Exhibit 13

                                TABLE OF CONTENTS
                                                                         Page
                                                                        Number
                                                                        ------

         Stockholders' Letter                                              1

         Selected Financial and Other Data                                 2

         Management's Discussion and Analysis                              4

         Report of Independent Registered Public Accounting Firm          18

         Consolidated Balance Sheet                                       19

         Consolidated Statement of Income                                 20

         Consolidated Statement of Changes in Stockholders' Equity        21

         Consolidated Statement of Cash Flows                             22

         Notes to the Consolidated Financial Statements                   23

         Common Stock Market Price and Dividend Information               50

         Corporate Information                                            51



<PAGE>


To Our Stockholders:


In an effort to contain  inflation,  the  Federal  Reserve  Board's  Open Market
Committee  increased its targeted federal funds rate by one-quarter of a percent
eight times during fiscal 2006.  The fiscal 2006  increases  were in addition to
eight identical  increases during fiscal 2005. Within the past two fiscal years,
these sixteen combined increases, coupled with higher energy prices, have caused
a marked  slow-down  in the  housing  market and  considerably  slowed  consumer
purchase  activity and sentiment.  Intermediate and longer-term  market interest
rates have not moved in tandem with the changes in  short-term  market  interest
rates. These changes in short,  intermediate and long-term market interest rates
and the flattening of the Treasury yield curve have caused a marked  compression
in industry-wide net interest margins and net income.

During Fiscal 2006, WVS Financial  Corp.  achieved solid gains despite a slowing
economy,  higher  short-term and  historically  low  intermediate  and long-term
market interest rates. Company net interest income increased $758 thousand while
income before income tax expense increased $597 thousand.  Net income for fiscal
2006 totaled $2.85 million - roughly even with the prior fiscal year. Income tax
expense more than doubled to $1.29 million primarily due to early redemptions of
tax-exempt  bonds and the  elimination  of a deferred tax asset.  Book value per
share, after the payment of cash dividends and stock  repurchases,  continued to
grow and  totaled  $12.60 per share at June 30,  2006.  Return on  stockholder's
equity was a strong 9.87%.

The Company's  Eighth Stock Buyback  continues to progress well.  Stock buybacks
add liquidity to your investment and promote an active  secondary  market in our
stock.  We continue to receive  positive  comments about our stock buybacks from
our NASDAQ  market  makers.  Since our stock  buybacks  began in Fiscal 1999 the
Company has  returned  more than $21  million to  stockholders  by  repurchasing
1,434,606  shares or about 38% of our issued  shares.  The Company has  returned
more money to  stockholders  through stock  buybacks  alone than was  originally
raised by selling stock to the public.

We would  like to extend  our  thanks  to each  stockholder  for your  continued
support and trust.  Please  continue to recommend West View Savings Bank to your
family, friends and neighbors.





/s/ DAVID J. BURSIC                                  /s/ DONALD E. HOOK

DAVID J. BURSIC                                      DONALD E. HOOK
President and                                        Chairman of the Board
Chief Executive Officer


<PAGE>
<TABLE>
<CAPTION>

                                    FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED
                                             FINANCIAL AND OTHER DATA

                                                         As of or For the Year Ended June 30,
                                       ---------------------------------------------------------------------------
                                           2006            2005            2004            2003            2002
                                       -----------     -----------     -----------     -----------     -----------
<S>                                        <C>             <C>             <C>             <C>             <C>
                                                      (Dollars in Thousands, except per share data)
Selected Financial Data:
Total assets                           $   421,742     $   421,044     $   433,624     $   367,188     $   404,911
Net loans receivable                        55,702          60,151          67,968          91,669         152,905
Mortgage-backed securities                 155,753         162,151          75,590         111,879          82,543
Investment securities                      196,421         183,066         273,589         147,482         151,384
Savings deposit accounts                   150,701         163,589         159,318         169,316         174,659
FHLB advances                              161,729         155,036         149,736         153,390         159,937
Other borrowings                            76,048          69,680          91,639           9,453          33,731
Stockholders' equity                        29,418          29,201          29,199          30,618          30,253
Non-performing assets, troubled debt
 restructurings and potential
 problem loans(2)                            1,695           2,171           2,171           3,481           5,279


Selected Operating Data:
Interest income                        $    22,248     $    17,874     $    16,006     $    19,231     $    23,760
Interest expense                            15,460          11,844          10,987          11,810          14,025
                                       -----------     -----------     -----------     -----------     -----------
Net interest income                          6,788           6,030           5,019           7,421           9,735
(Recovery) Provision for loan losses          (161)            (46)           (794)           (228)             57
                                       -----------     -----------     -----------     -----------     -----------
Net interest income after provision
  for loan losses                            6,949           6,076           5,813           7,649           9,678
Non-interest income                            705             992             715             725             687
Non-interest expense                         3,521           3,532           3,607           3,956           4,104
                                       -----------     -----------     -----------     -----------     -----------
Income before income tax expense             4,133           3,536           2,921           4,418           6,261
Income tax expense                           1,287             627             619           1,070           1,813
                                       -----------     -----------     -----------     -----------     -----------
Net income                             $     2,846     $     2,909     $     2,302     $     3,348     $     4,448
                                       ===========     ===========     ===========     ===========     ===========

Per Share Information:
Basic earnings                         $      1.21     $      1.20     $      0.91     $      1.28     $      1.63
Diluted earnings                       $      1.21     $      1.19     $      0.90     $      1.28     $      1.63
Dividends per share                    $      0.64     $      0.64     $      0.64     $      0.64     $      0.64
Dividend payout ratio                        52.89%          53.33%          70.33%          50.00%          39.26%
Book value per share at period end     $     12.60     $     12.20     $     11.84     $     11.86     $     11.30
Average shares outstanding:
      Basic                              2,357,217       2,432,267       2,535,796       2,617,576       2,723,891
      Diluted                            2,359,996       2,437,647       2,544,404       2,624,395       2,732,491

</TABLE>

                                                        2
<PAGE>
<TABLE>
<CAPTION>

                                             As of or For the Year Ended June 30,
                                        ----------------------------------------------
                                         2006      2005      2004      2003      2002
                                        ------    ------    ------    ------    ------
<S>                                       <C>       <C>       <C>       <C>       <C>

Selected Operating Ratios(1):
Average yield earned on interest-
  earning assets(3)                       5.29%     4.61%     4.28%     5.36%     6.41%
Average rate paid on interest-
  bearing liabilities                     4.01      3.27      3.13      3.57      4.13
Average interest rate spread(4)           1.28      1.34      1.14      1.79      2.28
Net interest margin(4)                    1.67      1.68      1.48      2.19      2.74
Ratio of interest-earning assets to
  interest-bearing liabilities          110.48    111.45    111.76    112.56    112.34
Non-interest expense as a percent of
  average assets                          0.82      0.87      0.91      1.05      1.07
Return on average assets                  0.66      0.71      0.58      0.89      1.16
Return on average equity                  9.87     10.03      7.64     10.97     14.85
Ratio of average equity to average
  assets                                  6.70      7.10      7.60      8.10      7.78
Full-service offices at end of period        5         5         5         5         5

Asset Quality Ratios(1):
Non-performing and potential problem
loans and troubled debt restructurings
  as a percent of net total loans(2)      3.03%     3.49%     3.19%     3.80%     3.30%
Non-performing assets as a percent
  of total assets(2)                      0.08      0.25      0.19      0.95      1.30
Non-performing assets, troubled debt
  restructurings and potential
  problem loans as a percent of
  total assets                            0.40      0.52      0.50      0.95      1.30
Allowance for loan losses as a
  percent of total loans receivable       1.69      1.83      1.97      2.68      1.77
Allowance for loan losses as a
  percent of non-performing loans       310.71    113.58    163.48     72.68     54.68
Charge-offs to average loans
  receivable outstanding during the
  period                                  0.01      0.37      0.68      0.00      0.04

Capital Ratios(1):
Tier 1 risk-based capital ratio          22.12%    20.99%    18.65%    14.30%    13.42%
Total risk-based capital ratio           22.88     21.80     19.62     15.57     14.66
Tier 1 leverage capital ratio             6.78      7.14      6.92      8.42      7.69

</TABLE>

----------------
(1)  Consolidated  asset  quality  ratios and  capital  ratios are end of period
     ratios,  except for charge-offs to average net loans. With the exception of
     end of period  ratios,  all ratios are based on  average  monthly  balances
     during the indicated periods.
(2)  Non-performing assets consist of non-performing loans and real estate owned
     ("REO").  Non-performing  loans consist of  non-accrual  loans and accruing
     loans  greater than 90 days  delinquent,  while REO consists of real estate
     acquired  through  foreclosure  and real estate acquired by acceptance of a
     deed in lieu of  foreclosure.  Potential  problem loans include loans where
     management  has some doubt as to the ability of the borrower to comply with
     present loan repayment terms.
(3)  Interest and yields on  tax-exempt  loans and  securities  (tax-exempt  for
     federal income tax purposes) are shown on a fully taxable equivalent basis.
(4)  Interest rate spread represents the difference between the weighted average
     yield  on  interest-earning   assets  and  the  weighted  average  cost  of
     interest-bearing  liabilities,  and  net  interest  margin  represents  net
     interest income as a percent of average interest-earning assets.

                                       3
<PAGE>


                       WVS FINANCIAL CORP. AND SUBSIDIARY
                       ----------------------------------


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

FORWARD LOOKING STATEMENTS

When used in this Annual  Report,  or, in future filings by the Company with the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases "will likely
result",  "are expected to",  "will  continue",  "is  anticipated",  "estimate",
"project"  or similar  expressions  are  intended to identify  "forward  looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Such  statements  are  subject  to  certain  risks  and  uncertainties
including changes in economic  conditions in the Company's market area,  changes
in policies by regulatory  agencies,  fluctuations in interest rates, demand for
loans in the  Company's  market area and  competition  that could  cause  actual
results  to differ  materially  from  historical  earnings  and those  presently
anticipated  or projected.  The Company  wishes to caution  readers not to place
undue reliance on any such forward  looking  statements,  which speak only as of
the date made.  The Company  wishes to advise  readers  that the factors  listed
above  could  affect the  Company's  financial  performance  and could cause the
Company's  actual  results  for  future  periods to differ  materially  from any
opinions or statements  expressed  with respect to future periods in any current
statements.

The Company does not undertake,  and specifically  disclaims any obligation,  to
publicly  release  the  result of any  revisions  which  may be made to  forward
looking  statements  to  reflect  events  or  circumstances  after  the  date of
statements or to reflect the occurrence of anticipated or unanticipated events.

GENERAL

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

West View Savings Bank is a  Pennsylvania-chartered,  SAIF-insured stock savings
bank  conducting  business  from six  offices  in the  North  Hills  suburbs  of
Pittsburgh.  The  Savings  Bank  converted  to the stock  form of  ownership  in
November 1993. The Savings Bank had no subsidiaries at June 30, 2006.

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

The Company's strategic focus includes:

Strong Net Income - During fiscal 2006, Company net income totaled $2.8 million.
Income before income tax expense  increased $597 thousand or 16.9% due to higher
levels of net interest income and recoveries for loan losses.  Company  retained
earnings grew by $1.3 million and exceeded $30 million at fiscal year end.

Enhancing Stockholder Value - During fiscal 2006, the Company returned over $2.5
million to stockholders via cash dividends and stock repurchases. Book value per
share increased to $12.60 from $12.20. The Company's stock continues to trade at
a premium to book value.


                                       4
<PAGE>

Commitment to Capital  Management - Return on average  stockholders'  equity was
9.87%.  The Company has returned more than $21 million through the repurchase of
1,434,606 shares or approximately  38% of our issued shares.  Through our Eighth
Stock Buyback  Program,  the Company has returned more money to stockholders via
share  repurchases  alone than was  originally  raised by  selling  stock to the
public.

Interest Rate Risk Management - During the past fiscal year, the Federal Reserve
has increased its targeted federal funds rate eight times - from 3.25% to 5.25%.
Intermediate  and  long-term  rates  remain  stubbornly  low.  The  Company  has
positioned  itself well for this rise in short-term  rates by actively  managing
its  asset/liability  mix. Net interest income increased $758 thousand or 12.6%,
favorably impacting Company net income.

Investments  in  Technology - During  fiscal 2006,  the Bank  completed its core
systems  migration.  Over the past three fiscal years, the Company has added new
P.C. based platforms, internet banking, on-line bill paying and expanded our ATM
system by joining  the STAR  network to provide  our  customers  with around the
clock  convenience  that  technology  and the  internet  have  ushered  in. Most
importantly,  we understand  that many  customers want a local touch, a place to
go, and a teller to hand back the receipt now and then.

Community  Based  Lending  - Due to low  market  interest  rates,  West View has
limited  origination  of thirty year mortgage loans to be held in the portfolio.
Thirty year mortgage loans continue to be originated on a  correspondent  basis.
Portfolio loan  originations  have focused on  multi-family  and commercial real
estate loans,  construction  loans,  land  acquisition  and  development  loans,
consumer loans and small business loans for business equipment and inventory.

Strong  Non-interest  Expense Ratios - For the fiscal years ended June 30, 2006,
2005 and 2004, the Company's  ratios of  non-interest  expense to average assets
were  0.82%,  0.87% and 0.91%,  respectively.  Investments  in  technology  have
allowed  each  employee to be more  productive  and to offer more  competitively
priced products and services to our loan and deposit customers.


CHANGES IN FINANCIAL CONDITION

                             Condensed Balance Sheet
                             -----------------------

                                            June 30,             Change
                                                           ---------------------
                                        2006       2005    Dollars    Percentage
                                        ----       ----    -------    ----------
                                         (Dollars in Thousands)

 Cash and interest-earning
      Deposits                       $  1,196   $  3,566   $ (2,370)      -66.5%

 Investments (1)                      360,035    352,986      7,049         2.0

 Net loans receivable                  55,702     60,151     (4,449)        7.4

 Total assets                         421,742    421,044        698         0.2

 Deposits                             151,713    164,706    (12,993)       -7.9

 Borrowed funds                       237,777    224,716     13,061         5.8

 Total liabilities                    392,324    391,843        481         0.1

 Stockholders' equity                  29,418     29,201        217         0.7
---------------
(1) Includes Federal Home Loan Bank stock.


                                       5
<PAGE>

Cash and Interest-Earning  Deposits. Cash on hand and interest-earning  deposits
represent cash equivalents.  Cash equivalents decreased $2.4 million or 66.5% to
$1.2  million at June 30, 2006 from $3.6  million at June 30,  2005.  Changes in
cash equivalents are influenced by the timing of customer transaction  deposits,
the  redeployment  of funds into other  earning  assets such as  investments  or
loans, and the repayment of Company borrowings.

Investments.  The Company's investment and mortgage-backed  portfolios increased
$7.0 million or 2.0% to $360.0  million at June 30, 2006 from $353.0  million at
June 30, 2005.  Investment  securities increased $13.5 million or 7.1% to $204.3
million at June 30, 2006.  This  increase was due primarily to purchases of U.S.
Government  Agency  securities,  funded by calls of lower  rate U.S.  Government
Agency securities.  Mortgage-backed securities decreased $6.4 million or 3.9% to
$155.8  million at June 30, 2006.  This decrease was due primarily to repayments
of  floating  rate  mortgage-backed  securities  and the  redeployment  of those
proceeds  into  investment   securities.   See   "Quantitative  and  Qualitative
Disclosures about Market Risk" beginning on page 13.

Net Loans  Receivable.  Net loans  receivable  decreased $4.4 million or 7.4% to
$55.7 million at June 30, 2006. The decrease in loans receivable was principally
the result of principal  repayments on the loan portfolio and residual levels of
refinancing activity due to historically low mortgage interest rates. As part of
its   asset/liability   management   strategy,   the  Company  chose  to  invest
substantially  all of these  proceeds  into  fixed rate U.S.  Government  Agency
securities  and  floating  rate  mortgage-backed  securities.  The Bank has also
partnered with SCORE (Service Corps of Retired Executives)  Pittsburgh to better
serve new business  owners and existing Bank business  customers  with access to
business counseling services.

Deposits.  Total deposits  decreased  $13.0 million or 7.9% to $151.7 million at
June 30, 2006.  Transaction  accounts  decreased  approximately  $7.9 million or
21.2%.  Certificates of deposit increased  approximately  $429 thousand or 0.6%.
Savings  accounts  decreased  $7.5  million or 16.9% and money  market  accounts
increased $2.9 million or 21.6%.

Borrowed Funds. Borrowed funds increased $13.1 million or 5.8% to $237.8 million
at June 30, 2006. Other short-term  borrowings increased $6.4 million or 9.2% to
$76.0 million,  FHLB long-term advances decreased $4.2 million or 2.9% to $138.6
million and FHLB short-term  advances  increased $10.8 million or 88.2% to $23.2
million.   The  Company   repositioned   its   borrowing  mix  as  part  of  its
assets/liability management program.

Stockholders' Equity. Total stockholders' equity increased $217 thousand or 0.7%
to $29.4  million  at June 30,  2006.  Company  earnings  of $2.8  million  were
partially  offset by $1.5 million of cash dividends paid on the Company's common
stock and $1.1 million was used to  repurchase  66,098  shares of the  Company's
common  stock.  The Company  believes  that the  repurchase  of its common stock
represented  an  attractive  investment   opportunity  and  favorably  added  to
secondary market liquidity.

                                       6
<PAGE>

RESULTS OF OPERATIONS

                         Condensed Statements of Income
                         ------------------------------

                               Year Ended         Year Ended          Year Ended
                                June 30,            June 30,           June 30,
                                 2006      Change    2005     Change     2004
                                -------    ------   -------   ------   -------
                                             (Dollars in Thousands)

Interest income                 $22,248    $4,374   $17,874   $1,868   $16,006
                                             24.5%              11.7%

Interest expense                $15,460    $3,616   $11,844     $857   $10,987
                                             30.5%               7.8%

Net interest income              $6,788      $758    $6,030   $1,011    $5,019
                                             12.6%              20.1%

Provision for loan losses         ($161)    ($115)     ($46)    $748     ($794)
                                          -250.0%               94.2%

Non-interest income                $705     ($287)     $992     $277      $715
                                           -28.9%               38.7%

Non-interest expense             $3,521      ($11)   $3,532     ($75)   $3,607
                                            -0.3%               -2.1%

Income tax expense               $1,287      $660      $627       $8      $619
                                            105.3%               1.3%

Net income                       $2,846      ($63)   $2,909     $607    $2,302
                                             -2.2%              26.4%


General. WVS reported net income of $2.8 million,  $2.9 million and $2.3 million
for the fiscal years ended June 30, 2006, 2005 and 2004,  respectively.  The $63
thousand or 2.2%  decrease in net income  during  fiscal 2006 was  primarily the
result of a $758  thousand  increase in net  interest  income,  a $115  thousand
increase  in  recoveries  for  loan  losses  and  a  $11  thousand  decrease  in
non-interest  expense which were more than offset by a $660 thousand increase in
income  tax  expense,  and a $287  thousand  decrease  in  non-interest  income.
Earnings per share totaled $1.21 (basic and diluted) for fiscal 2006 as compared
to $1.20 (basic) and $1.19  (diluted) for fiscal 2005.  The increase in earnings
per  share  was due to a  reduction  in the  weighted  average  number of shares
outstanding due to the Company's stock repurchases during fiscal 2006.

                                       7
<PAGE>

Average  Balances,  Net Interest  Income and Yields  Earned and Rates Paid.  The
following  average  balance  sheet  table  sets  forth  at and for  the  periods
indicated, information on the Company regarding: (1) the total dollar amounts of
interest income on interest-earning assets and the resulting average yields; (2)
the total dollar amounts of interest expense on interest-bearing liabilities and
the resulting average costs; (3) net interest income;  (4) interest rate spread;
(5) net  interest-earning  assets  (interest-bearing  liabilities);  (6) the net
yield  earned  on   interest-earning   assets;   and  (7)  the  ratio  of  total
interest-earning assets to total interest-bearing liabilities.


<PAGE>
<TABLE>
<CAPTION>

                                                                       For the Years Ended June 30,
                                       --------------------------------------------------------------------------------------------
                                                   2006                           2005                           2004
                                       ----------------------------   -----------------------------   -----------------------------
                                                           Average                         Average                         Average
                                       Average              Yield/     Average              Yield/     Average              Yield/
                                       Balance   Interest    Rate      Balance  Interest     Rate      Balance  Interest     Rate
                                       --------  --------  --------   --------  --------   --------   --------  --------   --------
<S>                                     <C>         <C>        <C>     <C>         <C>         <C>      <C>        <C>         <C>
                                                                           (Dollars in Thousands)
Interest-earning assets:
      Net loans receivable(1)          $ 58,274  $  4,009      6.88%  $ 63,725  $  4,206       6.60%  $ 76,513  $  5,180       6.77%
      Mortgage-backed securities        169,844     8,919      5.25    103,307     3,981       3.85     84,770     2,347       2.77
      Investments - taxable             177,031     8,292      4.68    200,688     7,873       3.92    191,544     6,709       3.50
      Investments - tax-free(2)          13,276       737      8.00     27,142     1,626       8.74     29,588     1,641       8.08
      FHLB stock                          7,033       276      3.92      7,594       178       2.34      7,797       120       2.01
      Interest-bearing deposits             924        15      1.62      1,818        10       0.55      2,079         9       0.43
                                       --------  --------             --------  --------              --------  --------
      Total interest-earning assets     426,382    22,248      5.29%   404,274    17,874       4.61%   392,291    16,006       4.28%
                                                 --------  ========             --------   ========             --------   ========
      Non-interest-earning assets         3,897                          3,849                           3,949
                                       --------                       --------                        --------
            Total assets               $430,279                       $408,123                        $396,240
                                       ========                       ========                        ========

Interest-bearing liabilities:
      Interest-bearing deposits
        and escrows                    $142,327  $  3,123      2.19%  $146,366  $  2,238       1.53%  $151,577  $  2,321       1.53%
      FHLB long-term advances           141,558     7,828      5.53    147,780     8,040       5.44    149,930     8,112       5.41
      FHLB short-term advances            2,421       106      4.38      3,021        79       2.62        642         8       1.25
      Other short-term borrowings        99,634     4,403      4.42     65,579     1,487       2.27     48,867       546       1.12
                                       --------  --------             --------  --------              --------  --------
      Total interest-bearing            385,940    15,460      4.01%   362,746    11,844       3.27%   351,016    10,987       3.13%
                                                 --------  ========             --------   ========             --------   ========
      liabilities
      Non-interest-bearing accounts      12,513                         12,774                          12,542
                                       --------                       --------                        --------
      Total interest-bearing
       liabilities and non-interest
        -bearing accounts               398,453                        375,520                         363,558
      Non-interest-bearing liabilities    2,976                          3,609                           2,563
                                       --------                       --------                        --------
            Total liabilities           401,429                        379,129                         366,121
Equity                                   28,850                         28,994                          30,119
                                       --------                       --------                        --------
Total liabilities and equity           $430,279                       $408,123                        $396,240
                                       ========                       ========                        ========
Net interest income                              $  6,788                       $  6,030                        $  5,019
                                                 ========                       ========                        ========
Interest rate spread                                           1.28%                           1.34%                           1.15%
                                                           ========                        ========                        ========
Net yield on interest-earning assets(3)                        1.67%                           1.68%                           1.48%
                                                           ========                        ========                        ========
Ratio of interest-earning assets to
   interest-bearing liabilities                              110.48%                         111.45%                         111.76%
                                                           ========                        ========                        ========
</TABLE>
----------------

(1)  Includes non-accrual loans.
(2)  Yields  on  tax-exempt  securities   (tax-exempt  for  federal  income  tax
     purposes)  are  shown  on a fully  taxable  equivalent  basis  utilizing  a
     calculation  that reflects the tax-exempt  coupon,  a 20% interest  expense
     disallowance and a federal tax rate of 34%.
(3)  Net interest income divided by average interest-earning assets.

                                       8
<PAGE>

Rate/Volume Analysis.  The following table describes the extent to which changes
in  interest  rates  and  changes  in  volume  of  interest-related  assets  and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing  liabilities,  information is provided on changes  attributable
to: (1) changes in volume (change in volume  multiplied by prior year rate), (2)
changes in rate (change in rate multiplied by prior year volume),  and (3) total
change in rate and  volume.  The  combined  effect of  changes  in both rate and
volume  has been  allocated  proportionately  to the  change due to rate and the
change due to volume.

<TABLE>
<CAPTION>
                                                                              Year Ended June 30,
                                                 --------------------------------------------------------------------------------
                                                              2006 vs. 2005                            2005 vs. 2004
                                                 --------------------------------------    --------------------------------------
                                                    Increase (Decrease)                      Increase (Decrease)
                                                          Due to               Total               Due to                Total
                                                 ------------------------     Increase     ------------------------     Increase
                                                   Volume         Rate       (Decrease)      Volume         Rate       (Decrease)
                                                 ----------    ----------    ----------    ----------    ----------    ----------
<S>                                                    <C>           <C>           <C>           <C>            <C>           <C>
                                                                              (Dollars in Thousands)
Interest-earning assets:
      Net loans receivable                       $     (370)   $      173    $     (197)   $     (847)   $     (127)   $     (974)
      Mortgage-backed securities                      3,156         1,782         4,938           590         1,044         1,634
      Investments - taxable                            (994)        1,413           419           333           831         1,164
      Investments - tax-free                           (709)         (180)         (889)         (202)          187           (15)
      FHLB stock                                        (14)          112            98            32            26            58
      Interest-bearing deposits                          (6)           11             5            (1)            2             1
                                                 ----------    ----------    ----------    ----------    ----------    ----------
            Total interest-earning assets             1,063         3,311         4,374           (95)        1,963         1,868
Interest-bearing liabilities:
      Interest-bearing deposits and
         Escrows                                         28           857           885          (200)          117           (83)
      FHLB long-term borrowings                        (343)          131          (212)         (117)           45           (72)
      FHLB short-term borrowings                        (17)           44            27            54            17            71
      Other short-term borrowings                     1,033         1,883         2,916           235           706           941
                                                 ----------    ----------    ----------    ----------    ----------    ----------
            Total interest-bearing liabilities          702         2,915         3,616           (28)          885           857
                                                 ----------    ----------    ----------    ----------    ----------    ----------

Change in net interest income                    $      361    $      396    $      758    $      (67)   $    1,078    $    1,011
                                                 ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

Net Interest Income. Net interest income is determined by the Company's interest
rate  spread   (i.e.   the   difference   between  the  yields   earned  on  its
interest-earning assets and the rates paid on its interest-bearing  liabilities)
and  the  relative  amounts  of  interest-earning  assets  and  interest-bearing
liabilities.  Net interest income  increased by $758 thousand or 12.6% in fiscal
2006 and $1.0 million or 20.1% in fiscal  2005.  The increase in fiscal 2006 was
the result of an increase in interest  and  dividend  income of $4.4  million or
24.5%,  which was  partially  offset by an increase in interest  expense of $3.6
million or 30.5%.  The  increase in fiscal 2005 was the result of an increase in
interest  and  dividend  income of $1.8  million or 11.7%,  which was  partially
offset by an increase in interest expense of $857 thousand or 7.8%.

Interest Income. Total interest income increased by $4.4 million or 24.5% during
fiscal 2006 and  increased  by $1.9 million or 11.7%  during  fiscal  2005.  The
increase  in fiscal 2006 was  primarily  the result of  increased  yields on the
Company's  interest-earning  assets and increases in the average balances of the
mortgage-backed securities portfolio which were partially offset by decreases in
the average  balances of the  investment  and loan  portfolios.  The increase in
fiscal 2005 was primarily a result of increased  yields and average  balances on
the investment and  mortgage-backed  securities  portfolios which were partially
offset by a decrease in the average balance and weighted average yield earned on
the loan portfolio.

Interest income on investment  securities and FHLB stock decreased $372 thousand
or 3.8% during  fiscal 2006 and  increased  $1.2 million or 14.3% during  fiscal
2005.  The decrease in fiscal 2006 was  primarily  the result of a $38.1 million
decrease in the average balance of investments  outstanding  which was partially
offset  by a 61  basis  point  increase  in the  weighted  average  yield on the
Company's  investment  securities  portfolio.  The  increase  in fiscal 2005 was
primarily  attributable  to a 40 basis point  increase in the  weighted  average
yield on the Company's investment  securities and a $6.5 million increase in the
average balance of the investment securities outstanding.

Interest income on mortgage-backed  securities  increased $4.9 million or 124.0%
during fiscal 2006 and increased  $1.6 million or 69.6% during fiscal 2005.  The
increase in fiscal 2006 was primarily  attributable to a

                                       9
<PAGE>

$66.6 million increase in the average balance of the mortgage-backed  securities
portfolio  and a 140 basis point  increase in the weighted  average yield on the
mortgage-backed  securities portfolio. The increase in fiscal 2005 was primarily
attributable to a 108 basis point increase in the weighted  average yield on the
Company's  mortgage-backed  securities portfolio and a $18.5 million increase in
the average balance of the mortgage-backed securities portfolio.

Interest income on net loans  receivable  decreased $197 thousand or 4.7% during
fiscal  2006 and  decreased  $974  thousand or 18.8%  during  fiscal  2005.  The
decrease in fiscal 2006 was primarily attributable to a $5.6 million decrease in
the average balance of net loans  outstanding which was partially offset by a 28
basis point  increase in the yield earned on the Company's loan  portfolio.  The
decrease in fiscal 2005 was primarily  attributable to a $12.8 million  decrease
in the average balance of net loans outstanding and a 17 basis point decrease in
the weighted  average  yield on the  Company's  loan  portfolio.  As part of its
asset/liability   management  strategy,   the  Company  previously  limited  its
origination of  longer-term  fixed rate loans to mitigate its exposure to a rise
in market interest rates. The Company  continued to offer longer-term fixed rate
loans on a correspondent basis during fiscal 2006 and 2005.

Interest Expense.  Total interest expense increased $3.6 million or 30.5% during
fiscal 2006 and  increased  by $857  thousand or 7.8% during  fiscal  2005.  The
increase  in fiscal  2006 was  primarily  attributable  to higher  rates paid on
interest-bearing  liabilities due to the Federal Reserve's continued  tightening
of  monetary  policy  and higher  levels of  interest-bearing  liabilities.  The
increase  in  fiscal  2005  was   attributable   to  higher  average  levels  of
interest-bearing  liabilities  and higher rates paid on such  liabilities due to
the Federal Reserve's tightening of monetary policy.

Interest  expense on  borrowings  increased  $2.7 million or 28.4% during fiscal
2006 and increased  $940  thousand or 10.8% during fiscal 2005.  The increase in
fiscal  2006 was  primarily  attributable  to a 62 basis  point  increase in the
weighted average yield on the Company's  borrowings and a $27.2 million increase
in the average balances of borrowings  outstanding.  The increase in the average
yield on borrowings  outstanding  reflects higher short-term interest rates. The
increase in the average balances outstanding was due to a $34.1 million increase
in the  average  balances of other  short-term  borrowings  which was  partially
offset by a $6.2  million  decrease in the  average  balance of  long-term  FHLB
advances and a $600 thousand  decrease in the average balance of short-term FHLB
advances.  The  increase in fiscal 2005 was  primarily  attributable  to a $16.9
million increase in the average balance of borrowings  outstanding and a 9 basis
point increase in the weighted  average yield on the Company's  borrowings.  The
increase in the average balances outstanding was due to a $16.7 million increase
in the  average  balance  of  other  short-term  borrowings  and a $2.4  million
increase  in the  average  balance  of  short-term  FHLB  advances,  which  were
partially  offset by a $2.2 million decrease in the average balance of long-term
FHLB advances.  During both fiscal 2006 and 2005, the Company's  borrowings were
primarily longer-term with fixed rates of interest.

Interest  expense  on  interest-bearing  deposits  and  escrows  increased  $885
thousand or 39.5% in fiscal 2006 and  decreased  $83  thousand or 3.6% in fiscal
2005. The increase in fiscal 2006 was primarily attributable to a 66 basis point
increase  in the  weighted  average  yield paid on deposits  and a $3.0  million
increase in the average  balances of money market and time deposits,  which were
partially  offset by a $7.1 million  decrease in the average  balance of savings
accounts and interest-bearing checking accounts. The decrease in fiscal 2005 was
primarily  attributable  to a $5.2  million  decrease in the average  balance of
interest bearing deposits.

Recovery for Loan Losses.  A provision for loan losses is charged to earnings to
bring the total allowance to a level considered adequate by management to absorb
potential losses in the portfolio. Management's determination of the adequacy of
the allowance is based on periodic evaluations of the loan portfolio considering
past experience, current economic conditions, volume, growth, composition of the
loan  portfolio  and other  relevant  factors.  The  Company  recorded  a credit
provision  (i.e.  recovery)  for loan losses of $161  thousand  in fiscal  2006,
compared to a credit  provision of $46 thousand in fiscal 2005.  The increase in
the credit  provision  for fiscal 2006 was primarily  attributable  to continued
paydowns  of  non-accrual  loans  and a  reallocation  of  $35  thousand  of its
allowance for loan loss attributable to off-balance  sheet liabilities  (builder
letters of credit and undisbursed lines of credit) to a separate reserve account
for  financial  reporting  purposes.  The decrease in the credit  provision  for
fiscal 2005 was primarily attributable to reduced levels of non-performing loans
and net loans receivable.

                                       10
<PAGE>

Non-interest  Income.  Total  non-interest  income decreased by $287 thousand or
28.9% in fiscal 2006 and increased by $277 thousand or 38.7% in fiscal 2005. The
decrease in fiscal 2006 was primarily  attributable to a $306 thousand  decrease
in  pre-tax  securities  gains,  which was  partially  offset by a $19  thousand
increase  in  deposit  account  fee  income.  The  increase  in fiscal  2005 was
primarily  attributable  to an increase of $316  thousand in pre-tax  securities
gains, which was partially offset by decreased deposit account fee income.

Non-interest Expense.  Total non-interest expense decreased $11 thousand or 0.3%
and decreased  $75 thousand or 2.1% during  fiscal 2006 and 2005,  respectively.
The decrease in fiscal 2006 was  primarily  attributable  to a decrease in fixed
asset  depreciation which was partially offset by a reallocation of a portion of
the  Company's  allowance  for  loan  loss  attributable  to  off-balance  sheet
liabilities  as  discussed  above.  The  decrease in fiscal  2005 was  primarily
attributable  to  decreases  in legal  expenses  and costs  associated  with the
work-out of  non-performing  assets,  payroll and benefit  related  costs,  real
estate owned expenses and ATM network  expenses,  which were partially offset by
increases in data processing expenses and fixed asset costs.

Income Taxes.  Income taxes increased $660 thousand or 105.3% during fiscal 2006
and  increased  $8 thousand or 1.3% during  fiscal 2005.  The  increases in both
fiscal 2006 and 2005 were  primarily  attributable  to higher  levels of taxable
income,  lower levels of federal  tax-exempt  income,  and the  elimination of a
deferred tax asset associated with a credit for the federal  alternative minimum
tax  which  were  partially   offset  by  higher  levels  of  interest  on  FHLB
obligations,  which are not taxable for Pennsylvania Mutual Thrift Tax purposes.
The  Company's  effective  tax rate was 31.1% at June 30, 2006 and 17.7% at June
30, 2005.


LIQUIDITY AND CAPITAL RESOURCES

Liquidity is often analyzed by reviewing the cash flow statement.  Cash and cash
equivalents  decreased by $2.4 million  during fiscal 2006 primarily due to $2.4
million of net cash used for financing  activities  and $2.4 million of net cash
used for investing  activities,  which were partially  offset by $2.5 million of
net cash provided by operating activities.

Funds provided by operating  activities  totaled $2.5 million during fiscal 2006
as compared to $3.8 million  during fiscal 2005.  Net cash provided by operating
activities  was  primarily  comprised  of $2.8  million  of net  income,  a $191
thousand  increase in accrued  interest payable and a $161 thousand net recovery
for loan  losses  which were  partially  offset by a $864  thousand  increase in
accrued interest receivable.

Funds used for investing  activities  totaled $2.4 million during fiscal 2006 as
compared to $12.0 million provided by investing  activities  during fiscal 2005.
Primary uses of funds during fiscal 2006 include  $217.6 million in purchases of
investment and  mortgage-backed  securities  (including FHLB stock),  which were
partially  offset by $210.6 million in repayments  and sales of investments  and
mortgage-backed securities (including FHLB stock) and a $4.6 million decrease in
net loans receivable. The investment purchases were primarily comprised of fixed
rate  callable U.S.  Government  agency bonds.  The  mortgage-backed  securities
purchases were floating rate  instruments  that  generally  reprice on a monthly
basis.

Funds used for  financing  activities  totaled  $2.4  million for fiscal 2006 as
compared to $15.3 million used for financing  activities in fiscal 2005. Primary
uses of funds for fiscal 2006 were a $13.0 million decrease in deposits,  a $4.2
million  decrease in FHLB long-term  borrowings,  $1.5 million in cash dividends
and $1.1 million in common stock  repurchases,  which were partially offset by a
$10.8 million  increase in FHLB short-term  advances and a $6.4 million increase
in other short-term borrowings.  During fiscal 2006 the Company purchased 66,098
shares of Company common stock for  approximately  $1.1 million.  Management has
determined that it currently is maintaining  adequate liquidity and continues to
better match funding sources with lending and investment opportunities.

The Company's primary sources of funds are deposits,  amortization,  prepayments
and  maturities of existing  loans,  mortgage-backed  securities  and investment
securities,  funds from operations, and funds obtained

                                       11
<PAGE>

through FHLB advances and other borrowings. At June 30, 2006, the total approved
loan  commitments  outstanding  amounted  to $762  thousand.  At the same  date,
commitments  under unused  letters and lines of credit  amounted to $8.4 million
and the unadvanced  portion of  construction  loans  approximated  $9.5 million.
Certificates  of  deposit  scheduled  to  mature in one year or less at June 30,
2006, totaled $42.9 million.  Management  believes that a significant portion of
maturing deposits will remain with the Company.

The Company's contractual obligations at June 30, 2006 were as follows:

<TABLE>
<CAPTION>
                                               Contractual Obligations
                                                (Dollars in Thousands)
                                        Less than                          More than
                               Total     1 year    1-3 years   3-5 years    5 years
                              --------   -------   ---------   ---------   ---------
<S>                           <C>        <C>       <C>         <C>         <C>
Long-term debt                $138,579   $     -   $ 13,500    $ 112,579   $  12,500
Operating lease obligations         39        23         16            -           -
                              $138,618   $    23   $ 13,516    $ 112,579   $  12,500
</TABLE>

See also Note 13 of the Company's Consolidated Financial Statements.

Historically,  the  Company  used its  sources  of funds  primarily  to meet its
ongoing  commitments  to  pay  maturing  certificates  of  deposit  and  savings
withdrawals,  fund loan  commitments  and  maintain a  substantial  portfolio of
investment  securities.  The Company has been able to generate  sufficient  cash
through FHLB advances and other borrowings and through the retail deposit market
to provide the cash utilized in investing activities.  The Company has access to
the Federal  Reserve Bank Primary Credit Program.  Management  believes that the
Company  currently  has  adequate  liquidity  available  to respond to liquidity
demands.

On July 25, 2006, the Company's  Board of Directors  declared a cash dividend of
$0.16 per share  payable on August  17,  2006 to  shareholders  of record at the
close of business on August 7, 2006.  Dividends are subject to determination and
declaration  by the Board of  Directors,  which take into account the  Company's
financial  condition,  statutory and regulatory  restrictions,  general economic
conditions and other  factors.  There can be no assurance that dividends will in
fact be paid on the common stock in the future or that, if paid,  such dividends
will not be reduced or eliminated in future periods.

As of June 30,  2006,  WVS  Financial  Corp.  exceeded  all  regulatory  capital
requirements and maintained Tier I and total  risk-based  capital equal to $29.4
million  or  22.1%  and  $30.4   million  or  22.9%,   respectively,   of  total
risk-weighted  assets;  and Tier I leverage  capital of $29.4 million or 6.8% of
average total assets.

Non-performing assets consist of non-accrual loans and real estate owned. A loan
is placed on  non-accrual  status  when,  in the  judgment  of  management,  the
probability of collection of interest is deemed  insufficient to warrant further
accrual.  When a loan is placed on non-accrual  status,  previously  accrued but
uncollected  interest is deducted from interest  income.  Non-performing  assets
decreased  $739 thousand or 69.9% to $318 thousand or 0.08% of total assets,  at
June 30, 2006.  The decrease was  primarily the result of $912 thousand in loans
reclassified as performing due to improved  economic  performance,  $10 thousand
transferred  to real estate  owned,  $7  thousand  in charged off loans,  and $1
thousand in repayments,  which were  partially  offset by $251 thousand in loans
classified as non-performing.

Impact of Inflation and Changing Prices. The consolidated  financial  statements
of the  Company  and  related  notes  presented  herein  have been  prepared  in
accordance with U.S. generally accepted accounting  principles which require the
measurement of financial  condition and operating results in terms of historical
dollars,  without  considering changes in the relative purchasing power of money
over time due to inflation.

Unlike  most  industrial   companies,   substantially  all  of  the  assets  and
liabilities  of a financial  institution  are  monetary in nature.  As a result,
interest  rates  have a more  significant  impact on a  financial  institution's
performance  than the effects of general levels of inflation.  Interest rates do
not  necessarily  move in the same  direction  or in the same  magnitude  as the
prices of goods and  services  since such prices are  affected by inflation to a
larger degree than interest  rates.  In the current  interest rate  environment,
liquidity

                                       12
<PAGE>

and the maturity  structure of the Company's assets and liabilities are critical
to the maintenance of acceptable performance levels.

Recent  Accounting and Regulatory  Pronouncements.  The Company's  discussion of
recent  accounting and regulatory  pronouncements  can be found in Note 1 of the
Company's Consolidated Financial Statements.

QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  primary  market risk  exposure  is interest  rate risk and, to a
lesser extent, liquidity risk. All of the Company's transactions are denominated
in US dollars with no specific foreign exchange  exposure.  The Savings Bank has
no agricultural  loan assets and therefore would not have a specific exposure to
changes in commodity prices.  Any impacts that changes in foreign exchange rates
and  commodity  prices would have on interest  rates are assumed to be exogenous
and will be analyzed on an ex post basis.
                           -- ----

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

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

Financial institutions derive their income primarily from the excess of interest
collected over interest paid. The rates of interest an institution  earns on its
assets and owes on its liabilities generally are established contractually for a
period of time.  Since market interest rates change over time, an institution is
exposed to lower profit margins (or losses) if it cannot adapt to  interest-rate
changes. For example, assume that an institution's assets carry intermediate- or
long-term  fixed  rates  and that  those  assets  were  funded  with  short-term
liabilities.   If  market  interest  rates  rise  by  the  time  the  short-term
liabilities  must be  refinanced,  the  increase in the  institution's  interest
expense on its liabilities may not be sufficiently  offset if assets continue to
earn at the long-term fixed rates.  Accordingly,  an institution's profits could
decrease on existing assets because the  institution  will either have lower net
interest income or,  possibly,  net interest  expense.  Similar risks exist when
assets are subject to  contractual  interest-rate  ceilings,  or rate  sensitive
assets are funded by longer-term,  fixed-rate  liabilities in a  decreasing-rate
environment.

During  fiscal 2006,  the Federal Open Market  Committee  increased its targeted
federal  funds rate by two hundred  basis  points from 3.25% at June 30, 2005 to
5.25% at June 30, 2006.  The  benchmark  two and ten year  treasury  yields were
5.16% and 5.15%  respectively  at June 30, 2006,  as compared to 3.66% and 3.94%
respectively  at June  30,  2005.  These  changes  in  short,  intermediate  and
long-term  market  interest rates and the flattening of the Treasury yield curve
have precipitated  continued  prepayments in the Company's loan,  investment and
mortgage-backed  securities portfolios and a marked compression of industry-wide
net interest margins.

Principal  repayments  on the Company's  loan,  investment  and  mortgage-backed
securities  portfolios  for the fiscal year ended June 30, 2006,  totaled  $25.5
million, $106.9 million and $97.8 million,  respectively.  In response to higher
levels  of  liquidity  the  Company   rebalanced   its  loan,   investment   and
mortgage-backed securities portfolios.

                                       13
<PAGE>

Due to the term structure of market  interest  rates,  the Company  continued to
reduce its  portfolio  originations  of  long-term  fixed rate  mortgages  while
continuing to offer such loans on a correspondent  basis. The Company also makes
available for origination  residential  mortgage loans with interest rates which
adjust pursuant to a designated  index,  although  customer  acceptance has been
somewhat limited in the Savings Bank's market area. The Company will continue to
selectively offer commercial real estate, land acquisition and development,  and
shorter-term   construction  loans,  primarily  on  residential  properties,  to
partially  increase  interest  income while  limiting  interest  rate risk.  The
Company has also emphasized higher yielding home equity and small business loans
to existing customers and seasoned prospective customers.

The Company purchased fixed rate callable U. S. Government Agency bonds in order
to earn a spread  against the Company's  long-term  FHLB advances while limiting
interest rate risk within the portfolio.  Within the mortgage-backed  securities
portfolio,  the Company  continued to purchase floating rate securities in order
to provide current income and in response to rising  short-term  market interest
rates.  Each of the  aforementioned  strategies  also helped to better match the
interest-rate  and liquidity risks associated with the Savings Bank's customers'
liquidity preference for shorter term deposit products.

During fiscal 2006 principal  investment  purchases were comprised of:  floating
rate collateralized  mortgage  obligations which reprice monthly - $91.4 million
with an original weighted average yield of 4.61%; callable fixed rate government
agency bonds with  initial  lock-out  periods as follows:  0 - 12 months - $35.7
million with a weighted  average yield to call of  approximately  6.76%, 13 - 24
months - $28.6 million with a weighted  average  yield to call of  approximately
6.04%,  25 - 36 months - $19.0 million with a weighted  average yield to call of
approximately  6.11% and over 36 months - $3.0 million  with a weighted  average
yield  to call of  approximately  6.0%;  and  callable  fixed to  floating  rate
government  agency bonds which will reprice within  twenty-four to  thirty-three
months - $25.0  million with a weighted  average yield of  approximately  5.07%.
Major  investment  proceeds  received  during fiscal 2006 were:  mortgage-backed
securities - $97.8  million;  callable  government  agency bonds - $85.0 million
with a weighted average yield of approximately 3.63%; tax-free municipal bonds -
$12.4 million with a weighted  average yield of approximately  5.89%;  corporate
demand notes - $7.3 million with a weighted  average  semiannual yield of 4.34%;
and taxable  municipal  bonds - $120 thousand  with a weighted  average yield of
6.61%.

As of June 30, 2006, the implementation of these asset and liability  management
initiatives resulted in the following:

     1)   $153.5 million or 98.5% of the Company's  portfolio of mortgage-backed
          securities  (including  collateralized  mortgage obligations - "CMOs")
          were comprised of floating rate  instruments that reprice on a monthly
          basis.
     2)   $73.0  million  or 35.7% of the  Company's  investment  portfolio  was
          comprised of fixed to floating rate U.S. Government Agency bonds which
          will reprice as follows: 3 months or less - $5.0 million; 3 - 6 months
          - $28.0  million;  6 - 12  months - $15.0  million;  and over 1 year -
          $25.0  million.  Management  currently  believes  that these bonds are
          likely to be repaid during the intervals shown.
     3)   $86.4  million  or 42.3% of the  Company's  investment  portfolio  was
          comprised of fixed-rate  callable U.S.  Government  Agency bonds which
          are callable as follows: 3 months or less - $9.9 million; 3 - 6 months
          - $20.3 million;  6 - 12 months - $20.6  million;  1 - 2 years - $13.5
          million; and over 2 years - $22.1 million.  These bonds may or may not
          actually be redeemed  prior to maturity (i.e.  called)  depending upon
          the level of market interest rates at their respective call dates.
     4)   $15.2  million  or  7.4% of the  Company's  investment  portfolio  was
          comprised of U.S.  Government  Agency Step-up bonds which will reprice
          as follows:  6 - 12 months - $8.5  million  from 4.00% to 7.00%,  $2.0
          million from 4.40% to 7.00%; and 1 - 2 years - $4.7 million from 4.70%
          to 6.00%.  Management  believes that  substantially all of these bonds
          are likely to be repaid during the intervals shown.
     5)   An  aggregate  of $31.1  million  or 55.8% of the  Company's  net loan
          portfolio had adjustable  interest rates or maturities of less than 12
          months; and
     6)   The maturity distribution of the Company's borrowings is as follows: 1
          month or less - $99.2 million or 41.7%; 1 - 3 years - $13.5 million or
          5.7%; 3 - 5 years - $112.6 million or 47.3%;  and over 5 years - $12.5
          million or 5.3%.

                                       14
<PAGE>

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

The  following  table  sets forth  certain  information  at the dates  indicated
relating  to  the  Company's   interest-earning   assets  and   interest-bearing
liabilities which are estimated to mature or are scheduled to reprice within one
year.

                                                          June 30,
                                              --------------------------------
                                                2006        2005        2004
                                              --------    --------    --------
                                                    (Dollars in Thousands)
Interest-earning assets maturing or
   repricing within one year                  $273,884    $318,015    $288,451
Interest-bearing liabilities maturing or
   repricing within one year                   194,509     181,085     171,655
                                              --------    --------    --------

Interest sensitivity gap                      $ 79,375    $136,930    $116,796
                                              ========    ========    ========
Interest sensitivity gap as a percentage of
   total assets                                  18.82%       32.5%       26.9%
Ratio of assets to liabilities
   maturing or repricing within one year        140.81%      175.6%      168.0%

During fiscal 2006, the Company  managed its one year interest  sensitivity  gap
by: (1) limiting the portfolio  origination of long-term  fixed rate  mortgages;
(2)  emphasizing  loans  with  shorter  terms  or  repricing  frequencies;   (3)
purchasing  investments  with  call  protection  of 2  years  or  more;  and (4)
purchasing floating rate CMO's which reprice on a monthly basis.

                                       15
<PAGE>

The following table  illustrates  the Company's  estimated  stressed  cumulative
repricing gap - the difference between the amount of interest-earning assets and
interest-bearing  liabilities  expected to reprice at a given point in time - at
June 30, 2006. The table estimates the impact of an upward or downward change in
market interest rates of 100 and 200 basis points.

<TABLE>
<CAPTION>
                                                  Cumulative Stressed Repricing Gap
                                                  ---------------------------------

                      Month 3       Month 6      Month 12       Month 24      Month 36      Month 60       Long Term
                      -------       -------      --------       --------      --------      --------       ---------
<S>                       <C>           <C>          <C>            <C>           <C>          <C>              <C>
                                                          (Dollars in Thousands)
Base Case Up 200 bp
-------------------
Cummulative
  Gap ($'s)           (82,423)      (60,013)     (64,152)       (54,200)      (56,770)      (68,692)         26,500
% of Total
  Assets                -19.5%        -14.2%       -15.2%         -12.9%        -13.5%        -16.3%            6.3%
Base Case Up 100 bp
-------------------
Cummulative
  Gap ($'s)           (28,604)        5,763        1,773         (4,436)       (6,878)      (67,646)         26,500
% of Total
  Assets                 -6.8%          1.4%         0.4%          -1.1%         -1.6%        -16.0%            6.3%
Base Case No Change
-------------------
Cummulative
  Gap ($'s)            46,259        82,977       79,375         71,124        67,744       (43,674)         26,500
% of Total
  Assets                 11.4%         19.7%        18.8%          16.9%         15.4%        -10.4%            6.3%
Base Case Down 100 bp
-------------------
Cummulative
  Gap ($'s)            62,591       118,590      136,469        143,418       151,751        46,585          26,500
% of Total
  Assets                 14.8%         28.1%        32.4%          34.0%         36.0%         11.0%            6.3%
Base Case Down 200 bp
-------------------
Cummulative
  Gap ($'s)            89,491       132,420      151,229        151,230       159,529        52,715          26,500
% of Total
  Assets                 21.2%         31.4%        35.9%          35.9%         37.8%         12.5%            6.3%
</TABLE>


Beginning in the third  quarter of fiscal 2001,  the Company began to utilize an
income  simulation  model to measure  interest rate risk and to manage  interest
rate  sensitivity.  The Company  believes  that income  simulation  modeling may
enable the  Company to better  estimate  the  possible  effects on net  interest
income  due to  changing  market  interest  rates.  Other key  model  parameters
include:  estimated  prepayment  rates on the  Company's  loan,  mortgage-backed
securities and investment  portfolios;  savings decay rate assumptions;  and the
repayment terms and embedded options of the Company's borrowings.

                                       16
<PAGE>

The following  table presents the simulated  impact of a 100 and 200 basis point
upward or downward shift in market  interest  rates and the estimated  impact on
net interest income,  return on average equity, return on average assets and the
market value of portfolio  equity.  This  analysis  was done  assuming  that the
interest-earning asset and interest-bearing  liability levels at the end of each
fiscal year remained constant.

           Analysis of Sensitivity to Changes in Market Interest Rates
           -----------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Modeled Change in Market Interest Rates
                        ----------------------------------------------------------------------------------------------------------
                                             June 30, 2006                                       June 30, 2005
                        ----------------------------------------------------   ---------------------------------------------------
Estimated impact on:      -200       -100         0        +100       +200       -200      -100         0        +100       +200
--------------------      ----       ----         -        ----       ----       ----      ----         -        ----       ----
<S>                        <C>        <C>        <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>
Change in net
interest income          -28.0%     -11.0%       0.00%    -11.4%     -46.1%     -88.1%    -26.6%       0.00%      17.6%      38.0%

Return on average
equity                     7.83%     10.74%     12.59%     10.69%      4.65%    -5.26%      4.42%      8.33%     10.83%     13.69%
Return on average
assets                     0.59%      0.78%      0.92%      0.78%      0.32%    -0.34%      0.30%      0.58%      0.76%      0.97%

Market value of
equity (in thousands)   $28,869    $33,371    $33,690    $25,363    $ 5,881    $11,310   $18,758    $24,370    $23,484    $15,770

</TABLE>

The  table  below   provides   information   about  the  Company's   anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed  letters  and  lines  of  credit.  The  Company  used no  derivative
financial  instruments  to hedge such  anticipated  transactions  as of June 30,
2006.

                            Anticipated Transactions
      --------------------------------------------------------------------
                                                     (Dollars in Thousands)
      Undisbursed construction and development loans
            Fixed rate                                       $      5,571
                                                                     7.58%

            Adjustable rate                                  $      3,941
                                                                     8.94%

      Undisbursed lines of credit
            Adjustable rate                                  $      7,662
                                                                     7.85%

      Loan origination commitments
            Fixed rate                                       $        762
                                                                     7.19%

      Letters of credit
            Adjustable rate                                  $        694
                                                                     9.27%


                                                             ------------
                                                             $     18,630
                                                             ============

                                       17
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors and Stockholders
WVS Financial Corp.

We have audited the  accompanying  consolidated  balance  sheet of WVS Financial
Corp. and subsidiary as of June 30, 2006 and 2005, and the related  consolidated
statements of income, stockholders' equity, and cash flows for each of the years
in the three-year period ended June 30, 2006. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of WVS Financial Corp.
and subsidiary as of June 30, 2006 and 2005, and the results of their operations
and their cash flows for each of the years in the  three-year  period ended June
30, 2006, in conformity with U.S. generally accepted accounting principles.




/s/ S.R. Snodgrass, A.C.
Wexford, PA
July 28, 2006

                                            18
<PAGE>
<TABLE>
<CAPTION>

                                    WVS FINANCIAL CORP.
                                 CONSOLIDATED BALANCE SHEET
                           (In thousands, except per share data)

                                                                            June 30,
                                                                        2006         2005
                                                                     ---------    ---------
<S>                                                                         <C>       <C>
ASSETS
      Cash and due from banks                                        $   1,099    $     900
      Interest-earning demand deposits                                      97        2,666
                                                                     ---------    ---------
      Total cash and cash equivalents                                    1,196        3,566
      Investment securities available for sale (amortized
         cost of $8,497 and $9,155)                                      8,469        9,155
      Investment securities held to maturity (market value
         of $185,680 and $174,323)                                     187,952      173,911
      Mortgage-backed securities available for sale
         (amortized cost of $2,229 and $2,893)                           2,292        3,120
      Mortgage-backed securities held to maturity
         (market value of $152,706 and $159,566)                       153,461      159,031
      Net loans receivable (allowance for loan losses of
         $957 and $1,121)                                               55,702       60,151
      Accrued interest receivable                                        2,921        2,057
      Federal Home Loan Bank stock, at cost                              7,861        7,769
      Premises and equipment                                               864          939
      Other assets                                                       1,024        1,345
                                                                     ---------    ---------

              TOTAL ASSETS                                           $ 421,742    $ 421,044
                                                                     =========    =========

LIABILITIES
      Deposits                                                       $ 151,713    $ 164,706
      Federal Home Loan Bank advances: long-term                       138,579      142,736
      Federal Home Loan Bank advances: short-term                       23,150       12,300
      Other borrowings                                                  76,048       69,680
      Accrued interest payable                                           1,451        1,260
      Other liabilities                                                  1,383        1,161
                                                                     ---------    ---------
TOTAL LIABILITIES                                                      392,324      391,843
                                                                     ---------    ---------

STOCKHOLDERS' EQUITY
      Preferred stock, no par value; 5,000,000 shares authorized;
         none outstanding                                                   --           --
      Common stock, par value $0.01; 10,000,000 shares authorized;
         3,769,838 and 3,762,618 shares issued                              38           38
      Additional paid-in capital                                        20,817       20,726
      Treasury stock (1,434,606 and 1,368,508 shares at cost)          (21,679)     (20,594)
      Retained earnings - substantially restricted                      30,221       28,885
      Accumulated other comprehensive income                                23          149
      Unallocated shares - Recognition and Retention Plans                  (2)          (3)
                                                                     ---------    ---------
TOTAL STOCKHOLDERS' EQUITY                                              29,418       29,201
                                                                     ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 421,742    $ 421,044
                                                                     =========    =========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                            19
<PAGE>
<TABLE>
<CAPTION>

                                   WVS FINANCIAL CORP.
                            CONSOLIDATED STATEMENT OF INCOME
                          (In thousands, except per share data)

                                                           Year Ended June 30,
                                                  2006           2005           2004
                                               -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>
INTEREST AND DIVIDEND INCOME
      Loans                                    $     4,009    $     4,206    $     5,180
      Investment securities                          9,029          9,499          8,350
      Mortgage-backed securities                     8,919          3,981          2,347
      Interest-earning demand deposits                  15             10              9
      Federal Home Loan Bank stock                     276            178            120
                                               -----------    -----------    -----------
          Total interest and dividend income        22,248         17,874         16,006
                                               -----------    -----------    -----------

INTEREST EXPENSE
      Deposits                                       3,123          2,238          2,321
      Federal Home Loan Bank advances                7,934          8,119          8,120
      Other borrowings                               4,403          1,487            546
                                               -----------    -----------    -----------
          Total interest expense                    15,460         11,844         10,987
                                               -----------    -----------    -----------

NET INTEREST INCOME                                  6,788          6,030          5,019
Recovery for loan losses                              (161)           (46)          (794)
                                               -----------    -----------    -----------
NET INTEREST INCOME AFTER
      RECOVERY FOR LOAN LOSSES                       6,949          6,076          5,813
                                               -----------    -----------    -----------

NONINTEREST INCOME
      Service charges on deposits                      380            361            385
      Investment securities gains                       30            336             20
      Other                                            295            295            310
                                               -----------    -----------    -----------
          Total noninterest income                     705            992            715
                                               -----------    -----------    -----------

NONINTEREST EXPENSE
      Salaries and employee benefits                 1,970          1,971          1,992
      Occupancy and equipment                          387            438            433
      Data processing                                  271            267            231
      Correspondent bank charges                       132            134            142
      Other                                            761            722            809
                                               -----------    -----------    -----------
          Total noninterest expense                  3,521          3,532          3,607
                                               -----------    -----------    -----------

Income before income taxes                           4,133          3,536          2,921

Income taxes                                         1,287            627            619
                                               -----------    -----------    -----------

NET INCOME                                     $     2,846    $     2,909    $     2,302
                                               ===========    ===========    ===========

EARNINGS PER SHARE:
      Basic                                    $      1.21    $      1.20    $      0.91
      Diluted                                         1.21           1.19           0.90

AVERAGE SHARES OUTSTANDING:
      Basic                                      2,357,217      2,432,267      2,535,796
      Diluted                                    2,359,996      2,437,647      2,544,404

</TABLE>

See accompanying notes to the consolidated financial statements.

                                           20
<PAGE>
<TABLE>
<CAPTION>

                                                        WVS FINANCIAL CORP.
                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                               (In thousands, except per share data)

                                                                                    Retained
                                                                                    Earnings-              Accumulated
                                                            Additional              Substan-  Unallocated      Other
                                                   Common     Paid-in   Treasury     tially   Shares Held  Comprehensive
                                                    Stock     Capital     Stock    Restricted    by RRP    Income (Loss)   Total
                                                  ---------  ---------  ---------  ----------  ---------   ------------  ---------
<S>                                                    <C>    <C>       <C>          <C>            <C>           <C>     <C>
Balance June 30, 2003                             $      37  $  20,212  $ (16,767)  $  26,857  $     (50)  $        329  $  30,618
                                                  ---------  ---------  ---------   ---------  ---------   ------------  ---------

Net income                                                                              2,302                                2,302
Unrealized loss on available-
  for-sale securities, net of taxes of $25                                                                          (48)       (48)
Tax benefit from stock grants issued
  under RRPs                                                        27                                                          27
Accrued compensation expense for RRPs                                                                  5                         5
Cancellation of unallocated RRP shares                                                     40                                   40
Exercise of stock options                                 1        488                                                         489
Purchase of treasury stock                                                 (2,610)                                          (2,610)
Cash dividends declared ($0.64 per share)                                              (1,624)                              (1,624)
                                                  ---------  ---------  ---------   ---------  ---------   ------------  ---------

Balance June 30, 2004                                    38     20,727    (19,377)     27,535         (5)           281     29,199

Net income                                                                              2,909                                2,909
Unrealized loss on available-
  for-sale securities, net of taxes of $68                                                                         (132)      (132)
Purchase of treasury stock                                                 (1,217)                                          (1,217)
Cash dividends declared ($0.64 per share)                                              (1,559)                              (1,559)
Other, net                                                          (1)                                2                         1
                                                  ---------  ---------  ---------   ---------  ---------   ------------  ---------

Balance June 30, 2005                                    38     20,726    (20,594)     28,885         (3)           149     29,201

Net income                                                                              2,846                                2,846
Unrealized loss on available-
  for-sale securities, net of tax benefit of $65                                                                   (126)      (126)
Exercise of stock options                                           91                                                          91
Purchase of treasury stock                                                 (1,085)                                          (1,085)
Cash dividends declared ($0.64 per share)                                              (1,510)                              (1,510)
Other, net                                                                                             1                         1
                                                  ---------  ---------  ---------   ---------  ---------   ------------  ---------

Balance June 30, 2006                             $      38  $  20,817  $ (21,679)  $  30,221  $      (2)  $         23  $  29,418
                                                  =========  =========  =========   =========  =========   ============  =========


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

                                                                21
<PAGE>
<TABLE>
<CAPTION>

                                               WVS FINANCIAL CORP.
                                       CONSOLIDATED STATEMENT OF CASH FLOWS
                                                  (In thousands)
                                                                                      Year Ended June 30,
                                                                                 2006         2005         2004
                                                                              ---------    ---------    ---------
<S>                                                                                <C>           <C>          <C>
OPERATING ACTIVITIES
      Net income                                                              $   2,846    $   2,909    $   2,302
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Recovery for loan losses                                                (161)         (46)        (794)
           Depreciation                                                             154          193          188
           Investment securities gains                                              (30)        (336)         (20)
           Amortization (accretion) of discounts, premiums, and
             deferred loan fees                                                    (234)        (415)       1,166
           Purchase of trading securities                                            --           --         (999)
           Sale of trading securities                                                --        1,000           --
           Deferred income taxes                                                    181           73          171
           Decrease (increase) in accrued interest receivable                      (864)         399          344
           Increase (decrease) in accrued interest payable                          191           63         (252)
           Other, net                                                               377          (43)          20
                                                                              ---------    ---------    ---------
                 Net cash provided by operating activities                        2,460        3,797        2,126
                                                                              ---------    ---------    ---------

INVESTING ACTIVITIES
      Available for sale:
           Purchase of investment and mortgage-backed
             securities                                                          (8,690)     (26,145)     (23,890)
           Proceeds from repayments of investment and
             mortgage-backed securities                                           9,395       20,364       45,852
           Proceeds from sales of investment and
               mortgage-backed securities                                         1,016        1,409          251
      Held to maturity:
           Purchase of investment and mortgage-backed
             securities                                                        (202,891)    (368,064)    (401,567)
           Proceeds from repayments of investment and
             mortgage-backed securities                                         194,306      377,002      288,489
      Net decrease in net loans receivable                                        4,581        7,733       23,751
      Purchase of Federal Home Loan Bank stock                                   (5,994)      (8,761)      (1,584)
      Redemption of Federal Home Loan Bank stock                                  5,902        8,524        1,849
      Acquisition of premises and equipment                                         (79)         (55)         (34)
      Other, net                                                                     60           --          572
                                                                              ---------    ---------    ---------
                 Net cash provided by (used for) investing activities            (2,394)      12,007      (66,311)
                                                                              ---------    ---------    ---------

FINANCING ACTIVITIES
      Net Increase (decrease) in deposits                                       (12,993)       4,143      (10,363)
      Net increase (decrease) in Federal Home Loan Bank short-term advances      10,850       12,300       (3,875)
      Net increase (decrease) in other borrowings                                 6,368      (21,959)      82,186
      Proceeds from Federal Home Loan Bank long-term advances                        --           --          500
      Repayments of Federal Home Loan Bank long-term advances                    (4,157)      (7,000)        (279)
      Net proceeds from exercise of stock options                                    91           --          489
      Cash dividends paid                                                        (1,510)      (1,559)      (1,624)
      Purchase of treasury stock                                                 (1,085)      (1,217)      (2,610)
                                                                              ---------    ---------    ---------
                 Net cash provided by (used for) financing activities            (2,436)     (15,292)      64,424
                                                                              ---------    ---------    ---------

Increase (decrease) in cash and cash equivalents                                 (2,370)         512          239

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                    3,566        3,054        2,815
                                                                              ---------    ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                      $   1,196    $   3,566    $   3,054
                                                                              =========    =========    =========

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
          Interest                                                            $  15,269    $  11,782    $  11,238
          Taxes                                                                     915          655          363
</TABLE>

See accompanying notes to the consolidated financial statements.

                                                       22
<PAGE>

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


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization
         ------------

         WVS    Financial    Corp.    ("WVS"    or   the    "Company")    is   a
         Pennsylvania-chartered  unitary  bank  holding  company  which owns 100
         percent of the common  stock of West View  Savings Bank ("West View" or
         the  "Savings  Bank").  The  operating  results of the  Company  depend
         primarily  upon the  operating  results of the  Savings  Bank and, to a
         lesser extent, income from  interest-earning  assets such as investment
         securities.

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

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

         Basis of Presentation
         ---------------------

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

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

         Investment and Mortgage-Backed Securities
         -----------------------------------------

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

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

                                       23
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Trading Securities
         ------------------

         Trading  securities are held for resale in  anticipation  of short-term
         (generally  90 days or less)  fluctuations  in market  prices.  Trading
         securities are stated at fair value.  Realized and unrealized gains and
         losses are  included in  noninterest  income as  investment  securities
         gains.

         Net Loans Receivable
         --------------------

         Net loans receivable are reported at their principal amount, net of the
         allowance for loan losses and deferred loan fees. Interest on mortgage,
         consumer, and commercial loans is recognized on the accrual method. The
         Company's  general  policy is to stop accruing  interest on loans when,
         based upon relevant factors, the collection of principal or interest is
         doubtful,  regardless of the contractual  status.  Interest received on
         nonaccrual  loans is  recorded as income or applied  against  principal
         according to  management's  judgment as to the  collectibility  of such
         principal.

         Loan origination and commitment  fees, and all incremental  direct loan
         origination  costs,  are deferred and recognized  over the  contractual
         remaining lives of the related loans on a level-yield basis.

         Allowance for Loan Losses
         -------------------------

         The allowance for loan losses  represents  the amount which  management
         estimates  is adequate to provide for probable  losses  inherent in its
         loan  portfolio.  The  allowance  method is used in providing  for loan
         losses. Accordingly,  all loan losses are charged to the allowance, and
         all  recoveries  are credited to it. The  allowance  for loan losses is
         established  through a provision for loan losses charged to operations.
         The  provision  for  loan  losses  is based  on  management's  periodic
         evaluation  of  individual  loans,  economic  factors,  past  loan loss
         experience, changes in the composition and volume of the portfolio, and
         other relevant factors.  The estimates used in determining the adequacy
         of the allowance  for loan losses,  including the amounts and timing of
         future  cash  flows  expected  on  impaired  loans,   are  particularly
         susceptible to changes in the near term.

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

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

                                       24
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Real Estate Owned
         -----------------

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

         Premises and Equipment
         ----------------------

         Premises  and   equipment   are  stated  at  cost,   less   accumulated
         depreciation. Depreciation is principally computed on the straight-line
         method over the  estimated  useful lives of the related  assets,  which
         range from 3 to 10 years for furniture and equipment and 25 to 50 years
         for building  premises.  Leasehold  improvements are amortized over the
         shorter  of their  estimated  useful  lives or their  respective  lease
         terms, which range from 7 to 15 years. Expenditures for maintenance and
         repairs  are  charged  against  income  as  incurred.  Costs  of  major
         additions and improvements are capitalized.

         Income Taxes
         ------------

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

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

         Earnings Per Share
         ------------------

         The Company  provides dual  presentation of basic and diluted  earnings
         per share.  Basic  earnings  per share are  calculated  by dividing net
         income available to common stockholders by the weighted-average  number
         of common shares  outstanding  during the period.  Diluted earnings per
         share  are  calculated  by  dividing  net  income  available  to common
         stockholders,  adjusted for the effects of any dilutive securities,  by
         the weighted-average number of common shares outstanding,  adjusted for
         the effects of any dilutive securities.

         Stock Options
         -------------

         The Company  accounts for  stock-based  compensation in accordance with
         Financial  Accounting  Standard  (FAS)  No.  123R.  FAS  123R  requires
         compensation  costs related to share-based  payment  transactions to be
         recognized in the financial statements (with limited  exceptions).  The
         amount of  compensation  cost is measured based on the grant-date  fair
         value of the equity or liability instruments issued.  Compensation cost
         is  recognized  over the period  that an employee  provides  service in
         exchange for the award.  The Company did not have any non-vested  stock
         options  outstanding  during the periods ended June 30, 2006, 2005, and
         2004.  There were no options  issued  during the periods ended June 30,
         2006 and 2005.

                                       25
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Comprehensive Income
         --------------------

         The  Company  is  required  to  present  comprehensive  income  and its
         components in a full set of general- purpose  financial  statements for
         all  periods  presented.   Other   comprehensive   income  is  composed
         exclusively   of  net   unrealized   holding  gains   (losses)  on  its
         available-for-sale  securities  portfolio.  The  Company has elected to
         report the effects of its other comprehensive income as part of Note 3.

         Cash Flow Information
         ---------------------

         Cash  and  cash  equivalents  include  cash  and  due  from  banks  and
         interest-earning demand deposits.

         Reclassification of Comparative Figures
         ---------------------------------------

         Certain  comparative  amounts for prior years have been reclassified to
         conform to current year presentations.  Such  reclassifications did not
         affect net income or stockholders' equity.

         Recent Accounting Pronouncements
         --------------------------------

         In February 2006,  the Financial  Accounting  Standards  Board ("FASB")
         issued Statement of Financial  Accounting  ("FAS") No. 155,  Accounting
         for Certain Hybrid Instruments,  as an amendment of FASB Statements No.
         133 and  140.  FAS No.  155  allows  financial  instruments  that  have
         embedded  derivatives to be accounted for as a whole  (eliminating  the
         need to bifurcate the derivative from its host) if the holder elects to
         account for the whole instrument on a fair value basis.  This statement
         is effective for all financial instruments acquired or issued after the
         beginning of an entity's first fiscal year that begins after  September
         15,  2006.  The  adoption of this  standard  is not  expected to have a
         material  effect on the  Company's  results of  operations or financial
         position.

         In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of
         Financial Assets. This Statement, which is an amendment to FAS No. 140,
         will simplify the accounting for servicing assets and liabilities, such
         as those common with mortgage securitization activities.  Specifically,
         FAS No. 156 addresses the  recognition  and  measurement  of separately
         recognized servicing assets and liabilities and provides an approach to
         simplify efforts to obtain hedge-like (offset) accounting.  FAS No. 156
         also clarifies when an obligation to service financial assets should be
         separately  recognized as a servicing  asset or a servicing  liability,
         requires  that a  separately  recognized  servicing  asset or servicing
         liability  be initially  measured at fair value,  if  practicable,  and
         permits  an entity  with a  separately  recognized  servicing  asset or
         servicing  liability to choose either of the amortization or fair value
         methods for subsequent  measurement.  The provisions of FAS No. 156 are
         effective  as of the  beginning  of the first  fiscal  year that begins
         after September 15, 2006. The adoption of this standard is not expected
         to have a material  effect on the  Company's  results of  operations or
         financial position.

         In June 2006,  the FASB issued FASB  Interpretation  No. 48 ("FIN 48"),
         Accounting for Uncertainty in Income Taxes. FIN 48 is an interpretation
         of FAS No. 109, Accounting for Income Taxes, and it seeks to reduce the
         diversity in practice  associated  with certain  aspects of measurement
         and recognition in accounting for income taxes. In addition, FIN No. 48
         requires expanded  disclosure with respect to the uncertainty in income
         taxes and is effective for fiscal years  beginning  after  December 15,
         2006.  The Company is currently  evaluating  the impact the adoption of
         the standard will have on the Company's results of operations.

                                       26
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

2.       EARNINGS PER SHARE

The following  table sets forth the computation of the  weighted-average  common
shares used to calculate basic and diluted earnings per share.

                                                2006        2005        2004
                                             ----------  ----------  ----------

Weighted-average common shares
      issued                                  3,765,511   3,762,892   3,747,821

Average treasury stock shares                (1,408,294) (1,330,625) (1,212,025)
                                             ----------  ----------  ----------

Weighted-average common shares and
     common stock equivalents used to
     calculate basic earnings per share       2,357,217   2,432,267   2,535,796

Additional common stock equivalents
     (stock options) used to calculate
     diluted earnings per share                   2,779       5,380       8,608
                                             ----------  ----------  ----------

Weighted-average common shares and
     common stock equivalents used
     to calculate diluted earnings per share  2,359,996   2,437,647   2,544,404
                                             ==========  ==========  ==========

         There are no convertible  securities that would affect the numerator in
         calculating basic and diluted earnings per share; therefore, net income
         as presented on the Consolidated Statement of Income is used.

3.       COMPREHENSIVE INCOME

         Other comprehensive income primarily reflects changes in net unrealized
         gains (losses) on  available-for-sale  securities.  Total comprehensive
         income for the years ended June 30 is summarized as follows:

<TABLE>
<CAPTION>
                                                             2006       2005       2004
                                                            -------    -------    -------
<S>                                                            <C>        <C>         <C>

Net Income                                                  $ 2,846    $ 2,909    $ 2,302
Other comprehensive income:
       Unrealized losses on available-for-sale securities      (221)      (536)       (93)
       Reclassification adjustment for gains included
       in net income                                             30        336         20
                                                            -------    -------    -------
Other comprehensive loss before tax                            (191)      (200)       (73)
Income tax benefit related to other
       comprehensive loss                                       (65)       (68)       (25)
                                                            -------    -------    -------
Other comprehensive loss, net of tax                           (126)      (132)       (48)
                                                            -------    -------    -------
Comprehensive income                                        $ 2,720    $ 2,777    $ 2,254
                                                            =======    =======    =======
</TABLE>

                                       27
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

4.       INVESTMENT SECURITIES

The amortized cost and estimated market values of investments are as follows:

<TABLE>
<CAPTION>
                                                       Gross        Gross         Estimated
                                       Amortized    Unrealized    Unrealized        Market
                                         Cost          Gains        Losses          Value
                                      -----------   -----------   -----------    -----------
<S>                                   <C>           <C>           <C>            <C>
2006
----
AVAILABLE FOR SALE
Corporate debt securities             $     8,497   $        --   $       (28)   $     8,469
                                      -----------   -----------   -----------    -----------

      Total                           $     8,497   $        --   $       (28)   $     8,469
                                      ===========   ===========   ===========    ===========

HELD TO MATURITY
U.S. Government agency securities     $   175,755   $        21   $    (2,771)   $   173,005
Obligations of states and political
  subdivisions                             12,197           482            (4)        12,675
                                      -----------   -----------   -----------    -----------

      Total                           $   187,952   $       503   $    (2,775)   $   185,680
                                      ===========   ===========   ===========    ===========
<CAPTION>
                                                       Gross        Gross         Estimated
                                       Amortized    Unrealized    Unrealized        Market
                                         Cost          Gains        Losses          Value
                                      -----------   -----------   -----------    -----------
<S>                                   <C>           <C>           <C>            <C>
2005
----
AVAILABLE FOR SALE
Corporate debt securities             $     9,155   $        --   $        --    $     9,155
                                      -----------   -----------   -----------    -----------

      Total                           $     9,155   $        --   $        --    $     9,155
                                      ===========   ===========   ===========    ===========

HELD TO MATURITY
U.S. Government agency securities     $   149,360   $        77   $      (493)   $   148,944
Obligations of states and political
  subdivisions                             24,551           848           (20)        25,379
                                      -----------   -----------   -----------    -----------

      Total                           $   173,911   $       925   $      (513)   $   174,323
                                      ===========   ===========   ===========    ===========
</TABLE>

         In 2006,  2005,  and 2004,  the Company  recorded  realized  investment
         security  gains,  and  unrealized  holding gains and losses for trading
         securities  of $30,  $336,  and $20.  Proceeds from sales of investment
         securities during 2006, 2005, and 2004 were $1,016, $1,409, and $251.

                                       28
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

4.       INVESTMENT SECURITIES (Continued)

         The amortized  cost and estimated  market values of debt  securities at
         June 30, 2006,  by  contractual  maturity,  are shown  below.  Expected
         maturities may differ from the contractual  maturities  because issuers
         may have the right to call securities prior to their final maturities.

                                      Due after   Due after
                             Due in      one        five
                            one year   through     through   Due after
                            or less   five years  ten years  ten years   Total
                            --------  ----------  ---------  ---------  --------
AVAILABLE FOR SALE
   Amortized cost           $  8,497         --   $     --   $     --   $  8,497
                            --------   --------   --------   --------   --------
   Estimated market value      8,469         --         --         --      8,469

HELD TO MATURITY
   Amortized cost           $     --   $    854   $ 49,094   $138,004   $187,952
   Estimated market value         --        875     48,538    136,267    185,680

         Investment  securities with amortized costs of $88,229 and $101,208 and
         estimated  market  values of $86,703 and  $100,951 at June 30, 2006 and
         2005, respectively,  were pledged to secure public deposits, repurchase
         agreements, and for other purposes as required by law.

5.       MORTGAGE-BACKED SECURITIES

         The  amortized  cost and  estimated  market  values of  mortgage-backed
         securities are as follows:

<TABLE>
<CAPTION>
                                                     Gross         Gross      Estimated
                                       Amortized   Unrealized   Unrealized      Market
                                         Cost        Gains        Losses        Value
                                      ----------   ----------   ----------    ----------
<S>                                   <C>          <C>          <C>           <C>
2006
----
AVAILABLE FOR SALE

Fannie Mae                            $       --   $       --   $       --    $       --
Government National Mortgage
  Association certificates                 2,171           61           --         2,232
Freddie Mac                                   --           --           --            --
Collateralized mortgage obligations           58            2           --            60
                                      ----------   ----------   ----------    ----------

     Total                            $    2,229   $       63   $       --    $    2,292
                                      ==========   ==========   ==========    ==========


HELD TO MATURITY

Fannie Mae                            $       --   $       --   $       --    $       --
Government National Mortgage
  Association certificates                    --           --           --            --
Freddie Mac                                   --           --           --            --
Collateralized mortgage obligations      153,461          216         (971)      152,706
                                      ----------   ----------   ----------    ----------

     Total                            $  153,461   $      216   $     (971)   $  152,706
                                      ==========   ==========   ==========    ==========
</TABLE>

                                       29
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

5.       MORTGAGE-BACKED SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                      Gross       Gross       Estimated
                                      Amortized    Unrealized   Unrealized      Market
                                         Cost         Gains       Losses        Value
                                      ----------   ----------   ----------    ----------
<S>                                      <C>              <C>          <C>       <C>
2005
----
AVAILABLE FOR SALE

Fannie Mae                            $      449   $       25   $       --    $      474
Government National Mortgage
  Association certificates                 2,333          196           --         2,529
Freddie Mac                                   44            1           --            45
Collateralized mortgage obligations           67            5           --            72
                                      ----------   ----------   ----------    ----------

     Total                            $    2,893   $      227   $       --    $    3,120
                                      ==========   ==========   ==========    ==========


HELD TO MATURITY

Fannie Mae                            $       16   $        1   $       --    $       17
Government National Mortgage
  Association certificates                   370           25           --           395
Freddie Mac                                    9            1           --            10
Collateralized mortgage obligations      158,636          525          (17)      159,144
                                      ----------   ----------   ----------    ----------

     Total                            $  159,031   $      552   $      (17)   $  159,566
                                      ==========   ==========   ==========    ==========
</TABLE>

The amortized cost and estimated market value of  mortgage-backed  securities at
June 30, 2006, by contractual maturity, are shown below. Expected maturities may
differ from the contractual  maturities  because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                               Due in       Due after      Due after
                               one year    one through    five through    Due after
                               or less      five years      ten years     ten years        Total
                            ------------   ------------   ------------   ------------   ------------
<S>                         <C>            <C>            <C>            <C>            <C>
AVAILABLE FOR SALE
   Amortized cost           $         --   $         --   $         --   $      2,229   $      2,229
   Estimated market value             --             --             --          2,292          2,292

HELD TO MATURITY
   Amortized cost           $         --   $         --   $         --   $    153,461   $    153,461
   Estimated market value             --             --             --        152,706        152,706
</TABLE>

At June 30, 2006 and 2005,  mortgage-backed securities with an amortized cost of
$138,349 and $112,047 and estimated market values of $137,827 and $112,730, were
pledged to secure borrowings with the Federal Home Loan Bank.

                                       30
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

6.       UNREALIZED LOSSES ON SECURITIES

The following table shows the Company's gross unrealized  losses and fair value,
aggregated by category and length of time that the  individual  securities  have
been in a continuous unrealized loss position, at June 30, 2006 and 2005.

<TABLE>
<CAPTION>
                                                                        2006
                             -----------------------------------------------------------------------------------------
                               Less Than Twelve Months        Twelve Months or Greater        Total
                             -----------------------------------------------------------------------------------------
                              Estimated        Gross          Estimated       Gross         Estimated        Gross
                               Market        Unrealized        Market       Unrealized        Market       Unrealized
                                Value          Losses           Value         Losses          Value          Losses
                             ------------   ------------    ------------   ------------    ------------   ------------
<S>                               <C>               <C>           <C>              <C>          <C>               <C>
U.S. government agencies
  securities                 $    104,620   $     (1,929)   $     38,389   $       (842)   $    143,009   $     (2,771)
Obligations of states and
    political subdivisions             --             --           1,315             (4)          1,315             (4)
Corporate debt securities             472            (28)             --             --             472            (28)
Collateralized mortgage
  obligations                     101,260           (648)         18,316           (323)        119,576           (971)
                             ------------   ------------    ------------   ------------    ------------   ------------

      Total                  $    206,352   $     (2,605)   $     58,020   $     (1,169)   $    264,372   $     (3,774)
                             ============   ============    ============   ============    ============   ============
<CAPTION>
                                                                        2005
                             -----------------------------------------------------------------------------------------
                               Less Than Twelve Months        Twelve Months or Greater        Total
                             -----------------------------------------------------------------------------------------
                              Estimated        Gross          Estimated       Gross         Estimated        Gross
                               Market        Unrealized        Market       Unrealized        Market       Unrealized
                                Value          Losses           Value         Losses          Value          Losses
                             ------------   ------------    ------------   ------------    ------------   ------------
<S>                          <C>            <C>             <C>            <C>             <C>            <C>
U.S. government agencies
  securities                 $    113,715   $       (493)   $         --   $         --    $    113,715   $       (493)
Obligations of states and
    political subdivisions             --             --           1,316            (20)          1,316            (20)
Collateralized mortgage
  obligations                      43,107            (16)            277             (1)         43,384            (17)
                             ------------   ------------    ------------   ------------    ------------   ------------

      Total                  $    156,822   $       (509)   $      1,593   $        (21)   $    158,415   $       (530)
                             ============   ============    ============   ============    ============   ============
</TABLE>

The policy of the Company is to recognize an other-than-temporary  impairment of
securities  where the fair  value has been  significantly  below  cost for three
consecutive quarters. For fixed-maturity  investments with unrealized losses due
to interest rates where the Company has the positive  intent and ability to hold
the  investment  for a period  of time  sufficient  to allow a market  recovery,
declines in value below cost are not assumed to be other than  temporary.  There
are 64 positions  that are  temporarily  impaired at June 30, 2006.  The Company
reviews its  position  quarterly  and has asserted  that at June 30,  2006,  the
declines  outlined  in the above  table  represent  temporary  declines  and the
Company does have the intent and ability to hold those securities to maturity or
to allow a market recovery.

The Company has  concluded  that any  impairment  of its  investment  securities
portfolio  is not  other  than  temporary  but is the  result of  interest  rate
changes,  sector credit changes, or Company-specific rating changes that are not
expected to result in the  noncollection  of principal  and interest  during the
period.

                                       31
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

7.       NET LOANS RECEIVABLE

         Major classifications of loans are summarized as follows:

                                                               2006        2005
                                                             -------     -------
First mortgage loans:
      1 - 4 family dwellings                                 $17,702     $20,680
      Construction                                            20,964      22,065
      Land acquisition and development                         3,221       5,884
      Multi-family dwellings                                   4,339       4,960
      Commercial                                               7,574       8,561
                                                             -------     -------
                                                              53,800      62,150
                                                             -------     -------
Consumer loans:
      Home equity                                              6,483       6,504
      Home equity lines of credit                              2,961       3,578
      Other                                                      962       1,089
                                                             -------     -------
                                                              10,406      11,171
                                                             -------     -------

Commercial loans                                               2,050         915
                                                             -------     -------

Less:
      Undisbursed construction and land development            9,512      12,882
      Net deferred loan fees                                      85          82
      Allowance for loan losses                                  957       1,121
                                                             -------     -------
                                                              10,554      14,085
                                                             -------     -------

Net loans receivable                                         $55,702     $60,151
                                                             =======     =======

         The  Company's  primary  business  activity is with  customers  located
         within its local trade area of Northern  Allegheny and Southern  Butler
         counties.  The Company has concentrated its lending efforts by granting
         residential and construction mortgage loans to customers throughout its
         immediate   trade  area.  The  Company  also   selectively   funds  and
         participates  in commercial and  residential  mortgage loans outside of
         its immediate trade area, provided such loans meet the Company's credit
         policy  guidelines.  At  June  30,  2006  and  2005,  the  Company  had
         approximately $15 million and $14 million, respectively, of outstanding
         loans for land  development  and  construction in the local trade area.
         Although the Company had a diversified  loan portfolio at June 30, 2006
         and 2005, loans outstanding to individuals and businesses are dependent
         upon the local economic conditions in its immediate trade area.

                                       32
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

7.       NET LOANS RECEIVABLE (Continued)

         Total nonaccrual loans and troubled debt restructurings and the related
         interest income recognized for the years ended June 30 are as follows:

                                                 2006         2005         2004
                                                ------       ------       ------

Principal outstanding                           $  308       $2,101       $2,181
                                                ------       ------       ------
Interest income that would
  have been recognized                              23          150          123
Interest income recognized                          10           99           94
                                                ------       ------       ------

Interest income foregone                        $   13       $   51       $   29
                                                ======       ======       ======

         The following table is a summary of the loans considered to be impaired
         as of June 30:

                                                 2006         2005         2004
                                                ------       ------       ------

Impaired loans with an allocated allowance      $   --       $   --       $1,900
Impaired loans without an allocated allowance       --           --           --
                                                ------       ------       ------
      Total impaired loans                      $   --       $   --       $1,900
                                                ======       ======       ======
Allocated allowance on impaired loans           $   --       $   --       $  762
Average impaired loans                              --           --        1,836
Income recognized on impaired loans                 --           --           89

         Certain  officers,  directors,  and their associates were customers of,
         and had  transactions  with,  the  Company  in the  ordinary  course of
         business.  A summary of loan  activity for those  directors,  executive
         officers, and their associates with aggregate loan balances outstanding
         of at least $60,000 during the years ended June 30 are as follows:

                                                              2006        2005
                                                             ------      ------

Balance, July 1                                              $  512      $  316
     Additions                                                  152         631
     Amounts collected                                         (291)       (435)
                                                             ------      ------

Balance, June 30                                             $  373      $  512
                                                             ======      ======

8.       ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses are as follows:

                                              2006          2005          2004
                                            -------       -------       -------

Balance, July 1                             $ 1,121       $ 1,370       $ 2,530
Add:
      Recovery for loan losses                 (161)          (46)         (794)
      Recoveries                                  4            34           158
Less:
      Loans charged off                           7           237           524
                                            -------       -------       -------

Balance, June 30                            $   957       $ 1,121       $ 1,370
                                            =======       =======       =======

                                       33
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

9.       ACCRUED INTEREST RECEIVABLE

         Accrued interest receivable consists of the following:

                                                              2006         2005
                                                             ------       ------

Investment and mortgage-backed securities                    $2,633       $1,758
Loans receivable                                                288          299
                                                             ------       ------

      Total                                                  $2,921       $2,057
                                                             ======       ======

10.      FEDERAL HOME LOAN BANK STOCK

         The Savings Bank is a member of the FHLB System. As a member, West View
         maintains an  investment in the capital stock of the FHLB of Pittsburgh
         in an amount not less than 65 basis  points of the  outstanding  unused
         FHLB  borrowing  capacity  and 4.65  percent  of its  outstanding  FHLB
         borrowings, as calculated throughout the year.

11.      PREMISES AND EQUIPMENT

         Major  classifications  of premises and  equipment  are  summarized  as
         follows:

                                                            2006           2005
                                                           ------         ------

Land and improvements                                      $  246         $  246
Buildings and improvements                                  1,994          1,992
Furniture, fixtures, and equipment                            928            851
                                                           ------         ------
                                                            3,168          3,089
Less accumulated depreciation                               2,304          2,150
                                                           ------         ------
     Total                                                 $  864         $  939
                                                           ======         ======

Depreciation  charged to operations was $154, $193, and $188 for the years ended
June 30, 2006, 2005, and 2004, respectively.

                                       34
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

12.      DEPOSITS

         Deposit accounts are summarized as follows:

<TABLE>
<CAPTION>
                                                2006                      2005
                                       -----------------------    -----------------------
                                                    Percent of                Percent of
                                         Amount     Portfolio       Amount     Portfolio
                                       ----------   ----------    ----------   ----------
<S>                                    <C>                 <C>    <C>                 <C>
Non-interest-earning checking          $   11,315          7.5%   $   11,926          7.2%
Interest-earning checking                  18,083         11.9        25,396         15.4
Savings accounts                           36,851         24.3        44,323         26.9
Money market accounts                      16,562         10.9        13,625          8.3
Advance payments by borrowers
   for taxes and insurance                  1,012          0.7         1,117          0.7
                                       ----------   ----------    ----------   ----------
                                           83,823         55.3        96,387         58.5
                                       ----------   ----------    ----------   ----------
Savings certificates:
      2.00% or less                            --           --        16,044          9.7
      2.01 - 4.00%                         31,786         20.9        44,895         27.3
      4.01 - 6.00%                         35,945         23.7         6,605          4.0
      6.01 - 6.95%                            159          0.1           775          0.5
                                       ----------   ----------    ----------   ----------
                                           67,890         44.7        68,319         41.5
                                       ----------   ----------    ----------   ----------

      Total                            $  151,713        100.0%   $  164,706        100.0%
                                       ==========   ==========    ==========   ==========
</TABLE>

         The maturities of savings certificates at June 30, 2006, are summarized
         as follows:

Within one year                                     $   42,855
Beyond one year but within two years                    14,585
Beyond two years but within three years                  4,653
Beyond three years                                       5,797
                                                    ----------

     Total                                          $   67,890
                                                    ==========

         Savings  certificates  with  balances of  $100,000 or more  amounted to
         $10,999 and $13,513 on June 30, 2006 and 2005, respectively.

         Interest expense by deposit category for the years ended June 30 are as
         follows:

                                                     2006       2005       2004
                                                    ------     ------     ------

Interest-earning checking accounts                  $   11     $   14     $   32
Savings accounts                                       280        311        334
Money market accounts                                  413        166        109
Savings certificates                                 2,408      1,734      1,831
Advance payments by borrowers for taxes
  and insurance                                         11         13         15
                                                    ------     ------     ------

     Total                                          $3,123     $2,238     $2,321
                                                    ======     ======     ======

                                       35
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

13.      FEDERAL HOME LOAN BANK ADVANCES

         The following table presents  contractual  maturities of FHLB long-term
         advances as of June 30:

<TABLE>
<CAPTION>

                                                   Weighted-        Stated interest
                           Maturity range          average             rate range
  Description          from            to       interest rate       from         to             2006              2005
-----------------    ----------      -------    ---------------    --------    --------     --------------    -------------
<S>                   <C>           <C>               <C>          <C>       <C>           <C>               <C>
Convertible           02/20/08       06/22/16          5.47%        4.96%     6.10%         $     137,500     $     137,500
Fixed rate            03/12/09       05/03/10          3.24         2.91      3.53                  1,079             5,236
                                                                                            -------------     -------------

                                                                                            $     138,579     $     142,736
                                                                                            =============     =============
</TABLE>

         Maturities of FHLB long-term  advances at June 30, 2006, are summarized
         as follows:

                                                       Weighted-
          Maturing During                              Average
         Fiscal Year Ended                             Interest
             June 30:                Amount              Rate
    --------------------------  ----------------  -----------------

               2008             $          3,000               5.48%
               2009                       10,500               4.99
               2010                       20,579               5.86
        2011 and thereafter              104,500               5.42
                                ----------------

               Total            $        138,579               5.45%
                                ================


         The terms of the convertible  advances reset to the three-month  London
         Interbank  Offered Rate  ("LIBOR")  and have  various  spreads and call
         dates ranging from three months to seven years.  The FHLB has the right
         to convert from a fixed rate to a  predetermined  floating  rate on its
         conversion  date  or  quarterly  thereafter.   Should  the  advance  be
         converted,  the Company  has the right to pay off the  advance  without
         penalty.  The FHLB advances are secured by the Company's FHLB stock and
         investment  securities  and  are  subject  to  substantial   prepayment
         penalties.

         The Company also  utilized  revolving  and  short-term  FHLB  advances.
         Short-term  FHLB  advances  generally  mature  within  90  days,  while
         revolving FHLB advances may be repaid by the Company  without  penalty.
         The following table presents information  regarding such advances as of
         June 30:

                                                            2006         2005
                                                           -------      -------

FHLB revolving and short-term advances:
      Ending balance                                       $23,150      $12,300
      Average balance during the year                        2,421        3,021
      Maximum month-end balance during the year             24,800       35,400
      Average interest rate during the year                   4.37%        2.63%
      Weighted-average rate at year-end                       5.32%        3.31%

         At June 30, 2006, the Company had remaining borrowing capacity with the
         FHLB of approximately $40 million.

         The  FHLB  advances  are  secured  by  the  Company's  FHLB  stock  and
         investment and  mortgage-backed  securities  held in safekeeping at the
         FHLB, and are subject to substantial prepayment penalties.

                                       36
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

14.      OTHER BORROWINGS

         Other borrowings include securities sold under agreements to repurchase
         with  securities  brokers.   The  outstanding   repurchase   agreements
         generally  mature  within 1 to 90 days  from the  transaction  date and
         qualifying   collateral  has  been   delivered.   The  Company  pledged
         investment  securities  with a carrying value of $78,259 and $69,775 at
         June 30, 2006 and 2005, respectively,  as collateral for the repurchase
         agreements  as  explained  in  Note 4.  The  following  table  presents
         information regarding other borrowings as of June 30:

                                                          2006           2005
                                                        --------       --------

Ending balance                                          $ 76,048       $ 69,680
Average balance during the year                           99,633         65,578
Maximum month-end balance during the year                122,185        117,976
Average interest rate during the year                       4.42%          2.27%
Weighted-average rate at year-end                           5.35%          3.29%

15.      COMMITMENTS AND CONTINGENT LIABILITIES

         Loan Commitments

         In the normal course of business,  there are various  commitments  that
         are not reflected in the Bank's financial statements. These instruments
         involve, to varying degrees,  elements of credit and interest rate risk
         in excess of the amount  recognized in the consolidated  balance sheet.
         The Bank's  exposure to credit loss in the event of  nonperformance  by
         the other parties to the financial  instruments  is  represented by the
         contractual  amounts as disclosed.  Losses,  if any, are charged to the
         allowance for loan losses.  Management minimizes its exposure to credit
         loss under these  commitments  by subjecting  them to credit  approval,
         review  procedures,  and collateral  requirements as deemed  necessary.
         Various loan commitments  totaling $18,630 and $20,473 at June 30, 2006
         and  2005,   respectively,   represent   financial   instruments   with
         off-balance  sheet risk. The commitments  outstanding at June 30, 2006,
         contractually mature in less than one year.

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

         Commitments  to extend  credit are  agreements to lend to a customer as
         long as there is no violation of any condition  established in the loan
         agreement.  These commitments are composed primarily of the undisbursed
         portion  of  construction   and  land   development   loans  (Note  7),
         residential, commercial real estate, and consumer loan originations.

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

         Litigation

         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
         financial condition of WVS.

                                       37
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

16.      REGULATORY CAPITAL

         Federal  regulations  require the Company and Savings  Bank to maintain
         minimum amounts of capital. Specifically,  each is required to maintain
         certain  minimum  dollar amounts and ratios of Total and Tier I Capital
         to Risk-Weighted Assets and of Tier I Capital to Average Total Assets.

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

         As of June 30, 2006 and 2005, the FDIC  categorized the Savings Bank as
         well capitalized  under the regulatory  framework for prompt corrective
         action. To be classified as a well capitalized  financial  institution,
         Total Risk-Based, Tier 1 Risk-Based, and Tier 1 Leverage Capital Ratios
         must be at least 10 percent, 6 percent, and 5 percent, respectively.

         The Company's and Savings Bank's actual capital ratios are presented in
         the following tables,  which show that both met all regulatory  capital
         requirements.

<TABLE>
<CAPTION>
                                                        June 30, 2006
                                           -----------------------------------------
                                                   WVS                West View
                                           -------------------   -------------------
                                            Amount     Ratio      Amount      Ratio
                                           --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>

Total Capital (to Risk-Weighted Assets)
---------------------------------------

Actual                                     $ 30,382     22.88%   $ 28,786     21.69%
To Be Well Capitalized                       13,279     10.00      13,273     10.00
For Capital Adequacy Purposes                10,623      8.00      10,619      8.00

Tier I Capital (to Risk-Weighted Assets)
----------------------------------------

Actual                                     $ 29,377     22.12%   $ 27,781     20.93%
To Be Well Capitalized                        7,967      6.00       7,964      6.00
For Capital Adequacy Purposes                 5,311      4.00       5,309      4.00

Tier I Capital (to Average Total Assets)
----------------------------------------

Actual                                     $ 29,377      6.78%   $ 27,781      6.40%
To Be Well Capitalized                       21,679      5.00      21,713      5.00
For Capital Adequacy Purposes                17,343      4.00      17,370      4.00

</TABLE>

                                       38
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

16.      REGULATORY CAPITAL (Continued)

                                                      June 30, 2005
                                          -------------------------------------
                                                 WVS              West View
                                          -----------------   -----------------
                                          Amount      Ratio   Amount      Ratio
                                          -------     -----   -------     -----

Total Capital (to Risk-Weighted Assets)
---------------------------------------

Actual                                    $30,172     21.80%  $28,417     20.74%
To Be Well Capitalized                     13,838     10.00    13,702     10.00
For Capital Adequacy Purposes              11,070      8.00    10,961      8.00

Tier I Capital (to Risk-Weighted Assets)
----------------------------------------

Actual                                    $29,051     20.99%  $27,296     19.92%
To Be Well Capitalized                      8,303      6.00     8,221      6.00
For Capital Adequacy Purposes               5,535      4.00     5,481      4.00

Tier I Capital (to Average Total Assets)
----------------------------------------

Actual                                    $29,051      7.14%  $27,296      6.73%
To Be Well Capitalized                     20,357      5.00    20,283      5.00
For Capital Adequacy Purposes              16,285      4.00    16,227      4.00

         Prior to the enactment of the Small  Business Job  Protection  Act, the
         Company  accumulated  approximately  $3.9 million of retained earnings,
         which  represent  allocations of income to bad debt  deductions for tax
         purposes only. Since there is no amount that represents the accumulated
         bad debt reserves  subsequent to 1987, no provision for federal  income
         tax has been made for such  amount.  If any  portion of this  amount is
         used other than to absorb loan losses (which is not  anticipated),  the
         amount will be subject to federal  income tax at the current  corporate
         rate.

17.      STOCK BENEFIT PLANS

         Stock Option Plan

         The Company maintains a Stock Option Plan for the directors,  officers,
         and  employees.  An  aggregate  of  347,258  shares of  authorized  but
         unissued  common stock of WVS was reserved  for future  issuance  under
         this Plan. The stock options  typically have an expiration  term of ten
         years,  subject to certain extensions and early  terminations.  The per
         share  exercise  price of an incentive  stock option shall at a minimum
         equal the fair market  value of a share of common stock on the date the
         option is granted. The per share exercise price of a compensatory stock
         option  granted  shall at least  equal the  greater  of par value or 85
         percent of the fair market value of a share of common stock on the date
         the option is granted.  Proceeds from the exercise of the stock options
         are credited to common stock for the aggregate par value and the excess
         is credited to paid-in capital.

                                       39
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

17.      STOCK BENEFIT PLANS (Continued)

         Stock Option Plan (Continued)

         The following  table presents  information  related to the  outstanding
         options:

                                      Officers' and                 Weighted-
                                        Employees'   Directors'      Average
                                          Stock        Stock        Exercise
                                         Options      Options         Price
                                       ----------    ----------    ----------

Outstanding, June 30, 2003                 73,420         5,214    $    15.07

      Granted                                  --            --
      Exercised                           (34,028)         (800)        15.19
      Forfeited                               (80)           --          5.00
                                       ----------    ----------

Outstanding, June 30, 2004                 39,312         4,414    $    14.99

      Granted                                  --            --
      Exercised                                --            --
      Foreited                                 --            --
                                       ----------    ----------

Outstanding, June 30, 2005                 39,312         4,414    $    14.99

      Granted                                  --            --
      Exercised                            (7,320)           --         12.41
      Forfeited                                --            --
                                       ----------    ----------

Outstanding, June 30, 2006                 31,992         4,414    $    15.51
                                       ==========    ==========

Exercisable at year-end                    31,992         4,414    $    15.51
                                       ==========    ==========

Available for future grant                     --            --
                                       ==========    ==========


         At June 30, 2006, for officers and employees  there were 31,992 options
         outstanding,  exercisable  at  a  weighted-average  exercise  price  of
         $15.63,  and a  weighted-average  remaining  contractual  life  of 1.42
         years.

         There were also 4,414 options outstanding and exercisable for directors
         with   a   weighted-average   exercise   price   of   $14.70,   and   a
         weighted-average remaining contractual life of 3.33 years.

                                       40
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

17.      STOCK BENEFIT PLANS (Continued)

         Recognition and Retention Plans ("RRP")
         -------------------------------

         The Company  also  maintains  an RRP for  substantially  all  officers,
         employees,  and directors of the Company.  The objective of the RRPs is
         to enable the Company to retain its corporate officers,  key employees,
         and directors who have the experience  and ability  necessary to manage
         WVS and the Savings Bank. Officers and key employees of the Company who
         were selected by members of a Board-appointed committee are eligible to
         receive benefits under the RRPs.  Non-employee directors of the Company
         are eligible to participate in the RRP for directors.

         An aggregate of 300,000  shares of common stock of WVS were acquired at
         conversion  for future  issuance  under these  plans,  of which  60,000
         shares are  subject to the RRP for  directors  and  240,000  shares are
         subject to the RRP for officers and key employees.

         The RRP expired during 2004 and all unissued  shares were retired.  RRP
         costs are accrued to operations and added back to stockholders'  equity
         over a four- to  ten-year  vesting  period.  Net  compensation  expense
         attributed  to the RRPs  amounted to $1, $1, and $5 for the years ended
         June 30, 2006, 2005, and 2004.

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

         WVS  maintains  an ESOP for the  benefit of officers  and Savings  Bank
         employees who have met certain eligibility  requirements related to age
         and  length of  service.  Compensation  expense  for the ESOP was $100,
         $100,  and $100 for the years  ended  June 30,  2006,  2005,  and 2004,
         respectively.  Total  ESOP  shares as of June 30,  2006 and 2005,  were
         220,264 and 232,031, respectively.

18.      DIRECTOR, OFFICER, AND EMPLOYEE BENEFITS

         Profit Sharing Plan

         The Company  maintains a  non-contributory  profit  sharing 401(k) plan
         (the "Plan") for its officers  and  employees  who have met the age and
         length of service requirements. The Plan is a defined contribution plan
         with the  contributions  based on a percentage  of salaries of the Plan
         participants.  The Company  made no  contributions  to the Plan for the
         three years ended June 30, 2006, 2005, and 2004.

         Directors' Deferred Compensation Plan

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

         The Plan allows for the deferred amounts to be paid in shares of common
         stock at the prevailing  market price on the date of distribution.  For
         fiscal years ended June 30, 2006, 2005, and 2004,  25,841,  29,979, and
         39,539 shares, respectively, were held by the Plan.

                                       41
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

19.      INCOME TAXES

         The provision for income taxes consists of:

                                             2006           2005           2004
                                            ------         ------         ------
Currently payable:
      Federal                               $  978         $  475         $  366
      State                                    128             79             82
                                            ------         ------         ------
                                             1,106            554            448
Deferred                                       181             73            171
                                            ------         ------         ------

      Total                                 $1,287         $  627         $  619
                                            ======         ======         ======


The following temporary  differences gave rise to the net deferred tax assets at
June 30:

                                                                  2006     2005
                                                                 ------   ------
Deferred tax assets:
      Allowance for loan losses                                  $  325   $  381
      Deferred compensation                                         324      294
      Reserve for uncollected interest                              183      183
      Reserve for off-balance sheet commitments                      16       --
      Alternative minimum tax credit                                 --      206
      Other                                                          60       50
                                                                 ------   ------
              Total gross deferred tax assets                       908    1,114
                                                                 ------   ------

Deferred tax liabilities:
      Net unrealized gain on securities available for sale           35       77
      Deferred origination fees, net                                188      200
      Depreciation reserve                                           42       55
      Other                                                           1        1
                                                                 ------   ------
              Total gross deferred tax liabilities                  266      333
                                                                 ------   ------

      Net deferred tax assets                                    $  642   $  781
                                                                 ======   ======

No valuation allowance was established at June 30, 2006 and 2005, in view of the
Company's  ability  to  carryback  to  taxes  paid  in  previous  years,  future
anticipated  taxable  income,  which  is  evidenced  by the  Company's  earnings
potential, and deferred tax liabilities at June 30.

                                       42
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

19.      INCOME TAXES (Continued)

         The  following is a  reconciliation  between the actual  provision  for
         income  taxes and the  amount of income  taxes  which  would  have been
         provided at federal statutory rates for the years ended June 30:

<TABLE>
<CAPTION>
                                          2006                  2005                   2004
                                   ------------------     ------------------     ------------------
                                               % of                   % of                    % of
                                              Pretax                 Pretax                 Pretax
                                   Amount     Income      Amount     Income      Amount     Income
                                   -------    -------     -------    -------     -------    -------
<S>                                   <C>        <C>         <C>       <C>          <C>       <C>
Provision at statutory rate        $ 1,405       34.0%    $ 1,202       34.0%    $   993       34.0%
State income tax, net of federal
  tax benefit                           84        2.0          52        1.5          54        1.9
Tax exempt income                     (251)      (6.1)       (553)     (15.6)       (558)     (19.1)
Other, net                              49        1.2         (74)      (2.2)        130        4.4
                                   -------    -------     -------    -------     -------    -------

Actual tax expense and
  effective rate                   $ 1,287       31.1%    $   627       17.7%    $   619       21.2%
                                   =======    =======     =======    =======     =======    =======
</TABLE>

         The Bank is subject to the Pennsylvania Mutual Thrift Institutions Tax,
         which is calculated at 11.5 percent of earnings.

20.      REGULATORY MATTERS

         Cash and Due From Banks

         The  Federal  Reserve  requires  the Savings  Bank to maintain  certain
         reserve  balances.  The  required  reserves  are  computed  by applying
         prescribed  ratios to the Savings  Bank's average  deposit  transaction
         account  balances.  As of June 30, 2006 and 2005,  the Savings Bank had
         required reserves of $667 and $923, respectively. The required reserves
         are  held  in  the  form  of  vault  cash  and  a  non-interest-bearing
         depository balance maintained directly with the Federal Reserve.

         Loans

         Federal law prohibits the Company from  borrowing from the Savings Bank
         unless the loans are secured by  specific  obligations.  Further,  such
         secured loans are limited in amount to 10 percent of the Savings Bank's
         capital surplus.

         Dividend Restrictions

         The Savings Bank is subject to the  Pennsylvania  Banking  Code,  which
         restricts the  availability of surplus for dividend  purposes.  At June
         30, 2006, surplus funds of $3,363 were not available for dividends.

                                       43
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

21.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  carrying  amounts  and  estimated  fair  values  at June 30 are as
         follows:

                                        2006                     2005
                              -----------------------   -----------------------
                               Carrying       Fair       Carrying       Fair
                                Amount        Value       Amount        Value
                              ----------   ----------   ----------   ----------
FINANCIAL ASSETS
Cash and cash equivalents     $    1,196   $    1,196   $    3,566   $    3,566
Investment securities            196,421      194,149      183,066      183,478
Mortgage-backed securities       155,753      154,998      162,151      162,686
Net loans receivable              55,702       54,280       60,151       62,297
Accrued interest receivable        2,921        2,921        2,057        2,057
FHLB stock                         7,861        7,861        7,769        7,769

FINANCIAL LIABILITIES
Deposits                      $  151,713   $  151,263   $  164,706   $  164,593
FHLB advances                    161,729      161,748      155,036      159,511
Other borrowings                  76,048       76,048       69,680       69,680
Accrued interest payable           1,451        1,451        1,260        1,260

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

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

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

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

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

                                       44
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

21.      FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         Cash and Cash Equivalents, Accrued Interest Receivable and Payable, and
         -----------------------------------------------------------------------
         Other Borrowings
         ----------------

         The fair value approximates the current book value.

         Investment Securities, Mortgage-Backed Securities, and FHLB Stock
         -----------------------------------------------------------------

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

         Net Loans Receivable and Deposits
         ---------------------------------

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

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

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

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

         FHLB Advances
         -------------

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

         Commitments to Extend Credit
         ----------------------------

         These  financial  instruments  are generally  not subject to sale,  and
         estimated fair values are not readily  available.  The carrying  value,
         represented  by the net  deferred  fee  arising  from the  unrecognized
         commitment, and the fair value, determined by discounting the remaining
         contractual  fee over the term of the  commitment  using fees currently
         charged to enter into similar  agreements with similar credit risk, are
         not considered  material for  disclosure.  The  contractual  amounts of
         unfunded  commitments  are  presented  in  Note 15 to  these  financial
         statements.

                                       45
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

22.      PARENT COMPANY

         Condensed financial information of WVS Financial Corp. is as follows:

                             CONDENSED BALANCE SHEET

                                                                  June 30,
                                                              2006        2005
                                                             -------     -------
ASSETS
   Interest-earning deposits with subsidiary bank            $ 1,561     $   402
   Investment securities available for sale                        2       1,333
   Investment in subsidiary bank                              27,822      27,446
   Accrued interest receivable and other assets                   53          28
                                                             -------     -------

TOTAL ASSETS                                                 $29,438     $29,209
                                                             =======     =======

LIABILITIES AND STOCKHOLDERS' EQUITY
   Other liabilities                                         $    20     $     8
   Stockholders' equity                                       29,418      29,201
                                                             -------     -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $29,438     $29,209
                                                             =======     =======

                                                         Year Ended June 30,
                                                      2006      2005      2004
                                                    -------   -------   -------
INCOME
   Loans                                            $    --   $    --   $     2
   Investment and mortgage-backed securities             16        52        89
   Dividend from subsidiary                           2,400     1,600     1,300
   Investment securities gains, net                      --       332        20
   Interest-earning deposits with subsidiary bank        27         3        10
                                                    -------   -------   -------

Total income                                          2,443     1,987     1,421
                                                    -------   -------   -------


OTHER OPERATING EXPENSE                                  98       101       104
                                                    -------   -------   -------

   Income before equity in undistributed
     earnings of subsidiary                           2,345     1,886     1,317
   Equity in undistributed earnings of subsidiary       501     1,114       983
                                                    -------   -------   -------

   Income before income taxes                         2,846     3,000     2,300
   Income tax expense (benefit)                          --        91        (2)
                                                    -------   -------   -------

NET INCOME                                          $ 2,846   $ 2,909   $ 2,302
                                                    =======   =======   =======

                                       46
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

21.      PARENT COMPANY (Continued)

<TABLE>
<CAPTION>
                                                               Year Ended June 30,
                                                            2006       2005       2004
                                                          -------    -------    -------
<S>                                                         <C>        <C>        <C>
OPERATING ACTIVITIES
   Net income                                             $ 2,846    $ 2,909    $ 2,302
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Undistributed net income of subsidiary                (501)    (1,114)      (983)
        Investment securities gains                            --       (332)       (20)
       Amortization (accretion) of investment discounts
        and premiums, net                                      --         --         (3)
       Other, net                                             (13)        62        119
                                                          -------    -------    -------
   Net cash provided by operating activities                2,332      1,525      1,415
                                                          -------    -------    -------

INVESTING ACTIVITIES
   Available for sale:
       Purchase of investment and
         mortgage-backed securities                          (611)    (1,550)    (3,321)
       Proceeds from repayments of investment and
         mortgage-backed securities                         1,942      1,422      5,183
       Proceeds from sales of investment securities            --        913        251
   Held to maturity:
       Purchases of investment and mortgage-backed
         securities                                            --         --     (3,199)
       Proceeds from repayments of investment and
         mortgage-backed securities                            --         --      3,451
       Net decrease in loans receivable                        --         --        115
                                                          -------    -------    -------
   Net cash provided by investing activities                1,331        785      2,480
                                                          -------    -------    -------

FINANCING ACTIVITIES
   Net proceeds from exercise of stock options                 91         --        489
   Cash dividends paid                                     (1,510)    (1,559)    (1,624)
   Purchases of treasury stock                             (1,085)    (1,217)    (2,610)
                                                          -------    -------    -------
   Net cash used for financing activities                  (2,504)    (2,776)    (3,745)
                                                          -------    -------    -------

   Increase (decrease) in cash and cash equivalents         1,159       (466)       150

CASH AND CASH EQUIVALENTS
  BEGINNING OF YEAR                                           402        868        718
                                                          -------    -------    -------

CASH AND CASH EQUIVALENTS
  END OF YEAR                                             $ 1,561    $   402    $   868
                                                          =======    =======    =======
</TABLE>

                                       47
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

23.      SELECTED QUARTERLY FINANCIAL DATA (unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                       --------------------------------------------------------
                                        September       December        March          June
                                          2005            2005           2006           2006
                                       -----------    -----------    -----------    -----------
<S>                                          <C>            <C>            <C>            <C>
Total interest and dividend income     $     4,840    $     5,293    $     5,954    $     6,162
Total interest expense                       3,385          3,784          4,091          4,200
                                       -----------    -----------    -----------    -----------

Net interest income                          1,455          1,509          1,863          1,962
Provision (recovery) for loan losses           (66)           (45)           (38)           (12)
                                       -----------    -----------    -----------    -----------

Net interest income after
  provision for loan losses                  1,521          1,554          1,901          1,974

Total noninterest income                       207            167            171            160
Total noninterest expense                      889            868            872            893
                                       -----------    -----------    -----------    -----------

Income before income taxes                     839            853          1,200          1,241
Income taxes                                   231            243            412            401
                                       -----------    -----------    -----------    -----------

Net income                             $       608    $       610    $       788    $       840
                                       ===========    ===========    ===========    ===========

Per share data:
Net income
      Basic                            $      0.25    $      0.26    $      0.34    $      0.36
      Diluted                                 0.25           0.26           0.34           0.36
Average shares outstanding
      Basic                              2,387,653      2,356,470      2,346,959      2,337,349
      Diluted                            2,391,294      2,359,671      2,348,619      2,339,962

</TABLE>

                                       48
<PAGE>

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         (In thousands, except per share data)

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

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                       -------------------------------------------------------
                                        September     December        March           June
                                          2004          2004           2005           2005
                                       -----------   -----------    -----------    -----------
<S>                                          <C>           <C>            <C>            <C>
Total interest and dividend income     $     4,430   $     4,405    $     4,509    $     4,530
Total interest expense                       2,752         2,977          3,018          3,097
                                       -----------   -----------    -----------    -----------

Net interest income                          1,678         1,428          1,491          1,433
Provision (recovery) for loan losses            78            (7)            (5)          (112)
                                       -----------   -----------    -----------    -----------

Net interest income after
  provision for loan losses                  1,600         1,435          1,496          1,545

Total noninterest income                       408           266            159            159
Total noninterest expense                      878           903            891            860
                                       -----------   -----------    -----------    -----------

Income before income taxes                   1,130           798            764            844
Income taxes                                   296           209            200            (78)
                                       -----------   -----------    -----------    -----------

Net income                             $       834   $       589    $       564    $       922
                                       ===========   ===========    ===========    ===========

Per share data:
Net income
      Basic                            $      0.34   $      0.24    $      0.23    $      0.38
      Diluted                                 0.34          0.24           0.23           0.38
Average shares outstanding
      Basic                              2,453,189     2,445,349      2,430,679      2,399,463
      Diluted                            2,458,926     2,451,242      2,435,935      2,404,097
</TABLE>

                                       49
<PAGE>


COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION

WVS Financial Corp.'s common stock is traded on the Nasdaq Global MarketSM under
the symbol "WVFC".

The  following  table sets  forth the high and low  market  prices of a share of
common stock, and cash dividends declared per share, for the periods indicated.

                                Market Price
                          ----------------------       Cash Dividends
  Quarter Ended             High           Low            Declared
----------------          -------        -------       --------------
June 2006                 $18.080        $16.400           $0.16
March 2006                 17.750         16.000            0.16
December 2005              16.870         16.000            0.16
September 2005             17.000         15.660            0.16

June 2005                 $17.250        $16.600           $0.16
March 2005                 18.140         16.250            0.16
December 2004              18.100         16.000            0.16
September 2004             18.000         16.000            0.16

There were ten Nasdaq Market Makers in the Company's common stock as of June 30,
2006:  Boenning & Scattergood  Inc.;  Sandler  O'Neill & Partners;  Boston Stock
Exchange;  Ryan Beck & Co., Inc.; Morgan Stanley & Co., Inc; UBS Securities LLC;
Hill, Thompson,  Magid and Co.; BNY Brokerage Inc.; Citigroup Global Markets and
Knight Equity Markets, L.P.

According  to  the  records  of  the  Company's   transfer  agent,   there  were
approximately  712  shareholders  of record at September 13, 2006. This does not
include any persons or entities who hold their stock in nominee or "street name"
through various brokerage firms.

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


                                       50
<PAGE>


                               WVS FINANCIAL CORP.
                              CORPORATE INFORMATION
--------------------------------------------------------------------------------
                                CORPORATE OFFICES
                  WVS FINANCIAL CORP. o WEST VIEW SAVINGS BANK
                     9001 Perry Highway Pittsburgh, PA 15237
                                  412-364-1911
<TABLE>
<CAPTION>
<S>                                                       <C>

                 COMMON STOCK                                BOARD OF DIRECTORS
  The common stock of WVS Financial Corp. is
traded on The Nasdaq Global MarketSM under the                David L. Aeberli
                symbol "WVFC".                                Funeral Director
                                                    McDonald-Aeberli Funeral Home, Inc.
          TRANSFER AGENT & REGISTRAR
        Registrar and Transfer Company                        Arthur H. Brandt
               10 Commerce Drive                          Former President and CEO
              Cranford, NJ 07016                        Brandt Excavating, Inc. and
                1-800-368-5948                              Brandt Paving, Inc.

            CORPORATE SECRETARY AND                           David J. Bursic
              INVESTOR RELATIONS                   President and Chief Executive Officer
                Pamela M. Tracy                           WVS Financial Corp. and
                 412-364-1911                              West View Savings Bank

                                                               Donald E. Hook
                SPECIAL COUNSEL                                   Chairman
     Elias, Matz, Tiernan & Herrick L.L.P.               Pittsburgh Cut Flower Co.
                Washington, DC
                                                             Lawrence M. Lehman
                                                              Sole Proprietor
            WEST VIEW SAVINGS BANK                     Newton-Lehman Insurance Agency
              9001 Perry Highway
             Pittsburgh, PA 15237                            Margaret VonDerau
                 412-364-1911                           Former Senior Vice President
                                                          and Corporate Secretary
               WEST VIEW OFFICE                           WVS Financial Corp. and
               456 Perry Highway                           West View Savings Bank
                 412-931-2171

               CRANBERRY OFFICE                              EXECUTIVE OFFICERS
              20531 Perry Highway
           412-931-6080/724-776-3480                           Donald E. Hook
                                                                  Chairman
             FRANKLIN PARK OFFICE
            2566 Brandt School Road                           David J. Bursic
                 724-935-7100                                  President and
                                                          Chief Executive Officer
                BELLEVUE OFFICE
              572 Lincoln Avenue                             Jonathan D. Hoover
                 412-761-5595                        Vice President of Bank Operations

             SHERWOOD OAKS OFFICE                             Bernard P. Lefke
             Serving Sherwood Oaks                       Vice President of Savings
                Cranberry Twp.
                                                              Keith A. Simpson
               LENDING DIVISION                        Vice President, Treasurer and
            2566 Brandt School Road                       Chief Accounting Officer
                 724-935-7400
</TABLE>

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


                                       51