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

                                    FORM 10-K

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

                    For the fiscal year ended: June 30, 2008
                                       OR

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

                          Commission File No.: 0-22444

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

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

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

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

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

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

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

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

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

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

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

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
definition  of  "accelerated  filer",  "large  accelerated  filer" and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large  accelerated  filer [_] Accelerated  filer [_]  Non-accelerated  filer [_]
Smaller reporting company [X]

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

As of December 31, 2007, the aggregate  value of the 1,841,297  shares of Common
Stock of the  registrant  issued and  outstanding  on such date,  which excludes
421,516  shares held by all directors and officers of the registrant as a group,
was  approximately  $30.3 million.  This figure is based on the last known trade
price of $16.43 per share of the registrant's Common Stock on December 31, 2007.

Number of shares of Common Stock outstanding as of September 25, 2008: 2,167,524

                       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, 2008 are  incorporated  into Part II.
(2) Portions of the  definitive  proxy  statement for the 2008 Annual Meeting of
Stockholders are incorporated into Part III.

<PAGE>

                           FORWARD-LOOKING STATEMENTS

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

     Although  we believe  that the  anticipated  results or other  expectations
reflected in our forward-looking statements are based on reasonable assumptions,
we can give no assurance  that those results or  expectations  will be attained.

Forward-looking statements involve risks, uncertainties and assumptions (some of
which are  beyond  our  control),  and as a result  actual  results  may  differ
materially  from those  expressed in  forward-looking  statements.  Factors that
could cause actual results to differ from  forward-looking  statements  include,
but are not  limited to, the  following,  as well as those  discussed  elsewhere
herein:

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

PART I.

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


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

     West View  Savings  Bank is a  Pennsylvania-chartered,  FDIC-insured  stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  The  Savings  Bank  converted  from the mutual to the stock form of
ownership in November  1993.  The Savings Bank had no  subsidiaries  at June 30,
2008.

Lending Activities

     General.  At June 30, 2008, the Company's net portfolio of loans receivable
totaled $56.5 million,  as compared to $60.4 million at June 30, 2007. Net loans
receivable  comprised  13.3% of the Company's  total assets at June 30, 2008, as
compared to 14.8% at June 30, 2007.  The  principal  categories  of loans in the
Company's  portfolio are single-family and multi-family  residential real estate
loans,  commercial real estate loans,  construction loans,  consumer loans, land
acquisition and development loans and commercial loans. Substantially all of the
Company's mortgage loan portfolio consists of conventional mortgage loans, which
are loans that are neither insured by the Federal Housing Administration ("FHA")
nor  partially   guaranteed  by  the  Department  of  Veterans  Affairs  ("VA").
Historically,  the  Company's  lending  activities  have  been  concentrated  in
single-family residential and land development and construction loans secured by
properties  located in its primary  market area of  northern  Allegheny  County,
southern Butler County and eastern Beaver County, Pennsylvania.

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

     Federal  regulations  impose  limitations on the aggregate  amount of loans
that a  savings  institution  can make to any one  borrower,  including  related
entities.  The permissible amount of loans-to-one  borrower follows the national
bank standard for all loans made by savings  institutions,  which generally does
not  permit  loans-to-one  borrower  to exceed  15% of  unimpaired  capital  and
surplus. Loans in an amount equal to an additional 10% of unimpaired capital and
surplus also may be made to a borrower if the loans are fully secured by readily
marketable   securities.   At  June  30,  2008,  the  Savings  Bank's  limit  on
loans-to-one  borrower was  approximately  $4.5 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, 2008, the Company's five largest loans or groups
of loans-to-one borrower,  including related entities,  ranged from an aggregate
of $2.4  million to $4.3  million,  with a $3.8  million  group of  loans-to-one
borrower secured by real estate located in the Company's primary market area and
investments pledged by the borrower. The remainder of the groups of loans-to-one
borrower  secured  primarily  by real estate  located in the  Company's  primary
market area.  Related  outstanding  principals  balances on the  Company's  five
largest loans or group of loans-to-one  borrower,  including  related  entities,
ranged from an aggregate of $1.4 million to $3.8 million.

                                       3
<PAGE>

     Loan Portfolio Composition.  The following table sets forth the composition
of the  Company's  net loans  receivable  portfolio by type of loan at the dates
indicated.
<TABLE>
<CAPTION>
                                                                     At June 30,
                            2008                   2007                   2006                  2005                   2004
                    Amount        %        Amount        %        Amount        %        Amount        %        Amount        %
                    ------        -        ------        -        ------        -        ------        -        ------        -
                                                                       (Dollars in Thousands)
<S>                   <C>         <C>        <C>          <C>       <C>          <C>       <C>          <C>       <C>          <C>
Real estate loans:
Single-family      $ 16,020       23.45%  $ 17,102       23.26%  $ 17,702       26.72%  $ 20,680       27.86%  $ 25,825       32.52%
Multi-family          6,897       10.09      6,458        8.78      4,339        6.55      4,960        6.68      4,761        5.99
Commercial            6,622        9.69      7,699       10.47      7,574       11.43      8,561       11.53      9,950       12.53
Construction         23,012       33.67     25,679       34.92     20,964       31.64     22,065       29.72     18,070       22.76
Land acquisition
 and development      1,992        2.91      2,195        2.99      3,221        4.86      5,884        7.93      7,947       10.01
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
Total real estate
  Loans              54,543       79.81     59,133       80.42     53,800       81.20     62,150       83.72     66,553       83.81
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
Consumer loans:
Home equity           8,732       12.78      9,858       13.41      9,444       14.26     10,082       13.58     11,018       13.88
Other                   737        1.08        551        0.75        962        1.45      1,089        1.47        870        1.09
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
Total consumer
  Loans               9,469       13.86     10,409       14.16     10,406       15.71     11,171       15.05     11,888       14.97
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
Commercial loans      4,328        6.33      3,988        5.42      2,050        3.09        915        1.23        968        1.22
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
Commercial lease
  Financings             --        0.00         --        0.00         --        0.00         --        0.00         --        0.00
                   --------    --------   --------    --------   --------    --------   --------    --------   --------    --------
                     68,340      100.00%    73,530      100.00%    66,256      100.00%    74,236      100.00%    79,409      100.00%
                   --------    ========   --------    ========   --------    ========   --------    ========   --------    ========
Less:
Undisbursed loan
  Proceeds          (10,813)               (12,090)                (9,512)               (12,882)                (9,956)
Net deferred loan
  Origination fees      (94)                  (104)                   (85)                   (82)                  (115)
Allowance for loan
  Losses               (956)                  (986)                  (957)                (1,121)                (1,370)
                   --------               --------               --------               --------               --------
Net loans
  Receivable       $ 56,477               $ 60,350               $ 55,702               $ 60,151               $ 67,968
                   ========               ========               ========               ========               ========
</TABLE>
     Contractual  Maturities.  The  following  table  sets  forth the  scheduled
contractual maturities of the Company's loans and mortgage-backed  securities at
June 30, 2008.  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             $       19   $      830   $      991   $   14,548   $      589   $      404   $       --   $   17,381
  After one year through
     five years                       905        1,378          126        5,808        1,327        3,873           --       13,417
  After five years                 15,096        4,689        5,505        2,656           76        9,520      215,905      253,447
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
     Total(1)                  $   16,020   $    6,897   $    6,622   $   23,012   $    1,992   $   13,797   $  215,905   $  284,245
                               ==========   ==========   ==========   ==========   ==========   ==========   ==========   ==========

Interest rate terms on
 amounts due after one year:
  Fixed                        $   12,940   $    1,551   $    2,459   $    2,208   $      537   $    7,718   $    2,215   $   29,628
  Adjustable                        3,061        4,516        3,172        6,256          866        5,675      213,690      237,236
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
     Total                     $   16,001   $    6,067   $    5,631   $    8,464   $    1,403   $   13,393   $  215,905   $  266,864
                               ==========   ==========   ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>
-------------
(1)  Does not include  adjustments  relating to loans in process,  the allowance
     for loan  losses,  accrued  interest,  deferred  fee  income  and  unearned
     discounts.

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

                                       4
<PAGE>

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

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

         At June 30, 2008, the Company had approximately $4.3 million of renewed
commercial  real estate and  construction  loans.  The $4.3 million in aggregate
disbursed  principal  that has  been  renewed  is  comprised  of:  single-family
speculative  construction  loans totaling $3.7 million and land  acquisition and
development  loans  totaling  $486  thousand.   Management   believes  that  the
previously discussed whole loans will self-liquidate during the normal course of
business,  though some additional rollovers may be necessary. All but one of the
loans  that  have  been  rolled  over are in  compliance  with  all loan  terms,
including the receipt of all required  payments,  and are considered  performing
loans.  The one  loan not in  compliance  with all  loan  terms  was  considered
non-performing as of June 30, 2008, but was paid off in full during July 2008.

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

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

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

         The Company has not been an aggressive purchaser of loans. However, the
Company may purchase whole loans or loan participations in those instances where
demand for new loan originations in the Company's market area is insufficient or
to increase the yield  earned on the loan  portfolio.  Such loans are  generally
presented  to  the  Company   from   contacts   primarily  at  other   financial
institutions,  particularly  those which have  previously done business with the
Company.  At June 30, 2008,  $613  thousand or 1.1% of the  Company's  net loans
receivable  consisted  of  single-family  mortgage  whole loans  purchased  from
another financial institution.

                                       5
<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,  2008,  $613  thousand  or 1.1% of the
Company's net loans receivable were being serviced for the Company by others.

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

                                               At or For the Year Ended June 30,
                                                  2008        2007       2006
                                                  ----        ----       ----
                                                     (Dollars in Thousands)

Net loans receivable beginning balance          $ 60,350    $ 55,702   $ 60,151
Real estate loan originations
   Single-family(1)                                  746       1,366      1,349
   Multi-family(2)                                   160         766         --
   Commercial                                        136         984        325
   Construction                                    9,504      12,910      8,932
   Land acquisition and development                  640       3,107        299
                                                --------    --------   --------
      Total real estate loan originations         11,186      19,133     10,905
                                                --------    --------   --------

Home equity                                          871       2,319      2,088
Commercial                                            --       1,205        480
Other                                                109         227        179
                                                --------    --------   --------
      Total loan originations                     12,166      22,884     13,652
                                                --------    --------   --------
Disbursements against available credit lines:
   Home equity                                     2,571       2,530      2,554
   Other                                              10           6          9
   Commercial                                      1,518       2,195      1,638
Purchase of whole loans and participations            --          --         --
                                                --------    --------   --------
     Total originations and purchases             16,265      27,615     17,853
                                                --------    --------   --------
Less:
   Loan principal repayments                      21,455      20,636     25,527
   Sales of whole loans (3)                           --          --         --
   Sales of participation interests (4)               --          --         --
   Transferred to real estate owned                   --          --         10
   Change in loans in process                     (1,277)      2,282     (3,074)
   Other, net(5)                                     (40)         49       (161)
                                                --------    --------   --------
     Net increase(decrease)                     $ (3,873)   $  4,648   $ (4,449)
                                                --------    --------   --------

Net loans receivable ending balance             $ 56,477    $ 60,350   $ 55,702
                                                ========    ========   ========

-------------
(1)  Consists of loans secured by one-to-four family properties.
(2)  Consists of loans secured by five or more family properties.
(3)  Loans sold included servicing rights.
(4)  As of June 30, 2008, loans serviced for others totaled  approximately  $719
     thousand.
(5)  Includes  reductions  for  net  deferred  loan  origination  fees  and  the
     allowance for loan losses.

                                       6
<PAGE>

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

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

         Single-Family  Residential  Real Estate  Loans.  Historically,  savings
institutions such as the Company have concentrated  their lending  activities on
the  origination of loans secured  primarily by first mortgage liens on existing
single-family  residences.  At June  30,  2008,  $16.0  million  or 23.4% 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 $746 thousand and  decreased  $620 thousand or 45.4%
during the fiscal year ended June 30, 2008,  when compared to the same period in
2007. The Company  believes that overall loan  originations  decreased in fiscal
2008  due to well  publicized  weaknesses  in the  national  and  local  housing
markets.  Due to low levels of market interest rates,  the Company  continued to
reduce its  portfolio  originations  of long-term  fixed rate  mortgages,  while
continuing to offer consumer, home equity,  construction loans, land acquisition
and development loans and commercial loans.

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

         At  June  30,  2008,  approximately  $13.0  million  or  80.9%  of  the
single-family  residential  loans in the Company's loan  portfolio  consisted of
loans which provide for fixed rates of interest.  Although these loans generally
provide for repayments of principal over a fixed period of 15 to 30 years, it is
the Company's  experience that because of prepayments  and due-on-sale  clauses,
such loans generally  remain  outstanding for a substantially  shorter period of
time.

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

                                       7
<PAGE>

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

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

         Multi-Family  Residential and Commercial Real Estate Loans. The Company
originates  mortgage  loans for the  acquisition  and  refinancing  of  existing
multi-family  residential  and commercial  real estate  properties.  At June 30,
2008, $6.9 million or 10.1% of the Company's  total loan portfolio  consisted of
loans secured by existing multi-family residential real estate properties, which
represented  an increase of $439  thousand or 6.8% from fiscal 2007. Of the $6.9
million,  approximately  $4.7 million or 68.4% provide for an adjustable rate of
interest, while approximately $2.2 million or 31.6% are fixed rate loans.

         At June 30, 2008,  $6.6 million or 9.7% of the Company's loan portfolio
consisted of loans secured by existing commercial real estate properties,  which
represented  a decrease of $1.1 million or 14.0% from fiscal  2007.  Of the $6.6
million,  approximately  $3.2 million or 48.2% provide for an adjustable rate of
interest, while approximately $3.4 million or 51.8% are fixed rate loans.

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

         Although  terms vary,  multi-family  residential  and  commercial  real
estate loans  generally are amortized over a period of up to 15 years  (although
some loans  amortize  over a 20 year  period)  and mature in 5 to 15 years.  The
Company  will  originate  these loans either with fixed or  adjustable  interest
rates which  generally is negotiated at the time of  origination.  Loan-to-value
ratios on the Company's  commercial  real estate loans are currently  limited to
75% or lower. As part of the criteria for underwriting  multi-family residential
and commercial real estate loans, the Company  generally imposes a debt coverage
ratio (the ratio of net cash from operations  before payment of the debt service
to debt service) of at least 110%. If the borrower has insufficient  stand-alone
financial  capacity,  the Savings Bank will either obtain personal guarantees on
its  multi-family   residential  and  commercial  real  estate  loans  from  the
principals  of the borrower  and, if these  cannot be  obtained,  to impose more
stringent loan-to-value, debt service and other underwriting requirements.

         At June 30, 2008 the Company's multi-family  residential and commercial
real estate loan portfolio  consisted of  approximately 44 loans with an average
principal  balance of $307  thousand.  At June 30,  2008,  the  Company  had one
commercial  real estate loan,  totaling $972  thousand that was  classified as a
non-accrual  loan. During the year ended June 30, 2008, $34 thousand of interest
was collected and recognized.

         Construction  Loans.  For many  years,  the  Company has been active in
originating loans to construct  primarily  single-family  residences,  and, to a
much lesser extent, loans to acquire and develop real estate for construction of
residential  properties.  These construction  lending  activities  generally are
limited to the Company's  primary  market area.  At June 30, 2008,  construction
loans amounted to  approximately  $23.1 million or 33.7% of the Company's  total
loan  portfolio,  which  represented  a decrease  of $2.7  million or 10.4% from
fiscal 2007. The decrease was principally due to decreased levels of speculative
construction  loans  as a  result  of slow  sales  of new and  existing  housing
nationally  and in the Company's  primary  market area. As of June 30, 2008, the
Company's  portfolio of construction loans consisted  primarily of $19.2 million
of  loans  for  the  construction  of  single-family  residential  real  estate.
Construction  loan  originations  totaled  $9.5  million and  decreased  by $3.4
million or 26.4%  during the fiscal year ended June 30, 2008,  when  compared to
the

                                       8
<PAGE>

same period in 2007. The Company  attributes the decrease in  construction  loan
originations  to higher  levels of unsold new and existing  homes  available for
sale nationally and in its primary market area.

         Construction   loans  are  made  for  the  purpose  of  constructing  a
single-family  residence.  The Company will underwrite such loans to individuals
on a  construction/permanent  mortgage loan basis or to a builder/developer on a
speculative (not pre-sold)  construction  mortgage loan basis. At June 30, 2008,
approximately  76.6% of total outstanding  construction loans were made to local
real  estate  builders  and  developers  with whom the  Company has worked for a
number  of  years  for  the  purpose  of  constructing  primarily  single-family
residences.  Upon  application,  credit  review and  analysis  of  personal  and
corporate  financial  statements,  the Company may grant local builders lines of
credit up to designated amounts.  These credit lines may be used for the purpose
of construction of speculative residential properties. In some instances,  lines
of credit will also be granted for  purposes of acquiring  finished  residential
lots and  developing  speculative  residential  properties  thereon.  Such lines
generally  have not  exceeded  $1.0  million,  with the  largest  line  totaling
approximately  $3.0 million.  Once approved for a construction line, a developer
must  still  submit  plans  and   specifications   and  receive  the   Company's
authorization,  including  an appraisal of the  collateral  satisfactory  to the
Company,  in order to begin utilizing the line for a particular  project.  As of
June 30,  2008,  the  Company  also had $2.0  million  or 2.9% of the total loan
portfolio  invested in land development loans, which consisted of 13 loans to 11
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, 2008, $9.5 million or 13.9% of the Company's total loan portfolio  consisted
of consumer  loans,  which  represented a decrease of $940 thousand or 9.0% from
fiscal  2007.  The  consumer  loans  offered by the Company  include home equity
loans, home equity lines of credit,  automobile loans,  loans secured by deposit
accounts and personal loans. Approximately 92.2% 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, 2008,
approximately  71.3% 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,  2008,  $4.3  million  or 6.3% of the
Company's  total loan  portfolio  consisted of commercial  loans,  which include
loans secured by accounts receivable, marketable investment securities, business
inventory  and  equipment,  and similar  collateral.  The $340  thousand or 8.5%
increase

                                       9
<PAGE>

from fiscal 2007 was principally  due to the Company's  emphasis in making these
types of loans.  The Company is  continuing  to develop this line of business in
order to increase  interest income and to attract  compensating  deposit account
balances.

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

         The  Company's  loan  origination  fees are  generally  calculated as a
percentage of the amount borrowed.  Loan origination and commitment fees and all
incremental  direct loan origination  costs are deferred and recognized over the
contractual  remaining  lives  of the  related  loans  on a level  yield  basis.
Discounts and premiums on loans purchased are accreted and amortized in the same
manner.  In accordance with Statement of Financial  Accounting  Standards (SFAS)
No. 91, the Company has recognized  $35 thousand,  $20 thousand and $19 thousand
of deferred  loan fees  during  fiscal  2008,  2007 and 2006,  respectively,  in
connection  with  loan  refinancings,   payoffs  and  ongoing   amortization  of
outstanding  loans.  The  increased  levels of loan  origination  fee income for
fiscal year 2008, was  principally  attributable  to a higher volume of mortgage
loan  payoffs  with  outstanding  deferred  loan  origination  fees  and  higher
commercial loan commitment fees earned.  Loans previously  originated with lower
or no loan origination  fees will reduce the recognition of associated  deferred
fee  balances  while loans  originated  with higher loan  origination  fees will
increase the recognition of associated deferred fee balances.

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

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

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

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


                                       10
<PAGE>

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

<TABLE>
<CAPTION>
                                                                At June 30,
                                               2008      2007      2006      2005      2004
                                               ----      ----      ----      ----      ----
                                                          (Dollars in Thousands)
<S>                                          <C>       <C>       <C>       <C>       <C>
Non-accruing loans:
Real estate:
   Single-family (1)                          $  232    $  214    $  291    $   58    $  281
   Commercial (2)                                972       972        --        --         4
   Construction (3)                              355        --        --       456        --
   Land Acquisition and Development               --        --        --       387       427
Consumer (4)                                      23        18        17        86        71
Commercial loans and leases                       --        --        --        --        45
                                              ------    ------    ------    ------    ------
Total non-accrual loans                        1,582     1,204       308       987       828
                                              ------    ------    ------    ------    ------
Accruing loans greater than 90 days
   Delinquent                                     --        --        --        --        --
                                              ------    ------    ------    ------    ------
     Total non-performing loans               $1,582    $1,204    $  308    $  987    $  828
                                              ------    ------    ------    ------    ------
Real estate owned                                 --         2        10        70        --
                                              ------    ------    ------    ------    ------
     Total non-performing assets              $1,582    $1,206    $  318    $1,057    $  828
                                              ======    ======    ======    ======    ======
Troubled debt restructurings                  $   --    $   --    $   --    $1,114    $1,343
                                              ======    ======    ======    ======    ======
Potential problem loans (5)                   $  342    $  368    $1,377    $   --    $   --
                                              ======    ======    ======    ======    ======
Total non-performing loans and potential
   problem loans and troubled debt
   restructurings as a percentage of
   net loans receivable                         3.41%     2.60%     3.03%     3.49%     3.19%
                                              ======    ======    ======    ======    ======
Total non-performing assets to total assets     0.37%     0.30%     0.08%     0.25%     0.19%
                                              ======    ======    ======    ======    ======
Total non-performing assets, troubled debt
     restructurings and potential problem
    loans as a percentage of total assets       0.45%     0.39%     0.40%     0.52%     0.50%
                                              ======    ======    ======    ======    ======
</TABLE>

--------------
(1)  At June 30, 2008, non-accrual  single-family  residential real estate loans
     consisted of four loans.
(2)  At June 30, 2008, non-accrual commercial real estate loans consisted of one
     loan.
(3)  At June 30, 2008,  non-accrual  construction  loans  consisted of one loan.
     This loan was paid off in full during July 2008.
(4)  At June 30, 2008, non-accrual consumer loans consisted of three loans.
(5)  At June 30, 2008, potential problem loans consisted of two loans.

         The $376 thousand increase in nonperforming assets during twelve months
ended June 30, 2008 was primarily  attributable  to the addition to  non-accrual
status of one  construction  loan  totaling  $355  thousand,  one  single-family
residential  real  estate  loan  totaling  $92  thousand  and one line of credit
secured by single-family real estate totaling $5 thousand,  which were partially
offset by $75  thousand  in  repayments  and the sale of one real  estate  owned
property with a carrying  value of $2 thousand.  The loans are in various stages
of collection activity.

         The  Company  had four  non-accrual  single-family  real  estate  loans
totaling  approximately  $232  thousand  at June 30,  2008.  One  loan  totaling
approximately $56 thousand is being serviced by another  financial  institution,
who is  proceeding  with  collection  activities,  while the other  three are in
various stages of collection.

         At June 30,  2008,  the Company  had one  previously  restructured  and
non-accrual  commercial real estate loan to a retirement  village located in the
North Hills totaling $972 thousand.  The Savings  Bank's  outstanding  principal
balance on this loan totaled  $2.0 million at June 30, 2003.  During the quarter
ended   September  30,  2003,   the  Savings  Bank  redeemed  $388  thousand  of
participating  interests.  During the quarter ended  December 31, 2003, the Bank
sold a forty percent participating  interest to another financial institution at
par  resulting  in proceeds  totaling  $979  thousand.  The Company had recorded
interest  received on this credit on a cost recovery  basis until  September 30,
2003 and is now recording  interest  income on a cash basis.  At March 31, 2007,
this credit was classified as non-performing.  The project is experiencing lower
than  desired  levels of  occupancy  and the  borrower  is working  to  increase
occupancy.

                                       11
<PAGE>

         At  June  30,  2008,  the  Company  had  one  non-accrual   speculative
single-family  construction loan totaling approximately $355 thousand, which was
paid off in full during July 2008.

         At  June  30,  2008,  the  Company  had  two  potential  problem  loans
consisting  of one  previously  restructured  loan secured by  undeveloped  land
totaling $321 thousand and one previously  restructured  unsecured loan totaling
$21 thousand to two  borrowers.  During the fourth  quarter of fiscal 2004,  the
Bankruptcy  court  approved  a  secured  claim  totaling  $440  thousand  and an
unsecured  claim totaling $76 thousand be paid on these loans in accordance with
a Bankruptcy Plan of  Reorganization.  All Court ordered plan payments have been
received in a timely manner.  In accordance with generally  accepted  accounting
principles,  the  Company  had  recorded  interest  payment  received  on a cost
recovery basis until June 30, 2006 and is now recording interest income.

         During fiscal 2008,  2007 and 2006,  approximately  $117 thousand,  $82
thousand and $23 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  $70  thousand,  $81
thousand and $10 thousand, respectively.

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

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

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

         The Company's general policy is to internally  classify its assets on a
regular  basis and  establish  prudent  general  valuation  allowances  that are
adequate to absorb losses that have not been identified but that are inherent in
the loan portfolio.  The Company maintains general valuation  allowances that it
believes

                                       12
<PAGE>

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, 2008, is adequate.

         The allowance  for loan losses at June 30, 2008  decreased $30 thousand
to $956  thousand.  The decrease in the  allowance for loan losses was primarily
the result of $93  thousand  in  recoveries  during  fiscal  2008 on  previously
charged-off  commercial  real estate loans.  The Company  believes that the loan
loss reserve  levels are prudent and  warranted at this time due to the weakness
of the  national  economy.  The  changes in prior  years  reflected  a number of
factors,  the most  significant of which were the changes in the Company's level
of non-performing  assets and the industry trend towards greater emphasis on the
allowance method of providing for loan losses.


                                       13
<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,
                                                 2008         2007         2006         2005         2004
                                                 ----         ----         ----         ----         ----
                                                                 (Dollars in Thousands)
<S>                                            <C>          <C>          <C>          <C>          <C>
Average net loans                              $ 58,458     $ 58,062     $ 55,881     $ 62,410     $ 74,656
                                               ========     ========     ========     ========     ========
Allowance balance (at beginning of period)     $    986     $    957     $  1,121     $  1,370     $  2,530
Provision for (Recovery of) loan losses            (123)          13         (161)         (46)        (794)
Charge-offs:
   Real estate:
     Single-family                                   --           --            7           15           --
     Multi-family                                    --           --           --           --           --
     Commercial                                      --           --           --          186          524
     Construction                                    --           --           --           --           --
   Land acquisition and development                  --           --           --           --           --
   Consumer:
     Home equity                                     --           --           --           25           --
     Education                                       --           --           --           --           --
     Other                                           --           --           --           --           --
   Commercial loans and leases                       --           --           --           11           --
                                               --------     --------     --------     --------     --------
     Total charge-offs                               --           --            7          237          524
                                               --------     --------     --------     --------     --------
Recoveries:
   Real estate:
     Single-family                                   --           --           --           --           --
     Multi-family                                    --           --           --           --           --
     Commercial                                      93           --            4            4          158
     Construction                                    --           15           --           30           --
   Land acquisition and development                  --           --           --           --           --
   Consumer:
     Home equity                                     --            1           --           --           --
     Education                                       --           --           --           --           --
     Other                                           --           --           --           --           --
   Commercial loans and leases                       --           --           --           --           --
                                               --------     --------     --------     --------     --------
     Total recoveries                                93           16            4           34          158
                                               --------     --------     --------     --------     --------
Net loans charged-off                               (93)         (16)           3          203          366
Transfer to real estate owned loss reserve           --           --           --           --           --
                                               --------     --------     --------     --------     --------
Allowance balance (at end of period)           $    956     $    986     $    957     $  1,121     $  1,370
                                               ========     ========     ========     ========     ========
Allowance for loan losses as a percentage of
  total loans receivable                           1.66%        1.60%        1.69%        1.83%        1.97%
                                               ========     ========     ========     ========     ========
Net loans charged-off as a percentage of
  average net loans                               (0.16)%      (0.03)%       0.01%        0.33%        0.49%
                                               ========     ========     ========     ========     ========
Allowance for loan losses to non-performing
  Loans                                           60.43%       81.89%      310.71%      113.58%      165.46%
                                               ========     ========     ========     ========     ========
Net loans charged-off to allowance for loan
  Losses                                          (9.73)%      (1.62)%       0.31%       18.11%       26.72%
                                               ========     ========     ========     ========     ========
Recoveries to charge-offs                          0.00%        0.00%       57.14%       14.35%       30.15%
                                               ========     ========     ========     ========     ========
</TABLE>

                                       14
<PAGE>
         The following  table presents the allocation of the allowances for loan
losses by loan category at the dates indicated.
<TABLE>
<CAPTION>
                                                                      At June 30,
                               2008                 2007                  2006                  2005                  2004
                               ----                 ----                  ----                  ----                  ----
                       % 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        $     50      23.45%  $     83      23.26%  $     54      26.72%  $     52      27.86%  $     82      32.52%
  Multi-family               28      10.09         39       8.78         22       6.55         26       6.68         18       5.99
  Commercial                396       9.69        409      10.47        420      11.43        465      11.53        597      12.53
  Construction               67      33.67         35      34.92         32      31.64         54      29.72         30      22.76
  Land acquisition
   and development          212       2.91        190       2.99        218       4.86        262       7.93        302      10.01
  Unallocated                --       0.00         --       0.00         --       0.00         --       0.00         --       0.00
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
    Total real estate
      Loans                 753      79.81        756      80.42        746      81.20        859      83.72      1,029      83.81
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------

Consumer loans:
  Home equity                88      12.78        102      13.41        103      14.26        128      13.58        117      13.88
  Other                      31       1.08         38       0.75         50       1.45         61       1.47         78       1.09
  Unallocated                --       0.00         --       0.00         --       0.00         --       0.00         --       0.00
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
    Total consumer
      loans                 119      13.86        140      14.16        153      15.71        189      15.05        195      14.97
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
Commercial loans:
  Commercial loans           84       6.33         90       5.42         58       3.09         35       1.23        116       1.22
  Unallocated                --       0.00         --       0.00         --       0.00         --       0.00         --       0.00
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
    Total commercial
      loans                  84       6.33         90       5.42         58       3.09         35       1.23        116       1.22
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
Commercial lease
  financings                 --       0.00         --       0.00         --       0.00         --       0.00         --       0.00
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
Off balance-sheet
   Items (1)                 --       0.00         --       0.00         --       0.00         38       0.00         30       0.00
                       --------   --------   --------   --------   --------   --------   --------   --------   --------   --------
                       $    956     100.00%  $    986     100.00%  $    957     100.00%  $  1,121     100.00%  $  1,370     100.00%
                       ========   ========   ========   ========   ========   ========   ========   ========   ========   ========
</TABLE>
-----
(1)  In accordance with generally accepted  accounting  principles,  the Company
     established a separate  reserve for  off-balance  sheet items  beginning in
     fiscal 2006. At June 30, 2008 this accounting reserve totaled $31 thousand.

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

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

         The Company had no unallocated loss allowance balance at June 30, 2008.

                                       15
<PAGE>

         The following table summarizes the  calculations of required  allowance
for loan losses by loan category as of June 30, 2008.

                                                                      Allowance
                                                                         for
                                                Group Rate            Loan Loss
                                                ----------            ---------
Homogenous loans:
      Single-family                               0.0015               $    23
      Multi-family                                0.0050                    28
      Commercial real estate                      0.0100                    56
      Construction/land acquisition
        and development                      0.0015 - 0.0100 (1)            84
      Secured consumer                            0.0100                    94
      Unsecured consumer                          0.0500                     3
      Commercial loans                            0.0500                    84
      Unallocated                                                            -

Individually evaluated loans:
      Single-family                                                         27
      Multi-family                                                           -
      Commercial real estate                                               340
      Construction/land acquisition
        and development                                                    195
      Secured consumer                                                       1
      Unsecured consumer                                                    21
      Commercial loans                                                       -

Total allowance for loan losses:
      Single-family                                                         50
      Multi-family                                                          28
      Commercial real estate                                               396
      Construction/land acquisition
        and development                                                    279
      Secured consumer                                                      95
      Unsecured consumer                                                    24
      Commercial loans                                                      84
      Unallocated                                                            -
                                                                         -----

Total allowance for loan losses                                          $ 956
                                                                         =====

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

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


Mortgage-Backed Securities

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

                                       16
<PAGE>

characteristics.  All of the Company's CMOs are rated in the highest category by
at least two national rating services.

         At June 30, 2008, the Company's MBS portfolio totaled $215.9 million as
compared to $121.5 million at June 30, 2007. The $94.4 million or 77.7% increase
in MBS balances  outstanding  during fiscal 2008 was primarily  attributable  to
$117.6 million of purchases of U.S.  Government  Agency floating rate CMOs which
were partially  offset by $23.6 million of principal  repayments on MBS. At June
30, 2008,  approximately  $213.7  million or 99.0% (book value) of the Company's
portfolio of MBS,  including CMOs, were comprised of adjustable or floating rate
instruments,  as  compared  to  $119.3  million  or  98.2%  at  June  30,  2007.
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.

                                               2008       2007       2006
                                               ----       ----       ----
MBS Available for Sale at June 30,                (Dollars in Thousands)
----------------------------------

GNMA PCs                                     $  2,101   $  2,137   $  2,171
CMOs - agency collateral                           --         49         58
                                             --------   --------   --------
Total amortized cost                         $  2,101   $  2,186   $  2,229
                                             ========   ========   ========
Total estimated market value                 $  2,215   $  2,246   $  2,292
                                             ========   ========   ========

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

CMOs - agency collateral                     $154,808   $ 59,533   $ 85,436
CMOs - single-family whole loan collateral     58,882     59,738     68,025
                                             --------   --------   --------
Total amortized cost                         $213,690   $119,271   $153,461
                                             ========   ========   ========
Total estimated market value                 $211,113   $119,646   $152,706
                                             ========   ========   ========

         The Company believes that its present MBS available for sale allocation
of $2.1  million  or  0.97%  of the  carrying  value  of the MBS  portfolio,  in
conjunction with other investment securities allocated as available for sale, is
adequate to meet anticipated future liquidity requirements and to reposition its
balance sheet and asset/liability mix should it wish to do so in the future.

         The  following  table  sets  forth  the  amortized  cost,   contractual
maturities and weighted average yields of the Company's MBS,  including CMOs, at
June 30, 2008.

<TABLE>
<CAPTION>
                          One Year    After One to  After Five to  Over Ten
                           or Less     Five Years    Ten Years       Years         Total
                           -------     ----------    ---------       -----         -----
                                               (Dollars in Thousands)
<S>                            <C>           <C>           <C>           <C>           <C>
MBS Available for Sale   $       --    $       --    $       --    $    2,101    $    2,101
                               0.00%         0.00%         0.00%         7.75%         7.75%

MBS Held to Maturity     $       --    $       --    $       --    $  213,690    $  213,690
                               0.00%         0.00%         0.00%         3.51%         3.51%
                         ----------    ----------    ----------    ----------    ----------

Total                    $       --    $       --    $       --    $  215,791    $  215,791
                         ==========    ==========    ==========    ==========    ==========
Weighted average yield         0.00%         0.00%         0.00%         3.55%         3.55%
                         ==========    ==========    ==========    ==========    ==========
</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, 2008,  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 at June 30, 2008.

                                       17
<PAGE>
<TABLE>
<CAPTION>

                                                      Number of                      Estimated
Name of Issuer                                        Securities   Carrying Value   Market Value
--------------                                        ----------   --------------   ------------
                                                                (Dollars in Thousands)
<S>                                                       <C>           <C>              <C>
Countrywide Home Loans                                    8          $ 28,629         $ 27,336
Credit Suisse First Boston Mortgage Securities Corp.      3            10,275            9,765
Chase Mortgage Finance Corp.                              2             9,929            9,413
Bank of America Mortgage Securities                       3             6,683            6,409
GSR Mortgage Loan Trust                                   1             3,366            3,186
                                                                     --------         --------

                                                                     $ 58,882         $ 56,109
                                                                     ========         ========
</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 decreased its position of U.S.  Government Agency  obligations while
increasing  its portfolio of U.S.  Government  Agency  floating  rate CMOs.  The
Company  purchased   approximately  $51.9  million  of  U.S.  Government  Agency
obligations during fiscal 2008. During fiscal 2008, approximately $145.2 million
of the Company's callable U.S. Government Agency obligations were redeemed prior
to maturity.  Outstanding  balances  totaled $93.4 million or 72.7% of the total
investment portfolio at June 30, 2008, as compared to $186.7 million or 85.7% of
the total investment portfolio at June 30, 2007. At June 30, 2008, approximately
$93.0 million or 99.5% of the Company's  U.S.  Government  Agency  portfolio was
comprised of U.S. Government Agency securities with longer-terms to maturity and
optional principal redemption features ("callable bonds").

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

<TABLE>
<CAPTION>
                                                       2008       2007       2006
                                                       ----       ----       ----
<S>                                                       <C>        <C>        <C>
Investment Securities Available for Sale at June 30,      (Dollars in Thousands)
----------------------------------------------------

Corporate debt obligations                           $      2   $      5   $      4
Commercial paper                                        7,492      8,397      7,993
Obligations of states and political subdivisions           --         --         --
                                                     --------   --------   --------
Total amortized cost                                    7,494      8,402      7,997
Equity securities                                         500        555        500
                                                     --------   --------   --------
Total amortized cost                                 $  7,994   $  8,957   $  8,497
                                                     ========   ========   ========
Total estimated fair value                           $  7,978   $  8,933   $  8,469
                                                     ========   ========   ========

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

Corporate debt obligations                           $ 19,092   $     --   $     --
Commercial paper                                           --      6,198         --
U.S. Government agency securities                      93,414    186,667    175,755
Obligations of states and political subdivisions        8,053      9,799     12,197
                                                     --------   --------   --------
                                                      120,559    202,664    187,952
FHLB stock                                              6,931      6,340      7,861
                                                     --------   --------   --------
Total amortized cost                                 $127,490   $209,004   $195,813
                                                     ========   ========   ========
Total estimated fair value                           $128,986   $207,850   $193,541
                                                     ========   ========   ========
</TABLE>

                                       18
<PAGE>

         Information  regarding the amortized cost,  contractual  maturities and
weighted average yields of the Company's  investment  portfolio at June 30, 2008
is presented below.

<TABLE>
<CAPTION>
Investment Securities                   One Year      After One to    After Five to    Over Ten
Available for Sale                       or Less       Five Years      Ten Years         Years           Total
------------------                       -------       ----------      ---------         -----           -----
                                                                (Dollars in Thousands)
<S>                                           <C>             <C>             <C>             <C>             <C>

Corporate debt obligations            $          2    $         --    $         --    $         --    $          2
                                              3.40%           0.00%           0.00%           0.00%           3.40%

Commercial paper                      $      7,492    $         --    $         --    $         --    $      7,492
                                              3.16%           0.00%           0.00%           0.00%           3.16%
                                      ------------    ------------    ------------    ------------    ------------

Total                                 $      7,494    $         --    $         --    $         --    $      7,494
                                      ============    ============    ============    ============    ============
Weighted average yield                        3.16%           0.00%           0.00%           0.00%           3.16%
                                      ============    ============    ============    ============    ============
<CAPTION>

Investment Securities                   One Year      After One to    After Five to    Over Ten
Held to Maturity                         or Less       Five Years      Ten Years         Years           Total
----------------                         -------       ----------      ---------         -----           -----
<S>                                           <C>             <C>             <C>             <C>             <C>
Corporate debt obligations            $     17,815    $      1,277    $         --    $         --    $     19,092
                                              4.48%           4.25%           0.00%           0.00%           4.46%

U.S. Government Agency
      securities                      $         --    $         --    $     69,410    $     24,004    $     93,414
                                              0.00%           0.00%           5.80%           5.96%           5.84%

Obligations of states and political
      subdivisions (1)                $         --    $      1,299    $         --    $      6,754    $      8,053
                                              0.00%           7.58%           0.00%           8.04%           7.96%
                                      ------------    ------------    ------------    ------------    ------------

Total                                 $     17,815    $      2,576    $     69,410    $     30,758    $    120,559
                                      ============    ============    ============    ============    ============
Weighted average yield                        4.48%           5.93%           5.80%           6.42%           5.76%
                                      ============    ============    ============    ============    ============
</TABLE>
-----------------
(1)  Tax exempt obligations of states and political  subdivisions are calculated
     on a taxable  equivalent  basis  utilizing a calculation  that reflects the
     tax-exempt  coupon, a 20% interest  expense  disallowance and a federal tax
     rate of 34%.

                                       19
<PAGE>

         Information  regarding  the  amortized  cost,  earliest  call dates and
weighted average yield of the Company's  investment  portfolio at June 30, 2008,
is presented below. All Company  investments in callable U.S.  Government Agency
bonds were classified as held to maturity at June 30, 2008.

<TABLE>
<CAPTION>
                                       One Year      After One to   After Five to   Over Ten
                                        or Less       Five Years     Ten Years        Years          Total
                                        -------       ----------     ---------        -----          -----
<S>                                          <C>            <C>            <C>            <C>            <C>
Corporate debt obligations            $    17,817    $     1,277    $        --    $        --    $    19,094
                                             4.48%          4.25%          0.00%          0.00%          4.46%

Commercial paper                      $     7,492    $        --    $        --    $        --    $     7,492
                                             3.16%          0.00%          0.00%          0.00%          3.16%

U.S. Government Agency
      securities                      $    89,925    $     3,035    $        --    $       454    $    93,414
                                             5.85%          6.00%          0.00%          2.88%          5.84%

Obligations of states and political
      subdivisions (1)                $       688    $     7,365    $        --    $        --    $     8,053
                                             7.88%          7.97%          0.00%          0.00%          7.96%
                                      -----------    -----------    -----------    -----------    -----------

Total                                 $   115,922    $    11,677    $        --    $       454    $   128,053
                                      -----------    -----------    -----------    -----------    -----------
Weighted average yield                       5.48%          7.05%          0.00%          2.88%          5.61%
                                      ===========    ===========    ===========    ===========    ===========
</TABLE>
--------------
(1)  Tax exempt obligations of states and political  subdivisions are calculated
     on a taxable  equivalent  basis  utilizing a calculation  that reflects the
     tax-exempt  coupon, a 20% interest  expense  disallowance and a federal tax
     rate of 34%.

         At June 30, 2008,  the Company had no securities  classified as trading
investment securities.

         The  following  table  sets  forth  information  with  respect  to  the
investment  securities,  comprised  solely of  short-term  commercial  paper and
corporate  debt  obligations,  owned by the Company at June 30, 2008 which had a
carrying  value greater than 10% of the Company's  stockholders'  equity at such
date,  other than securities  issued by the United States  Government and United
States  Government  agencies and  corporations.  All Commercial paper securities
owned by the  Company,  including  those  shown  below,  have been  assigned  an
investment grade rating by at least two national rating services.

                                                                 Estimated
  Name of Issuer                            Carrying Value      Market Value
  --------------                            --------------      ------------
                                                  (Dollars in Thousands)
  Kansas City Power & Light                    $  4,497           $  4,497
  Merril Lynch & Company                       $  3,345           $  3,336
                                               --------           --------
                                               $  7,842           $  7,833
                                               ========           ========

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  $150.1 million at June 30,
2008,  as  compared to $159.4  million at June 30,  2007.  Transaction  accounts
decreased  approximately $1.8 million or 5.6%. Certificates of deposit decreased
approximately $9.9 million or 13.4%. Savings accounts decreased $912 thousand or
2.8% and money market  accounts  increased  $3.4  million or 17.1%.  In order to
attract new and lower cost core deposits,  the Company continued to promote a no
minimum balance,  "free", checking account

                                       20
<PAGE>

product and Internet  Banking.  Current deposit products include regular savings
accounts,  demand  accounts,  negotiable order of withdrawal  ("NOW")  accounts,
money market deposit  accounts and certificates of deposit ranging in terms from
30 days to 10 years.  Included among these deposit  products are certificates of
deposit with negotiable  interest rates and balances of $100,000 or more,  which
amounted to $9.1  million or 6.1% of the  Company's  total  deposits at June 30,
2008,  as compared to $15.9  million or 10.0% at June 30,  2007.  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, 2008. The Company has drive-up  banking  facilities and
automated teller machines  ("ATMs") at its McCandless,  Franklin Park,  Bellevue
and Cranberry Township offices.  The Company also has an ATM machine at its West
View  Office.  The  Company  participates  in the  PULSE(R)  and  CIRRUS(R)  ATM
networks. The Company also participates in an ATM program called the Freedom ATM
AllianceSM.  The Freedom ATM AllianceSM  allows West View Savings Bank customers
to use other  Pittsburgh  area Freedom ATM AllianceSM  affiliates'  ATMs without
being  surcharged  and vice versa.  The Freedom ATM  AllianceSM was organized to
help smaller local banks compete with larger  national banks that have large ATM
networks.

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

         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,
                                          2008                  2007                  2006
                                          ----                  ----                  ----
                                   Amount      Rate       Amount      Rate       Amount      Rate
                                   ------      ----       ------      ----       -----       ----
                                                       (Dollars in Thousands)
<S>                                 <C>          <C>       <C>          <C>       <C>          <C>
Regular savings and club
   accounts                       $ 30,853       0.70%   $ 33,635       0.70%   $ 39,877       0.70%
NOW accounts                        17,730       0.06      18,705       0.06      20,023       0.06
Money market deposit
   accounts                         22,258       2.84      17,557       3.55      15,024       2.75
Certificate of deposit accounts     69,331       4.41      72,805       4.54      66,599       3.62
Escrows                                703       1.56         704       1.56         804       1.37
                                  --------   --------    --------   --------    --------   --------
     Total interest-bearing
        deposits and escrows       140,875       2.79     143,406       2.92     142,327       2.19
Non-interest-bearing checking
   accounts                         13,787       0.00      12,927       0.00      12,513       0.00
                                  --------   --------    --------   --------    --------   --------
     Total deposits and escrows   $154,662       2.54%   $156,333       2.68%   $154,840       2.01%
                                  ========   ========    ========   ========    ========   ========
</TABLE>

                                       21
<PAGE>

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

                                            Year Ended June 30,
                                        2008        2007       2006
                                        ----        ----       ----
                                           (Dollars in Thousands)
Increase (decrease) before interest
   credited                           $(13,204)   $  3,692   $(15,947)
Interest credited                        3,969       3,972      2,954
                                      --------    --------   --------
Net deposit increase (decrease)       $ (9,235)   $  7,664   $(12,993)
                                      ========    ========   ========

         The following table sets forth maturities of the Company's certificates
of deposit of $100,000 or more at June 30, 2008, by time remaining to maturity.

                                                        Amounts
                                                        -------
                                                (Dollars in Thousands)
         Three months or less                          $  3,207
         Over three months through six months             2,144
         Over six months through twelve months            2,704
         Over twelve months                               1,068
                                                       --------
                                                       $  9,123
                                                       ========

         Borrowings.  Borrowings  are  comprised of FHLB  advances  with various
terms, FRB borrowings,  and repurchase  agreements with securities  brokers with
original  maturities of 278 days or less. At June 30, 2008,  borrowings  totaled
$236.2 million as compared to $213.5 million at June 30, 2007. The $22.7 million
or  10.6%   increase  was  primarily  due  to  purchases  of   investments   and
mortgage-backed  securities  and  decreases  in deposits,  which were  partially
offset by redemptions of investment and mortgage-backed securities and decreases
in the  Company's  loan  portfolio.  For a detailed  discussion of the Company's
asset and liability  management  activities,  please see the  "Quantitative  and
Qualitative  Disclosures about Market Risk" section of the Company's fiscal year
2008 Annual Report included as Exhibit 13.  Wholesale  funding also provides the
Company with a larger  degree of control  with respect to the term  structure of
its liabilities than traditional retail deposits.  By utilizing  borrowings,  as
opposed  to  retail  certificates  of  deposit,  the  Company  also  avoids  the
additional  operating  costs  associated  with increasing its branch network and
associated federal deposit insurance premiums.

Competition

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

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

Employees

         The Company had 32 full-time employees and 16 part-time employees as of
June 30, 2008. None of these employees is represented by a collective bargaining
agent.  The  Company  believes  that it  enjoys  excellent  relations  with  its
personnel.

                                       22
<PAGE>

                           REGULATION AND SUPERVISION

The Company

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

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

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

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

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

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

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

                                       23
<PAGE>

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

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

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

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

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

The Savings Bank

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

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

                                       24
<PAGE>

Federal  Deposit  Insurance  Corporation  greater  discretion  to  identify  the
relative risks all  institutions  present to the Deposit  Insurance Fund and set
risk-based premiums.

         Major provisions in the legislation include:

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

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

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

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

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


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

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

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

         The Savings  Bank is a "well  capitalized"  institution  as of June 30,
2008.

         Capital Requirements.  The FDIC has promulgated regulations and adopted
a statement of policy  regarding the capital adequacy of  state-chartered  banks
which, like the Savings Bank, are not members of the Federal Reserve System. The
FDIC's capital  regulations  establish a minimum of 3.0% Tier I leverage capital
requirement for the most highly-rated state-chartered, non-member banks, with an
additional  cushion  of  at  least  100  to  200  basis  points  for  all  other
state-chartered,  non-member banks,  which effectively will increase the minimum
Tier I leverage  ratio for such other  banks to 4.0% to 5.0% or more.  Under the
FDIC's  regulation,  highest-rated  banks are those that the FDIC determines are
not  anticipating or experiencing  significant  growth and have well diversified
risk,  including no undue interest rate risk exposure,  excellent asset quality,
high  liquidity,  good earnings and, in general,  which are  considered a strong
banking

                                       25
<PAGE>

organization,  rated composite 1 under the Uniform Financial Institutions Rating
System.  Leverage or core capital is defined as the sum of common  stockholders'
equity (including  retained earnings),  noncumulative  perpetual preferred stock
and related surplus, and minority interest in consolidated  subsidiaries,  minus
all intangible assets other than certain qualifying  supervisory  goodwill,  and
certain   purchased   mortgage   servicing   rights  and  purchased  credit  and
relationships.

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

         The  components  of Tier I capital are  equivalent  to those  discussed
above under the 3% leverage standard.  The components of supplementary  (Tier 2)
capital include certain perpetual preferred stock, certain mandatory convertible
securities,  certain  subordinated  debt and  intermediate  preferred  stock and
general  allowances  for loan losses.  Allowance  for loan losses  includable in
supplementary  capital is limited to a maximum of 1.25% of risk-weighted assets.
Overall,  the amount of capital  counted  toward  supplementary  capital  cannot
exceed 100% of core capital.  At June 30, 2008, the Savings Bank met each of its
capital requirements.

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

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

Miscellaneous

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

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

                                       26
<PAGE>

                           FEDERAL AND STATE TAXATION

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

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

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

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

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

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

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

         State Taxation.  The Company is subject to the  Pennsylvania  Corporate
Net Income Tax and Capital Stock and Franchise Tax. The  Pennsylvania  Corporate
Net  Income Tax rate is 9.99% and is  imposed  on the  Company's  unconsolidated
taxable income for federal purposes with certain  adjustments.  In general,  the
Capital  Stock  Tax is a  property  tax  imposed  at the  rate  of  0.289%  of a
corporation's  capital stock

                                       27
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

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

         We  face   strong   competition   which  may   adversely   affect   our
profitability.

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

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

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

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

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

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

         Not applicable.

                                       29
<PAGE>

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

         The following table sets forth certain  information with respect to the
         offices and other properties of the Company at June 30, 2008.

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

         McCandless Office                            Owned
           9001 Perry Highway
           Pittsburgh, PA  15237

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

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

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

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

         Franklin Park Boro Office                    Owned
           2566 Brandt School Road
           Wexford, PA  15090
--------
(1)      The Company  operates  this office out of a retirement  community.  The
         lease is for a period of 3 1/2 years ending in December 2009.
(2)      The lease is for a period of 10 years ending in November 2016.

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

         (a)      The Company is involved with various legal actions  arising in
                  the  ordinary  course of  business.  Management  believes  the
                  outcome of these  matters will have no material  effect on the
                  consolidated operations or consolidated financial condition of
                  WVS Financial Corp.
         (b)      Not applicable.

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

         Not applicable.

                                       30
<PAGE>

PART II.

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

         (a)      The  information  required herein is incorporated by reference
                  on page 52 of the Company's 2008 Annual Report to Stockholders
                  included as Exhibit 13 ("2008 Annual Report").
         (b)      Not applicable.
         (c)      The  following  table sets forth  information  with respect to
                  purchases  of common stock of the Company made by or on behalf
                  of the Company during the three months ended June 30, 2008.
<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------------------------
                                              ISSUER PURCHASES OF EQUITY SECURITIES
         --------------------------------------------------------------------------------------------------------------
                                                                         Total Number of         Maximum Number of
                                      Total                              Shares Purchased       Shares that may yet
                                    Number of                          as part of Publicly        be Repurchased
                                      Shares       Average Price         Announced Plans        Under the Plans or
               Period               Purchased    Paid per Share ($)      or Programs (1)           Programs (2)
         --------------------------------------------------------------------------------------------------------------
<S>                                         <C>                 <C>                    <C>                      <C>
         04/01/08 - 04/30/08              7,941               16.00                  7,941                    64,594
         --------------------------------------------------------------------------------------------------------------
         05/01/08 - 05/31/08                  0                  --                      0                    64,594
         --------------------------------------------------------------------------------------------------------------
         06/01/08 - 06/30/08                  0                  --                      0                    64,594
         --------------------------------------------------------------------------------------------------------------
              Total                       7,941               16.00                  7,941                    64,594
         --------------------------------------------------------------------------------------------------------------
</TABLE>
         ------------

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

         (2)      Ninth Stock Repurchase Program

                  (a)      Announced August 14, 2007.
                  (b)      125,000 common shares approved for repurchase.
                  (c)      No fixed date of expiration.
                  (d)      This  Program has not  expired and has 64,594  shares
                           remaining to be purchased at June 30, 2008.
                  (e)      Not applicable.

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

         The information required herein is incorporated by reference from pages
         3 to 4 of the Company's 2008 Annual Report.

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

         The information required herein is incorporated by reference from pages
         5 to 13 of the Company's 2008 Annual Report.

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

         The information required herein is incorporated by reference from pages
         13 to 18 of the Company's 2008 Annual Report.

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

         The information required herein is incorporated by reference from pages
         19 to 51 of the Company's 2008 Annual Report.

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

         Not applicable.

                                       31
<PAGE>

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

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

                  Management   assessed  the   effectiveness  of  the  Company's
                  internal control over financial reporting as of June 30, 2008.
                  In making this  assessment,  management  used the criteria set
                  forth by the  Committee  of  Sponsoring  Organizations  of the
                  Treadway  Commission  (COSO) in Internal  Control - Integrated
                  Framework.

                  Based on this assessment, management believes that, as of June
                  30,  2008,  the  Company's  internal  control  over  financial
                  reporting was effective.

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

         (b)      No change in our internal control over financial reporting (as
                  defined in Rules  13a-15(f) and 15d-15(f) under the Securities
                  Exchange  Act of  1934)  occurred  during  the  fourth  fiscal
                  quarter of fiscal  2008 that has  materially  affected,  or is
                  reasonably likely to materially  affect,  our internal control
                  over financial reporting.

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

         Not applicable.

PART III

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

         The information required herein is incorporated by reference from pages
         2 to 6 of the Company's  Proxy Statement for the 2008 Annual Meeting of
         Stockholders dated September 26, 2008 ("Proxy Statement").

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

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

         The information required herein is incorporated by reference from pages
         9 to 10 of the Company's Proxy Statement.

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

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

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

         The information required herein is incorporated by reference on pages 3
         and 15 of the Company's Proxy Statement.

                                       32
<PAGE>

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

         The information required herein is incorporated by reference on page 16
         of the Company's Proxy Statement.

PART IV.

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

         (a)      Documents filed as part of this report.

                  (1)      The  following  documents  are  filed as part of this
                           report and are incorporated  herein by reference from
                           the Company's 2008 Annual Report.

                           Report of Independent  Registered  Public  Accounting
                           Firm.

                           Consolidated Balance Sheet at June 30, 2008 and 2007.

                           Consolidated  Statement of Income for the Years Ended
                           June 30, 2008, 2007 and 2006.

                           Consolidated  Statement  of Changes in  Stockholders'
                           Equity for the Years  Ended June 30,  2008,  2007 and
                           2006.

                           Consolidated  Statement  of Cash  Flows for the Years
                           Ended June 30, 2008, 2007 and 2006.

                           Notes to the Consolidated Financial Statements.

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

                                       33
<PAGE>

                  (3)      The following exhibits are filed as part of this Form
                           10-K, and this list includes the Exhibit Index.
<TABLE>
<CAPTION>
                           No.      Description                                                                         Page
                           ---      -----------                                                                         ----
<S>                        <C>      <C>                                                                                   <C>
                           3.1      Amended and Restated Articles of Incorporation                                         *
                           3.2      Amended and Restated By-Laws                                                           *
                           4        Stock Certificate of WVS Financial Corp.                                              **
                           10.1     WVS Financial Corp. Recognition Plans and Trusts for
                                         Executive Officers, Directors and Key Employees***                               **
                           10.2     WVS Financial Corp. 1993 Stock Incentive Plan***                                      **
                           10.3     WVS Financial Corp. 1993 Directors' Stock Option Plan***                              **
                           10.4     WVS Financial Corp. Employee Stock Ownership Plan and Trust***                        **
                           10.5     Amended West View Savings Bank Employee Profit Sharing Plan***                        **
                           10.6     Employment Agreements between WVS Financial Corp. and
                                         David Bursic ***                                                               ****
                           10.7     Directors Deferred Compensation Program***                                            **
                           13       2008 Annual Report to Stockholders                                        filed herewith
                           14.1     Ethics Policy                                                                      *****
                           14.2     Code of Ethics for Senior Financial Officers                                       *****
                           21       Subsidiaries of the Registrant - Reference is made to
                                         Item 1. "Business" for the required information                                   2
                           23       Consent of Independent Registered Public Accounting Firm                  filed herewith
                           31.1     Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive
                                      Officer                                                                 filed herewith
                           31.2     Rule 13a-14(a) / 15d-14(a) Certification of the Chief Accounting
                                      Officer                                                                 filed herewith
                           32.1     Section 1350 Certification of the Chief Executive Officer                 filed herewith
                           32.2     Section 1350 Certification of the Chief Accounting Officer                filed herewith
</TABLE>

*        Incorporated  by reference from the Current Report on Form 8-K filed by
         the Company with the SEC on August 1, 2007.
**       Incorporated by reference from the  Registration  Statement on Form S-1
         (Registration No. 33-67506) filed by the Company with the SEC on August
         16, 1993, as amended.
***      Management contract or compensatory plan or arrangement.
****     Incorporated  by  reference  from the Form 10-Q for the  quarter  ended
         September  30, 1998 filed by the Company  with the SEC on November  13,
         1998.
*****    Incorporated  by reference from the Annual Report on Form 10-K filed by
         the Company with the SEC on September 24, 2004.

                                       34
<PAGE>

                                   SIGNATURES

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

                                           WVS FINANCIAL CORP.



September 29, 2008                      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 29, 2008
Chief Executive Officer
(Principal Executive Officer)


/s/ Keith A. Simpson
--------------------------------------------
Keith A. Simpson,  Vice President, Treasurer               September 29, 2008
and Chief Accounting Officer
(Principal Accounting Officer)


/s/ Donald E. Hook
--------------------------------------------
Donald E. Hook,                                            September 29, 2008
Chairman of the Board of Directors


/s/ David L. Aeberli
--------------------------------------------
David L. Aeberli, Director                                 September 29, 2008


/s/ John W. Grace
--------------------------------------------
John W. Grace, Director                                    September 29, 2008


/s/ Lawrence M. Lehman
--------------------------------------------
Lawrence M. Lehman, Director                               September 29, 2008


/s/ Margaret VonDerau
--------------------------------------------
Margaret VonDerau, Director                                September 29, 2008



                                       35