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

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

                    For the fiscal year ended: June 30, 2003

                                       OR

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

             For the transition period from __________ to __________

                          Commission File No.: 0-22444

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

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

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

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

           Securities registered pursuant to Section 12(b) of the Act:
                                 Not Applicable

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

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

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

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|

As of December 31, 2002, the aggregate  value of the 2,133,479  shares of Common
Stock of the  Registrant  issued and  outstanding  on such date,  which excludes
468,393  shares held by all directors and officers of the Registrant as a group,
was  approximately  $34.0 million.  This figure is based on the last known trade
price of $15.92 per share of the Registrant's Common Stock on December 31, 2002.

Number of shares of Common Stock outstanding as of September 24, 2003: 2,571,437

                       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, 2003 are incorporated into Parts II and IV.

(2)  Portions of the definitive  proxy  statement for the 2003 Annual Meeting of
     Stockholders are incorporated into Part III.

<PAGE>

PART I.

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

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

     West View  Savings  Bank is a  Pennsylvania-chartered,  SAIF-insured  stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  The  Savings  Bank  converted  to the stock  form of  ownership  in
November 1993. The Savings Bank had no subsidiaries at June 30, 2003.

Lending Activities

     General.  At June 30, 2003, the Company's net portfolio of loans receivable
totaled $91.7 million, as compared to $152.9 million at June 30, 2002. Net loans
receivable  comprised  25.0% of Company total assets and 53.6% of total deposits
at June 30,  2003,  as  compared to 37.8% and 86.1%,  respectively,  at June 30,
2002.  The  principal  categories  of  loans  in  the  Company's  portfolio  are
single-family  and multi-family  residential real estate loans,  commercial real
estate  loans,  construction  loans,  consumer  loans and land  acquisition  and
development  loans.  Substantially all of the Company's  mortgage loan portfolio
consists  of  conventional  mortgage  loans,  which are loans  that are  neither
insured by the Federal Housing  Administration  ("FHA") nor partially guaranteed
by the  Department  of Veterans  Affairs  ("VA").  Historically,  the  Company's
lending  activities have been  concentrated in single-family  residential  loans
secured by properties  located in its primary market area of northern  Allegheny
County, southern Butler County and eastern Beaver County, Pennsylvania.

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

     Federal  regulations  impose  limitations on the aggregate  amount of loans
that a  savings  institution  can make to any one  borrower,  including  related
entities.  The permissible amount of loans-to-one  borrower follows the national
bank standard for all loans made by savings  institutions,  which generally does
not  permit  loans-to-one  borrower  to exceed  15% of  unimpaired  capital  and
surplus. Loans in an amount equal to an additional 10% of unimpaired capital and
surplus also may be made to a borrower if the loans are fully secured by readily
marketable   securities.   At  June  30,  2003,  the  Savings  Bank's  limit  on
loans-to-one  borrower was  approximately  $3.8 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, 2003, the Company's five largest loans or groups
of loans-to-one borrower,  including related entities,  ranged from an aggregate
of $1.8  million to $3.3  million,  and are  secured  primarily  by real  estate
located in the Company's primary market area.


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            At June 30,
                        ----------------------------------------------------------------------------------------------------------
                               2003                    2002                   2001                  2000                1999
                        ------------------     ------------------     ------------------     -----------------   -----------------
                         Amount        %        Amount        %        Amount        %        Amount       %      Amount       %
                         ------        -        ------        -        ------        -        ------       -      ------       -
                                                                       (Dollars in Thousands)
<S>                     <C>          <C>       <C>          <C>       <C>          <C>       <C>         <C>     <C>         <C>
Real estate loans:

Single-family           $ 43,255     40.91%    $ 89,889     53.69%    $105,623     51.50%    $105,964    52.49%  $103,035    54.43%
Multi-family               5,196      4.92        6,173      3.69        6,920      3.37        6,077     3.01      5,925     3.12
Commercial                17,949     16.98       25,439     15.19       34,955     17.05       32,847    16.27     28,546    15.08
Construction              16,942     16.03       19,965     11.92       28,157     13.73       26,935    13.34     23,810    12.58
Land acquisition
 and development           7,437      7.03        6,691      4.00        6,343      3.09        7,510     3.72      7,646     4.04
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
Total real estate
  Loans                   90,779     85.87      148,157     88.49      181,998     88.74      179,333    88.83    168,962    89.25
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
Consumer loans:
Home equity               12,374     11.70       16,319      9.75       19,142      9.33       18,558     9.19     16,467     8.70
Education                      0      0.00            1      0.00           31      0.02           57     0.03         11     0.01
Other                      1,069      1.01        1,514      0.90        2,092      1.02        2,062     1.02      2,153     1.14
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
Total consumer
  Loans                   13,443     12.71       17,834     10.65       21,265     10.37       20,677    10.24     18,631     9.85
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
Commercial loans           1,499      1.42        1,447      0.86        1,819      0.89        1,879     0.93      1,720     0.90
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
Commercial lease
  Financings                 ---      0.00          ---      0.00          ---      0.00         ---     0.00         ---     0.00
                        --------    ------     --------    ------     --------    ------     --------   ------   --------   ------
                         105,721    100.00%     167,438    100.00%     205,082    100.00%     201,889   100.00%   189,313   100.00%
                        --------    ======     --------    ======     --------    ======     --------   ======   --------   ======
Less:
Undisbursed loan
  Proceeds               (11,348)               (11,311)               (16,481)               (15,820)            (16,327)
Net deferred loan
  origination fees          (174)                  (464)                  (659)                  (801)               (817)
Allowance for loan
  Losses                  (2,530)                (2,758)                (2,763)                (1,973)             (1,842)
                        --------               --------               --------               --------            --------
Net loans
  Receivable            $ 91,669               $152,905               $185,179               $183,295            $170,327
                        ========               ========               ========               ========            ========
</TABLE>

     Contractual  Maturities.  The  following  table  sets  forth the  scheduled
contractual maturities of the Company's loans and mortgage-backed  securities at
June 30, 2003.  The amounts  shown for each period do not take into account loan
prepayments and normal amortization of the Company's loan portfolio.

<TABLE>
<CAPTION>
                                                Real Estate Loans
                                ------------------------------------------------
                                                                                        Land       Consumer
                                                                                    acquisition   loans and     Mortgage
                                  Single-      Multi-                                   and       commercial    -backed
                                  family       family     Commercial  Construction  development     loans      securities    Total
                                  ------       ------     ----------  ------------  -----------     -----      ----------    -----
                                                                        (Dollars in Thousands)
<S>                              <C>          <C>          <C>          <C>           <C>          <C>          <C>        <C>
Amounts due in:
  One year or less               $  2,095     $    589     $    242     $ 11,719      $  1,834     $  1,239     $      0   $ 17,718
  After one year through
     five years                     2,400           23          705        3,951         5,603        3,638            0     16,320
  After five years                 38,760        4,584       17,002        1,272             0       10,065      111,879    183,562
                                 --------     --------     --------     --------      --------     --------     --------   --------
     Total(1)                    $ 43,255     $  5,196     $ 17,949     $ 16,942      $  7,437     $ 14,942     $111,879   $217,600
                                 ========     ========     ========     ========      ========     ========     ========   ========

Interest rate terms on amounts due after one year:
  Fixed                          $ 36,575     $  2,778     $ 11,155     $  1,757      $    126     $  8,758     $ 14,445   $ 75,594
  Adjustable                        4,585        1,829        6,552        3,466         5,477        4,945       97,434    124,288
                                 --------     --------     --------     --------      --------     --------     --------   --------
     Total                       $ 41,160     $  4,607     $ 17,707     $  5,223      $  5,603     $ 13,703     $111,879   $199,882
                                 ========     ========     ========     ========      ========     ========     ========   ========

</TABLE>

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


                                       3
<PAGE>

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

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

     At June 30,  2003,  the Company had  approximately  $3.6 million of renewed
commercial  real estate and  construction  loans.  The $3.6 million in aggregate
disbursed  principal  that has been renewed is comprised  of:  construction  and
business  lines  of  credit  totaling  $1.5  million  and land  acquisition  and
single-family  speculative construction loans totaling $2.1 million.  Management
believes that the previously  discussed whole loans will  self-liquidate  during
the  normal  course  of  business,  though  some  additional  rollovers  may  be
necessary.  All but one of the loans that have been rolled  over,  as  discussed
above,  are in  compliance  with all loan  terms,  including  the receipt of all
required payments, and are considered performing loans.

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

     All processing and  underwriting of real estate and commercial  business is
performed solely at the Company's loan division at the Franklin Park office. The
Company believes this centralized  approach to approving such loan  applications
allows it to process  and  approve  such  applications  faster and with  greater
efficiency.  The Company also believes that this approach  increases its ability
to service the loans.  All loan  applications are required to be approved by the
Company's Loan  Committee,  comprised of both outside  directors and management,
which meets at least monthly.

     Historically,  the Company has  originated  substantially  all of the loans
retained in its  portfolio.  Substantially  all of the  residential  real estate
loans  originated  by  the  Company  have  been  under  terms,   conditions  and
documentation   which  permit  their  sale  to  the  Federal  National  Mortgage
Association and other investors in the secondary market.  Although West View has
not been a frequent seller of loans in the secondary market, the Savings Bank is
on the Federal National Mortgage Association approved list of sellers/servicers.
The Company has held most of the loans it originates in its own portfolio  until
maturity, due, in part, to competitive pricing conditions in the marketplace for
origination by nationwide lenders and portfolio lenders. During fiscal 2003, the
Company  sold  loans  with an  approximate  combined  principal  balance of $3.0
thousand comprised  primarily of education loans. The Company did not retain any
servicing rights with respect to the loans sold.

     The Company has not been an  aggressive  purchaser of loans.  However,  the
Company may purchase whole loans or loan participations in those instances where
demand for new loan originations in the Company's market area is insufficient or
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, 2003,  $2.0 million or 2.2% of the  Company's  total loans
receivable consisted of whole loans purchased from another financial institution
which consisted of single-family mortgage loans.


                                       4
<PAGE>

     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, 2003, $2.0 million or 2.2% of the Company's total
loans receivable were being serviced for the Company by others.

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

<TABLE>
<CAPTION>
                                                    At or For the Year Ended June 30,
                                                  ------------------------------------
                                                    2003          2002           2001
                                                    ----          ----           ----
                                                         (Dollars in Thousands)
<S>                                               <C>           <C>           <C>
Net loans receivable beginning balance            $152,905      $185,179      $183,295
Real estate loan originations
   Single-family(1)                                  1,220         5,313         7,918
   Multi-family(2)                                     ---            40           412
   Commercial                                        1,209           578         3,268
   Construction                                      8,971        13,634        22,255
   Land acquisition and development                  2,471         3,695         1,954
                                                  --------      --------      --------
      Total real estate loan originations           13,871        23,260        35,807
                                                  --------      --------      --------

Home equity                                          2,833         3,950         5,358
Education                                                2           333           342
Commercial                                             250           215           295
Other                                                  189           370           979
                                                  --------      --------      --------
          Total loan originations                   17,145        28,128        42,781
                                                  --------      --------      --------
Disbursements against available credit lines:
   Home equity                                       3,242         3,472         4,491
   Other                                               685           250           776
Purchase of whole loans and participations             302           ---         2,848
                                                  --------      --------      --------
     Total originations and purchases               21,374        31,850        50,896
                                                  --------      --------      --------
Less:
   Loan principal repayments                        83,087        66,054        47,398
   Sales of whole loans and participations(3)            3         2,988           313
   Transferred to real estate owned                    ---           500           ---
   Change in loans in process                           37        (5,170)          661
   Other, net(4)                                      (517)         (248)          640
                                                  --------      --------      --------
     Net increase (decrease)                      $(61,236)     $(32,274)     $  1,884
                                                  --------      --------      --------

Net loans receivable ending balance               $ 91,669      $152,905      $185,179
                                                  ========      ========      ========
</TABLE>

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

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

(3)  Loans sold in fiscal years 2003, 2002 and 2001 included  servicing  rights.
     As of June 30, 2003, loans serviced for others totaled  approximately  $1.2
     million.

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


                                       5
<PAGE>

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

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

     Single-Family   Residential  Real  Estate  Loans.   Historically,   savings
institutions such as the Company have concentrated  their lending  activities on
the  origination of loans secured  primarily by first mortgage liens on existing
single-family  residences.  At June  30,  2003,  $43.3  million  or 40.9% of the
Company's  total loan  portfolio  consisted of  single-family  residential  real
estate loans,  substantially all of which are conventional loans.  Single-family
loan  originations  totaled  $1.2  million and  decreased  $4.1 million or 77.4%
during the fiscal year ended June 30, 2003,  when compared to the same period in
2002.  Due to low levels of market  interest  rates,  the Company  continued  to
reduce its  originations of long-term fixed rate mortgages,  while continuing to
offer consumer home equity and construction 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, 2003, approximately $38.7 million or 89.4% of the single-family
residential  loans in the  Company's  loan  portfolio  consisted  of loans which
provide for fixed rates of interest.  Although these loans generally provide for
repayments  of  principal  over a  fixed  period  of 15 to 30  years,  it is the
Company's experience that because of prepayments and due-on-sale  clauses,  such
loans generally remain outstanding for a substantially shorter period of time.

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


                                       6
<PAGE>

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

     Multi-Family  Residential  and  Commercial  Real Estate Loans.  The Company
originates  mortgage  loans for the  acquisition  and  refinancing  of  existing
multi-family  residential  and commercial  real estate  properties.  At June 30,
2003,  $5.2 million or 4.9% of the Company's  total loan portfolio  consisted of
loans secured by existing multi-family residential real estate properties, which
represented  a decrease of $977  thousand or 15.8% from fiscal 2002. At June 30,
2003, $17.9 million or 17.0% of the loan portfolio consisted of loans secured by
existing commercial real estate properties, which represented a decrease of $7.5
million or 29.4% from fiscal 2002.  During fiscal 2003, the Company chose not to
emphasize  originations  of  commercial  real estate loans to reduce credit risk
associated with the national and local economic weaknesses.

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

     Although terms vary,  multi-family  residential  and commercial real estate
loans  generally are amortized  over a period of up to 15 years  (although  some
loans  amortize  over a twenty  year  period)  and mature in 5 to 15 years.  The
Company  will  originate  these loans either with fixed or  adjustable  interest
rates which  generally is negotiated at the time of  origination.  Loan-to-value
ratios on the Company's  commercial  real estate loans are currently  limited to
75% or lower. As part of the criteria for underwriting  multi-family residential
and commercial real estate loans, the Company  generally imposes a debt coverage
ratio (the ratio of net cash from operations  before payment of the debt service
to debt service) of at least 100%. It is also the Savings  Bank's general policy
to obtain  personal  guarantees on its  multi-family  residential and commercial
real estate loans from the  principals  of the borrower and, when this cannot be
obtained,  to  impose  more  stringent  loan-to-value,  debt  service  and other
underwriting requirements.

     At June 30, 2003,  the Company's  multi-family  residential  and commercial
real estate loan portfolio  consisted of  approximately 74 loans with an average
principal  balance of $313  thousand.  At June 30,  2003,  the  Company had four
commercial  real estate loans to three  borrowers,  totaling $3.3 million,  that
were not accruing interest.

     Construction  Loans.  In  recent  years,  the  Company  has been  active in
originating loans to construct  primarily  single-family  residences,  and, to a
much lesser extent, loans to acquire and develop real estate for construction of
residential  properties.  These construction  lending  activities  generally are
limited to the Company's  primary  market area.  At June 30, 2003,  construction
loans amounted to  approximately  $16.9 million or 16.0% of the Company's  total
loan  portfolio,  which  represented  a decrease  of $3.1  million or 15.5% from
fiscal 2002. The decrease was  principally  due to decreased  levels of new home
construction. As of June 30, 2003, the Company's portfolio of construction loans
consisted  of $15.6  million  of loans  for the  construction  of  single-family
residential  real  estate,  $300  thousand  of  loans  for the  construction  of
commercial  real  estate,  and $1.0  million  of loans for the  construction  of
multi-family  residential real estate.  Construction loan  originations  totaled
$9.0 million and decreased by $4.6 million or 33.8% during the fiscal year ended
June 30, 2003, when compared to the same period in 2002.

     Construction  loans are made for the  purpose  of  constructing  a personal
residence.  In such  circumstances,  the Company will underwrite such loans on a
construction/permanent  mortgage  loan basis.  At June 30,  2003,  approximately
86.3% of total  outstanding  construction  loans were made to local real  estate
builders and  developers  with whom the Company has worked for a number of years
for  the   purpose   of   constructing   primarily   single-family   residential
developments, 5.7% of total construction loans were made to


                                       7
<PAGE>

individuals for the purpose of constructing a personal residence,  6.2% of total
construction  loans were made to a developer for the purpose of  constructing  a
six unit apartment  building,  and 1.8% of total construction loans were made to
an  individual  for the purpose of  constructing  a  commercial  building.  Upon
application,  credit  review and  analysis of personal and  corporate  financial
statements,  the  Company  will  grant  local  builders  lines of  credit  up to
designated  amounts.  These  credit  lines  may  be  used  for  the  purpose  of
construction  of  speculative  (or  unsold)  residential  properties.   In  some
instances,  lines of credit  will also be  granted  for  purposes  of  acquiring
finished  residential  lots and developing  speculative  residential  properties
thereon.  Such lines generally have not exceeded $1.0 million,  with the largest
line totaling approximately $1.2 million. Once approved for a construction line,
a developer must still submit plans and specifications and receive the Company's
authorization,  including  an appraisal of the  collateral  satisfactory  to the
Company,  in order to begin utilizing the line for a particular  project.  As of
June 30,  2003,  the  Company  also had $7.4  million  or 7.0% of the total loan
portfolio  invested in land development loans, which consisted of 24 loans to 20
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,
2003, $13.4 million or 12.7% of the Company's total loan portfolio  consisted of
consumer  loans,  which  represented  a decrease  of $4.4  million or 24.7% from
fiscal 2002.  The consumer loan  portfolio,  like the mortgage  loan  portfolio,
decreased due to the low levels of market interest rates and an increase in loan
refinances. The consumer loans offered by the Company include home equity loans,
home equity lines of credit,  education loans, automobile loans, deposit account
secured loans and personal loans.  Approximately 92.0% 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, 2003,
approximately  64.7% of the Company's home equity loans were at a fixed rate for
a  fixed  term.   Although  there  have  been  a  few  exceptions  with  greater
loan-to-value  ratios,  substantially  all of such loans are  originated  with a
loan-to-value  ratio which,  when coupled with the  outstanding  first  mortgage
loan, does not exceed 80%.

     Commercial  Loans.  At June 30, 2003, $1.5 million or 1.4% of the Company's
total loan portfolio  consisted of commercial loans, which include loans secured
by  accounts   receivable,   business  inventory  and  equipment,   and  similar
collateral.  The $52 thousand or 3.6% increase from fiscal 2002 was  principally
due to draws  against  existing  commercial  lines of  credit.  The  Company  is
continuing to develop this line of business in order to increase interest income
and to attract compensating deposit account balances.


                                       8
<PAGE>

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

     The  Company's  loan  origination  fees  are  generally   calculated  as  a
percentage of the amount borrowed.  Loan origination and commitment fees and all
incremental  direct loan origination  costs are deferred and recognized over the
contractual  remaining  lives  of the  related  loans  on a level  yield  basis.
Discounts and premiums on loans purchased are accreted and amortized in the same
manner.  In accordance  with SFAS 91, the Company has recognized  $332 thousand,
$285 thousand and $202  thousand of deferred loan fees during fiscal 2003,  2002
and 2001,  respectively,  in  connection  with loan  refinancings,  payoffs  and
ongoing amortization of outstanding loans. The increases in loan origination fee
income for fiscal year 2003 was  principally  attributable to a higher volume of
loan  refinancings.  A  higher  volume  of loan  refinancings  will  permit  the
acceleration of associated deferred fee balances.

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

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

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


                                       9
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    At June 30,
                                                ------------------------------------------------------
                                                 2003        2002        2001        2000        1999
                                                 ----        ----        ----        ----        ----
                                                               (Dollars in Thousands)
<S>                                             <C>         <C>         <C>         <C>         <C>
Non-accruing loans:
Real estate:
   Single-family(1)                             $   59      $  582      $  201      $   67      $  189
   Commercial(2)                                 3,342       3,267       3,326       2,344         274
   Construction                                    ---         520       1,355       1,520         ---
   Land Acquisition and Development (3)             58         477         ---         ---         ---
Consumer                                           ---         ---         134         113          77
Commercial loans and leases(4)                      22         198         ---           6           7
                                                ------      ------      ------      ------      ------
Total non-accrual loans                          3,481       5,044       5,016       4,050         547
                                                ------      ------      ------      ------      ------
Accruing loans greater than 90 days
   Delinquent                                      ---         ---         ---         ---         ---
                                                ------      ------      ------      ------      ------
     Total non-performing loans                 $3,481      $5,044      $5,016      $4,050      $  547
                                                ------      ------      ------      ------      ------
Real estate owned                                  ---         235         ---         ---         218
                                                ------      ------      ------      ------      ------
     Total non-performing assets                $3,481      $5,279      $5,016      $4,050      $  765
                                                ======      ======      ======      ======      ======
Troubled debt restructurings(5)                 $2,497      $  ---      $  ---      $  ---      $  ---
                                                ======      ======      ======      ======      ======
Total non-performing loans and troubled
 debt restructurings as a percentage of
 net loans receivable                             4.36%       3.30%       2.71%       2.21%       0.32%
                                                ======      ======      ======      ======      ======
Total non-performing assets to total assets       0.95%       1.30%       1.27%       0.99%       0.22%
                                                ======      ======      ======      ======      ======
Total non-performing assets and troubled
   debt restructurings as a percentage of
    total assets                                  1.09%       1.30%       1.27%       0.99%       0.22%
                                                ======      ======      ======      ======      ======
</TABLE>

----------

(1)  At June 30, 2003, non-accrual  single-family  residential real estate loans
     consisted of one loan.

(2)  At June 30, 2003,  non-accrual  commercial  real estate loans  consisted of
     four loans.

(3)  At June 30,  2003,  non-accrual  land  acquisition  and  development  loans
     consisted of one loan.

(4)  At June 30, 2003,  non-accrual commercial loans and leases consisted of one
     loan.

(5)  At June 30, 2003, trouble debt  restructurings  consisted of two loans, one
     of which totaling $1.98 million was also reported as non-accrual.

     The $1.6  million  decrease  in  non-accrual  loans  during  fiscal 2003 is
comprised of a $520 thousand decrease in non-accrual  single-family  real estate
loans,  a $520  thousand  decrease in  non-accrual  construction  loans,  a $419
thousand  decrease in non-accrual land  acquisition and development  loans and a
$176 thousand  decrease in non-accrual  commercial loans and leases,  which were
partially  offset by a $75  thousand  increase in  non-accrual  commercial  real
estate loans.

     As of June 30,  2003,  the Company had four  commercial  real estate  loans
classified as non-accrual loans as described below.

     The  Company  had one  non-accrual  commercial  real  estate  loan  and one
construction loan to a retirement  village located in the North Hills area. Both
loans became  delinquent  in fiscal 2000.  The  original  outstanding  principal
balances  totaled $3.8  million,  of which $2.6 million was owned by the Company
and  the   remaining   $1.2  million  was  serviced  by  the  Company  for  four
participating  lenders.  During the quarter ended December 31, 2002, the Savings
Bank entered into Loan  Modification  Agreements  with respect to these credits.
Among  other  things  the  obligor  agreed to (i) resume  monthly  interest-only
payments on the $1.3 million loan and to secure  third-party  refinancing  on or
before July 1, 2003; (ii) resume monthly  principal and interest payments on the
$2.5 million loan; (iii) consent to Judgment in Mortgage  Foreclosure which will
be  discontinued  upon payment of the $1.3 million loan; and (iv) to release the
Savings  Bank from any and all claims.  Among  other  things,  the Savings  Bank
agreed to (i) modify  certain  interest  rates,  and (ii)  forgive  accrued  and
uncollected  interest,  late charges and legal fees if the modified payments are
received and the full  principal  balance on both loans are repaid  according to
their  modified  terms.  During the quarter  ended March 31,  2003,  the Company
returned the construction loan to accrual status due to timely repayments


                                       10
<PAGE>

under the modified terms and its first lien  position.  During the quarter ended
June 30, 2003, the obligor was able to obtain third-party financing and paid off
the $1.3  million  construction  loan and the  Company  reduced  its  allowances
associated with this credit by  approximately  $257 thousand.  At June 30, 2003,
the Company  owned  approximately  $2.0 million of the $2.4 million of remaining
indebtedness.  During the first quarter of fiscal 2004, the Company redeemed the
remaining  participants'  balances  of  approximately  $388  thousand.  Payments
continue to be  received on a timely  basis.  The  Company  continues  to record
interest received on the remaining non-accrual  commercial real estate loan on a
cost recovery basis.

     The Company  has one  non-accruing  commercial  real  estate  loan,  with a
principal balance of $980 thousand,  to a personal care home that was originally
part  of the  two  retirement  village  loans  discussed  above.  Due to the low
occupancy  of the  personal  care  home,  and  the  related  cash  drain  on the
retirement  village,  the Savings Bank "carved out"  approximately $1 million of
loan debt from the retirement  village,  assigned that $1 million in debt to the
personal care home, and allowed one of the obligors - a geriatric physician - to
separately  own and operate the personal care home as a separate  facility.  The
borrower was in compliance with a written loan work-out agreement until February
2002.  Sporadic  payments  have been  received  since March 2002.  The  borrower
alleges  insufficient  operating cash,  along with the loss of other income,  to
service the debt.  The Savings Bank also holds three other loans,  totaling $362
thousand,  secured by pledges of various real estate and  chattel,  to this same
borrower  which were  non-accrual  as of September 30, 2002.  During the quarter
ended  December 31, 2002,  the obligor  filed for  bankruptcy  protection  under
Chapter 11 of the  Federal  Bankruptcy  Code.  The Company  has  retained  legal
counsel,  has obtained  possession  of the  personal  care home and related real
property,  and  anticipates a sale of the property  during the second quarter of
fiscal 2004, with estimated proceeds of $500 thousand. The Company and its legal
counsel  are  also  investigating   other  claims  and  remedies  against  other
properties pledged as collateral for these loans.

     The  Company  has one  non-accruing  commercial  real  estate  loan  with a
principal balance of $103 thousand at June 30, 2003. The obligors have filed for
bankruptcy  under Chapter 7 of the Federal  Bankruptcy Code. In January 2003 the
Bankruptcy  Court entered an Order  authorizing the listing for sale of the real
property securing the loan,  ordered interest only payments to begin in February
2003 and granted Relief from the Automatic  Stay to  Foreclosure  effective June
2003.  The  Company  has  collected  nominal  rents  on  a  sporadic  basis  and
anticipates a sheriff's sale during the second quarter of fiscal 2004.

     During  fiscal  2003,  2002 and 2001,  approximately  $256  thousand,  $408
thousand and $422 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  $26  thousand,  $162
thousand and $296 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 21, 1993, the FDIC, in  conjunction  with the Office of
the  Comptroller  of the  Currency,  the  Office of Thrift  Supervision  and the
Federal Reserve Board,  adopted an Interagency Policy Statement on the Allowance
for Loan and Lease Losses  ("Policy  Statement").  The Policy  Statement,  which
effectively supersedes previous FDIC proposed guidance, includes guidance (1) on
the  responsibilities  of management for the assessment and  establishment of an
adequate allowance and (2) for the agencies'  examiners to use in evaluating the
adequacy  of  such  allowance  and  the  policies  utilized  to  determine  such
allowance.  The Policy Statement also sets forth  quantitative  measures for the
allowance with respect to assets classified substandard and doubtful,  described
below,  and with  respect  to the  remaining  portion of an  institution's  loan
portfolio.   Specifically,   the  Policy  Statement  sets  forth  the  following
quantitative measures which examiners may use to determine the reasonableness of
an allowance: (1) 50% of the portfolio that is


                                       11
<PAGE>

classified  doubtful;  (2) 15% of the portfolio that is classified  substandard;
and (3) for  the  portions  of the  portfolio  that  have  not  been  classified
(including loans designated  special mention),  estimated credit losses over the
upcoming  twelve  months  based  on facts  and  circumstances  available  on the
evaluation  date.  While the  Policy  Statement  sets  forth  this  quantitative
measure, such guidance is not intended as a "floor" or "ceiling".

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

     The  Company's  general  policy is to  internally  classify its assets on a
regular  basis and  establish  prudent  general  valuation  allowances  that are
adequate to absorb losses that have not been identified but that are inherent in
the loan portfolio.  The Company maintains general valuation  allowances that it
believes  are  adequate  to  absorb  losses in its loan  portfolio  that are not
clearly   attributable  to  specific  loans.  The  Company's  general  valuation
allowances  are within the following  ranges:  (1) 0% to 5% of assets subject to
special mention; (2) 5% to 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, 2003, is adequate.

     The allowance for loan losses at June 30, 2003  decreased  $228 thousand to
$2.53  million.  The  decrease in the  provision  for loan loss was  principally
attributable  to pay downs in the loan  portfolio,  and the payoff of a previous
non-performing  commercial real estate loan. The Company  believes that the loan
loss reserve  levels are prudent and warranted at this time due to the weakening
of the national  economy.  The  increases  in prior years  reflected a number of
factors,  the most  significant of which were the industry trend towards greater
emphasis on the  allowance  method of providing for loan losses and the increase
in non-accrual loans.


                                       12
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            At June 30,
                                                  -------------------------------------------------------------------
                                                   2003         2002            2001           2000           1999
                                                   ----         ----            ----           ----           ----
                                                                                 (Dollars in Thousands)
<S>                                              <C>          <C>            <C>             <C>            <C>
Average net loans                                $125,221     $ 173,023      $ 185,895       $ 177,557      $ 158,651
                                                 ========     =========      =========       =========      =========
Allowance balance (at beginning of period)       $  2,758     $   2,763      $   1,973       $   1,842      $   1,860
Provision for loan losses                            (228)           57            788             150            ---
Charge-offs:
   Real estate:
     Single-family                                    ---           ---            ---             ---              5
     Multi-family                                     ---           ---            ---             ---            ---
     Commercial                                       ---           ---             10             ---            ---
     Construction                                     ---           ---            ---             ---            ---
   Land acquisition and development                   ---           ---            ---             ---            ---
   Consumer:
     Home equity                                      ---            25            ---             ---             15
     Education                                        ---           ---            ---             ---            ---
     Other                                            ---            43            ---              19            ---
   Commercial loans and leases                        ---           ---              7             ---            ---
                                                 --------     ---------      ---------       ---------      ---------
     Total charge-offs                                ---            68             17              19             20
                                                 --------     ---------      ---------       ---------      ---------
Recoveries:
   Real estate:
     Single-family                                    ---           ---            ---             ---              1
     Multi-family                                     ---           ---            ---             ---            ---
     Commercial                                       ---           ---            ---             ---            ---
     Construction                                     ---           ---            ---             ---            ---
   Land acquisition and development                   ---           ---            ---             ---            ---
   Consumer:
     Home equity                                      ---           ---            ---             ---              1
     Education                                        ---           ---            ---             ---            ---
     Other                                            ---             6             19             ---            ---
   Commercial loans and leases                        ---           ---            ---             ---            ---
                                                 --------     ---------      ---------       ---------      ---------
     Total recoveries                                 ---             6             19             ---              2
                                                 --------     ---------      ---------       ---------      ---------
Net loans charged-off                                 ---            62             (2)             19             18
Transfer to real estate owned loss reserve            ---           ---            ---             ---            ---
                                                 --------     ---------      ---------       ---------      ---------
Allowance balance (at end of period)             $  2,530     $   2,758      $   2,763       $   1,973      $   1,842
                                                 ========     =========      =========       =========      =========
Allowance for loan losses as a percentage of
  total loans receivable                             2.68%         1.77%          1.47%           1.06%          1.07%
                                                 ========     =========      =========       =========      =========
Net loans charged-off as a percentage of
  average net loans                                   ---          0.04%          0.01%           0.01%          0.02%
                                                 ========     =========      =========       =========      =========
Allowance for loan losses to non-performing
  loans                                             72.68%        54.68%         55.08%          48.72%        336.75%
                                                 ========     =========      =========       =========      =========
Net loans charged-off to allowance for loan
  losses                                              ---          2.25%         (0.07)%          0.96%          0.98%
                                                 ========     =========      =========       =========      =========
Recoveries to charge-offs                             ---          8.82%        111.76%           0.00%         11.12%
                                                 ========     =========      =========       =========      =========
</TABLE>


                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           At June 30,
                        ------------------------------------------------------------------------------------------------------------
                                2003                   2002                  2001                  2000                 1999
                                ----                   ----                  ----                  ----                 ----
                        % of Total Loans by    % of Total Loans by   % of Total Loans by    % of Total Loans by  % of Total Loans by
                        Amount     Category    Amount    Category   Amount      Category   Amount      Category   Amount    Category
                        ------     --------    ------    --------   ------      --------   ------      --------   ------    --------
                                                                  (Dollars in Thousands)
<S>                     <C>           <C>      <C>          <C>     <C>           <C>      <C>           <C>      <C>         <C>
Real estate loans:
  Single-family         $   75        40.91%   $  191       53.69%  $  180        51.50%   $  167        52.49%   $  174      54.43%
  Multi-family              26         4.92        31        3.69       35         3.37        30         3.01       152       3.12
  Commercial             1,944        16.98     1,745       15.19    1,721        17.05       704        16.27       283      15.08
  Construction              33        16.03       300       11.92      407        13.73       287        13.34        85      12.58
  Land acquisition
   and development          73         7.03        66        4.00       41         3.09        57         3.72        57       4.04

  Unallocated              ---         0.00        10        0.00      ---         0.00       363         0.00       695       0.00
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
    Total real estate
      loans              2,151        85.87     2,343       88.49    2,384        88.74     1,608        88.83     1,446      89.25
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
Consumer loans:
  Home equity              124        11.70       165        9.75      231         9.33       184         9.19       202       8.70
  Education                ---         0.00       ---        0.00      ---         0.02         1         0.03       ---       0.01
  Other                     22         1.01        28        0.90       73         1.02        80         1.02        24       1.14
  Unallocated              ---         0.00       ---        0.00      ---         0.00       ---         0.00        77       0.00
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
    Total consumer
      loans                146        12.71       193       10.65      304        10.37       265        10.24       303       9.85
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
Commercial loans:
  Commercial loans         200         1.42       187        0.86       75         0.89       100         0.93        86       0.90
  Unallocated              ---         0.00       ---        0.00      ---         0.00       ---         0.00         7       0.00
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
    Total commercial
      loans                200         1.42       187        0.86       75         0.89       100         0.93        93       0.90
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
Commercial lease
  financings               ---         0.00       ---        0.00      ---         0.00       ---         0.00       ---       0.00
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
Off balance-sheet
   items                    33         0.00        35        0.00      ---         0.00       ---         0.00       ---       0.00
                        ------       ------    ------      ------   ------       ------    ------       ------    ------     ------
                        $2,530       100.00%   $2,758      100.00%  $2,763       100.00%   $1,973       100.00%   $1,842     100.00%
                        ======       ======    ======      ======   ======       ======    ======       ======    ======     ======
</TABLE>

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

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

     The Company had no unallocated loss allowance  balance at June 30, 2003. In
prior fiscal years,  an unallocated  loss  allowance  balance was maintained for
real estate,  consumer and small commercial  loans.  With respect to real estate
loans,  the Company  believed that it was prudent to maintain a certain level of
unallocated  loss  allowances  as the Bank grew its  commercial  real estate and
construction segments. At the time the Company's historical loss experience with
these two segments was somewhat limited. Management


                                       14
<PAGE>

believed that risks were inherent  within those segments but was uncertain as to
the degree of loss. A reasonable  estimate,  using  industry loss  factors,  was
utilized.  The same rationale applied to the unallocated  allowance for consumer
loans.  The Company had no  unallocated  consumer loan  allowances  for the past
three fiscal years.

     The following table summarizes the  calculations of required  allowance for
loan losses by loan category as of June 30, 2003.

<TABLE>
<CAPTION>
                                                                        Allowance
                                                                           for
                                                    Group Rate          Loan Loss
                                                -----------------      -----------
<S>                                             <C>                       <C>
      Homogenous loans:
            Single-family                             0.0015              $   72
            Multi-family                              0.0050                  26
            Commercial real estate                    0.0100                 159
            Construction/land acquisition
              and development                   0.0015 -  0.0100(1)           89
            Secured consumer                          0.0100                 137
            Unsecured consumer                        0.0500                   8
            Commercial loans                          0.0500                  65
            Off balance-sheet items (2)               0.0100                  33
            Unallocated                                                      ---

      Individually evaluated loans:
            Single-family                                                      3
            Multi-family                                                     ---
            Commercial real estate                                         1,785
            Construction/land acquisition
              and development                                                 17
            Secured consumer                                                   1
            Unsecured consumer                                               ---
            Commercial loans                                                 135
            Off balance-sheet items                                          ---

      Total allowance for loan losses:
            Single-family                                                     75
            Multi-family                                                      26
            Commercial real estate                                         1,944
            Construction/land acquisition
              and development                                                106
            Secured consumer                                                 138
            Unsecured consumer                                                 8
            Commercial loans                                                 200
            Off balance-sheet items                                           33
            Unallocated                                                      ---
                                                                          ------

      Total allowance for loan losses                                     $2,530
                                                                          ======
</TABLE>

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

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


                                       15
<PAGE>

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

Mortgage-Backed Securities

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

     At June 30, 2003,  the Company's MBS portfolio  totaled  $111.9  million as
compared to $82.5 million at June 30, 2002.  The $29.4 million or 35.6% increase
in MBS balances  outstanding  during fiscal 2003 was primarily  attributable  to
purchases  of  floating  rate CMOs  which  were  partially  offset by  principal
repayments.  At June 30, 2003, approximately $97.4 million or 87.1% (book value)
of the Company's  portfolio of MBS, including CMOs, were comprised of adjustable
or floating rate instruments,  as compared to $58.5 million or 70.9% at June 30,
2002.  Substantially all of the Company's floating rate MBS adjust monthly based
upon changes in certain short-term market indices (e.g. LIBOR, Prime, etc.).

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

<TABLE>
<CAPTION>
                                                  2003          2002          2001
                                                  ----          ----          ----
MBS Available for Sale at June 30,                     (Dollars in Thousands)
----------------------------------
<S>                                             <C>           <C>           <C>
FHLMC PCs                                       $     47      $     48      $     49
GNMA PCs                                           2,510         2,627         2,777
FNMA PCs                                           1,494         3,228         4,840
CMOs - agency collateral                             168           293           472
CMOs - single-family whole loan collateral           ---           ---           248
                                                --------      --------      --------
Total amortized cost                            $  4,219      $  6,196      $  8,386
                                                ========      ========      ========
Total estimated market value                    $  4,387      $  6,450      $  8,551
                                                ========      ========      ========

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

FHLMC PCs                                       $     36      $     60      $     74
GNMA PCs                                           2,603         4,069         7,413
FNMA PCs                                              29            35            27
CMOs - agency collateral                          47,516        55,587        17,590
CMOs - single-family whole loan collateral        57,308        16,342        30,477
                                                --------      --------      --------
Total amortized cost                            $107,492      $ 76,093      $ 55,581
                                                ========      ========      ========
Total estimated market value                    $107,914      $ 76,819      $ 56,082
                                                ========      ========      ========
</TABLE>

     The Company  believes that its present MBS available for sale allocation of
$4.2 million or 3.8% of the carrying value of the MBS portfolio,  is adequate to
meet  anticipated  future  liquidity  requirements and to reposition its balance
sheet and asset/liability mix should it wish to do so in the future.


                                       16
<PAGE>

     The following table sets forth the amortized cost,  contractual  maturities
and weighted  average yields of the Company's MBSs,  including CMOs, at June 30,
2003.

<TABLE>
<CAPTION>
                               One Year or   After One to  After Five to     Over Ten
                                  Less        Five Years     Ten Years        Years           Total
                                  ----        ----------     ---------        -----           -----
                                                      (Dollars in Thousands)
<S>                              <C>           <C>            <C>            <C>            <C>
MBS available for sale           $   ---       $    ---       $     25       $  4,194       $  4,219
                                    0.00%          0.00%          9.00%          7.24%          7.25%

MBS held to maturity             $   ---       $    ---       $     34       $107,458       $107,492
                                    0.00%          0.00%          9.00%          2.94%          2.94%
                                 -------       --------       --------       --------       --------

Total                            $   ---       $    ---       $     59       $111,652       $111,711
                                 =======       ========       ========       ========       ========
Weighted average yield              0.00%          0.00%          9.00%          3.10%          3.10%
                                 =======       ========       ========       ========       ========
</TABLE>

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

     The following table sets forth information with respect to the MBS owned by
the Company at June 30, 2003, which had a carrying value greater than 10% of the
Company's stockholders' equity at such date, other than securities issued by the
United States Government or United States Government  agencies and corporations.
All MBS owned by the  Company  have been  assigned a triple A  investment  grade
rating.

<TABLE>
<CAPTION>
                                                                                Estimated
      Name of Issuer                                     Carrying Value       Market Value
      --------------                                     --------------       ------------
                                                                 (Dollars in Thousands)
<S>                                                         <C>                <C>
      Bank of America Mortgage Securities                   $   16,147         $   16,228
      Washington Mutual Mortgage Securities Corp.               15,847             15,887
      Wells Fargo Mortgage Backed Securities Trust               9,352              9,393
      Structured Asset Securities Corp.                          5,723              5,793
      Residential Funding Mortgage Securities, Inc.              3,530              3,548
                                                            ----------         ----------

                                                            $   50,599         $   50,849
                                                            ==========         ==========
</TABLE>

Investment Securities

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

     The Company's investment activities are directly monitored by the Company's
Finance Committee under policy guidelines adopted by the Board of Directors.  In
recent years, the general objective of the Company's  investment policy has been
to manage the Company's  interest rate sensitivity gap and generally to increase
interest-earning   assets.   As  reflected  in  the  table  below,  the  Company
experienced   significant  prepayments  in  its  investment  portfolio  of  U.S.
Government  agency  obligations.  Outstanding  balances totaled $24.1 million or
15.6% of the total  investment  portfolio at June 30, 2003, as compared to $55.2
million or 36.5% of the total investment portfolio at June 30, 2002. At June 30,
2003,  approximately  $22.1  million or 91.8% of the Company's  U.S.  Government
Agency  portfolio  was  comprised  of U.S.  Government  Agency  securities  with
longer-terms to maturity and optional principal  redemption  features ("callable
bonds").  The Company purchased  approximately $81.9 million of investment grade
corporate debt securities during fiscal year 2003 and held  approximately  $74.4
million  or  48.0%  of  the  total   investment   portfolio  in  corporate  debt
obligations.  All  Company  owned  corporate  debt  obligations  have been rated
investment  grade by at  least  two  nationally  recognized  independent  rating
services.


                                       17
<PAGE>

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

<TABLE>
<CAPTION>
                                                          2003          2002          2001
                                                          ----          ----          ----
Investment Securities Available for Sale at June 30,          (Dollars in Thousands)
----------------------------------------------------
<S>                                                     <C>           <C>           <C>
Trust preferred securities                              $    128      $    860      $    161
Corporate debt obligations                                 7,428         6,495           ---
Commercial paper                                          15,442           ---           ---
Obligations of states and political subdivisions           1,000           ---           ---
                                                        --------      --------      --------
Total amortized cost                                      23,998         7,355           161
Equity securities                                          1,312         1,020         1,219
                                                        --------      --------      --------
Total amortized cost                                    $ 25,310      $  8,375      $  1,380
                                                        ========      ========      ========
Total estimated market value                            $ 25,641      $  8,426      $  1,380
                                                        ========      ========      ========

Investment Securities Held to Maturity at June 30,
--------------------------------------------------
Corporate debt obligations                              $ 66,978      $ 58,415      $ 10,520
U.S. Government agency securities                         24,097        55,216        87,927
Commercial paper                                           1,099           ---           ---
Obligations of states and political subdivisions          29,667        29,327        29,766
                                                        --------      --------      --------
                                                         121,841       142,958       128,213
FHLB stock                                                 7,797         8,281         8,150
                                                        --------      --------      --------
Total amortized cost                                    $129,638      $151,239      $136,363
                                                        ========      ========      ========
Total estimated market value                            $133,833      $154,427      $137,341
                                                        ========      ========      ========
</TABLE>


                                       18
<PAGE>

     Information  regarding  the  amortized  cost,  contractual  maturities  and
weighted average yields of the Company's  investment  portfolio at June 30, 2003
is presented below.

<TABLE>
<CAPTION>
Investment Securities                    One Year or     After One to    After Five to       Over Ten
Available for Sale                          Less          Five Years       Ten Years           Years           Total
------------------                          ----          ----------       ---------           -----           -----
                                                                   (Dollars in Thousands)
<S>                                      <C>              <C>             <C>               <C>             <C>
Trust preferred securities               $      ---       $      ---      $      ---        $      128      $     128
                                               0.00%            0.00%           0.00%             8.63%          8.63%

Corporate debt obligations               $    6,428       $    1,000      $      ---        $      ---      $   7,428
                                               3.44%            7.40%           0.00%             0.00%          3.98%

Commercial paper                         $   15,442       $      ---      $      ---        $      ---      $  15,442
                                               1.52%            0.00%           0.00%             0.00%          1.52%

Obligations of states and political
      subdivisions                       $    1,000       $      ---      $      ---        $      ---      $   1,000
                                               1.25%            0.00%           0.00%             0.00%          1.25%

Equity securities                        $      ---       $      ---      $      ---        $    1,312      $   1,312
                                               0.00%            0.00%           0.00%             4.85%          4.85%
                                         ----------       ----------      ----------        ----------      ---------

Total                                    $   22,870       $    1,000      $      ---        $    1,440      $  25,310
                                         ==========       ==========      ==========        ==========      =========
Weighted average yield                         2.05%            7.40%           0.00%             5.18%          2.44%
                                         ==========       ==========      ==========        ==========      =========
<CAPTION>

Investment Securities                    One Year or     After One to    After Five to       Over Ten
Held to Maturity                            Less          Five Years       Ten Years           Years           Total
----------------                            ----          ----------       ---------           -----           -----
<S>                                      <C>              <C>             <C>               <C>             <C>
Corporate debt obligations               $   54,913       $   12,065      $      ---        $      ---      $  66,978
                                               3.51%            3.66%           0.00%             0.00%          3.54%

U.S. Government agency
      securities                         $      ---       $      ---      $      ---        $   24,097      $  24,097
                                               0.00%            0.00%           0.00%             4.59%          4.59%

Commercial paper                         $    1,099       $      ---      $      ---        $      ---      $   1,099
                                               1.70%            0.00%           0.00%             0.00%          1.70%

Obligations of states and political
      subdivisions (1)                   $      300       $      ---      $    1,495        $   27,872      $  29,667
                                               3.07%            0.00%           7.43%             9.08%          8.93%
                                         ----------       ----------      ----------        ----------      ---------

Total                                    $   56,312       $   12,065      $    1,495        $   51,969      $  121,841
                                         ==========       ==========      ==========        ==========      =========
Weighted average yield                       3.48 %             3.66%           7.43%             7.00%          5.04%
                                         ==========       ==========      ==========        ==========      =========
</TABLE>

----------
(1)  Tax exempt obligations of states and political  subdivisions are calculated
     on a taxable equivalent basis utilizing a federal tax rate of 34%.


                                       19
<PAGE>

     Information  regarding the amortized cost, earliest call dates and weighted
average  yield  of the  Company's  investment  portfolio  at June 30,  2003,  is
presented  below.  All Company  investments in callable bonds were classified as
held to maturity at June 30, 2003.

<TABLE>
<CAPTION>
                                         One Year or     After One to    After Five to       Over Ten
                                            Less          Five Years        Ten Years          Years           Total
                                            ----          ----------        ---------          -----           -----
<S>                                      <C>              <C>              <C>              <C>              <C>
Corporate debt obligations               $   61,341       $   13,065       $      ---       $      ---       $ 74,406
                                               3.50%            3.94%            0.00%            0.00%          3.58%

U.S. Government agency
      securities                         $   16,924       $    5,197       $      ---       $    1,976       $ 24,097
                                               3.85%            8.03%            0.00%            1.88%          4.59%

Trust preferred securities               $      ---       $      ---       $      ---       $      128       $    128
                                               0.00%            0.00%            0.00%            8.63%          8.63%

Commercial paper                         $   16,541       $      ---       $      ---       $      ---       $ 16,541
                                               1.53%            0.00%            0.00%            0.00%          1.53%

Obligations of states and political
      subdivisions (1)                   $    1,300       $   22,017       $    7,350       $      ---       $ 30,667
                                               1.67%            9.15%            8.53%            0.00%          8.68%
                                         ----------       ----------       ----------       ----------       --------

Total debt obligations                   $   96,106       $   40,279       $    7,350       $    2,104       $145,839
                                         ==========       ==========       ==========       ==========       ========
Weighted average yield                         3.20%            7.32%            8.53%            2.29%          4.59%
                                         ==========       ==========       ==========       ==========       ========

Equity securities                        $      ---       $      ---       $      ---       $    1,312       $  1,312
                                         ----------       ----------       ----------       ----------       --------

Total                                    $   96,106       $   40,279       $    7,350       $    3,416       $147,151
                                         ==========       ==========       ==========       ==========       ========
</TABLE>

----------
(1)   Tax exempt obligations of states and political subdivisions are calculated
      on a taxable equivalent basis utilizing a federal tax rate of 34%.

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


                                       20
<PAGE>

     The following table sets forth  information  with respect to the investment
securities  owned by the Company at June 30,  2003,  which had a carrying  value
greater than 10% of the Company's  stockholders' equity at such date, other than
securities  issued by the United States  Government and United States Government
agencies  and  corporations.  All  investment  securities  owned by the Company,
including those shown below, have been assigned an investment grade rating by at
least two national rating services. The Company's investments in trust preferred
securities are unrated.

                                                                   Estimated
       Name of Issuer                          Carrying Value     Market Value
       --------------                          --------------     ------------
                                                    (Dollars in Thousands)
       Pittston Area School District              $5,221             $5,739
       GMAC Demand Note                            4,485              4,510
       Ford Money Market                           4,420              4,420
       Eastman Kodak                               4,348              4,348
       AEP Resources Inc.                          4,265              4,281
       PNC Funding Corp Note                       4,018              4,030
       AT&T Corp Notes                             3,842              3,858
       Household Finance Corp                      3,754              3,815
       Capital One Bank Corp                       3,724              3,727
       Duke Energy Corp Note                       3,696              3,701
       CINERGY Corp Debenture                      3,566              3,673
       Energy East Corp Note                       3,563              3,575
       PA Electric Co                              3,555              3,606
       Walt Disney Company                         3,517              3,548
       Delphi Corp                                 3,499              3,499
       Kraft Foods                                 3,497              3,497
       Sempra Energy                               3,376              3,414
       Harleysville Group Corp                     3,312              3,334
       Textron Financial Corp                      3,151              3,156
                                                 -------            -------
                                                 $72,809            $73,731
                                                 =======            =======

Sources of Funds

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

     Deposits.  The Company's  deposits totaled $170.9 million at June 30, 2003,
as compared to $177.6  million at June 30, 2002.  The $6.7 million  decrease was
primarily  attributable to an approximate  $4.8 million decrease in certificates
of deposits,  a $1.4 million  decrease in escrows,  a $438 thousand  decrease in
core deposits and a $152 thousand decrease in money market deposit accounts.  In
order to attract  new and lower cost core  deposits,  the Company  continued  to
promote a no minimum balance,  "free", checking account product. Current deposit
products include regular savings accounts, demand accounts,  negotiable order of
withdrawal  ("NOW") accounts,  money market deposit accounts and certificates of
deposit ranging in terms from 30 days to 10 years.  Included among these deposit
products are certificates of deposit with negotiable interest rates and balances
of $100,000 or more,  which  amounted to $14.2  million or 8.3% of the Company's
total  deposits at June 30, 2003,  as compared to $12.3  million or 6.9% at June
30, 2002.  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, 2003.  The Company has drive-up  banking  facilities  and  automated  teller
machines  ("ATMs") at its  McCandless,  Franklin  Park,  Bellevue and  Cranberry
Township  offices.  The Company also has an ATM machine at its West View Office.
The Company participates in the STAR(R) and


                                       21
<PAGE>

CIRRUS(R)  ATM  networks.  The Company  also  participates  in a new ATM program
called the Freedom ATM  Alliance(SM).  The Freedom ATM Alliance(SM)  allows West
View  Savings  Bank  customers  to  use  other   Pittsburgh   area  Freedom  ATM
Alliance(SM)  affiliates'  ATMs without  being  surcharged  and vice versa.  The
Freedom ATM  Alliance(SM) was organized to help smaller local banks compete with
larger national banks that have large ATM networks.

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

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

<TABLE>
<CAPTION>
                                                                        At June 30,
                                           -------------------------------------------------------------------
                                                 2003                      2002                      2001
                                                 ----                      ----                      ----
                                           Amount      Rate         Amount       Rate        Amount       Rate
                                           ------      ----         ------       ----        ------       ----
                                                                 (Dollars in Thousands)
<S>                                       <C>           <C>        <C>           <C>        <C>           <C>
Regular savings and club
   accounts                               $ 41,906      1.21%      $ 38,277      1.92%      $ 35,623      2.51%
NOW accounts                                19,775      0.21         19,463      0.31         17,543      0.54
Money market deposit
   accounts                                 14,334      1.28         13,460      1.91         12,409      2.65
Certificate of deposit accounts             80,208      3.18         90,022      4.44         93,879      5.82
Escrows                                      1,548      1.55          2,116      1.56          2,367      1.69
                                          --------      ----       --------      ----       --------      ----
     Total interest-bearing
        deposits and escrows               157,771      2.10        163,338      3.11        161,821      4.22
Non-interest-bearing checking
   accounts                                 12,149      0.00         11,814      0.00         11,616      0.00
                                          --------      ----       --------      ----       --------      ----
     Total deposits and escrows           $169,920      1.95%      $175,152      2.90%      $173,437      3.93%
                                          ========      ====       ========      ====       ========      ====
</TABLE>

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

                                                       Year Ended June 30,
                                             -----------------------------------
                                               2003           2002         2001
                                               ----           ----         ----
                                                    (Dollars in Thousands)
Increase(decrease) before interest
   credited                                  $(10,245)      $(9,365)      $1,975
Interest credited                               3,499         5,698        6,506
                                             --------       -------       ------
Net deposit increase (decrease)              $ (6,746)      $(3,667)      $8,481
                                             ========       =======       ======

      The following table sets forth maturities of the Company's certificates of
deposit of $100,000 or more at June 30, 2003, by time remaining to maturity.

                                                                  Amounts
                                                                  -------
                                                          (Dollars in Thousands)
      Three months or less                                        $ 3,578
      Over three months through six months                          6,003
      Over six months through twelve months                         2,625
      Over twelve months                                            1,955
                                                                  -------
                                                                  $14,161
                                                                  =======

     Borrowings.  Borrowings  are  comprised of FHLB advances with various terms
and repurchase  agreements with securities  brokers with original  maturities of
ninety-two days or less. At June 30, 2003,  borrowings totaled $162.8 million as
compared to $193.7 million at June 30, 2002. The $30.9 million or 16.0% decrease
was primarily due to maturities and repayments of investment and mortgage-backed
securities.  For a detailed  discussion  of the  Company's  asset and  liability
management activities, please see


                                       22
<PAGE>

the "Quantitative and Qualitative  Disclosures about Market Risk" section of the
Company's  fiscal year 2003 Annual Report.  Wholesale  funding also provides the
Company with a larger  degree of control  with respect to the term  structure of
its liabilities than traditional retail deposits.  By utilizing  borrowings,  as
opposed  to  retail  certificates  of  deposit,  the  Company  also  avoids  the
additional  operating  costs  associated  with increasing its branch network and
associated federal deposit insurance premiums.

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 40 full-time  employees  and 14  part-time  employees as of
June 30, 2003. None of these employees is represented by a collective bargaining
agent.  The  Company  believes  that it  enjoys  excellent  relations  with  its
personnel.


                                       23
<PAGE>

                           REGULATION AND SUPERVISION

The Company

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

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

     BHCA  Activities  and Other  Limitations.  The Bank Holding  Company Act of
1956, as amended ("BHCA") prohibits a bank holding company from acquiring direct
or  indirect  ownership  or control of more than 5% of the voting  shares of any
bank,  or  increasing  such  ownership  or  control of any bank,  without  prior
approval of the Federal Reserve Board. The BHCA also generally  prohibits a bank
holding  company from  acquiring any bank located  outside of the state in which
the existing bank  subsidiaries  of the bank holding  company are located unless
specifically  authorized by applicable  state law. No approval under the BHCA is
required,  however, for a bank holding company already owning or controlling 50%
of the voting shares of a bank to acquire additional shares of such bank.

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

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

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


                                       24
<PAGE>

of such loans are assigned a 20% level in the risk-weighting system. Off-balance
sheet items also are adjusted to take into account certain risk characteristics.

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

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

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

The Savings Bank

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

     FDIC Insurance Premiums.  The Savings Bank currently pays deposit insurance
premiums to the FDIC on a risk-based  assessment system  established by the FDIC
for all SAIF-member institutions. Under applicable regulations, institutions are
assigned to one of three capital groups which is based solely on the level of an
institution's  capital  -  "well  capitalized",   "adequately  capitalized"  and
"undercapitalized"-  which is  defined  in the same  manner  as the  regulations
establishing the prompt corrective action system under Section 38 of the Federal
Deposit Insurance Act ("FDIA"),  as discussed below. These three groups are then
divided  into  three  subgroups  which  reflect  varying  levels of  supervisory
concern,  from those  which are  considered  to be  healthy  to those  which are
considered  to be of  substantial  supervisory  concern.  The  matrix so created
results in nine assessment risk  classifications,  with rates ranging from 0.00%
for  well  capitalized,  healthy  institutions  to  0.27%  for  undercapitalized
institutions with substantial  supervisory concerns. The Savings Bank is a "well
capitalized" institution as of June 30, 2003.

     Capital  Requirements.  The FDIC has promulgated  regulations and adopted a
statement of policy  regarding  the capital  adequacy of  state-chartered  banks
which,  like the Savings Bank,  are not members of the Federal  Reserve  System.
These  requirements  are  substantially  similar to those adopted by the Federal
Reserve Board regarding bank holding companies, as described above.

     The  FDIC's  capital  regulations  establish  a minimum  3% Tier I leverage
capital requirement for the most highly-rated state-chartered, non-member banks,
with an  additional  cushion  of at least 100 to 200 basis  points for all other
state-chartered,  non-member banks,  which effectively will increase the minimum
Tier I leverage ratio for such other banks to 4% to 5% or more. Under the FDIC's
regulation,  highest-rated  banks are  those  that the FDIC  determines  are not
anticipating or experiencing  significant growth and have well diversified risk,
including no undue interest rate risk exposure,  excellent  asset quality,  high
liquidity,  good earnings and, in general, which are considered a strong banking
organization  and rated  composite  1 under the Uniform  Financial  Institutions
Rating System.

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


                                       25
<PAGE>

FDIC's regulation also provides that any insured  depository  institution with a
ratio of Tier I  capital  to total  assets  that is less than 2% is deemed to be
operating in an unsafe or unsound condition pursuant to Section 8(a) of the FDIA
and is subject to potential  termination of deposit insurance.  However, such an
institution will not be subject to an enforcement  proceeding  thereunder solely
on account of its  capital  ratios if it has entered  into and is in  compliance
with a written  agreement with the FDIC to increase its Tier I leverage  capital
ratio to such level as the FDIC deems  appropriate and to take such other action
as may be  necessary  for the  institution  to be  operated  in a safe and sound
manner. The FDIC capital  regulation also provides,  among other things, for the
issuance by the FDIC or its designee(s) of a capital directive, which is a final
order issued to a bank that fails to maintain  minimum capital to be restored to
the minimum leverage capital  requirement  within a specified time period.  Such
directive is enforceable in the same manner as a final cease-and-desist order.

Miscellaneous

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

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


                                       26
<PAGE>

                           FEDERAL AND STATE TAXATION

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

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

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

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

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

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

     Audit by IRS. The  Company's  consolidated  federal  income tax returns for
taxable  years  through  December 31, 1999,  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 0.699% of a  corporation's
capital stock


                                       27
<PAGE>

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

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


                                       28
<PAGE>

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

            The following table sets forth certain information with respect to
            the offices and other properties of the Company at June 30, 2003.

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

            McCandless Office                            Owned
              9001 Perry Highway
              Pittsburgh, PA  15237

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

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

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

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

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

----------
(1)  The Company operates this office out of a retirement  community.  The lease
     expires in June 2006.

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

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

          The 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.

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

          Not applicable.

PART II.

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

          The information required herein is incorporated by reference from page
          49 of the Company's 2003 Annual Report.

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

          The  information  required  herein is  incorporated  by reference from
          pages 2 to 3 of the Company's 2003 Annual Report.

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

          The  information  required  herein is  incorporated  by reference from
          pages 4 to 16 of the Company's 2003 Annual Report.


                                       29
<PAGE>

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

          The  information  required  herein is  incorporated  by reference from
          pages 12 to 16 of the Company's 2003 Annual Report.

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

          The  information  required  herein is  incorporated  by reference from
          pages 17 to 48 of the Company's 2003 Annual Report.

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

          Not applicable.

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

          Our  management  evaluated,   with  the  participation  of  our  Chief
          Executive  Officer and Chief Financial  Officer,  the effectiveness of
          our disclosure  controls and procedures (as defined in Rules 13a-15(e)
          and 15d-15(e)  under the  Securities  Exchange Act of 1934) as of June
          30, 2003.  Based on such evaluation,  our Chief Executive  Officer and
          Chief  Financial  Officer have concluded that our disclosure  controls
          and procedures are designed to ensure that information  required to be
          disclosed  by us in the  reports  that  we file or  submit  under  the
          Securities Exchange Act of 1934 is recorded, processed, summarized and
          reported  within the time  periods  specified  in the SEC's  rules and
          regulations and are operating in an effective manner.

          No change in our internal control over financial reporting (as defined
          in Rules 13a-15(f) and 15(d)-15(f)  under the Securities  Exchange Act
          of 1934) occurred during the fourth fiscal quarter of fiscal 2003 that
          has materially affected, or is reasonably likely to materially affect,
          our internal control over financial reporting.

Part III

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

          The  information  required  herein is  incorporated  by reference from
          pages 2 to 6 of the  Company's  Proxy  Statement  for the 2003  Annual
          Meeting of Stockholders dated September 26, 2003 ("Proxy Statement").

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

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

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

          The security  ownership of certain  beneficial  owners and  management
          information  required herein is incorporated by reference from pages 7
          to 9 of the Company's  Proxy  Statement.  For the related  stockholder
          matters  information  required herein,  see "Equity  Compensation Plan
          Information" on page 10 of the Company's Proxy Statement.

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

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

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

          Not applicable.


                                       30
<PAGE>

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
-------- ----------------------------------------------------------------

          (a) Documents filed as part of this report.

          (1) The  following  documents are filed as part of this report and are
          incorporated  herein  by  reference  from the  Company's  2003  Annual
          Report.

          Report of Independent Auditors.

          Consolidated Balance Sheet at June 30, 2003 and 2002.

          Consolidated  Statement  of Income for the Years Ended June 30,  2003,
          2002 and 2001.

          Consolidated  Statement  of  Changes in  Stockholders'  Equity for the
          Years Ended June 30, 2003, 2002 and 2001.

          Consolidated  Statement  of Cash  Flows for the Years  Ended  June 30,
          2003, 2002 and 2001.

          Notes to the Consolidated Financial Statements.

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

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

<TABLE>
<CAPTION>
                   No.                                    Description                                       Page
                   ---       -----------------------------------------------------------------------       ------
<S>                          <C>                                                                            <C>
                   3.1       Articles of Incorporation                                                        *
                   3.2       By-Laws                                                                          *
                     4       Stock Certificate of WVS Financial Corp.                                         *
                  10.1       WVS Financial Corp. Recognition Plans and Trusts for
                                 Executive Officers, Directors and Key Employees**                            *
                  10.2       WVS Financial Corp. 1993 Stock Incentive Plan**                                  *
                  10.3       WVS Financial Corp. 1993 Directors' Stock Option Plan**                          *
                  10.4       WVS Financial Corp. Employee Stock Ownership Plan and Trust**                    *
                  10.5       Amended West View Savings Bank Employee
                                 Profit Sharing Plan**                                                        *
                  10.6       Employment Agreements between WVS Financial Corp. and
                                 David Bursic and Edward Wielgus **                                         ***
                  10.7       Directors Deferred Compensation Program**                                        *
                    13       2003 Annual Report to Stockholders                                             E-1
                    21       Subsidiaries of the Registrant - Reference is made to
                                 Item 1. "Business" for the required information                              2
                    23       Consent of Independent Auditors                                                E-57
                  31.1       Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer        E-58
                  31.2       Rule 13a-14(a) / 15d-14(a) Certification of the Chief Accounting Officer       E-59
                  32.1       Section 1350 Certification of the Chief Executive Officer                      E-60
                  32.2       Section 1350 Certification of the Chief Accounting Officer                     E-61
</TABLE>

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

**   Management contract or compensatory plan or arrangement.

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

     (3)(b) The Company filed a Current Report on Form 8-K dated April 15, 2003,
          reporting  under Item 9 earnings for the three and nine months  ending
          March 31,  2003.  The Company  included as an exhibit the Form 8-K the
          press release dated April 15, 2003.


                                       31
<PAGE>

                                   SIGNATURES

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

                                           WVS FINANCIAL CORP.


September 26, 2003                     By: /s/ David J. Bursic
                                           -------------------------------------
                                           David J. Bursic
                                           President and Chief Executive Officer

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

/s/ David J. Bursic
--------------------------------------------
David J. Bursic, Director, President and                     September 26, 2003
Chief Executive Officer
(Principal Executive Officer)

/s/ Donald E. Hook
--------------------------------------------
Donald E. Hook,                                              September 26, 2003
Chairman of the Board

/s/ Margaret VonDerau
--------------------------------------------
Margaret VonDerau, Director,                                 September 26, 2003
and Corporate Secretary

/s/ Keith A. Simpson
--------------------------------------------
Keith A. Simpson,  Vice President, Treasurer                 September 26, 2003
and Chief Accounting Officer
(Principal Accounting Officer)

/s/ David L. Aeberli
--------------------------------------------
David L. Aeberli, Director                                   September 26, 2003

/s/ Arthur H. Brandt
--------------------------------------------
Arthur H. Brandt, Director                                   September 26, 2003

/s/ Lawrence M. Lehman
--------------------------------------------
Lawrence M. Lehman, Director                                 September 26, 2003

/s/ John M. Seifarth
--------------------------------------------
John M. Seifarth, Director                                   September 26, 2003


                                       32