33.67               |        |  |                     | 35  |  | 34.92  |   |          |   | 32  |        | 31.64  |          |  |   | 54    |  | 29.72  |  
|Land acquisition and development |  |                        | 180 |          | 2.12                |   |        |                     | 212      |  | 2.91                |        |  |                     | 190 |  | 2.99   |   |          |   | 218 |        | 4.86   |          |  |   | 262   |  | 7.93   |  
|Unallocated                      |  |                        |    |          | 0.00                |   |        |                     |         |  | 0.00                |        |  |                     |    |  | 0.00   |   |          |   |    |        | 0.00   |          |  |   |      |  | 0.00   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Total real estate Loans          |  |                        | 465 |          | 80.02               |   |        |                     | 753      |  | 79.81               |        |  |                     | 756 |  | 80.42  |   |          |   | 746 |        | 81.20  |          |  |   | 859   |  | 83.72  |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Consumer loans:                  |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Home equity                      |  |                        | 100 |          | 12.41               |   |        |                     | 88       |  | 12.78               |        |  |                     | 102 |  | 13.41  |   |          |   | 103 |        | 14.26  |          |  |   | 128   |  | 13.58  |  
|Other                            |  |                        | 3   |          | 1.52                |   |        |                     | 31       |  | 1.08                |        |  |                     | 38  |  | 0.75   |   |          |   | 50  |        | 1.45   |          |  |   | 61    |  | 1.47   |  
|Unallocated                      |  |                        |    |          | 0.00                |   |        |                     |         |  | 0.00                |        |  |                     |    |  | 0.00   |   |          |   |    |        | 0.00   |          |  |   |      |  | 0.00   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Total consumer loans             |  |                        | 103 |          | 13.93               |   |        |                     | 119      |  | 13.86               |        |  |                     | 140 |  | 14.16  |   |          |   | 153 |        | 15.71  |          |  |   | 189   |  | 15.05  |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Commercial loans:                |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Commercial loans                 |  |                        | 94  |          | 6.05                |   |        |                     | 84       |  | 6.33                |        |  |                     | 90  |  | 5.42   |   |          |   | 58  |        | 3.09   |          |  |   | 35    |  | 1.23   |  
|Unallocated                      |  |                        |    |          | 0.00                |   |        |                     |         |  | 0.00                |        |  |                     |    |  | 0.00   |   |          |   |    |        | 0.00   |          |  |   |      |  | 0.00   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Total commercial loans           |  |                        | 94  |          | 6.05                |   |        |                     | 84       |  | 6.33                |        |  |                     | 90  |  | 5.42   |   |          |   | 58  |        | 3.09   |          |  |   | 35    |  | 1.23   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Commercial lease financings      |  |                        |    |          | 0.00                |   |        |                     |         |  | 0.00                |        |  |                     |    |  | 0.00   |   |          |   |    |        | 0.00   |          |  |   |      |  | 0.00   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|Off balance-sheet Items (1)      |  |                        |    |          | 0.00                |   |        |                     |         |  | 0.00                |        |  |                     |    |  | 0.00   |   |          |   |    |        | 0.00   |          |  |   | 38    |  | 0.00   |  
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  
|                                 |  | $                      | 662 |          | 100.00              | % |        | $                   | 956      |  | 100.00              | %      |  | $                   | 986 |  | 100.00 | % |          | $ | 957 |        | 100.00 | %        |  | $ | 1,121 |  | 100.00 | %
|                                 |  |                        |     |          |                     |   |        |                     |          |  |                     |        |  |                     |     |  |        |   |          |   |     |        |        |          |  |   |       |  |        |  



|(1) | In accordance with generally accepted accounting principles, the Company established a separate reserve for off-balance sheet items beginning in fiscal 2006. At
June 30, 2009 this accounting reserve totaled $42 thousand.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

The Company had no unallocated loss allowance balance at June 30, 2009.



15



---

The following table summarizes the calculations of required allowance for loan losses by
loan category as of June 30, 2009.



|                                              |  |                 |     |  |                       |    
|--------------------------------------------- |  | --------------- | --- |  | --------------------- | ---
|                                              |  | Group Rate      |     |  | AllowanceforLoan Loss
|Homogenous loans:                             |  |                 |     |  |                       |    
|Single-family                                 |  | 0.0015          |     |  | $                     | 21 
|Multi-family                                  |  | 0.0050          |     |  |                       | 22 
|Commercial real estate                        |  | 0.0100          |     |  |                       | 82 
|Construction/land acquisition and development |  | 0.0015 - 0.0100 | (1) |  |                       | 78 
|Secured consumer                              |  | 0.0100          |     |  |                       | 87 
|Unsecured consumer                            |  | 0.0500          |     |  |                       | 2  
|Commercial loans                              |  | 0.0500          |     |  |                       | 88 
|Unallocated                                   |  |                 |     |  |                       |   
|                                              |  |                
|Individually evaluated loans:                 |  |                 |     |  |                       |    
|Single-family                                 |  |                 |     |  |                       | 58 
|Multi-family                                  |  |                 |     |  |                       | 23 
|Commercial real estate                        |  |                 |     |  |                       |   
|Construction/land acquisition and development |  |                 |     |  |                       | 182
|Secured consumer                              |  |                 |     |  |                       | 12 
|Unsecured consumer                            |  |                 |     |  |                       | 1  
|Commercial loans                              |  |                 |     |  |                       | 6  
|                                              |  |                
|Total allowance for loan losses:              |  |                 |     |  |                       |    
|Single-family                                 |  |                 |     |  |                       | 79 
|Multi-family                                  |  |                 |     |  |                       | 45 
|Commercial real estate                        |  |                 |     |  |                       | 82 
|Construction/land acquisition and development |  |                 |     |  |                       | 260
|Secured consumer                              |  |                 |     |  |                       | 99 
|Unsecured consumer                            |  |                 |     |  |                       | 3  
|Commercial loans                              |  |                 |     |  |                       | 94 
|Unallocated                                   |  |                 |     |  |                       |   
|                                              |  |                 |     |  |                       |    
|                                              |  |                
|Total allowance for loan losses               |  |                 |     |  | $                     | 662
|                                              |  |                 |     |  |                       |    



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

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

Other-Than-Temporary Impairment Assessments for Investment Securities.

Effective June 30, 2009, the Company adopted FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments(FSP 115-2).
Among other things, FSP 115-2 revises the recognition and reporting requirements for OTTI of debt securities classified as available-for-sale and held-to-maturity.

For debt securities, the ability and intent to hold provision was eliminated in FSP 115-2, and impairment is now considered to be other than temporary if an entity
(1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the securitys entire amortized cost basis (even if
the entity does not intend



16



---

to sell the security). In addition, the probability standard relating to the collectability of cash flows was eliminated in FSP 115-2, and impairment is
now considered to be other than temporary if the present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security (any such shortfall is referred to in FSP 115-2 as a credit
loss).

The Company evaluates outstanding available-for-sale and held-to-maturity securities in an unrealized loss position
(i.e., impaired securities) for OTTI on at least a quarterly basis. In doing so, the Company considers many factors including, but not limited to: the credit ratings assigned to the securities by the Nationally Recognized Statistical Rating
Organizations (NRSROs); other indicators of the credit quality of the issuer; the strength of the provider of any guarantees; the length of time and extent that fair value has been less than amortized cost; and whether the Company has the intent to
sell the security or more likely than not will be required to sell the security before its anticipated recovery. In the case of its private label residential MBS, the Company also considers prepayment speeds, the historical and projected performance
of the underlying loans and the credit support provided by the subordinate securities. These evaluations are inherently subjective and consider a number of quantitative and qualitative factors.

In the case of its private label residential MBS that exhibit adverse risk characteristics, the Company employs models to determine the
cash flows that it is likely to collect from the securities. These models consider borrower characteristics and the particular attributes of the loans underlying the securities, in conjunction with assumptions about future changes in home prices and
interest rates, to predict the likelihood a loan will default and the impact on default frequency, loss severity and remaining credit enhancement. A significant input to these models is the forecast of future housing price changes for the relevant
states and metropolitan statistical areas, which are based upon an assessment of the various housing markets. In general, since the ultimate receipt of contractual payments on these securities will depend upon the credit and prepayment performance
of the underlying loans and, if needed, the credit enhancements for the senior securities owned by the Company, the Company uses these models to assess whether the credit enhancement associated with each security is sufficient to protect against
likely losses of principal and interest on the underlying mortgage loans. The development of the modeling assumptions requires significant judgment.

In conjunction with our adoption of FAS 115-2 and FAS 124-2 effective June 30, 2009, the Company retained an independent third party to assist us with our private label CMO portfolio OTTI assessment. The
independent third party utilized certain assumptions for producing the cash flow analyses used in the OTTI assessment. Key assumptions would include interest rates, expected market participant spreads and discount rates, housing prices, projected
future delinquency levels and assumed loss rates on any liquidated collateral.

The Company reviewed the Independent third
partys assumptions used in the June 30, 2009 OTTI process. Based on the results of this review, the Company deemed the Independent third partys assumptions to be reasonable and adopted them. However, different assumptions could
produce materially different results, which could impact the Companys conclusions as to whether an impairment is considered other-than-temporary and the magnitude of the credit loss.

If the Company intends to sell an impaired debt security, or more likely than not will be required to sell the security before recovery
of its amortized cost basis, the impairment is other-than-temporary and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost.

In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security and it is not
more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and
(2) the amount of the total impairment related to all other factors (i.e., the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors
is recognized in accumulated other comprehensive loss. The total OTTI is presented in the Statement of Operations with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive loss. Absent the intent or
requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary.



17



---

Regardless of whether an OTTI is recognized in its entirety in earnings or if the credit
portion is recognized in earnings and the noncredit portion is recognized in other comprehensive income (loss), the estimation of fair values has a significant impact on the amount(s) of any impairment that is recorded.

The noncredit portion of any OTTI losses recognized in accumulated other comprehensive loss for debt securities classified as
held-to-maturity is accreted over the remaining life of the debt security (in a pro rata manner based on the amount of actual cash flows received as a percentage of total estimated cash flows) as an increase in the carrying value of the security
until the security is sold, the security matures, or there is an additional OTTI that is recognized in earnings. The noncredit portion of any OTTI losses on securities classified as available-for-sale is adjusted to fair value with an offsetting
adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security.

In periods subsequent to the recognition of an OTTI loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the
previous amortized cost basis less the credit-related OTTI recognized in earnings. For debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is
accreted into interest income over the remaining life of the security in a prospective manner based on the amount and timing of future estimated cash flows.

Mortgage-Backed Securities

Mortgage-backed securities (MBS) include mortgage pass-through
certificates (PCs) and collateralized mortgage obligations (CMOs). With a pass-through security, investors own an undivided interest in the pool of mortgages that collateralize the PCs. Principal and interest is passed
through to the investor as it is generated by the mortgages underlying the pool. PCs and CMOs may be insured or guaranteed by the Federal Home Loan Mortgage Corporation (FHLMC), the Fannie Mae (FNMA) and the Government
National Mortgage Association (GNMA). CMOs may also be privately issued with varying degrees of credit enhancements. A CMO reallocates mortgage pool cash flow to a series of bonds (called traunches) with varying stated maturities,
estimated average lives, coupon rates and prepayment characteristics.

The Companys CMO portfolio is comprised of two
segments: CMOs backed by U.S. Government Agencies (Agency CMOs) and CMOs backed by single-family whole loans not guaranteed by a U.S. Government Agency (Private-Label CMOs).

At June 30, 2009, our Agency CMOs totaled $117.1 million as compared to $154.8 million at June 30, 2008. Our
private-label CMOs totaled $57.0 million at June 30, 2009 as compared to $58.9 million at June 30, 2008. The $39.6 million decrease in the CMO segment of our MBS portfolio was primarily due to repayments on our Agency CMOs.
During fiscal 2009, we received principal payments totaling $1.9 million on our private-label CMOs. At June 30, 2009, approximately $174.1 million or 98.8% (book value) of the Companys MBS portfolio, including CMOs were
comprised of adjustable or floating rate investments, as compared to $213.7 million or 99.0% at June 30, 2008. Substantially all of the Companys floating rate MBS adjust monthly based upon changes in the one month LIBOR. The Company has
no investment in multi-family or commercial real estate based MBS.

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



|                                           |  |                        |         |      |   |         |  |   |        
|------------------------------------------ |  | ---------------------- | ------- | ---- | - | ------- |  | - | -------
|                                           |  | 2009                   |         | 2008 |   | 2007   
|                                           |  | (Dollars in Thousands)
|                                           | 
|MBS Available for Sale at June 30,         |  |                        |        
|                                           |  |                        |        
|GNMA PCs                                   |  | $                      | 2,062   |      | $ | 2,101   |  | $ | 2,137  
|CMOs  agency collateral                   |  |                        |        |      |   |        |  |   | 49     
|                                           |  |                        |         |      |   |         |  |   |        
|Total amortized cost                       |  | $                      | 2,062   |      | $ | 2,101   |  | $ | 2,186  
|                                           |  |                        |         |      |   |         |  |   |        
|Total estimated market value               |  | $                      | 2,075   |      | $ | 2,215   |  | $ | 2,246  
|                                           |  |                        |         |      |   |         |  |   |        
|                                           |  |                        |        
|MBS Held to Maturity at June 30,           |  |                        |         |      |   |         |  |   |        
|                                           |  |                        |        
|CMOs  agency collateral                   |  | $                      | 117,133 |      | $ | 154,808 |  | $ | 59,533 
|CMOs  single-family whole loan collateral |  |                        | 56,996  |      |   | 58,882  |  |   | 59,738 
|                                           |  |                        |         |      |   |         |  |   |        
|Total amortized cost                       |  | $                      | 174,129 |      | $ | 213,690 |  | $ | 119,271
|                                           |  |                        |         |      |   |         |  |   |        
|Total estimated market value               |  | $                      | 166,695 |      | $ | 211,113 |  | $ | 119,646
|                                           |  |                        |         |      |   |         |  |   |        



18



---

The Company believes that its present MBS available for sale allocation of $2.1 million
or 1.17% of the carrying value of the MBS portfolio, in conjunction with other investment securities allocated as available for sale, is adequate to meet anticipated future liquidity requirements and to reposition its balance sheet and
asset/liability mix should it wish to do so in the future.

The following table sets forth the amortized cost, contractual
maturities and weighted average yields of the Companys MBS, including CMOs, at June 30, 2009.



|                       |                        |                 |      |   |                        |   |      |                        |  |   |               |   |  |       |         |   |  |   |         |  
|---------------------- | ---------------------- | --------------- | ---- | - | ---------------------- | - | ---- | ---------------------- |  | - | ------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                       |                        | One Yearor Less |      |   | After One toFive Years |   |      | After Five toTen Years |  |   | Over TenYears |   |  | Total |        
|                       | (Dollars in Thousands) |                
|                       |                        |                 |      |   |                       
|MBS Available for Sale |                        | $               |     |   |                        | $ |     |                        |  | $ |              |   |  | $     | 2,062   |   |  | $ | 2,062   |  
|                       |                        |                 | 0.00 | % |                        |   | 0.00 | %                      |  |   | 0.00          | % |  |       | 7.75    | % |  |   | 7.75    | %
|                       |                        |                 |      |   |                       
|MBS Held to Maturity   |                        | $               |     |   |                        | $ |     |                        |  | $ |              |   |  | $     | 174,129 |   |  | $ | 174,129 |  
|                       |                        |                 | 0.00 | % |                        |   | 0.00 | %                      |  |   | 0.00          | % |  |       | 1.43    | % |  |   | 1.43    | %
|                       |                        |                 |      |   |                        |   |      |                        |  |   |               |   |  |       |         |   |  |   |         |  
|                       |                        |                 |      |   |                       
|Total                  |                        | $               |     |   |                        | $ |     |                        |  | $ |              |   |  | $     | 176,191 |   |  | $ | 176,191 |  
|                       |                        |                 |      |   |                        |   |      |                        |  |   |               |   |  |       |         |   |  |   |         |  
|Weighted average yield |                        |                 | 0.00 | % |                        |   | 0.00 | %                      |  |   | 0.00          | % |  |       | 1.50    | % |  |   | 1.50    | %
|                       |                        |                 |      |   |                        |   |      |                        |  |   |               |   |  |       |         |   |  |   |         |  

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

The following table sets forth information with respect to the Companys private-label CMO portfolio as of June 30, 2009. At the time of purchase, all of our private-label CMOs were rated in the
highest investment category by at least two ratings agencies.



|          |  |                      |  |         |  |                          |  |                                    |  |   |        |  |   |       
|--------- |  | -------------------- |  | ------- |  | ------------------------ |  | ---------------------------------- |  | - | ------ |  | - | ------
|Cusip #   |  | Security Description |  | Rating  |  | Book Value(in thousands) |  | Estimated Fair Value(in thousands)
|          |  | S&P                  |  | Moodys |  | Fitch                    |  |                                   
|05949AN63 |  | BOAMS 2005-1 1A7     |  | N/A     |  | A2                       |  | AAA/*-                             |  | $ | 3,419  |  | $ | 3,103 
|36242DE25 |  | GSR 2005-3F 1A11     |  | N/A     |  | Aaa/*-                   |  | AAA/*-                             |  |   | 3,367  |  |   | 3,144 
|05949A2H2 |  | BOAMS 2005-3 1A6     |  | N/A     |  | Baa1                     |  | AAA/*-                             |  |   | 1,333  |  |   | 1,221 
|05949A2H2 |  | BOAMS 2005-3 1A6     |  | N/A     |  | Baa1                     |  | AAA/*-                             |  |   | 1,699  |  |   | 1,557 
|225458JZ2 |  | CSFB 05-3 3A4        |  | AAA     |  | N/A                      |  | AAA/*-                             |  |   | 8,116  |  |   | 7,304 
|225458KE7 |  | CSFB 2005-3 3A9      |  | AAA     |  | N/A                      |  | AAA/*-                             |  |   | 529    |  |   | 475   
|225458KE7 |  | CSFB 2005-3 3A9      |  | AAA     |  | N/A                      |  | AAA/*-                             |  |   | 1,599  |  |   | 1,437 
|12669G3A7 |  | CWHL 2005 16A8       |  | NR      |  | Ba2                      |  | AAA/*-                             |  |   | 1,530  |  |   | 1,425 
|12669G3A7 |  | CWHL 2005 16A8       |  | NR      |  | Ba2                      |  | AAA/*-                             |  |   | 2,783  |  |   | 2,591 
|12669G3A7 |  | CWHL 2005 16A8       |  | NR      |  | Ba2                      |  | AAA/*-                             |  |   | 3,810  |  |   | 3,547 
|12669G3A7 |  | CWHL 2005 16A8       |  | NR      |  | Ba2                      |  | AAA/*-                             |  |   | 4,174  |  |   | 3,886 
|126694CP1 |  | CWHL SER 21 A11      |  | N/A     |  | Baa3                     |  | AA/*-                              |  |   | 7,542  |  |   | 6,098 
|126694KF4 |  | CWHL SER 24 A15      |  | B-      |  | N/A                      |  | AA/*-                              |  |   | 2,282  |  |   | 1,999 
|126694KF4 |  | CWHL SER 24 A15      |  | B-      |  | N/A                      |  | AA/*-                              |  |   | 4,562  |  |   | 3,996 
|16162WLW7 |  | CHASE SER S2 A10     |  | N/A     |  | Baa1                     |  | AAA/*-                             |  |   | 3,670  |  |   | 3,254 
|16162WLW7 |  | CHASE SER S2 A10     |  | N/A     |  | Baa1                     |  | AAA/*-                             |  |   | 5,137  |  |   | 4,555 
|126694MP0 |  | CWHL SER 26 1A5      |  | B       |  | N/A                      |  | AA/*-                              |  |   | 1,444  |  |   | 1,196 
|          |  |                      |  |         |  |                          |  |                                    |  |   |        |  |   |       
|          |  |                      |  |         |  |                          |  |                                    |  | $ | 56,996 |  | $ | 50,788
|          |  |                      |  |         |  |                          |  |                                    |  |   |        |  |   |       

The Company retained an independent third party to assist us in the determination
of a fair value for each of our private-label CMOs. This valuation is meant to be a Level Three valuation as defined by FAS 157 Fair Value measurements. The valuation does not represent the actual terms or prices at which any party
could purchase the securities. There is currently no active secondary market for private-label CMOs and there can be no assurance that any secondary market for private-label CMOs will develop.

We believe that the data and assumptions used to determine the fair values are reasonable. The fair value calculations reflect relevant
facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the private-label CMO segments fair value.



19



---

Investment Securities

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

The Companys investment activities are directly monitored by the Companys Finance Committee under policy guidelines adopted
by the Board of Directors. In recent years, the general objective of the Companys investment policy has been to manage the Companys interest rate sensitivity gap and generally to increase interest-earning assets. As reflected in the
table below, the Company decreased its position of U.S. Government Agency obligations while increasing its portfolio of investment-grade corporate debt obligations. The Company purchased approximately $41.8 million of U.S. Government Agency
obligations during fiscal 2009. During fiscal 2009, approximately $102.1 million of the Companys callable U.S. Government Agency obligations were redeemed prior to maturity. Outstanding balances totaled $32.9 million or 26.6% of the total
investment portfolio at June 30, 2009, as compared to $93.4 million or 72.7% of the total investment portfolio at June 30, 2008. At June 30, 2009, approximately $32.5 million or 98.7% of the Companys U.S. Government Agency
portfolio was comprised of U.S. Government Agency securities with longer-terms to maturity and optional principal redemption features (callable bonds).

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



|                                                     |  |                        |         |      |   |         |  |   |        
|---------------------------------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | - | -------
|                                                     |  | 2009                   |         | 2008 |   | 2007   
|                                                     |  | (Dollars in Thousands)
|                                                     | 
|Investment Securities Available for Sale at June 30, |  |                        |        
|                                                     |  |                        |        
|Corporate debt obligations                           |  | $                      |        |      | $ | 2       |  | $ | 5      
|Foreign debt securities (1)                          |  |                        |        |      |   |        |  |   |       
|Commercial paper                                     |  |                        |        |      |   | 7,492   |  |   | 8,397  
|Obligations of states and political subdivisions     |  |                        |        |      |   |        |  |   |       
|                                                     |  |                        |         |      |   |         |  |   |        
|Total amortized cost                                 |  |                        |        |      |   | 7,494   |  |   | 8,402  
|Equity securities                                    |  |                        | 500     |      |   | 500     |  |   | 555    
|                                                     |  |                        |         |      |   |         |  |   |        
|Total amortized cost                                 |  | $                      | 500     |      | $ | 7,994   |  | $ | 8,957  
|                                                     |  |                        |         |      |   |         |  |   |        
|Total estimated fair value                           |  | $                      | 493     |      | $ | 7,978   |  | $ | 8,933  
|                                                     |  |                        |         |      |   |         |  |   |        
|                                                     |  |                        |        
|Investment Securities Held to Maturity at June 30,   |  |                        |         |      |   |         |  |   |        
|                                                     |  |                        |        
|Corporate debt obligations                           |  | $                      | 74,065  |      | $ | 19,092  |  | $ |       
|Foreign debt securities (1)                          |  |                        | 8,168   |      |   |        |  |   |       
|Commercial paper                                     |  |                        |        |      |   |        |  |   | 6,198  
|U.S. Government agency securities                    |  |                        | 32,937  |      |   | 93,414  |  |   | 186,667
|Obligations of states and political subdivisions     |  |                        | 7,958   |      |   | 8,053   |  |   | 9,799  
|                                                     |  |                        |         |      |   |         |  |   |        
|                                                     |  |                        | 123,128 |      |   | 120,559 |  |   | 202,664
|FHLB stock                                           |  |                        | 10,875  |      |   | 6,931   |  |   | 6,340  
|                                                     |  |                        |         |      |   |         |  |   |        
|Total amortized cost                                 |  | $                      | 134,003 |      | $ | 127,490 |  | $ | 209,004
|                                                     |  |                        |         |      |   |         |  |   |        
|Total estimated fair value                           |  | $                      | 135,241 |      | $ | 128,986 |  | $ | 207,850
|                                                     |  |                        |         |      |   |         |  |   |        



|(1) | U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
|--- | ----------------------------------------------------------------------------------



20



---

Information regarding the amortized cost, contractual maturities and weighted average yields of the
Companys investment portfolio at June 30, 2009 is presented below.



|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|---------------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------ | ---------------------- |  | - | ------------- | - |  | ----- | ------ | - |  | - | ------- | -
|                                                     |  | One Yearor Less        |        |   | After One toFive Years |   |        | After Five toTen Years |  |   | Over TenYears |   |  | Total |       
|                                                     |  | (Dollars in Thousands) |       
|                                                     | 
|Investment Securities Available for Sale             |  |                        |        |  
|                                                     |  |                        |        |   |                       
|Corporate debt obligations                           |  | $                      |       |   |                        | $ |       |                        |  | $ |              |   |  | $     |       |   |  | $ |        |  
|                                                     |  |                        | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 0.00   | % |  |   | 0.00    | %
|                                                     |  |                        |        |   |                       
|Foreign debt securities (2)                          |  | $                      |       |   |                        | $ |       |                        |  | $ |              |   |  | $     |       |   |  | $ |        |  
|                                                     |  |                        | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 0.00   | % |  |   | 0.00    | %
|                                                     |  |                        |        |   |                       
|Commercial paper                                     |  | $                      |       |   |                        | $ |       |                        |  | $ |              |   |  | $     |       |   |  | $ |        |  
|                                                     |  |                        | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 0.00   | % |  |   | 0.00    | %
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|                                                     |  |                        |        |   |                       
|Total                                                |  | $                      |       |   |                        | $ |       |                        |  | $ |              |   |  | $     |       |   |  | $ |        |  
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|Weighted average yield                               |  |                        | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 0.00   | % |  |   | 0.00    | %
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|                                                     |  |                        |        |   |                       
|                                                     |  | One Yearor Less        |        |   | After One toFive Years |   |        | After Five toTen Years |  |   | Over TenYears |   |  | Total |       
|                                                     |  |                        |        |   |                       
|Investment Securities Held to Maturity               |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|                                                     |  |                        |        |   |                       
|Corporate debt obligations                           |  | $                      | 21,034 |   |                        | $ | 45,993 |                        |  | $ | 7,038         |   |  | $     |       |   |  | $ | 74,065  |  
|                                                     |  |                        | 3.87   | % |                        |   | 4.48   | %                      |  |   | 6.09          | % |  |       | 0.00   | % |  |   | 4.46    | %
|                                                     |  |                        |        |   |                       
|Foreign debt securities (2)                          |  | $                      | 2,959  |   |                        | $ | 5,209  |                        |  | $ |              |   |  | $     |       |   |  | $ | 8,168   |  
|                                                     |  |                        | 3.61   | % |                        |   | 5.46   | %                      |  |   | 0.00          | % |  |       | 0.00   | % |  |   | 4.79    | %
|                                                     |  |                        |        |   |                       
|U.S. Government Agency securities                    |  | $                      |       |   |                        | $ |       |                        |  | $ |              |   |  | $     | 32,937 |   |  | $ | 32,937  |  
|                                                     |  |                        | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 4.22   | % |  |   | 4.22    | %
|                                                     |  |                        |        |   |                       
|Obligations of states and political subdivisions (1) |  | $                      |       |   |                        | $ | 1,196  |                        |  | $ |              |   |  | $     | 6,762  |   |  | $ | 7,958   |  
|                                                     |  |                        | 0.00   | % |                        |   | 7.76   | %                      |  |   | 0.00          | % |  |       | 8.24   | % |  |   | 8.17    | %
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|                                                     |  |                        |        |   |                       
|Total                                                |  | $                      | 23,993 |   |                        | $ | 52,398 |                        |  | $ | 7,038         |   |  | $     | 39,699 |   |  | $ | 123,128 |  
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  
|Weighted average yield                               |  |                        | 3.84   | % |                        |   | 4.65   | %                      |  |   | 6.09          | % |  |       | 4.90   | % |  |   | 4.66    | %
|                                                     |  |                        |        |   |                        |   |        |                        |  |   |               |   |  |       |        |   |  |   |         |  



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

|(2) | U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
|--- | ----------------------------------------------------------------------------------



21



---

Information regarding the amortized cost, earliest call dates and weighted average yield
of the Companys investment portfolio at June 30, 2009, is presented below. All Company investments in callable U.S. Government Agency bonds were classified as held to maturity at June 30, 2009.



|                                                     |  |                 |        |   |                        |   |        |                        |  |   |               |   |  |       |      |   |  |   |         |  
|---------------------------------------------------- |  | --------------- | ------ | - | ---------------------- | - | ------ | ---------------------- |  | - | ------------- | - |  | ----- | ---- | - |  | - | ------- | -
|                                                     |  | One Yearor Less |        |   | After One toFive Years |   |        | After Five toTen Years |  |   | Over TenYears |   |  | Total |     
|                                                     |  |                 |        |   |                       
|Corporate debt obligations                           |  | $               | 22,293 |   |                        | $ | 44,734 |                        |  | $ | 7,038         |   |  | $     |     |   |  | $ | 74,065  |  
|                                                     |  |                 | 3.98   | % |                        |   | 4.44   | %                      |  |   | 6.09          | % |  |       | 0.00 | % |  |   | 4.46    | %
|                                                     |  |                 |        |   |                       
|Foreign debt securities (2)                          |  | $               | 2,959  |   |                        | $ | 5,209  |                        |  | $ |              |   |  | $     |     |   |  | $ | 8,168   |  
|                                                     |  |                 | 3.61   | % |                        |   | 5.46   | %                      |  |   | 0.00          | % |  |       | 0.00 | % |  |   | 4.79    | %
|                                                     |  |                 |        |   |                       
|Commercial paper                                     |  | $               |       |   |                        | $ |       |                        |  | $ |              |   |  | $     |     |   |  | $ |        |  
|                                                     |  |                 | 0.00   | % |                        |   | 0.00   | %                      |  |   | 0.00          | % |  |       | 0.00 | % |  |   | 0.00    | %
|                                                     |  |                 |        |   |                       
|U.S. Government Agency securities                    |  | $               | 27,769 |   |                        | $ | 4,735  |                        |  | $ |              |   |  | $     | 433  |   |  | $ | 32,937  |  
|                                                     |  |                 | 4.24   | % |                        |   | 4.45   | %                      |  |   | 0.00          | % |  |       | 0.88 | % |  |   | 4.22    | %
|                                                     |  |                 |        |   |                       
|Obligations of states and political subdivisions (1) |  | $               | 4,669  |   |                        | $ | 3,289  |                        |  | $ |              |   |  | $     |     |   |  | $ | 7,958   |  
|                                                     |  |                 | 8.51   | % |                        |   | 7.67   | %                      |  |   | 0.00          | % |  |       | 0.00 | % |  |   | 8.17    | %
|                                                     |  |                 |        |   |                        |   |        |                        |  |   |               |   |  |       |      |   |  |   |         |  
|                                                     |  |                 |        |   |                       
|Total                                                |  | $               | 57,690 |   |                        | $ | 57,967 |                        |  | $ | 7,038         |   |  | $     | 433  |   |  | $ | 123,128 |  
|                                                     |  |                 |        |   |                        |   |        |                        |  |   |               |   |  |       |      |   |  |   |         |  
|Weighted average yield                               |  |                 | 4.45   | % |                        |   | 4.71   | %                      |  |   | 6.09          | % |  |       | 0.88 | % |  |   | 4.66    | %
|                                                     |  |                 |        |   |                        |   |        |                        |  |   |               |   |  |       |      |   |  |   |         |  



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

|(2) | U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
|--- | ----------------------------------------------------------------------------------

At June 30, 2009, the Company had no securities classified as trading investment securities.

The following table sets forth information with respect to the investment securities, comprised solely of short-term commercial paper and
corporate debt obligations, owned by the Company at June 30, 2009 which had a carrying value greater than 10% of the Companys stockholders equity at such date, other than securities issued by the United States Government and United
States Government agencies and corporations. All corporate securities owned by the Company, including those shown below, have been assigned an investment grade rating by at least two national rating services.



|                                                                                      |  |                        |        |                       |   |       
|------------------------------------------------------------------------------------- |  | ---------------------- | ------ | --------------------- | - | ------
|Name of Issuer                                                                        |  | CarryingValue          |        | EstimatedMarket Value
|                                                                                      |  | (Dollars in Thousands)
|Detroit Edison Company                                                                |  | $                      | 3,414  |                       | $ | 3,477 
|Consumers Energy Company                                                              |  | $                      | 3,305  |                       | $ | 3,371 
|Kohls Corporation                                                                    |  | $                      | 3,237  |                       | $ | 3,228 
|Anheuser-Busch Inbev Worldwide, Inc.*                                                 |  | $                      | 3,202  |                       | $ | 3,225 
|                                                                                      |  |                        |        |                       |   |       
|                                                                                      |  | $                      | 13,158 |                       | $ | 13,301
|                                                                                      |  |                        |        |                       |   |       
|                                                                                     
|*  U.S. dollar-denominated investment-grade corporate bonds of large foreign
issuers.

Sources of Funds

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



22



---

Deposits. The Companys deposits totaled $146.3 million at
June 30, 2009, as compared to $150.1 million at June 30, 2008. Certificates of deposit decreased $6.8 million or 10.6%. Transaction accounts increased $1.5 million or 5.1%. Money market accounts increased $892 thousand or 3.8% and savings
accounts increased $661 thousand or 2.1%. In order to attract new and lower cost core deposits, the Company continued to promote a no minimum balance, free, checking account product and Internet Banking. Current deposit products include
regular savings accounts, demand accounts, negotiable order of withdrawal (NOW) accounts, money market deposit accounts and certificates of deposit ranging in terms from 30 days to 10 years. Included among these deposit products are
certificates of deposit with negotiable interest rates and balances of $100,000 or more, which amounted to $8.5 million or 5.8% of the Companys total deposits at June 30, 2009, as compared to $9.1 million or 6.1% at June 30, 2008.
The Companys deposit products also include Individual Retirement Account certificates (IRA certificates).

The Companys deposits are obtained primarily from residents of northern Allegheny, southern Butler and eastern Beaver counties, Pennsylvania. The Company utilizes various marketing methods to attract new
customers and savings deposits, including print media advertising and direct mailings. The Company does not advertise for deposits outside of its local market area or utilize the services of deposit brokers, and management believes that an
insignificant number of deposit accounts were held by non-residents of Pennsylvania at June 30, 2009. The Company has drive-up banking facilities and automated teller machines (ATMs) at its McCandless, Franklin Park, Bellevue and
Cranberry Township offices. The Company also has an ATM machine at its West View Office. The Company participates in the PULSE® and CIRRUS® ATM networks. The Company also
participates in an ATM program called the Freedom ATM AllianceSM. The Freedom ATM
AllianceSMallows West View Savings Bank customers to use other Pittsburgh area Freedom
ATM AllianceSMaffiliates ATMs without being surcharged and vice versa. The
Freedom ATM AllianceSMwas organized to help smaller local banks compete with larger
national banks that have large ATM networks.

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

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



|                                            |  |                        |         |      |      |   |        |      |         |  |      |        |  |      |         |  |      |  
|------------------------------------------- |  | ---------------------- | ------- | ---- | ---- | - | ------ | ---- | ------- |  | ---- | ------ |  | ---- | ------- |  | ---- | -
|                                            |  | At June 30,            |        
|                                            |  | 2009                   |         |      | 2008 |   |        | 2007 |        
|                                            |  | Amount                 |         | Rate |      |   | Amount |      | Rate    |  |      | Amount |  | Rate |        
|                                            |  | (Dollars in Thousands) |        
|Regular savings and club accounts           |  | $                      | 31,787  |      | 0.62 | % |        | $    | 30,853  |  | 0.70 | %      |  | $    | 33,635  |  | 0.70 | %
|NOW accounts                                |  |                        | 17,416  |      | 0.05 |   |        |      | 17,730  |  | 0.06 |        |  |      | 18,705  |  | 0.06 |  
|Money market deposit accounts               |  |                        | 24,829  |      | 1.01 |   |        |      | 22,258  |  | 2.84 |        |  |      | 17,557  |  | 3.55 |  
|Certificate of deposit accounts             |  |                        | 60,188  |      | 2.82 |   |        |      | 69,331  |  | 4.41 |        |  |      | 72,805  |  | 4.54 |  
|Escrows                                     |  |                        | 667     |      | 1.65 |   |        |      | 703     |  | 1.56 |        |  |      | 704     |  | 1.56 |  
|                                            |  |                        |         |      |      |   |        |      |         |  |      |        |  |      |         |  |      |  
|Total interest-bearing deposits and escrows |  |                        | 134,887 |      | 1.60 |   |        |      | 140,875 |  | 2.79 |        |  |      | 143,406 |  | 2.92 |  
|Non-interest-bearing checking accounts      |  |                        | 14,191  |      | 0.00 |   |        |      | 13,787  |  | 0.00 |        |  |      | 12,927  |  | 0.00 |  
|                                            |  |                        |         |      |      |   |        |      |         |  |      |        |  |      |         |  |      |  
|Total deposits and escrows                  |  | $                      | 149,078 |      | 1.45 | % |        | $    | 154,662 |  | 2.54 | %      |  | $    | 156,333 |  | 2.68 | %
|                                            |  |                        |         |      |      |   |        |      |         |  |      |        |  |      |         |  |      |  



23



---

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



|                                             |  |                        |        |   |      |   |         |      |  |   |      
|-------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------- | ---- |  | - | -----
|                                             |  | Year Ended June 30,   
|                                             |  | 2009                   |        |   | 2008 |   |         | 2007
|                                             |  | (Dollars in Thousands)
|Increase (decrease) before interest credited |  | $                      | (6,352 | ) |      | $ | (13,204 | )    |  | $ | 3,692
|Interest credited                            |  |                        | 2,525  |   |      |   | 3,969   |      |  |   | 3,972
|                                             |  |                        |        |   |      |   |         |      |  |   |      
|Net deposit increase (decrease)              |  | $                      | (3,827 | ) |      | $ | (9,235  | )    |  | $ | 7,664
|                                             |  |                        |        |   |      |   |         |      |  |   |      

The following table sets forth maturities of the Companys certificates of
deposit of $100,000 or more at June 30, 2009, by time remaining to maturity.



|                                      |  |                        |      
|------------------------------------- |  | ---------------------- | -----
|                                      |  | Amounts               
|                                      |  | (Dollars in Thousands)
|Three months or less                  |  | $                      | 2,230
|Over three months through six months  |  |                        | 2,182
|Over six months through twelve months |  |                        | 3,413
|Over twelve months                    |  |                        | 684  
|                                      |  |                        |      
|                                      |  | $                      | 8,509
|                                      |  |                        |      

Borrowings. Borrowings are comprised of FHLB advances with various
terms, FRB borrowings, and repurchase agreements with securities brokers with original maturities generally within 90 days. At June 30, 2009, borrowings totaled $238.9 million as compared to $236.2 million at June 30, 2008. The $2.7
million or 1.1% increase was primarily due to purchases of investments and mortgage-backed securities and decreases in deposits, which were partially offset by redemptions of investment and mortgage-backed securities and decreases in the
Companys loan portfolio. Wholesale funding also provides the Company with a larger degree of control with respect to the term structure of its liabilities than traditional retail deposits. By utilizing borrowings, as opposed to retail
certificates of deposit, the Company also avoids the additional operating costs associated with increasing its branch network and associated federal deposit insurance premiums. For a detailed discussion of the Companys asset and liability
management activities, please see the Quantitative and Qualitative Disclosures about Market Risk section of the Companys fiscal year 2009 Annual Report included as Exhibit 13.

Competition

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

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

Employees

The Company had 31 full-time employees and 16 part-time employees as of June 30, 2009. None of these employees is represented by a collective bargaining agent. The Company believes that it
enjoys excellent relations with its personnel.



24



---

REGULATION AND SUPERVISION

The Company

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

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

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

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

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

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

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



25



---

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

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

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

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

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

The Savings Bank

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

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



26



---

Major provisions in the legislation include:



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



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



| |  |  | providing the Federal Deposit Insurance Corporation with the ability to set the designated reserve ratio within a range of between 1.15% and 1.50%, rather than
maintaining 1.25% at all times regardless of prevailing economic conditions;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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

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

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

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

Under the Federal Deposit Insurance Act, the FDIC, absent extraordinary circumstances, must establish and implement a plan to restore the deposit insurance reserve ratio to 1.15% of insured deposits, over a five-year
period, at any time that the reserve ratio falls below 1.15%. During fiscal 2009, a significant number of financial institutions have failed. These failures have caused significant reductions to the Deposit Insurance Funds loss reserve,
resulting in a decline in the reserve ratio to 0.27% as of March 31, 2009. The FDIC expects a higher rate of insured institution failures in the next few years, which will likely result in a continued decline in the reserve ratio. The
anticipated decline in the reserve ratio may necessitate an increase to the FDICs regular insurance, or special assessment, rate schedules.

On October 7, 2008, the FDIC released a five-year recapitalization plan and a proposal to raise premiums to recapitalize the fund. In order to implement the restoration plan, the FDIC proposed to change



27



---

both its risk-based assessment system and its base assessment rates. Assessment rates would increase by seven basis points across the range of risk
weightings. Changes to the risk-based assessment system would include increasing premiums for institutions that rely on excessive amounts of brokered deposits, increasing premiums for excessive use of secured liabilities, and lowering premiums for
smaller institutions with very high capital levels.

On February 27, 2009, the FDIC: (1) adopted a final rule
modifying the risk based assessment system and setting initial base assessment rates beginning April 1, 2009, at 12 to 45 basis points; (2) due to extraordinary circumstances, extended the period of the restoration plan to seven years; and
(3) adopted an interim rule with request for comments imposing an emergency 20 basis point special assessment on June 30, 2009, which will be collected on September 30, 2009, and allowing the FDICs Board of Directors to impose
possible additional special assessments up to 10 basis points thereafter to maintain public confidence in the Deposit Insurance Fund.

On May 20, 2009, President Obama signed the Helping Families Save Their Homes Act, which extends the temporary increase in the standard maximum deposit insurance amount (SMDIA) to $250,000 per
depositor through December 31, 2013. This extension of the temporary $250,000 coverage limit became effective immediately upon the Presidents signature. The legislation provides that the SMDIA will return to $100,000 on January 1,
2014.

On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on cash insured
depository institutions assets minus Tier 1 capital as of June 30, 2009. The amount of the special assessment will not exceed 10 basis points times the institutions assessment base for the second quarter of calendar 2009. The
Companys special assessment of $149 thousand was accrued as of June 30, 2009 and will be collected on September 30, 2009. An additional special assessment later in 2009 is possible, but the amount and timing are uncertain.

The Savings Bank is a well capitalized institution as of June 30, 2009.

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

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

The components of Tier I capital are equivalent to those discussed above under the 3% leverage standard. The components of supplementary
(Tier 2) capital include certain perpetual preferred stock, certain mandatory convertible securities, certain subordinated debt and intermediate preferred stock and general allowances for loan losses. Allowance for loan losses includable in
supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted toward supplementary capital cannot exceed 100% of core capital. At June 30, 2009, the Savings Bank met each of its capital
requirements.

A bank which has less than the minimum leverage capital requirement shall, within 60 days of the date as of
which it fails to comply with such requirement, submit to its FDIC regional director for review and approval a reasonable plan describing the means and timing by which the bank shall achieve its minimum leverage capital requirement. A bank which
fails to file such plan with the FDIC is deemed to be operating in



28



---

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

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

Miscellaneous

The Savings Bank is subject to certain restrictions on loans to the Company, on investments in the stock or securities thereof, on the taking of such stock or securities as collateral for loans
to any borrower, and on the issuance of a guarantee or letter of credit on behalf of the Company. In addition, there are various limitations on the distribution of dividends to the Company by the Savings Bank.

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



29



---

FEDERAL AND STATE TAXATION

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

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

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

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

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

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

Audit by IRS. The Companys consolidated federal income tax returns for taxable years through
December 31, 2005, have been closed for the purpose of examination by the Internal Revenue Service.

State
Taxation. The Company is subject to the Pennsylvania Corporate Net Income Tax and Capital Stock and Franchise Tax. The Pennsylvania Corporate Net Income Tax rate is 9.99% and is imposed on the Companys unconsolidated taxable income for
federal purposes with certain adjustments. In general, the Capital Stock Tax is a property tax imposed at the rate of 0.289% of a corporations capital stock value, which is determined in accordance with a fixed formula based upon average net
income and consolidated net worth.



30



---

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



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

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

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

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

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

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

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

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



31



---

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

The Company invests in Mortgage-backed securities (MBS) including significant legacy positions in private label MBS which could result in impairment charges.

The Company invests in MBS, including Agency and private label MBS. These investments carry a significant amount of risk, relative to
other investments within the Companys portfolio. The MBS portfolio accounts for 42.0% of the Companys total assets and 33.0% of the Companys total interest income.

MBS are secured by mortgage properties that are geographically diverse, but may include exposure in some areas that have experienced
rapidly declining property values. The MBS portfolio is also subject to interest rate risk, prepayment risk, operational risk, servicer risk and originator risk, all of which can have a negative impact on the underlying collateral of the MBS
investments. The rate and timing of unscheduled payments and collections of principal on mortgage loans serving as collateral for these securities are difficult to predict and can be affected by a variety of factors, including the level of
prevailing interest rates, restrictions on voluntary prepayments contained in the mortgage loans, the availability of lender credit, loan modifications and other economic, demographic, geographic, tax and legal factors.

The Companys investment securities portfolio includes a significant portfolio of held-to-maturity securities, which are reported at
book value on the Balance Sheet. Some securities in this portfolio have experienced unrealized losses, which are considered temporary. These securities are analyzed regularly to determine if the impairment would be considered other-than-temporary,
which would result in mark-to-market adjustments that could impact the Companys financial condition and results of operation.

During 2008, the U.S. housing market continued to experience significant adverse trends, including accelerating price depreciation in some markets and rising delinquency and default rates. The Company expects that housing prices will
experience further deterioration through 2009 and the current recession is likely to increase the level of delinquencies in the Companys MBS portfolio. This continued deterioration in the mortgage and credit markets could result in additional
other-than-temporary impairment charges on MBS which would negatively affect the Companys financial condition, results of operations and its capital position.

Our financial condition or results of operations may be adversely affected if MBS servicers fail to perform their obligations to service mortgage loans as collateral for MBS.

MBS servicers have a significant role in servicing the mortgage loans that serve as collateral for the Companys MBS portfolio,
including playing an active role in loss mitigation efforts and making servicer advances. The Companys credit risk exposure to the servicer counterparties includes the risk that they will not perform their obligation to service these mortgage
loans, which could adversely affect the Companys financial condition or results or operations. The risk of such failure has increased as deteriorating market conditions have affected the liquidity and financial condition of some of the larger
servicers. These risks could result in losses significantly higher than currently anticipated.

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

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



32



---

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

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

We face strong competition which may adversely affect our profitability.

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

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

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

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

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

Our deposit insurance premium could be substantially higher in the future which would have an adverse effect on our future earnings.

On May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each insured
depository institutions assets minus Tier 1 capital as of June 30, 2009. The amount of the special assessment will not exceed 10 basis points times the institutions assessment base for the second quarter of calendar 2009. The
Companys special assessment of $149 thousand was accrued as of June 30, 2009 and will be collected on September 30, 2009. An additional special assessment later in 2009 is possible, but the amount and timing are uncertain.

Pursuant to the Federal Deposit Insurance Act, the FDIC also established a Temporary Liquidity Guarantee Program that
provides a guarantee for newly-issued senior unsecured debt and non-interest bearing transactions deposit accounts at eligible insured institutions. For non-interest bearing transaction deposit accounts, a 10 basis point annual rate surcharge will
be applied to deposit amounts in excess of $250,000. We have elected not to participate in the Capital Purchase Program but we have elected to participate in the Temporary Liquidity Guarantee Program.



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

Not applicable.



33



---

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

The following
table sets forth certain information with respect to the offices and other properties of the Company at June 30, 2009.



|                             |  |             
|---------------------------- |  | ------------
|Description/Address          |  | Leased/Owned
|                             | 
|McCandless Office            |  | Owned       
|9001 Perry Highway           |  |             
|Pittsburgh, PA 15237         |  |             
|                             | 
|West View Boro Office        |  | Owned       
|456 Perry Highway            |  |             
|Pittsburgh, PA 15229         |  |             
|                             | 
|Cranberry Township Office    |  | Owned       
|20531 Perry Highway          |  |             
|Cranberry Township, PA 16066 |  |             
|                             | 
|Sherwood Oaks Office         |  | Leased(1)   
|100 Norman Drive             |  |             
|Cranberry Township, PA 16066 |  |             
|                             | 
|Bellevue Boro Office         |  | Leased(2)   
|572 Lincoln Avenue           |  |             
|Pittsburgh, PA 15202         |  |             
|                             | 
|Franklin Park Boro Office    |  | Owned       
|2566 Brandt School Road      |  |             
|Wexford, PA 15090            |  |             



|(1) | The Company operates this office out of a retirement community. The lease is for a period of 3 1/2years ending in December 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------

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



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



| | (a) | On May 21, 2009, Plaintiff Matthew Dragotta filed a lawsuit against West View Savings Bank in the United States District Court for the Western District of
Pennsylvania. The lawsuit was assigned a case number of 2:09-cv-627. The Plaintiff alleged that West View Savings Bank failed to comply with the notification requirements of the Electronic Funds Transfer Act, 15 U.S.C.§ 1693 et. Seq.before a bank can impose a transaction fee for the use of an automated teller machine. The Plaintiff did not ask for a specific amount of damages.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On July 22, 2009, West View Savings Bank filed a Motion to Dismiss and a Motion for Summary Judgment.

On August 24, 2009, U.S. District Court Judge Terrence F. McVerry granted West View Savings Banks Motion to Dismiss.

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



| | (b) | Not applicable.
| | --- | ---------------



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

Not applicable.



34



---

|Item 4A. | Executive Officers of the Registrant
|-------- | ------------------------------------

Set forth below is information with respect to the principal occupation during the last five years for the executive officers of the Company and the Savings Bank who do not serve as directors.

Keith A. Simpson. Age 52. Mr. Simpson has been Treasurer of the Company and the Savings Bank since April 2003 and Vice President and
Chief Accounting Officer of the Company and the Savings Bank since November 2002. Previously, Mr. Simpson was Controller and Assistant Treasurer of the Savings Bank since October 1995. In October 2008, Mr. Simpson filed personal bankruptcy
under Chapter 7 of the U.S. Bankruptcy Code, which was discharged in February 2009.

Bernard P. Lefke. Age 58.
Mr. Lefke has been Vice President of Savings of the Savings Bank since February 1991. Previously, Mr. Lefke was an Assistant Vice President and Branch Manager of the Savings Bank since 1981.

PART II.



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



| | (a) | The information required herein is incorporated by reference from page 57 of the Companys 2009 Annual Report to Stockholders included as Exhibit 13
(2009 Annual Report).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Not applicable.
| | --- | ---------------



| | (c) | The following table sets forth information with respect to purchases of common stock of the Company made by or on behalf of the Company during the three months
ended June 30, 2009.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                      |  |                               |  |                                 |       |                                                                                  |       |                                                                                  |       
|------------------------------------- |  | ----------------------------- |  | ------------------------------- | ----- | -------------------------------------------------------------------------------- | ----- | -------------------------------------------------------------------------------- | ------
|ISSUER PURCHASES OF EQUITY
SECURITIES
|Period                                |  | TotalNumber ofSharesPurchased |  | Average PricePaid per Share ($) |       | Total Number ofShares Purchasedas part of PubliclyAnnounced Plansor Programs (1) |       | Maximum Number ofShares that may yetbe RepurchasedUnder the Plans orPrograms (2)
|04/01/09 - 04/30/09                   |  | 0                             |  |                                 |      |                                                                                  | 0     |                                                                                  | 61,500
|05/01/09 - 05/31/09                   |  | 7,600                         |  | $                               | 14.70 |                                                                                  | 7,600 |                                                                                  | 53,900
|06/01/09 - 06/30/09                   |  | 0                             |  |                                 |      |                                                                                  | 0     |                                                                                  | 53,900
|Total                                 |  | 7,600                         |  | $                               | 14.70 |                                                                                  | 7,600 |                                                                                  | 53,900
|                                     

| | (1) | All shares indicated were purchased under the Companys Tenth Stock Repurchase Program.
| | --- | ---------------------------------------------------------------------------------------

| | (2) | Tenth Stock Repurchase Program
| | --- | ------------------------------

| | (a) | Announced January 29, 2009.
| | --- | ---------------------------

| | (b) | 106,000 common shares approved for repurchase.
| | --- | ----------------------------------------------

| | (c) | No fixed date of expiration.
| | --- | ----------------------------

| | (d) | This Program has not expired and has 53,900 shares remaining to be purchased at June 30, 2009.
| | --- | ----------------------------------------------------------------------------------------------

| | (e) | Not applicable.
| | --- | ---------------



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

The information required herein is incorporated by reference from pages 2 to 3 of the Companys 2009 Annual Report.



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

The information required herein is incorporated by reference from pages 4 to 14 of the Companys 2009 Annual Report.



35



---

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

The information required herein is incorporated by reference from pages 14 to 19 of the Companys 2009 Annual Report.



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

The information required herein is incorporated by reference from pages 20 to 56 of the Companys 2009 Annual Report.



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

Not applicable.

Item 9A(T).
Controls and Procedures.



| | (a) | Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a 
15(f) and 15d  15(f) under the Securities Exchange Act of 1934).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management assessed the
effectiveness of the Companys internal control over financial reporting as of June 30, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control  Integrated Framework.

Based on this assessment, management believes that, as of June 30,
2009, the Companys internal control over financial reporting was effective.

This annual report does not include an
attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.



| | (b) | No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) occurred
during the fourth fiscal quarter of fiscal 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Not
applicable.

PART III



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The information required herein is incorporated by reference from pages 2 to 6 of the Companys Proxy Statement for the 2009 Annual Meeting of Stockholders dated September 15, 2009 (Proxy
Statement).

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



36



---

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

The
information required herein is incorporated by reference from pages 9 to 11 of the Companys Proxy Statement.



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

The security ownership of certain beneficial owners and management information required herein is incorporated by reference from pages 7
to 8 of the Companys Proxy Statement. The related stockholder matters information required herein is incorporated by reference from pages 13 to 15 of the Companys Proxy Statement.

The following table sets forth certain information for all equity compensation plans and individual compensation arrangements (whether
with employees or non-employees, such as directors) in effect as of June 30, 2009.

Equity Compensation Plan Information



|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                                                                               |       
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ----- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------
|Plan Category                                              |  | Number of securities to beissued upon exercise ofoutstanding options,warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |       | Number of securities remainingavailable for future
issuanceunder equity compensation plans(excluding securities reflected inthe first column)
|                                                           |  |                                                                                          | 
|Equity compensation plans approved by security holders     |  | 125,127                                                                                  |  | $                                                                        | 16.20 |                                                                                                                                               | 27,481
|                                                           |  |                                                                                          | 
|Equity compensation plans not approved by security holders |  |                                                                                         |  |                                                                          |      |                                                                                                                                               |      
|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                                                                               |       
|                                                           |  |                                                                                          | 
|Total                                                      |  | 125,127                                                                                  |  | $                                                                        | 16.20 |                                                                                                                                               | 27,481
|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                                                                               |       



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

The information required herein is incorporated by reference from pages 3 and 13 of the Companys Proxy Statement.



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

The information required herein is incorporated by reference from page 14 of the Companys Proxy Statement.

PART
IV.



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



| | (a) | Documents filed as part of this report.
| | --- | ---------------------------------------



| | (1) | The following documents are filed as part of this report and are incorporated herein by reference from the Companys 2009 Annual Report.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheet at June 30, 2009 and 2008.

Consolidated Statement of Income for the Years Ended June 30, 2009, 2008 and 2007.



37



---

Consolidated Statement of Changes in Stockholders Equity for the Years Ended
June 30, 2009, 2008 and 2007.

Consolidated Statement of Cash Flows for the Years Ended June 30, 2009, 2008 and
2007.

Notes to the Consolidated Financial Statements.



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



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



|     |  |                                                                                                                             |  |                                                                                                                                                                    
|---- |  | --------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                 |  | Location                                                                                                                                                           
|3.1  |  | Amended and Restated Articles of Incorporation                                                                              |  | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on August 1, 2007.                                                 
|     |  |                                                                                                                            
|3.2  |  | Amended and Restated By-Laws                                                                                                |  | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on August 28, 2009.                                                
|     |  |                                                                                                                            
|4    |  | Stock Certificate of WVS Financial Corp.                                                                                    |  | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 33-67506) filed by the Company with the SEC on August 16, 1993, as
amended.
|     |  |                                                                                                                            
|10.1 |  | WVS Financial Corp. Amended and Restated Recognition Plans and Trusts for Executive Officers, Directors and Key Employees * |  | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on November 28, 2008.                                              
|     |  |                                                                                                                            
|10.2 |  | WVS Financial Corp. 1993 Stock Incentive Plan *                                                                             |  | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 33-67506) filed by the Company with the SEC on August 16, 1993, as
amended.
|     |  |                                                                                                                            
|10.3 |  | WVS Financial Corp. 1993 Directors Stock Option Plan *                                                                     |  | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 33-67506) filed by the Company with the SEC on August 16, 1993, as
amended.
|     |  |                                                                                                                            
|10.4 |  | WVS Financial Corp. Employee Stock Ownership Plan *                                                                         |  | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 33-67506) filed by the Company with the SEC on August 16, 1993, as
amended.
|     |  |                                                                                                                            
|10.5 |  | Amended West View Savings Bank Employee Profit Sharing Plan *                                                               |  | Incorporated by reference from the Registration Statement on Form S-1 (Registration No. 33-67506) filed by the Company with the SEC on August 16, 1993, as
amended.
|     |  |                                                                                                                            
|10.6 |  | Amended and Restated Employment Agreement between WVS Financial Corp., West View Savings Bank and David Bursic *            |  | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on November 28, 2008.                                              
|     |  |                                                                                                                            
|10.7 |  | Amended and Restated Directors Deferred Compensation Program *                                                              |  | Incorporated by reference from the Current Report on Form 8-K filed by the Company with the SEC on November 28, 2008.                                              
|     |  |                                                                                                                            
|10.8 |  | WVS Financial Corp. 2008 Stock Incentive Plan *                                                                             |  | Incorporated by reference from the Definitive Proxy Statement filed by the Company with the SEC on September 26, 2008.                                             
|     |  |                                                                                                                            
|13   |  | 2009 Annual Report to Stockholders                                                                                          |  | Filed herewith                                                                                                                                                     
|     |  |                                                                                                                            
|14.1 |  | Ethics Policy                                                                                                               |  | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on September 24, 2004.                                             



38



---

|     |  |                                                                                                       |  |                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                           |  | Location                                                                                                              
|14.2 |  | Code of Ethics for Senior Financial Officers                                                          |  | Incorporated by reference from the Annual Report on Form 10-K filed by the Company with the SEC on September 24, 2004.
|     |  |                                                                                                      
|21   |  | Subsidiaries of the Registrant  Reference is made to Item 1. Business for the required information |  | Page 3                                                                                                                
|     |  |                                                                                                      
|23   |  | Consent of Independent Registered Public Accounting Firm                                              |  | Filed herewith                                                                                                        
|     |  |                                                                                                      
|31.1 |  | Rule 13a-14(a)/ 15d-14(a) Certification of the Chief Executive Officer                                |  | Filed herewith                                                                                                        
|     |  |                                                                                                      
|31.2 |  | Rule 13a-14(a)/ 15d-14(a) Certification of the Chief Accounting Officer                               |  | Filed herewith                                                                                                        
|     |  |                                                                                                      
|32.1 |  | Section 1350 Certification of the Chief Executive Officer                                             |  | Filed herewith                                                                                                        
|     |  |                                                                                                      
|32.2 |  | Section 1350 Certification of the Chief Accounting Officer                                            |  | Filed herewith                                                                                                        



|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



39



---

SIGNATURES

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



|                   |  |  |  |                     |  |                                      
|------------------ |  |  |  | ------------------- |  | -------------------------------------
|                   |  |  |  | WVS FINANCIAL CORP.
|                   |  |  | 
|September 10, 2009 |  |  |  | By:                 |  | /s/ David J. Bursic                  
|                   |  |  |  |                     |  | David J. Bursic                      
|                   |  |  |  |                     |  | President and Chief Executive Officer

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



|                                                                                                        |  |                    |  | 
|------------------------------------------------------------------------------------------------------- |  | ------------------ |  | 
|/s/ David J. Bursic                                                                                     |  |                    |  | 
|David J. Bursic, Director, President and Chief Executive Officer (Principal Executive Officer)          |  | September 10, 2009 |  | 
|                                                                                                        |  |                   
|/s/ Keith A. Simpson                                                                                    |  |                    |  | 
|Keith A. Simpson, Vice President, Treasurer and Chief Accounting Officer (Principal Accounting Officer) |  | September 10, 2009 |  | 
|                                                                                                        |  |                   
|/s/ David L. Aeberli                                                                                    |  |                    |  | 
|David L. Aeberli,                                                                                       |  | September 10, 2009 |  | 
|Chairman of the Board of the Directors                                                                  |  |                    |  | 
|                                                                                                        |  |                   
|/s/ John W. Grace                                                                                       |  |                    |  | 
|John W. Grace, Director                                                                                 |  | September 10, 2009 |  | 
|                                                                                                        |  |                   
|/s/ Jonathan D. Hoover                                                                                  |  |                    |  | 
|Jonathan D. Hoover, Director and Senior Vice President                                                  |  | September 10, 2009 |  | 
|                                                                                                        |  |                   
|/s/ Lawrence M. Lehman                                                                                  |  |                    |  | 
|Lawrence M. Lehman, Director                                                                            |  | September 10, 2009 |  | 
|                                                                                                        |  |                   
|/s/ Margaret VonDerau                                                                                   |  |                    |  | 
|Margaret VonDerau, Director                                                                             |  | September 10, 2009 |  | 



40