W
                                       V
                                        S

                                   FINANCIAL
                                   ---------
                                  CORPORATION

                 THE HOLDING COMPANY OF WEST VIEW SAVINGS BANK











                                                              1998 ANNUAL REPORT
<PAGE>




                                TABLE OF CONTENTS


                                                                          Page
                                                                         Number
                                                                         ------

         Stockholders' Letter                                              1

         Selected Financial and Other Data                                 2

         Management's Discussion and Analysis                              4

         Report of Independent Auditors                                   23

         Consolidated Statements of Financial Condition                   24

         Consolidated Statements of Income                                25

         Consolidated Statements of Changes in Stockholders' Equity       26

         Consolidated Statements of Cash Flows                            27

         Notes to the Consolidated Financial Statements                   28

         Common Stock Market Price and Dividend Information               58

         Corporate Information


<PAGE>
To Our Stockholders:

         WVS  Financial  Corp.  has completed  its fourth  successful  year as a
public company.  During fiscal 1998 the Company and its  shareholders  benefited
from several significant accomplishments:  (1) a 23.7% increase in the Company's
stock  price;  (2) the  payment  of a  two-for-one  stock  split;  and (3)  cash
dividends paid to shareholders  totaling $1.50 per share,  including a $0.95 per
share special cash dividend. Our current regular dividend yield of 3.9% is among
the highest bank and thrift common stock dividend yields in the nation.

         Net income for fiscal 1998  totaled  $3.5 million - an increase of $533
thousand or 18.0% over fiscal 1997.  Basic  earnings per share  totaled $1.01 as
compared to $0.88 and diluted  earnings per share  amounted to $0.98 as compared
to $0.85 in fiscal 1997. As more fully  explained in this Annual Report,  fiscal
year 1998 net income was impacted by four  significant  one-time items:  federal
deposit insurance premiums decreased approximately $1.2 million due to a special
one-time charge in fiscal 1997; a $553 thousand  non-recurring charge related to
the resignation of the Company's former  President;  a $180 thousand decrease in
the provision for loan losses;  and a $133  thousand  non-recurring  gain on the
sale of an office building.  Excluding the four one-time items, net income would
have totaled  approximately  $3.7 million with  corresponding  basic and diluted
earnings per share of $1.06 and $1.03, respectively.

         As we  enter  fiscal  1999,  the  financial  markets  face  significant
challenges.  Market interest rates have declined  substantially  during the past
fiscal year due in large part to deterioration in certain key foreign economies.
South Korea,  Indonesia and Thailand are in an economic depression.  Japan is in
its worst slump since the end of World War II. Economic unrest has struck Russia
and may begin to impact Brazil, Argentina and Mexico.

         During times of economic turmoil, foreign investors seek the safety and
stability of the U.S. dollar and U.S. Treasury  securities.  Unfortunately  this
economic spillover has caused the U.S. stock markets into their first correction
in a number of years.  The recent downturn in the stock market has impacted most
stock prices,  including the Company's.  In response to market  conditions,  the
Company's Board of Directors authorized a 5% stock buyback on July 28, 1998. The
Company's  announcement  was well  received by the  capital  markets and we look
forward  to  updating  our  stockholders  about the  buyback's  progress  at the
Company's Annual Meeting.

         West View  Savings  Bank has  served our  communities  well for over 90
years by  reinvesting  local  deposits  back  into  mortgage  loans  within  the
community.  As we enter our next 90 years,  West View Savings Bank will continue
to provide loans to fund home  purchases and  improvements,  consumer  loans and
small business  loans.  This  reinvestment  into our communities has resulted in
impressive  stockholder returns. We wish to thank you for your continued support
and hope to see you at the Annual Meeting.



/S/David J. Bursic                                       /S/James S. McKain, Jr.
------------------                                       -----------------------
DAVID J. BURSIC                                          JAMES S. MCKAIN, JR.
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,
                                        ---------------------------------------------------------------------------- 
                                           1998              1997           1996            1995            1994
                                        -----------      -----------     -----------     -----------     -----------

                                                                     (Dollars in Thousands)
<S>                                     <C>              <C>             <C>             <C>             <C>        
Selected Financial Data:
Total assets .......................    $   297,054      $   294,693     $   259,622     $   227,368     $   221,315
Net loans receivable ...............        157,737          158,134         149,011         133,343         123,600
Mortgage-backed securities .........         46,314           37,490          42,118          22,655          25,704
Investment securities ..............         81,268           87,548          59,218          61,525          63,578
Real estate owned ..................           --               --              --              --                25
Deposit accounts ...................        167,670          170,879         170,843         168,786         180,329
FHLB advances ......................         88,857           77,857          38,000          14,984           4,000
Other borrowings ...................            889            6,784          10,652           4,047            --
Stockholders' equity ...............         32,978           32,889          34,038          33,809          32,369
Nonperforming assets and troubled
  debt restructurings(1) ...........            603              274             980           1,959           1,931

Selected Operating Data:
Interest income ....................    $    22,146      $    21,125     $    18,317     $    15,612     $    14,615
Interest expense ...................         11,781           10,884           8,840           7,372           7,545
                                        -----------      -----------     -----------     -----------     -----------
Net interest income ................         10,365           10,241           9,477           8,240           7,070
Provision for loan losses ..........           (120)              60             150             211             211
                                        -----------      -----------     -----------     -----------     -----------
Net interest income after provision
  for loan losses ..................         10,485           10,181           9,327           8,029           6,859
Non-interest income ................            538              374             383             307             315
Non-interest expense ...............          5,422            5,666           4,067           4,894           4,270
                                        -----------      -----------     -----------     -----------     -----------
Income before income tax expense ...          5,601            4,889           5,643           3,442           2,904
Income tax expense .................          2,109            1,930           2,066           1,652             914
                                        -----------      -----------     -----------     -----------     -----------
Net income before cumulative effect
  of accounting change .............          3,492            2,959           3,577           1,790           1,990
Cumulative effect of change in
  accounting for income taxes ......           --               --              --              --               245
                                        -----------      -----------     -----------     -----------     -----------
Net income .........................    $     3,492      $     2,959     $     3,577     $     1,790     $     2,235
                                        ===========      ===========     ===========     ===========     ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                     <C>              <C>             <C>             <C>             <C>        
Per Share Information(2)(3):
Basic:
Net income before cumulative effect
  of accounting change .............    $      1.01      $      0.88     $      1.07     $      0.54     $      0.60
Cumulative effect of change in
  accounting for income taxes ......           --               --              --              --              0.07
                                        -----------      -----------     -----------     -----------     -----------
Basic earnings .....................    $      1.01      $      0.88     $      1.07     $      0.54     $      0.67
                                        ===========      ===========     ===========     ===========     ===========
                                                                                                      
Diluted earnings ...................    $      0.98      $      0.85     $      1.04     $      0.52     $      0.66
                                                                                                     
Dividends per share(4) .............    $      1.50      $      1.50     $      1.03     $      0.21     $      0.02
                                                                                                      
Dividend payout ratio(4) ...........         148.51%          170.45%          96.26%          38.89%           2.99%
Book value per share at period end .    $      9.50      $      9.41     $      9.80     $      9.73     $      9.32
                                                                                                               
Average shares outstanding:
      Basic ........................      3,472,328        3,369,796       3,347,363       3,331,086       3,315,299
      Diluted ......................      3,575,892        3,490,226       3,452,854       3,409,688       3,372,647
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                                                    As of or For the Year Ended June 30,
                                            -------------------------------------------------- 
                                             1998       1997       1996       1995       1994
                                            ------     ------     ------     ------     ------
                                                           (Dollars in Thousands)
<S>                                           <C>        <C>        <C>        <C>        <C>   
Selected Operating Ratios(5):
Average yield earned on interest-
  earning assets ....................         7.69%      7.69%      7.83%      7.33%      6.81%
Average rate paid on interest-
  bearing liabilities ...............         4.77       4.78       4.58       4.19       4.02
Average interest rate spread(6) .....         2.92       2.91       3.25       3.14       2.79
Net interest margin(6) ..............         3.60       3.73       4.05       3.87       3.30
Ratio of interest-earning assets to
  interest-bearing liabilities ......       116.65     120.70     121.18     121.09     114.30
Non-interest expense as a percent of
  average assets ....................         1.86       2.04       1.71       2.26       1.96
Return on average assets ............         1.20       1.06       1.51       0.83       1.02
Return on average equity ............        10.45       8.63      10.19       5.34       8.74
Ratio of average equity to average
  assets ............................        11.48      12.33      14.81      15.48      11.70
Full-service offices at end of period            5          5          5          5          5

Asset Quality Ratios(5):
Non-performing loans and troubled
  debt restructurings as a percent of
  net total loans(1) ................         0.38%      0.17%      0.66%      1.47%      1.54%
Non-performing assets as a percent
  of total assets(1) ................         0.20       0.09       0.15       0.45       0.45
Non-performing assets and troubled
  debt restructurings as a percent of
  total assets ......................         0.20       0.09       0.38       0.86       0.86
Allowance for loan losses as a
  percent of total loans receivable .         1.08       1.16       1.17       1.25       1.14
Allowance for loan losses as a
  percent of non-performing loans ...       308.46     733.21     520.95     178.43     169.75
Charge-offs to average loans
  receivable outstanding during the
  period ............................         0.02       0.01       0.02       0.01       0.02
Capital Ratios(5):
Tier 1 risk-based capital ratio .....        20.90%     24.52%     27.19%     27.06%     21.39%
Total risk-based capital ratio ......        22.09      25.77      28.44      28.32      22.47
Tier 1 leverage capital ratio .......        10.98      11.44      13.90      14.74      14.59
</TABLE>

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

(2)  Earnings per share for fiscal 1994 have been computed as if all shares were
     issued on July 1, 1993.  Earnings  per share  computed  for the period from
     November  29,  1993 (date of the  mutual-to-stock  conversion)  to June 30,
     1994, would be $0.78.
<PAGE>
(3)  All per share  information for fiscal years ended June 30, 1997, 1996, 1995
     and 1994 have been restated to reflect the  two-for-one  stock split of May
     22, 1998.

(4)  Dividends  per  share and  dividend  payout  ratio  includes  special  cash
     dividends of $0.95,  $1.15,  and $0.85 per share,  paid during fiscal 1998,
     1997 and 1996, respectively.

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

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

                                       3
<PAGE>
                       WVS FINANCIAL CORP. AND SUBSIDIARY


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


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

          West View Savings Bank is a Pennsylvania-chartered, SAIF-insured stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  Originally  organized under  Pennsylvania  law in 1908 as West View
Building Loan  Association,  West View changed its name to West View Savings and
Loan   Association   in  1954.  In  June  1992,   West  View  converted  from  a
Pennsylvania-chartered    mutual    savings   and   loan    association   to   a
Pennsylvania-chartered  mutual  savings bank.  The Savings Bank converted to the
stock form of ownership in November 1993.  The Savings Bank had no  subsidiaries
at June 30, 1998.

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

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

          Core  Deposits - As of June 30, 1998,  $74.1  million or 44.2% of West
View's total  deposits  consisted of regular  savings and club  accounts,  money
market deposit accounts,  and checking accounts.  Approximately $38.0 million or
51.3% of core deposits consisted of regular savings and club accounts.  Checking
account  balances grew $0.4 million or 1.8% during fiscal 1998 and totaled $22.9
million or 30.9% of core  deposits at June 30,  1998.  The  continued  growth in
checking  account  deposits  was  primarily  due  to  increased   marketing  and
promotional  efforts by the  Company to gain market  share.  Core  deposits  are
considered to be more stable and lower cost funds than  certificates  of deposit
and other borrowings.

          Consistent  Core  Earnings - The  Company's  net  interest  income has
consistently covered operating expenses  (non-interest  expense).  During fiscal
1998, net interest income totaled $10.4 million,  representing a $0.2 million or
1.2% increase over fiscal 1997.

          Asset Quality - Largely  reflecting a lending strategy that emphasizes
local loan origination, West View has not had significant non-performing assets.
For the fiscal years ended June 30, 1998, 1997 and 1996, the Company's ratios of
non-performing assets and troubled debt

                                       4
<PAGE>
restructurings to total assets were 0.20%, 0.09% and 0.38%, respectively.  Total
net charge-offs for the past three fiscal years have aggregated $66 thousand.

          Non-Interest  Expense  Ratios - For the  fiscal  years  ended June 30,
1998,  1997 and 1996, the Company's  ratios of  non-interest  expense to average
assets  were  1.86%,  2.04% and 1.71%,  respectively.  Excluding  unusual  items
relating to  severance  costs,  shareholder  litigation  and the  one-time  SAIF
recapitalization charge, the Company's ratios of non-interest expense to average
assets were  1.68%,  1.63% and 1.88% for the fiscal  years ended June 30,  1998,
1997 and 1996, respectively.

          Traditional  Thrift Lending - West View has  consistently  focused its
lending activities toward  traditional  thrift loan products.  At June 30, 1998,
$118.5  million or 74.3% of the  Company's  total loans  consisted  of permanent
single-family  mortgage and home equity loans.  At June 30, 1998,  approximately
$154.8 million or 97.0% of the Company's total loan portfolio consisted of loans
secured by real estate.


FINANCIAL CONDITION

          The  Company's  assets  totaled  $297.1  million  at June 30,  1998 as
compared to $294.7  million at June 30, 1997. The $2.4 million or 0.8% growth in
total assets was  primarily  comprised  of an $8.8 million or 23.5%  increase in
mortgage-backed  securities and a $0.7 million or 19.1% increase in Federal Home
Loan Bank ("FHLB") stock, partially offset by a $6.3 million or 7.2% decrease in
investment  securities  and a  $0.4  million  or  0.3%  decrease  in  net  loans
receivable.  The Company's total  liabilities  increased $2.3 million or 0.9% to
$264.1  million as of June 30, 1998 from $261.8 million as of June 30, 1997. The
$2.3 million increase in total  liabilities was primarily  comprised of an $11.0
million or 14.1%  increase in Federal  Home Loan Bank  advances  and  short-term
borrowings,  partially  offset  by a $5.9  million  or 86.9%  decrease  in other
borrowings  and a $3.2  million  or  1.9%  decrease  in  total  deposits.  Total
stockholders'  equity increased $89 thousand or 0.3% to $33.0 million as of June
30, 1998 from $32.9 million as of June 30, 1997,  primarily due to the Company's
ongoing  commitment to manage its capital levels to further enhance  stockholder
value.  The $89  thousand  increase  in  stockholders'  equity  was  principally
attributable to $3.5 million of Company net income,  a $1.5 million  increase in
capital  attributable to stock option  exercises,  Employee Stock Ownership Plan
("ESOP")  share  releases and  Recognition  and  Retention  Plan ("RRP")  equity
contributions and a $337 thousand increase in unrealized  securities gains, less
cash  dividends paid to  stockholders  totaling $5.2 million for the fiscal year
ended June 30, 1998.

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

          The Company has continued its investment  growth  program,  originally
initiated in the third quarter of fiscal 1994,  throughout  fiscal 1998 in order
to realize  additional net interest income.  Under this strategy,  a longer-term
callable  investment  security,  or mortgage-backed  security,  is 

                                       5
<PAGE>
purchased and funded  through the use of FHLB advances and, to a lesser  extent,
short-term  borrowings.  With  this  strategy,  the  Company  increases  its net
interest  income,  but also  faces the risk,  during  periods  of rising  market
interest  rates,  that it may experience a decline in net interest income if the
rate  paid  on its  various  borrowings  rises  above  the  rate  earned  on the
investment security purchased. In order to mitigate this exposure, the Board has
placed certain restrictions on the investment growth program, including: (i) the
average outstanding daily balance of total borrowings,  computed quarterly,  may
not exceed  approximately  $125.0 million;  (ii) suitable  investments  shall be
restricted  to  those  meeting  the  credit  quality  criteria  outlined  in the
Company's investment policy; (iii) each security purchased (excluding commercial
paper) shall initially  yield a minimum of  seventy-five  basis points above the
incremental  rate paid on short-term  borrowings,  at the time of purchase;  and
(iv) the Company's  total borrowed funds position may not exceed $150.0 million.
In most cases, the initial yield spread earned on investment  security purchases
exceeded approximately one hundred to one hundred and forty basis points.

          During the fiscal year ended June 30, 1998, the Company  increased its
mortgage-backed  securities  holdings  by $8.8  million.  At June  30,  1998 the
Company held $46.3 million of  mortgage-backed  securities  with an  approximate
yield of 7.0%. The  mortgage-backed  securities  purchases were made in order to
mitigate the principal calls on the Company's callable bond portfolio and earn a
higher yield with an expected  average life profile  comparable  to  longer-term
callable agency bonds.

         The Company has  continued to purchase  bonds with  optional  principal
redemption  features  ("callable  bonds")  in order to  capture  additional  net
interest income. Callable bonds generally provide investors with higher rates of
return than  noncallable  bonds  because the issuer has the option to redeem the
bonds before maturity.  While this strategy affords WVS the current  opportunity
to improve its net interest income, during a period of declining interest rates,
such as was experienced  during fiscal 1998, the Company would be exposed to the
risk that the investment will be redeemed prior to its final stated maturity. In
order to mitigate this risk, the Company has funded a significant portion of its
purchases of callable bonds with FHLB advances.  Approximately  $80.0 million of
callable  agency  bonds with an  estimated  weighted  average rate of 7.66% were
called during the fiscal year ended June 30, 1998.  During the fiscal year ended
June 30, 1998,  the Company  purchased  approximately  $61.7 million of callable
bonds with an approximate  weighted  average yield to call and maturity of 7.10%
and 7.41%,  respectively.  The callable  agency bond  purchases,  totaling $61.7
million, are summarized by initial term to call as follows: $13.6 million within
three  months,  $11.2  million  with  greater  than three  months and within six
months,  $21.5  million with greater than six months and within  twelve  months,
$13.5  million  within  twenty-four  months,  and $2.0 million over  twenty-four
months.

          During the  fiscal  year ended June 30,  1998,  the  Company  borrowed
approximately  $57.2 million from the FHLB in the way of various borrowings with
a weighted  average rate of 5.38% and $40.6 million in other  borrowings  with a
weighted  average rate of 5.61%.  During the twelve  months ended June 30, 1998,
the Company  repaid $46.2  million of FHLB  advances and $46.6  million of other
borrowings.  Due to a decline in market  interest  rates  during the fiscal year
ended June 30, 1998, the Company  increased its use of FHLB  Convertible  Select
advances.  FHLB  Convertible  Select  advances offer fixed rate funding during a
portion of the advance term.  After this initial  period,  the FHLB may elect to
convert the advance to variable  interest rate,  generally on a quarterly basis.
If the FHLB  elects to convert  the  advance,  the Company may repay the advance
without  penalty.  The Company  believes that FHLB  Convertible  Select advances
offer an attractive  funding  alternative  to short-term  fixed rate advances or
broker repurchase agreements under present market conditions.

                                       6
<PAGE>
          The Company's net interest income could also be adversely  impacted by
a general rise in market  interest  rates.  In order to partially  mitigate this
risk,  approximately  $17.8  million or 38.5% of the  Company's  mortgage-backed
securities  portfolio were comprised of floating rate securities.  The yields on
the floating rate securities adjust monthly based upon certain short-term market
indexes (e.g. LIBOR, Prime,  etc.). The Company's floating rate  mortgage-backed
securities  had an  approximate  weighted  average yield of 6.87% as of June 30,
1998.

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

         As of June 30, 1998,  the  implementation  of these asset and liability
management  initiatives  resulted in the  following:  (i) an  aggregate of $49.5
million or 31.0% of the Company's net loan  portfolio  had  adjustable  interest
rates or maturities  of less than 12 months;  (ii) $17.8 million or 38.5% of the
Company's  portfolio of  mortgage-backed  securities  (including  collateralized
mortgage  obligations - "CMOs") were secured by floating rate securities;  (iii)
$20.4  million or 25.1% of the  Company's  investment  securities  portfolio had
scheduled maturities of one year or less; and (iv) $63.7 million or 78.5% of the
Company's investment securities portfolio was comprised of callable bonds.

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

          The  Company's  one year  cumulative  interest  rate  sensitivity  gap
amounted to a negative  24.6% of total assets at June 30, 1998, as compared to a
negative 13.3% at June 30, 1997, in each instance,  based on certain assumptions
by management  with respect to the repricing of certain assets and  liabilities.
At June 30, 1998, the Company's  interest-earning  assets  maturing or repricing
within one year totaled  $107.2  million  while the  Company's  interest-bearing
liabilities  maturing  or  repricing  within one year  totaled  $180.3  million,
providing  a  deficiency  of  interest-earning   assets  over   interest-bearing
liabilities of $73.1 million.  At June 30, 1998, the percentage of the Company's
assets to liabilities maturing or repricing within one year was 59.4%.


                                       7
<PAGE>
          The  following  table  sets  forth  certain  information  at the dates
indicated relating to the Company's interest-earning assets and interest-bearing
liabilities which are estimated to mature or are scheduled to reprice within one
year.
<TABLE>
<CAPTION>
                                                               June 30,
                                               ---------------------------------------
                                                  1998           1997           1996
                                               ---------      ---------      ---------
                                                         (Dollars in Thousands)
<S>                                            <C>            <C>            <C>      
Interest-earning assets maturing or
   repricing within one year(1) ...........    $ 107,186      $ 103,161      $  88,530
Interest-bearing liabilities maturing or
   repricing within one  year(2) ..........      180,318        142,265        135,344
                                               ---------      ---------      ---------

Excess (deficiency) of interest-earning
   assets over interest-bearing liabilities    $ (73,132)     $ (39,104)     $ (46,814)
                                               =========      =========      ========= 
Excess (deficiency) of interest-earning
   assets over interest-bearing liabilities      
   as a percentage of total assets ........        (24.6)%        (13.3)%        (18.0)%
Percentage of assets to liabilities
   maturing or repricing within one year ..          59.4%         72.5 %         65.4 %
</TABLE>

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

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

                                       8
<PAGE>
         The following table summarizes the anticipated  maturities or repricing
of the Company's interest-earning assets and interest-bearing  liabilities as of
June 30, 1998,  based on the information and assumptions set forth in the notes.
The  Company  believes  that  the  assumptions  utilized,  which  are  based  on
statistical data provided by a federal regulatory agency in the Company's market
area, are reasonable.
<TABLE>
<CAPTION>
                                                                 More Than     More Than
                                     Within         Six to       One Year        Three            Over
                                      Six           Twelve       to Three       Years to          Five
                                     Months         Months         Years       Five Years        Years         Total
                                   ---------      ---------      ---------      ---------      ---------     ---------
<S>                                <C>            <C>            <C>            <C>            <C>           <C>      
Interest-earning assets:
  Loans receivable (1)(2)(3)(4)    $  37,075      $  21,165      $  41,430      $  20,349      $  40,393     $ 160,412
  Mortgage-backed securities ..       18,388          1,595          4,341          1,807         19,983        46,114
  Investments(5) ..............       27,156           --             --             --           58,749        85,905
  Interest-bearing deposits ...        1,807           --             --             --             --           1,807
                                   ---------      ---------      ---------      ---------      ---------     ---------
       Total ..................       84,426         22,760         45,771         22,156        119,125       294,238
                                   ---------      ---------      ---------      ---------      ---------     ---------
Interest-bearing liabilities:
  Interest-bearing deposits
  and escrows (6)(7)(8) .......       49,371         44,201         40,412         14,401         22,597       170,982
  Borrowings ..................       76,746         10,000           --            3,000           --          89,746
                                   ---------      ---------      ---------      ---------      ---------     ---------
       Total ..................      126,117         54,201         40,412         17,401         22,597       260,728
                                   ---------      ---------      ---------      ---------      ---------     ---------
Excess (deficiency) of
interest-earning assets over
interest-bearing liabilities ..      (41,691)       (31,441)         5,359          4,755         96,528
                                   ---------      ---------      ---------      ---------      ---------      
Cumulative excess of
interest-earning assets over
interest-bearing liabilities ..      (41,691)       (73,132)       (67,773)       (63,018)        33,510
                                   ---------      ---------      ---------      ---------      ---------      
Cumulative excess of
interest-earning assets over
interest-bearing liabilities as
a percentage of total assets ..        (14.0)%        (24.6)%        (22.8)%        (21.2)%        11.3%
                                   ---------      ---------      ---------      ---------      ---------      
</TABLE>

(1)  Net of  undisbursed  loan  proceeds and does not include net deferred  loan
     fees or the allowance for loan losses.
(2)  For  single-family  residential  loans,  assumes  annual  amortization  and
     prepayment rate at 15% for adjustable rate loans,  and 11% to 38% for fixed
     rate loans. For  multi-family  residential  loans and other loans,  assumes
     amortization and prepayment rate of 12%.
(3)  For second mortgage loans,  assumes annual amortization and prepayment rate
     of 18%.
(4)  Consumer loans assumes amortization and prepayment rate of 13%.
(5)  Totals  include the  Company's  investment in Federal Home Loan Bank stock.
     Amounts  adjusted  to  reflect  called   investment   securities   totaling
     approximately $5,000.
(6)  For regular savings accounts, assumes an annual decay rate of 17% for three
     years or less,  16% for more than three through five years and 14% for more
     than five years.
<PAGE>

(7)  For NOW accounts, assumes an annual decay rate of 37% for one year or less,
     32% for more than one  through  three  years  and 17% for more  than  three
     years.
(8)  For money market deposit accounts,  assumes an annual decay rate of 79% for
     one year or less and 31% for more than one year. 


                                       9
<PAGE>
         QUANTITATIVE  AND  QUALITATIVE   DISCLOSURES  ABOUT  MARKET  RISK.  The
Company's  primary  market risk  exposure is interest rate risk and, to a lesser
extent,  liquidity risk. All of the Company's transactions are denominated in 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.

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

         Several  techniques  might  be  used  by  an  institution  to  minimize
interest-rate risk. One approach used by the Company is to periodically  analyze
its assets and  liabilities and make future

                                       10
<PAGE>
financing and investment  decisions  based on payment  streams,  interest rates,
contractual maturities, and estimated sensitivity to actual or potential changes
in market  interest rates.  Such  activities fall under the broad  definition of
asset/liability  management.  The Company's primary  asset/liability  management
technique is the measurement of the Company's asset/liability gap - that is, the
difference  between  the cash flow  amounts  of  interest-sensitive  assets  and
liabilities  that will be refinanced  (or repriced)  during a given period.  For
example, if the asset amount to be repriced exceeds the corresponding  liability
amount for a certain day, month,  year, or longer period,  the institution is in
an asset-sensitive  gap position.  In this situation,  net interest income would
increase if market  interest  rates rose or decrease  if market  interest  rates
fell.  If,  alternatively,  more  liabilities  than  assets  will  reprice,  the
institution  is in a  liability-sensitive  position.  Accordingly,  net interest
income would decline when rates rose and increase when rates fell.  Also,  these
examples assume that interest-rate changes for assets and liabilities are of the
same  magnitude,  whereas  actual  interest-rate  changes  generally  differ  in
magnitude for assets and liabilities.

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

         The following table provides  information about the Company's financial
instruments that are sensitive to changes in interest rates as of June 30, 1998,
based on the information  and  assumptions  set forth in the notes.  The Company
believes that the  assumptions  utilized,  which are based on  statistical  data
provided  by a federal  regulatory  agency in the  Company's  market  area,  are
reasonable.  The Company had no  derivative  financial  instruments,  or trading
portfolio,  as of June 30,  1998.  The expected  maturity  date values for loans
receivable,   mortgage-backed   securities,   and  investment   securities  were
calculated  by  adjusting  the  instrument's   contractual   maturity  date  for
expectations  of  prepayments,  as set forth in the notes.  Similarly,  expected
maturity date values for  interest-bearing  core deposits were calculated  based
upon estimates of the period over which the deposits would be outstanding as set
forth in the notes.  With respect to the Company's  adjustable rate instruments,
expected  maturity  date values  were  measured by  adjusting  the  instrument's
contractual  maturity date for expectations of prepayments,  as set forth in the
notes. From a risk management  perspective,  however,  the Company believes that
repricing  dates, as opposed to expected  maturity dates, may be a more relevant
metric in analyzing the value of such instruments.  Similarly, substantially all
of the  Company's  investment  securities  portfolio  is  comprised  of callable
government agency  securities.  Company borrowings were tabulated by contractual
maturity dates and without regard to any conversion or repricing dates.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                        EXPECTED MATURITY DATE -
                                                       FISCAL YEAR ENDED JUNE 30,
                                       -------------------------------------------------------
                                                                                                     There-                   Fair
                                         1999         2000        2001       2002        2003        after        Total       value
                                       --------     -------     -------    -------     -------     --------     --------    --------
<S>                                    <C>          <C>         <C>        <C>          <C>         <C>         <C>         <C>     
ON-BALANCE SHEET FINANCIAL INSTRUMENTS 
Interest-earning assets:
  Loans receivable (1)(2)(3)(4)          
    Fixed rate                         $ 27,781     $17,393     $12,905    $10,732      $7,937      $36,462     $113,210    $118,324
      Average interest rate                8.28%       8.01%       7.90%      7.85%       7.74%        7.49%         
                                         
    Adjustable rate                       9,578       7,885       6,672      5,633       4,744       12,690       47,202      49,826
      Average interest rate(5)             8.15%       8.16%       8.17%      8.18%       8.19%        7.94% 
  Mortgage-backed securities             
    Fixed rate                               54         260         ---        120       2,309       26,071       28,814      28,535
      Average interest rate                6.43%       6.37%       0.00%      8.03%       6.02%        6.53%     
                                         
    Adjustable rate                         ---         ---         ---        ---         ---       17,301       17,301      18,283
      Average interest rate(6)             0.00%       0.00%       0.00%      0.00%       0.00%        6.86% 
                                                                                                                                    
  Investments(7)                         20,419         ---         ---        ---         ---       65,486       85,905      86,190
      Average interest rate                6.27%       0.00%       0.00%      0.00%       0.00%        7.07%  
                                                                                                                                    
  Interest-bearing deposits               1,807         ---         ---        ---         ---          ---        1,807       1,807
      Average interest rate                6.11%       0.00%       0.00%      0.00%       0.00%        0.00%  
                                       --------     -------     -------    -------     -------     --------     --------    --------
        Total                          $ 59,639     $25,538     $19,577    $16,485     $14,990     $158,010     $294,239    $302,965
                                                                                                                       
Interest-bearing liabilities:                                                                                                       
  Interest-bearing deposits              
   and escrows(8)(9)(10)               $ 93,569     $20,208     $20,208    $ 7,201     $ 7,201     $ 22,595     $170,982    $171,194
      Average interest rate                4.54%       3.93%       3.93%      3.36%       3.36%        2.31%   
                                                                                                                                    
  Borrowings                              7,246       8,000         ---     51,500         ---       23,000       89,746      88,960
      Average interest rate                5.19%       5.89%       0.00%      5.75%       0.00%        5.05% 
                                       --------     -------     -------    -------     -------     --------     --------    --------
        Total                          $100,815     $28,208     $20,208    $58,701     $ 7,201     $ 45,595     $260,728    $260,154
</TABLE>                               

(1)  Net of  undisbursed  loan  proceeds and does not include net deferred  loan
     fees or the allowance for loan losses.
(2)  For  single-family  residential  loans,  assumes  annual  amortization  and
     prepayment rate at 15% for adjustable rate loans,  and 11% to 38% for fixed
     rate loans. For  multi-family  residential  loans and other loans,  assumes
     amortization and prepayment rate of 12%.
(3)  For second mortgage loans,  assumes annual amortization and prepayment rate
     of 18%.
(4)  Consumer loans assumes amortization and prepayment rate of 13%.
(5)  Substantially  all of the  Company's  adjustable  rate loans  reprice on an
     annual basis based upon changes in the one-year constant maturity  treasury
     index with various market based annual and lifetime  interest rate caps and
     floors.
<PAGE>
(6)  Substantially  all  of  the  Company's   adjustable  rate   mortgage-backed
     securities  reprice on a monthly  basis based upon changes in the one month
     LIBOR index with various lifetime caps and floors.
(7)  Totals  include the  Company's  investment in Federal Home Loan Bank stock.
     Amounts  adjusted  to  reflect  called   investment   securities   totaling
     approximately $5,000.
(8)  For regular savings accounts, assumes an annual decay rate of 17% for three
     years or less,  16% for more than three through five years and 14% for more
     than five years.
(9)  For NOW accounts, assumes an annual decay rate of 37% for one year or less,
     32% for more than one though three years and 17% for more than three years.
(10) For money market deposit accounts,  assumes an annual decay rate of 79% for
     one year or less and 31% for more than one year.

                                       12
<PAGE>
         The table below provides  information  about the Company's  anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed  letters  and  lines  of  credit.  The  Company  used no  derivative
financial  instruments  to hedge such  anticipated  transactions  as of June 30,
1998.

 


                             Anticipated Transactions
                    ----------------------------------------
                     Undisbursed construction and
                         land development loans
                           Fixed rate ...........    $ 3,984
                                                        8.84%

                           Adjustable rate ......    $ 7,328
                                                        9.44%
                     Undisbursed lines of credit
                           Adjustable rate ......    $ 7,982
                                                        8.32%
                     Loan origination commitments
                           Fixed rate ...........    $   648
                                                        7.31%

                           Adjustable rate ......    $ 3,847
                                                        8.76%
                     Letters of credit
                           Adjustable rate ......    $    82
                                                        11.5%
                                                     -------
                                                     $23,871
                                                     =======



                                        13
<PAGE>
RESULTS OF OPERATIONS

         GENERAL. WVS reported net income of $3.5 million, $3.0 million and $3.6
million for the fiscal years ended June 30, 1998,  1997 and 1996,  respectively.
Net income for the fiscal  year ended June 30,  1998,  totaled  $3.5  million or
$1.01 basic and $0.98  diluted  earnings  per share as compared to net income of
$3.0  million or $0.88 basic and $0.85  diluted  earnings per share for the same
period in 1997.  The $533 thousand or 18.0% increase in net income during fiscal
1998 was  primarily  the  result of a $244  thousand  decrease  in  non-interest
expense,  a $180  thousand  decrease in the  provision  for loan losses,  a $164
thousand  increase in  non-interest  income and a $124 thousand  increase in net
interest income which was partially offset by a $179 thousand increase in income
tax expense. As more fully explained within this Annual Report, fiscal year 1998
net income was impacted by four  significant  one-time  items:  federal  deposit
insurance  premiums  decreased  approximately  $1.2 million primarily due to the
Savings Association Insurance Fund ("SAIF")  recapitalization incurred in fiscal
1997; a $553 thousand  non-recurring  charge  related to the  resignation of the
Company's former  President;  the Company's  provision for loan losses decreased
$180 thousand,  primarily due to the payoff of a past due commercial loan; and a
$133 thousand  non-recurring  gain on the sale of an office building.  Excluding
the four  one-time  items,  net income for the fiscal  year ended June 30,  1998
would have totaled  approximately  $3.7 million with basic and diluted  earnings
per share totaling $1.06 and $1.03 respectively.

         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.


                                       14
<PAGE>
         Average Balances, Net Interest Income and Yields Earned and Rates Paid.
The  following  average  balance  sheet  table sets forth at and for the periods
indicated, information on the Company regarding: (i) the total dollar amounts of
interest  income on  interest-earning  assets and the resulting  average yields;
(ii)  the  total  dollar  amounts  of  interest   expense  on   interest-bearing
liabilities and the resulting  average costs;  (iii) net interest  income;  (iv)
interest  rate  spread;  (v)  net  interest-earning   assets   (interest-bearing
liabilities);  (vi) the net yield earned on  interest-earning  assets; and (vii)
the  ratio  of  total   interest-earning   assets   to  total   interest-bearing
liabilities.  Average balances are derived from month-end  balances.  Management
does not believe that the use of  month-end  balances  instead of daily  average
balances has caused any material differences in the information presented.
<TABLE>
<CAPTION>
                                                                      For the Years Ended June 30,
                          At June 30   ---------------------------------------------------------------------------------------------
                              1998                 1998                          1997                            1996
                          -----------  ----------------------------- ------------------------------  -------------------------------
                          Period End   Average             Average   Average              Average    Average               Average
                           Rate/Cost   Balance   Interest Yield/Rate Balance   Interest  Yield/Rate  Balance   Interest   Yield/Rate
                           ---------   -------   -------- ---------- -------   --------  ----------  -------   --------   ----------
                                                                (Dollars in Thousands)
<S>                         <C>       <C>         <C>       <C>      <C>        <C>      <C>         <C>         <C>         <C> 
Interest-earning assets:                                                                                                            
  Net loans receivable(1)      7.95%  $163,046    $13,191     8.09%  $153,726   $12,440    8.09%     $141,643    $11,756       8.30%
  Mortgage-backed                                                                                                                   
      securities               6.98     40,066      2,715     6.78     39,451     2,724     6.90       25,384      1,638       6.45 
  Investments                  6.88     82,877      6,167     7.44     79,128     5,881     7.43       64,679      4,831       7.47 
  Interest-bearing deposits    6.11      1,842         73     3.96      2,335        80     3.43        2,288         92       4.02 
                                      --------    -------            --------   -------              --------    -------            
  Total interest-earning                                                                                                            
      assets                   7.47%   287,831     22,146     7.69%   274,640    21,125     7.69%     233,994     18,317       7.83%
                             ======               -------   ======              -------   ======                 -------      ===== 
  Non-interest-earning                                                                                                              
      assets                             3,143                          3,331                           3,140                       
                                      --------                       --------                        --------      
        Total assets                  $290,974                       $277,971                        $237,134                       
                                      ========                       ========                        ======== 
                                                                                                                                    
Interest-bearing liabilities:                                                                                                       
  Interest-bearing deposits                                                                                                         
      and escrows              4.00%  $161,855     $6,943     4.29%  $165,017    $7,086     4.29%    $168,280     $7,431       4.42%
  Borrowings                   5.54     84,887      4,838     5.70     62,522     3,798     6.07       24,814      1,409       5.68 
                                      --------    -------            --------   -------              --------    ------- 
  Total interest-bearing                                                                                                            
      liabilities              4.53%   246,742     11,781     4.78%   227,539    10,884     4.78%     193,094      8,840       4.58%
                             ======               -------   ======              -------   ======                 -------      =====
  Non-interest-bearing                                                                                                              
      accounts                           7,073                          6,459                           4,559 
                                      --------                       --------                        --------  
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                         <C>       <C>         <C>       <C>      <C>        <C>      <C>         <C>         <C>         <C>
  Total interest-bearing                                                                                                            
      liabilities and non-                                                                                                          
      interest-bearing                                                                                                              
      accounts                         253,815                        233,998                         197,653                       
  Non-interest-bearing                                                                                                              
      liabilities                        3,747                          9,686                           4,361                       
                                      --------                       --------                        --------         
        Total liabilities              257,562                        243,684                         202,014                       
Retained income                         33,412                         34,287                          35,120                       
                                      --------                       --------                        --------  
Total liabilities and                                                                                                               
retained income                       $290,974                       $277,971                        $237,134                       
                                      ========                       ========                        ======== 
Net interest income                               $10,365                       $10,241                           $9,477            
                                                  =======                       =======                           ======            
Interest rate spread           2.94%                         2.91%                         2.91%                              3.25% 
                             ======                        ======                        ======                             ======  
Net yield on interest-                                                                                                              
    earning assets(2)          3.55%                         3.60%                         3.73%                              4.05% 
                             ======                        ======                        ======                             ======  
Ratio of interest-earning                                                                                                           
    assets to interest-                                                                                                             
    bearing liabilities      111.92%                       116.65%                       120.70%                            121.18% 
                             ======                        ======                        ======                             ======
</TABLE>                                                 
 (1)Includes non-accrual loans.
 (2)Net interest income divided by interest-earning assets.

                                       15
<PAGE>
         Rate/Volume Analysis. The following table describes the extent to which
changes in interest rates and changes in volume of  interest-related  assets and
liabilities  have affected the Company's  interest income and expense during the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume  (change in volume  multiplied  by prior year rate),  (ii)
changes in rate  (change in rate  multiplied  by prior year  volume),  and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume  has been  allocated  proportionately  to the  change due to rate and the
change due to volume.
<TABLE>
<CAPTION>
                                                                      Year Ended June 30,
                                           ---------------------------------------------------------------------- 
                                                      1998 vs. 1997                        1997 vs. 1996
                                           ----------------------------------   ---------------------------------
                                            Increase  (Decrease)                 Increase  (Decrease)    
                                                    Due to           Total              Due to            Total
                                           ---------------------    Increase    ---------------------   Increase
                                             Volume       Rate     (Decrease)     Volume      Rate     (Decrease)
                                             ------       ----     ----------     ------      ----     ----------
                                                                       (In Thousands)
<S>                                         <C>         <C>         <C>         <C>         <C>         <C>    
Interest-earning assets:
     Net loans receivable ..............    $   751     $     0     $   751     $   987     $  (303)    $   684
     Mortgage-backed securities ........         39         (48)         (9)        965         121       1,086
     Investments .......................        278           8         286       1,076         (26)      1,050
     Interest-bearing deposits .........        (18)         11          (7)          1         (13)        (12)
                                            -------     -------     -------     -------     -------     -------
           Total interest-earning assets      1,050         (29)      1,021       3,029        (221)      2,808
Interest-bearing liabilities:
     Interest-bearing deposits and
        escrows ........................       (212)         69        (143)       (156)       (189)       (345)
     Other borrowings ..................      1,283        (243)      1,040       2,286         103       2,389
                                            -------     -------     -------     -------     -------     -------
           Total interest-bearing      
           liabilities .................      1,071        (174)        897       2,130         (86)      2,044
                                            -------     -------     -------     -------     -------     -------
Increase (decrease) in net interest
   income ..............................    $   (21)    $   145     $   124     $   899     $  (135)    $   764
                                            =======     =======     =======     =======     =======     =======

</TABLE>
          INTEREST  INCOME.  Total interest income  increased by $1.0 million or
4.8% during  fiscal 1998 and  increased by $2.8  million or 15.3% during  fiscal
1997,  primarily as a result of changes in interest  income on the Company's net
loans receivable and investment securities portfolio during the periods.

          Interest  income on net loans  receivable  increased  $751 thousand or
6.0% during fiscal 1998 and increased  $684 thousand or 5.8% during fiscal 1997.
The increase in fiscal 1998 was  attributable to a $9.3 million  increase in the
average balance of net loans  outstanding  while maintaining a constant weighted
average yield on the Company's loan  portfolio.  The increase in fiscal 1997 was
attributable  to a $12.1  million  increase in the average  balance of net loans
outstanding which more than offset a decrease of 21 basis points in the weighted
average yield earned on the Company's loan portfolio.

          Interest income on investment securities and FHLB stock increased $286
thousand or 4.9% during fiscal 1998 and  increased  $1.1 million or 22.9% during
fiscal 1997.  The increase in the average  balance of investment  securities was
primarily  attributable  to increased  purchases of callable  government  agency
securities during the first six months of fiscal 1998. In response to the marked
decline  in market  interest  rates  during  the  second  half of  fiscal  1998,
management

                                       16
<PAGE>
increased  its  purchase  of  mortgage-backed   securities.   The  Company  held
approximately  $15.4 million of investment  grade  commercial  paper at June 30,
1998, to  capitalize  on seasonally  high quarter end money market rates and for
liquidity  management.  The increase in fiscal 1997 was  attributable to a $14.4
million increase in the average balance of investment  securities and FHLB stock
outstanding, which more than offset a decrease of 4 basis points in the weighted
average yield earned on the Company's investment and FHLB stock portfolio.

          Interest income on mortgage-backed securities decreased $9 thousand or
0.33% during fiscal 1998 and increased $1.1 million or 68.8% during fiscal 1997.
While the average outstanding balance of mortgage-backed securities increased by
$615 thousand  during fiscal 1998, the weighted  average  interest rate yield on
such  investments  decreased by 12 basis points,  keeping  interest  income from
mortgage-backed securities relatively constant. During the second half of fiscal
1998, the Company began to increase its holdings of mortgage-backed  securities.
The Company believes that its mortgage-backed  securities provided a higher rate
of return than  callable  agency  securities  offered at the time and  generally
provided  monthly  payments  of  principal  and  interest.  As in the past,  the
Company's  purchases of  mortgage-backed  securities  emphasized  current coupon
paper  in order  to  avoid  increased  levels  of  premium  amortization  due to
relatively  high  prepayments.  The  Company  believes  that  this  conservative
approach has contributed to the overall yield of the mortgage-backed  securities
portfolio.  The  increase in fiscal 1997 was  attributable  to an increase of 45
basis  points  in  the   weighted   average   yield  earned  on  the   Company's
mortgage-backed securities portfolio and a $14.1 million increase in the average
balance of mortgage-backed securities outstanding.

          Interest income on interest-bearing  deposits decreased $7 thousand or
8.8% during  fiscal 1998 and decreased $12 thousand or 13.0% during fiscal 1997.
The decrease in fiscal 1998 was primarily due to a $493 thousand decrease in the
average balance of interest-bearing deposits outstanding, which was considerably
offset by an increase of 53 basis points in the weighted average yield earned on
these deposits.  The decrease in fiscal 1997 was primarily due to a $47 thousand
decrease in the average balance of interest-earning  deposits  outstanding and a
decrease  of 59  basis  points  in the  weighted  average  yield  earned  on the
Company's interest-earning deposits.

          Throughout fiscal 1998, market interest rates continued to decline due
to (i)  financial  turmoil  abroad,  especially  in the  economies of Asia (e.g.
Japan,  South Korea,  Thailand) and Russia;  (ii) low domestic  inflation in the
United  States  due to record  low  levels of  commodity  prices;  and (iii) the
desirability of U.S. dollar  denominated  bonds as a "safe haven" investment for
foreign  investors  seeking  shelter from  foreign  currency  fluctuations.  The
Company  continued to restructure  its balance sheet by adjusting the mix of its
financial  assets,  particularly its investment and  mortgage-backed  securities
portfolios,  and  lengthening  the  maturities of its financial  liabilities  by
emphasizing  the use of FHLB advances.  The Company  believes that this strategy
has contributed to increased net interest income during fiscal 1998.

          INTEREST  EXPENSE.  Total interest expense  increased $897 thousand or
8.2% during  fiscal 1998 and  increased by $2.1  million or 23.9% during  fiscal
1997.

          Interest expense on borrowings  increased $1.0 million or 27.4% during
fiscal  1998 and  increased  $2.4  million or 171.4%  during  fiscal  1997.  The
increases for both fiscal 1998 and 1997 were primarily attributable to increases
in the average  balance of  borrowings  outstanding  totaling  $22.3 million and
$37.7 million,  respectively.  In order to better match investment opportunities
and 

                                       17
<PAGE>
resources,  enhance its net interest income and reduce the amount of excess cash
invested at the FHLB of Pittsburgh,  the Company continues to utilize short- and
intermediate-term  borrowings to purchase  investment  securities and fund other
commitments.

          Interest expense on  interest-bearing  deposits and escrows  decreased
$143  thousand or 2.0% in fiscal  1998 and  decreased  $345  thousand or 4.6% in
fiscal 1997. The decrease in fiscal 1998 was principally  attributable to a $3.2
million decrease in the average balance of interest-bearing deposits and escrows
outstanding,  which was slightly  offset by an increase of 4 basis points in the
weighted  average rate paid on the  Company's  deposits.  The decrease in fiscal
1997 was primarily attributable to a decrease of 13 basis points in the weighted
average rate paid on the Company's  deposits and a $3.2 million  decrease in the
average balance of interest-bearing deposits and escrows outstanding.

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

          The Company's provision for loan losses decreased by $180 thousand for
fiscal 1998  primarily  due to a recovery of  previously  established  loan loss
reserves  attributable  to the payoff of a commercial  loan  participation.  The
Company established  provisions for possible losses on loans of $60 thousand and
$150  thousand for the fiscal years ended June 30, 1997 and 1996,  respectively.
The  provisions  for fiscal 1997 and 1996 were primarily due to increases in the
Company's general allowance for losses on loans.

          NON-INTEREST  INCOME.  Total  non-interest  income  increased  by $164
thousand  or 43.9% in fiscal  1998 and  decreased  $9 thousand or 2.3% in fiscal
1997.  The increase in  non-interest  income for fiscal year 1998 was  partially
offset by the  absence of a $30  thousand  gain from the sale of  securities  in
1997.

          Service  charges on  deposits  increased  by $31  thousand or 15.3% in
fiscal 1998 and  increased $7 thousand or 3.6% in fiscal  1997.  The increase in
both fiscal years was  principally  attributable to service charges applied to a
larger number of transaction  accounts opened during the respective fiscal year.
The increase in fiscal 1998 was also  attributable to increased  service charges
on automated teller machines and transaction accounts. The Company has continued
to  aggressively  pursue  transaction  accounts in order to enhance its level of
core  deposits  and to  increase  its  relationship  base with new and  existing
customers.

          Other  non-interest  income (e.g.  safe deposit box fees,  income from
loan late charges,  automated teller machine (ATM) fee income, profit on sale of
real estate owned,  miscellaneous  income, and money order fee income) increased
$163  thousand in fiscal 1998 and  increased $8 thousand in fiscal  1997.  Other
non-interest  income increased during fiscal 1998 principally as a result of the
recognition of a $133 thousand gain on the sale of an office building.

          NON-INTEREST  EXPENSE.   Total  non-interest  expense  decreased  $244
thousand or 4.3% during fiscal 1998 and  increased  $1.6 million or 39.0% during
fiscal  1997.  The  decrease  in  non-interest  expense  during  fiscal 1998 was
primarily attributable to a $1.2 million decrease in

                                       18
<PAGE>
deposit  insurance  premiums,  which was  partially  offset by an $893  thousand
increase in employee salaries and benefits, principally a $533 thousand one-time
expense as further discussed below. The increase in non-interest  expense during
fiscal  1997  was  principally  attributable  to an  $893  increase  in  deposit
insurance  premiums,  the  absence of $382  thousand  of  non-taxable  insurance
settlement proceeds resulting from previously  disclosed and settled shareholder
litigation  and  defense  costs and a $337  thousand  increase  in  compensation
expense.

          Salaries and employee benefits increased $893 thousand or 30.2% during
fiscal  1998 and  increased  $337  thousand or 12.8%  during  fiscal  1997.  The
increase in fiscal 1998 was primarily  attributable  to a  non-recurring  charge
totaling $533 thousand  related to the resignation of the Company's former Chief
Executive  Officer,  a  $125  thousand  discretionary  increase  related  to the
Company's  ESOP,  a $115  thousand  increase  in  employee  wages  and  salaries
principally attributable to merit pay and cost of living adjustments,  and a $28
thousand  increase in profit  sharing plan expense.  The increase in fiscal 1997
was  principally  attributable  to a  $195  thousand  increase  related  to  the
Company's ESOP, a $75 thousand increase in employee wages and salaries and a $57
thousand increase in profit sharing plan expense.

          Federal  deposit  insurance  premiums  decreased $1.2 million or 91.7%
during fiscal 1998 and increased  $893 thousand or 222.7% during fiscal 1997. On
September 30, 1996 the President signed the Deposit  Insurance Funds Act of 1996
(the  "Funds  Act") into law.  The Funds Act calls for a Special  Assessment  on
SAIF-assessable  deposits as of March 31, 1995,  to  capitalize  the SAIF to its
designated  reserve  ratio of 1.25%.  The Company  recorded a pre-tax  charge of
approximately $1.1 million during the quarter ended September 30, 1996, using an
FDIC estimated  assessment rate of $0.657 for every $100 of assessable deposits.
This was a non-recurring charge for fiscal 1997 and a non-recurring  decrease in
premiums  for fiscal 1998.  During the quarter  ended  December  31,  1996,  the
Company  accrued a $102 thousand  refund of prepaid  federal  deposit  insurance
premiums  as a result  of the  capitalization  of the  SAIF.  Federal  insurance
premiums are  dependent on the size of the  Company's  deposit base and premiums
which were assessed by the FDIC during the respective years.

          Other  non-interest  expense (e.g.  director's  compensation  expense,
advertising,  Pennsylvania capital stock tax expense, ATM network expense, legal
expense,  transfer  agent expense,  etc.)  increased $53 thousand or 7.4% during
fiscal 1998 and decreased $15 thousand or 2.0% during fiscal 1997.  The increase
in  fiscal  1998  was  primarily  attributable  to a $36  thousand  increase  in
professional,  telecommunications  and  advertising  expense which was partially
offset by an $11  thousand  decrease in ATM network  expenses.  The  decrease in
fiscal  1997 was  primarily  attributable  to the  absence  of $25  thousand  of
foreclosed real estate disposition costs and related expenses.

          INCOME  TAXES.  Income taxes  increased  $179  thousand or 9.3% during
fiscal 1998 and decreased $136 thousand or 6.6% during fiscal 1997. The increase
in fiscal 1998 was primarily  attributable  to a $712 thousand or 14.6% increase
in taxable income. The decrease in fiscal 1997 was principally attributable to a
$754 or 13.4% decrease in taxable income.  The Company's  effective tax rate was
37.7%,  39.4%  and 36.6% at June 30,  1998,  1997 and  1996,  respectively.  The
decrease in the  effective  rate for fiscal 1996 was due primarily to a one-time
adjustment for the non-taxable litigation settlement previously discussed.


                                       19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

          Net cash provided by operating  activities totaled $5.1 million during
fiscal 1998 as compared to $3.7  million for fiscal 1997.  Net cash  provided by
operating activities was primarily comprised of $3.5 million in net income.

          Funds used by investing  activities  totaled  $2.2 million  during the
fiscal year ended June 30,  1998.  Primary  uses of funds during the fiscal year
ended June 30, 1998,  include  $136.7  million in purchases  of  investment  and
mortgage-backed securities, a $2.6 million increase in net loan receivables, and
a $0.7 million increase in FHLB stock, partially offset by the receipt of $134.9
million  of  proceeds  from  the  repayment  of  principal  on  investments  and
mortgage-backed securities and $2.9 million in proceeds from the sale of loans.

          Funds used for  financing  activities  totaled  $2.9  million  for the
fiscal year ended June 30, 1998.  Primary  financial uses include a $5.9 million
decrease in other  borrowings,  $5.2 million in cash  dividends  paid and a $3.2
million decrease in interest-bearing deposits, which were partially offset by an
$11.0  million  increase  in FHLB  advances  used to fund loan  commitments  and
investment security purchases.  Financial institutions generally,  including the
Company,  have  experienced a certain degree of depositor  disintermediation  to
other  investment   alternatives.   Management   believes  that  the  degree  of
disintermediation  experienced  by the Company has not had a material  impact on
overall liquidity.  As of June 30, 1998, $74.1 million or 44.2% of the Company's
total  deposits  consisted of core deposits.  Management has determined  that it
currently  is  maintaining  adequate  liquidity  and  continues  to better match
funding sources with lending and investment opportunities.

         The  Company's  primary  sources of funds are  deposits,  amortization,
prepayments  and maturities of existing  loans,  mortgage-backed  securities and
investment securities, funds from operations, and funds obtained through Federal
Home Loan  Bank  advances  and other  borrowings.  At June 30,  1998,  the total
approved loan  commitments  outstanding  amounted to $4.5  million.  At the same
date,  commitments  under  unused  letters and lines of credit  amounted to $8.0
million and the unadvanced  portion of  construction  loans  approximated  $11.3
million. Certificates of deposit scheduled to mature in one year or less at June
30, 1998, totaled $63.0 million.  Management believes that a significant portion
of maturing deposits will remain with the Company.

         Historically,  the Company used its sources of funds  primarily to meet
its ongoing  commitments  to pay  maturing  certificates  of deposit and savings
withdrawals,  fund loan  commitments  and  maintain a  substantial  portfolio of
investment  securities.  The Company has been able to generate  sufficient  cash
through the retail deposit market,  its traditional  funding source, and through
FHLB  advances and other  borrowings,  to provide the cash utilized in investing
activities.  The Company has established a $15.0 million line of credit with the
FHLB,  which is scheduled to mature on March 25, 1999, and is subject to various
conditions,  including the pledging and delivery of acceptable  collateral.  The
primary  purpose  of the  line of  credit  is to serve  as a  back-up  liquidity
facility for the Company, however, the Company may from time to time utilize the
line of credit to purchase investment securities and fund other commitments.  In
addition,  the Company has access to the Federal  Reserve Bank discount  window.
Management  believes that the Company currently has adequate liquidity available
to respond to liquidity demands.

          On July 28, 1998,  the  Company's  Board of Directors  declared a cash
dividend  of $0.15 per share  payable on August 20,  1998,  to  shareholders  of
record at the close of business  on August

                                       20
<PAGE>
10, 1998. 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,  1998,  WVS  Financial  Corp.  exceeded  all  regulatory
capital requirements and maintained Tier I and total risk-based capital equal to
$32.8  million  or 20.9% and $34.7  million  or  22.1%,  respectively,  of total
risk-weighted  assets,  and Tier I leverage capital of $32.8 million or 11.0% of
average total assets.

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

         The  Company's   nonperforming   assets  at  June  30,  1998,   totaled
approximately  $603  thousand  or 0.21%  of total  assets  as  compared  to $274
thousand or 0.09% of total assets as of June 30, 1997.  Nonperforming  assets at
June 30, 1998,  consisted of $481 thousand in commercial real estate loans,  $52
thousand  in   single-family   loans  and  $70   thousand  in  consumer   loans.
Approximately  $20  thousand  of  additional  interest  income  would  have been
recorded during the fiscal year ended June 30, 1998, if the Company's nonaccrual
and  restructured  loans had been current in accordance with their original loan
terms and outstanding throughout the fiscal year ended June 30, 1998.


YEAR 2000 COMPLIANCE

         The  Company  outsources  substantially  all  of  its  data  processing
requirements and it is to a large extent  dependent upon vendor  cooperation for
systems used in its day-to-day  business.  The Company,  in conjunction with its
vendors, is testing its computer systems and requiring  representations from its
vendors  that the  products  provided  are or will be year 2000  compliant.  The
Company has developed a plan of action to help ensure that its  operational  and
financial systems will not be adversely affected by year 2000  software/hardware
failures due to processing errors arising from calculations  using the year 2000
date. All hardware and software products are expected to be compliant by the end
of  calendar  1998.  The Company  does not expect  material  expenditures  to be
incurred to address  the year 2000  issue.  Based upon  current  estimates,  the
Company does not expect to incur more than $75  thousand  (pre-tax) in Year 2000
remediation  expenses.  Any  year  2000  compliance  failures  could  result  in
additional  expenses or business  disruption  to the Company which are currently
unknown.


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,

                                       21
<PAGE>
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.


                                       22
<PAGE>
[SNODGRASS LETTERHEAD]




                          REPORT OF INDEPENDENT AUDITORS





Board of Directors and Stockholders
WVS Financial Corp.

We have audited the accompanying  consolidated statements of financial condition
of WVS Financial  Corp.  and  subsidiary as of June 30, 1998,  and 1997, 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,  1998.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of WVS Financial Corp.
and subsidiary as of June 30, 1998 and 1997, and the results of their operations
and their cash flows for each of the years in the three year  period  ended June
30, 1998, in conformity with generally accepted accounting principles.




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

Wexford, PA
July 31, 1998


                                       23
<PAGE>
<TABLE>
<CAPTION>
                                   WVS FINANCIAL CORP.
                     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                     (In thousands)
                                                                          June 30,
                                                                    1998          1997
                                                                  ---------     ---------
<S>                                                               <C>           <C>      
ASSETS
Cash and due from banks ......................................    $     699     $     667
Interest - earning demand deposits ...........................        1,807         1,904
Investment securities available for sale (amortized
    cost of $17,481 and $3,689) (Note 4) .....................       17,519         3,553
Investment securities held to maturity (market value of
    $63,996 and $83,889) (Note 4) ............................       63,749        83,995
Mortgage - backed securities available for sale (amortized
    cost of $18,842 and $18,417) (Note 5) ....................       19,041        18,280
Mortgage - backed securities held to maturity (market value
    of $27,777 and $19,381) (Note 5) .........................       27,273        19,210
Net loans receivable (Note 6) ................................      157,737       158,134
Accrued interest receivable ..................................        2,414         2,809
Federal Home Loan Bank stock, at cost ........................        4,675         3,927
Premises and equipment .......................................        1,179         1,298
Deferred taxes and other assets ..............................          961           916
                                                                  ---------     ---------

TOTAL ASSETS .................................................    $ 297,054     $ 294,693
                                                                  =========     =========
LIABILITIES
Deposits (Note 11) ...........................................    $ 167,670     $ 170,879
Federal Home Loan Bank advances (Note 12) ....................       88,857        77,857
Other borrowings (Note 13) ...................................          889         6,784
Advance payments by borrowers for taxes and insurance ........        3,312         3,531
Accrued interest payable .....................................        1,874         1,768
Other liabilities ............................................        1,474           985
                                                                  ---------     ---------
TOTAL LIABILITIES ............................................      264,076       261,804
                                                                  ---------     ---------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares authorized;
    none outstanding .........................................         --            --
Common stock, par value $.01; 10,000,000 shares authorized;
    3,617,120 and 1,747,280 shares issued and outstanding ....           36            17
Additional paid - in capital .................................       18,386        17,236
Retained earnings - substantially restricted (Note 15) .......       15,143        16,900
Net unrealized gain (loss) on securities .....................          157          (180)
Unallocated shares - Employee Stock Ownership Plan (Note 16) .         (312)         (453)
Unallocated shares - Recognition and Retention Plans (Note 16)         (432)         (631)
                                                                  ---------     ---------
TOTAL STOCKHOLDERS' EQUITY ...................................       32,978        32,889
                                                                  ---------     ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................    $ 297,054     $ 294,693
                                                                  =========     =========
</TABLE>
See accompanying notes to the consolidated financial statements.

                                       24
<PAGE>
<TABLE>
<CAPTION>
                                               WVS FINANCIAL CORP.
                                        CONSOLIDATED STATEMENTS OF INCOME
                                      (In thousands, except per share data)

                                                                                Year Ended June 30,
                                                                        1998            1997            1996
                                                                    -----------     -----------     -----------
<S>                                                                 <C>             <C>             <C>        
INTEREST AND DIVIDEND INCOME
Loans ..........................................................    $    13,191     $    12,440     $    11,756
Investment securities ..........................................          5,908           5,696           4,747
Mortgage - backed securities ...................................          2,715           2,724           1,638
Interest - earning demand deposits .............................             73              80              92
Federal Home Loan Bank stock ...................................            259             185              84
                                                                    -----------     -----------     -----------
Total interest and dividend income .............................         22,146          21,125          18,317
                                                                    -----------     -----------     -----------
INTEREST EXPENSE
Deposits (Note 11) .............................................          6,899           7,041           7,385
Borrowings (Notes 12 and 13) ...................................          4,838           3,798           1,409
Advance payments by borrowers for
    taxes and insurance ........................................             44              45              46
                                                                    -----------     -----------     -----------
Total interest expense .........................................         11,781          10,884           8,840
                                                                    -----------     -----------     -----------

NET INTEREST INCOME ............................................         10,365          10,241           9,477
Provision for loan losses (Note 7) .............................           (120)             60             150
                                                                    -----------     -----------     -----------
NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES ............................................         10,485          10,181           9,327
                                                                    -----------     -----------     -----------
NONINTEREST INCOME
Service charges on deposits ....................................            234             203             196
Investment securities gains ....................................           --                30              54
Other ..........................................................            304             141             133
                                                                    -----------     -----------     -----------
Total noninterest income .......................................            538             374             383
                                                                    -----------     -----------     -----------
NONINTEREST EXPENSE
Unusual items:
    Shareholder litigation settlement (Note 14) ................           --               (11)           (245)
    Shareholder litigation costs (Note 14) .....................           --              --              (137)
Salaries and employee benefits .................................          3,855           2,962           2,625
Occupancy and equipment ........................................            399             416             408
Deposit insurance premium (Note 21) ............................            107           1,294             401
Data processing ................................................            169             171             168
Other ..........................................................            892             834             847
                                                                    -----------     -----------     -----------
Total noninterest expense ......................................          5,422           5,666           4,067
                                                                    -----------     -----------     -----------

Income before income taxes .....................................          5,601           4,889           5,643

Income taxes (Note 18) .........................................          2,109           1,930           2,066
                                                                    -----------     -----------     -----------

NET INCOME .....................................................    $     3,492     $     2,959     $     3,577
                                                                    ===========     ===========     ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                 <C>             <C>             <C>        
EARNINGS PER SHARE:
Basic ..........................................................    $      1.01     $      0.88     $      1.07
Diluted ........................................................           0.98            0.85            1.04

AVERAGE SHARES OUTSTANDING:
Basic ..........................................................      3,472,328       3,369,796       3,347,363
Diluted ........................................................      3,575,892       3,490,226       3,452,854
</TABLE>


See accompanying notes to the consolidated financial statements. 

                                       25
<PAGE>
<TABLE>
<CAPTION>
                                                         WVS FINANCIAL CORP.
                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                (In thousands, except per share data)

                                                                Retained        Net
                                                 Additional     Earnings-    Unrealized      Unallocated     Unallocated
                                       Common     Paid-in    Substantially  Gain (Loss)     Shares Held      Shares Held
                                       Stock      Capital      Restricted   on Securities     by ESOP          by RRP       Total
                                      -------    ---------   -------------  -------------   -------------    -----------  --------- 
<S>                                   <C>        <C>            <C>            <C>            <C>             <C>         <C> 
Balance, June 30, 1995                $    17    $  16,867      $  18,629      $     -        $   (664)       $ (1,040)   $  33,809 
Release of earned Employee                                                                                                          
Stock Ownership Plan shares                             76                                          80                          156 
Accrued compensation expense                                                                                                        
for Recognition and Retention Plans                                                                                205          205 
Exercise of Stock Options                                4                                                                      4   
Cash dividends declared                                                                                                             
($1.03 per share)                                                  (3,345)                                                   (3,345)
Net unrealized loss on securities                                                 (368)                                        (368)
Net income                                                          3,577                                                     3,577 
                                      -------    ---------      ---------      ------         --------        --------    ---------
Balance, June 30, 1996                     17       16,947         18,861         (368)           (584)           (835)      34,038 
Release of earned Employee                                                                                                          
Stock Ownership Plan shares                            184                                         131                          315 
Accrued compensation expense                                                                                                        
for Recognition and Retention Plans                                                                                204          204 
Exercise of Stock Options                              105                                                                      105
Cash dividends declared                                                                                                             
($1.50 per share)                                                  (4,920)                                                   (4,920)
Net unrealized gain on securities                                                  188                                          188 
Net income                                                          2,959                                                     2,959 
                                      -------    ---------      ---------      ------         --------        --------    ---------
Balance, June 30, 1997                     17       17,236         16,900         (180)           (453)           (631)      32,889 
Release of earned Employee                                                                                                          
Stock Ownership Plan shares                            360                                         141                          501 
Accrued compensation expense                                                                                                        
for Recognition and Retention Plans                                                                                199          199 
Exercise of Stock Options                   1          635                                                                      636
Tax benefit from stock grants issued                                                                                                
under Recognition and Retention Plan                   173                                                                      173
Two-for-one stock split                    18          (18)                                                                       -
Cash dividends declared                                                                                                             
($1.50 per share)                                                  (5,249)                                                   (5,249)
Net unrealized gain on securities                                                  337                                          337 
Net income                                                          3,492                                                     3,492 
                                      -------    ---------      ---------      -------        -------        --------     ---------
Balance, June 30, 1998                $    36    $  18,386      $  15,143      $   157        $  (312)       $   (432)    $  32,978 
                                      =======    =========      =========      =======        =======        ========     ========= 
</TABLE>
See accompanying notes to the consolidated financial statements.

                                       26
<PAGE>
<TABLE>
<CAPTION>
                                         WVS FINANCIAL CORP.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (In thousands)
                                                                        Year Ended June 30,
                                                                 1998          1997          1996
                                                              ---------     ---------     ---------

<S>                                                           <C>           <C>           <C>      
OPERATING ACTIVITIES
Net income ...............................................    $   3,492     $   2,959     $   3,577
Adjustments to reconcile net income to net cash provided
    by operating activities:
Provision for loan losses ................................         (120)           60           161
Depreciation and amortization, net .......................          126           134           133
Amortization of discounts, premiums and deferred loan fees          (32)          111          (203)
Amortization of ESOP and RRP deferred and unearned
    compensation .........................................          899           519           361
Investment securities gains ..............................         --             (30)          (54)
Deferred income taxes ....................................         (202)          (52)           88
Decrease (increase) in accrued interest receivable .......          396          (436)         (288)
Increase in accrued interest payable .....................          106           343           159
Other, net ...............................................          445            71          (185)
                                                              ---------     ---------     ---------
Net cash provided by operating activities ................        5,110         3,679         3,749
                                                              ---------     ---------     ---------
INVESTING ACTIVITIES
Available for sale:
    Purchase of investment and mortgage-backed securities       (36,992)       (1,508)      (13,470)
    Proceeds from repayments of investment and
        mortgage-backed securities .......................       20,731         2,711         4,135
    Proceeds from sale of investment and
        mortgage-backed securities .......................        2,192         1,678           301
Held to maturity:
    Purchase of investment and mortgage-backed securities       (99,744)      (75,006)      (71,399)
    Proceeds from repayments of investment and
        mortgage - backed securities .....................      112,017        48,856        62,705
Net increase in net loans receivable .....................       (2,602)       (9,476)      (15,637)
Proceeds from sale of real estate owned ..................         --              73            24
Proceeds from sale of loans ..............................        2,914          --            --
Increase in Federal Home Loan Bank Stock .................         (748)       (2,027)         (747)
Acquisition of premises and equipment ....................           (8)         (105)           (6)
                                                              ---------     ---------     ---------
Net cash used for investing activities ...................       (2,240)      (34,804)      (34,094)
                                                              ---------     ---------     ---------
FINANCING ACTIVITIES
Net increase (decrease) in deposits ......................       (3,208)           36         2,057
Net increase in Federal Home Loan Bank advances ..........       11,000        39,857        23,016
Net increase (decrease) in other borrowings ..............       (5,895)       (3,868)        6,604
Net increase (decrease) in advance payments by
    borrowers for taxes and insurance ....................         (219)         (241)          518
Net proceeds from issuance of common stock ...............          636           105             4
Cash dividends paid ......................................       (5,249)       (4,920)       (3,345)
                                                              ---------     ---------     ---------
Net cash provided by (used for) financing activities .....       (2,935)       30,969        28,854
                                                              ---------     ---------     ---------
Decrease in cash and cash equivalents ....................          (65)         (156)       (1,491)
CASH AND CASH EQUIVALENTS AT BEGINNING
    OF YEAR ..............................................        2,571         2,727         4,218
                                                              ---------     ---------     ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR .................    $   2,506     $   2,571     $   2,727
                                                              =========     =========     =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                           <C>           <C>           <C>      
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
    Interest .............................................    $  11,675     $  10,541     $   8,681
    Taxes ................................................        2,286         2,118         1,869

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



                                       27
<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% 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  emanate from its portfolio of
residential  real estate and commercial  mortgage  loans, as well as income from
investment and mortgage-backed securities.

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

Basis of Presentation

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

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

Investment and Mortgage-Backed Securities

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

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

                                       28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Net Loans Receivable

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

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

Allowance for Loan Losses

The allowance for loan losses  represents the amount which management  estimates
is adequate  to provide for  potential  loan losses 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
which is charged to operations.  The provision is based on management's periodic
evaluation of the adequacy of the  allowance  for loan losses which  encompasses
the  overall  risk  characteristics  of the  various  portfolio  segments,  past
experience  with losses,  the impact of economic  conditions on  borrowers,  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 significant change in
the near term.

A loan is  considered  impaired  when it is probable  that the borrower will not
repay  the  loan  according  to the  original  contractual  terms  of  the  loan
agreement.  Management has  determined  that first mortgage loans on one-to-four
family   properties   and  all  consumer   loans   represent   large  groups  of
smaller-balance  homogeneous  loans  that  are  to  be  collectively  evaluated.
Management  considers an insignificant  delay,  which is defined as less than 90
days by the Savings Bank, will not cause a loan to be classified as impaired.  A
loan is not  impaired  during a period of delay in payment if the  Savings  Bank
expects to collect all amounts due including interest accrued at the contractual
interest  rate for the period of delay.  All loans  identified  as impaired  are
evaluated independently by management.  The Savings Bank estimates credit losses
on impaired  loans based on the present value of expected cash flows or the fair
value of the  underlying  collateral  if the loan  repayment is expected to come
from the sale or  operation  of such  collateral.  Impaired  loans,  or portions
thereof,  are  charged-off  when  it is  determined  that a  realized  loss  has
occurred.  Until such time,  an  allowance  for loan  losses is  maintained  for
estimated  losses.  Cash receipts on impaired loans are applied first to accrued
interest receivable, unless otherwise required by the loan terms, except when an
impaired  loan is also a  nonaccrual  loan,  in which  case the  portion  of the
receipts related to interest is recognized as income.

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Owned

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

Premises and Equipment

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

Income Taxes

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

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

Earnings Per Share

In February  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of  Financial  Accounting  Standards  No. 128,  "Earnings  Per Share."
Statement No. 128, which became  effective for financial  statements  issued for
fiscal periods ending after December 15, 1997,  replaced the previously reported
primary and fully diluted earnings per share with basic and diluted earnings per
share.  Unlike primary earnings per share, basic earnings per share excludes any
dilutive  effects of options,  warrants,  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share.  All references to per share  information  for 1997 and 1996
have been restated to conform with the Statement.

Cash Flow Information

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

Reclassification of Comparative Figures

Certain  comparative amounts for 1997 and 1996 have been reclassified to conform
to 1998 presentations. Such reclassifications did not affect net income.

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

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

In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures  about  Segments of an Enterprise  and Related  Information."  This
statement  establishes standards for the way public companies report information
about operating segments in annual financial  statements and requires that those
enterprises  report  selected  information  about segments in interim  financial
reports  issued to  stockholders.  It also  establishes  standards  for  related
disclosures about products and services,  geographic areas, and major customers.
The statement  defines an operating segment as a component of an enterprise that
generates  revenue and incurs expense,  whose operating  results are reviewed by
the chief operating  decision maker in the determination of resource  allocation
and performance, and for which discrete financial information is available. This
statement  is  effective  for fiscal years  beginning  after  December 15, 1997,
however,  it does not require  disclosure  in interim  reporting  in the year of
initial application.

In  January  1998,   Statement  of  Financial   Accounting  Standards  No.  132,
"Employers'  Disclosure About Pensions and Other Post-Retirement  Benefits," was
issued.  This standard will require  certain  footnote  disclosure  requirements
related  primarily  to  defined  benefit  pension  and other  retiree  benefits.
Implementation  of this  standard is required for fiscal years  beginning  after
December 15, 1997.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and  Hedging  Activities."  The  statement  provides  accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other  contracts,  by requiring  the  recognition  of those items as
assets or liabilities in the statement of financial  position,  recorded at fair
value.  Statement  No. 133,  precludes a  held-to-maturity  security  from being
designated as a hedged item, however, at the date of initial application of this
statement, an entity is permitted to transfer any held-to-maturity security into
the  available-for-sale  or trading  categories.  The unrealized holding gain or
loss on such  transferred  securities  shall  be  reported  consistent  with the
requirements of Statement No. 115,  "Accounting for Certain  Investments in Debt
and  Equity  Securities."  Such  transfers  do not raise an issue  regarding  an
entity's  intent to hold other debt  securities to maturity in the future.  This
statement  applies  prospectively for all fiscal quarters of all years beginning
after June 15, 1999.  Earlier  adoption is permitted for any fiscal quarter that
begins after the issue date of this statement.

                                       31
<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 basic and diluted earnings per
share.

There  are no  convertible  securities  which  would  effect  the  numerator  in
calculating  basic and  diluted  earnings  per share;  therefore,  net income as
presented  on  the  Consolidated  Statements  of  Income  will  be  used  as the
numerator. The following table sets forth a reconciliation of the denominator of
the basic and diluted earnings per share computation.
<TABLE>
<CAPTION>

                                                1998         1997         1996
                                             ---------    ---------    ---------
<S>                                          <C>          <C>          <C>      
Denominator for basic earnings per
    share - weighted-average shares .....    3,472,328    3,369,796    3,347,363
Employee stock options ..................      103,564      120,430      105,491
                                             ---------    ---------    ---------

Denominator for diluted earnings per
    share - adjusted weighted-average
    assumed conversions .................    3,575,892    3,490,226    3,452,854
                                             =========    =========    =========

</TABLE>
3. COMMON STOCK SPLIT

On April 28, 1998,  the Board of Directors  approved a two-for-one  stock split.
All references to the number of common shares and per share amounts for 1997 and
1996 have been restated to reflect the stock split.

                                       32
<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>
                                                                              1998
                                                 ------------------------------------------------------------  
                                                                     Gross            Gross         Estimated
                                                 Amortized        Unrealized       Unrealized         Market
                                                   Cost              Gains           Losses           Value
                                                  -------          -------          --------         --------
<S>                                              <C>               <C>              <C>              <C>  
AVAILABLE FOR SALE
Corporate securities                             $ 15,419          $     -          $     (3)        $ 15,416    
Equity securities                                   2,062               86               (45)           2,103  
                                                  -------          -------          --------         --------
                                                                                                               
    Total                                        $ 17,481          $    86          $    (48)        $ 17,519  
                                                  =======          =======          ========         ======== 
<CAPTION>
                                                                              1998
                                                 ------------------------------------------------------------  
                                                                     Gross            Gross         Estimated
                                                 Amortized        Unrealized       Unrealized         Market
                                                   Cost              Gains           Losses           Value
                                                  -------          -------          --------         --------
<S>                                              <C>               <C>              <C>              <C> 
HELD TO MATURITY                                                                                               
U.S. Government agency securities                $ 63,749          $   262          $    (15)        $ 63,996 
                                                  -------          -------          --------         --------
                                                                                                               
    Total                                        $ 63,749          $   262          $    (15)        $ 63,996 
                                                  =======          =======          ========         ======== 
<CAPTION>
                                                                              1997
                                                 ------------------------------------------------------------  
                                                                     Gross            Gross         Estimated
                                                 Amortized        Unrealized       Unrealized         Market
                                                   Cost              Gains           Losses           Value
                                                  -------          -------          --------         --------
<S>                                              <C>               <C>              <C>              <C>          
AVAILABLE FOR SALE                                                             
U.S. Government securities                       $  2,192          $     -          $   (185)        $  2,007  
Equity securities                                   1,497               49                 -            1,546 
                                                  -------          -------          --------         --------
                                                                                                               
    Total                                        $  3,689          $    49          $   (185)        $  3,553 
                                                  =======          =======          ========         ======== 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>                                                                                                                
                                                                              1997
                                                 ------------------------------------------------------------  
                                                                     Gross            Gross         Estimated
                                                 Amortized        Unrealized       Unrealized         Market
                                                   Cost              Gains           Losses           Value
                                                  -------          -------          --------         --------
<S>                                              <C>               <C>              <C>              <C> 
HELD TO MATURITY                                                                                               
U.S. Government agency securities                $ 81,850          $   134          $   (241)        $ 81,743   
Corporate securities                                2,145                3                (2)           2,146  
                                                 --------          -------          --------         --------   
                                                                                                                
    Total                                        $ 83,995          $   137          $   (243)        $ 83,889 
                                                 ========          =======          ========         ========  
</TABLE>                                                   
                                       33
<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,
1998, by contractual  maturity,  are shown below. Expected maturities may differ
from the  contractual  maturities  because  issuers  may have the  right to call
securities prior to their final maturities.
<TABLE>
<CAPTION>
                                         Due in        Due after        Due after
                                       one year       one through     five through        Due after
                                        or less       five years        ten years         ten years            Total
                                        --------      ---------       ------------       -----------       ------------
<S>                                     <C>           <C>             <C>                <C>                <C>   
AVAILABLE FOR SALE
    Amortized Cost                      $ 15,419      $        -      $           -      $          -      $     15,419
    Estimated Market Value                15,416               -                  -                 -            15,416

HELD TO MATURITY
    Amortized Cost                      $      -      $        -      $      21,995      $     41,754      $     63,749
    Estimated Market Value                     -               -             22,110            41,886            63,996
</TABLE>
 
Proceeds from the sale of investment securities available for sale and the gross
realized gains and losses for the year ended June 30 are as follows:

                             1998           1997          1996
                           -------        -------       ------
        Proceeds           $ 2,192        $ 1,678       $  301
        Gross gains              -             30           54
        Gross losses             -              -            -
  
Investment  securities  with carrying  values of $2,000 and $9,256 and estimated
market values of $2,003 and $9,144 at June 30, 1998 and 1997, respectively, were
pledged to secure public deposits,  repurchase agreements and for other purposes
as required by law.

<PAGE>
5. MORTGAGE-BACKED SECURITIES

The amortized cost and estimated market values of mortgage-backed securities are
as follows:
<TABLE>
<CAPTION>
                                                                            1998
                                                   -----------------------------------------------------
                                                                    Gross        Gross         Estimated
                                                   Amortized      Unrealized   Unrealized        Market
                                                     Cost           Gains        Losses           Value
                                                    -------        -------     ----------        -------      
<S>                                                 <C>            <C>         <C>               <C> 
AVAILABLE FOR SALE
Federal National Mortgage
    Association certificates .............          $ 9,178        $    83     $       (6)       $ 9,255      
Government National Mortgage                                                                                
    Association certificates .............            1,022             27              -          1,049    
Federal Home Loan Mortgage                                                                                 
    Corporation certificates .............              308              6              -            314    
Collateralized mortgage obligations issued                                                                 
    by agencies of the U.S. Government ...            8,334             89              -          8,423    
                                                    -------        -------     ----------        -------    
                                                                                                            
     Total ...............................          $18,842        $   205     $       (6)       $19,041    
                                                    =======        =======     ==========        ======= 
</TABLE>

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

5. MORTGAGE-BACKED SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                            1998
                                                   ------------------------------------------------------
                                                                    Gross        Gross          Estimated
                                                   Amortized      Unrealized   Unrealized         Market
                                                      Cost          Gains        Losses           Value
                                                    --------     --------     -----------        -------- 
<S>                                                 <C>            <C>         <C>               <C> 
HELD TO MATURITY
Federal National Mortgage
    Association certificates ..............         $    151     $      8     $         -        $    159
Government National Mortgage
    Association certificates ..............            1,156           15               -           1,171
Federal Home Loan Mortgage
    Corporation certificates ..............              246           19               -             265
Collateralized mortgage obligations issued
    by agencies of the U.S. Government ....           25,001          437              (7)         25,431
Collateralized mortgage obligations backed
    by securities issued by U.S. Government
    agencies ..............................              719           32               -             751
                                                    --------     --------     -----------        -------- 
     Total ................................         $ 27,273     $    511     $        (7)       $ 27,777
                                                    ========     ========     ===========        ======== 

<CAPTION>
                                                                            1997
                                                   ------------------------------------------------------
                                                                    Gross        Gross          Estimated
                                                   Amortized      Unrealized   Unrealized         Market
                                                      Cost          Gains        Losses           Value
                                                    -------        -------     ----------        --------
<S>                                                 <C>            <C>         <C>               <C> 
AVAILABLE FOR SALE
Federal National Mortgage
    Association certificates .............          $10,708        $     6     $     (265)        $ 10,449
Government National Mortgage
    Association certificates .............            1,306             38              --           1,344
Federal Home Loan Mortgage
    Corporation certificates .............              931             19              --             950
Collateralized mortgage obligations issued
    by agencies of the U.S. Government ...            5,472             74             (9)           5,537
                                                    -------        -------     ----------         --------
     Total ...............................          $18,417        $   137     $     (274)        $ 18,280
                                                    =======        =======     ==========         ========
</TABLE>
                                       35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

5. MORTGAGE-BACKED SECURITIES (Continued)

<TABLE> 
<CAPTION>
                                                                            1997
                                                   --------------------------------------------------  
                                                                    Gross        Gross      Estimated
                                                   Amortized      Unrealized   Unrealized     Market
                                                      Cost          Gains        Losses       Value
                                                    --------       --------    --------      --------     
<S>                                                 <C>            <C>         <C>               <C>  
HELD TO MATURITY      
Federal National Mortgage
    Association certificates ..............         $    194       $     11    $   --        $    205     
Government National Mortgage                                                                            
    Association certificates ..............            1,219             14         (13)        1,220   
Federal Home Loan Mortgage                                                                              
    Corporation certificates ..............              350             30        --             380   
Collateralized mortgage obligations issued                                                              
    by agencies of the U.S. Government ....           16,728            115        --          16,843   
Collateralized mortgage obligations backed                                                              
    by securities issued by U.S. Government                                                             
    agencies ..............................              719             14        --             733   
                                                    --------       --------    --------      --------     
     Total ................................         $ 19,210       $    184    $    (13)     $ 19,381   
                                                    ========       ========    ========      ========   
                                                                                                              
</TABLE>
The amortized cost and estimated market values of mortgage-backed  securities at
June 30, 1998, 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 .......           $    54          $ 2,633           $   -           $16,155           $18,842   
    Estimated Market Value                54            2,632               -            16,355            19,041  
                                                                                                  
HELD TO MATURITY                                                                                  
    Amortized Cost .......           $     -          $    55           $   -           $27,218           $27,273  
    Estimated Market Value                 -               57               -            27,720            27,777  
</TABLE>
                                       36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

6. NET LOANS RECEIVABLE

Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
                                                             1998         1997
                                                           --------     --------
<S>                                                        <C>          <C>     
First mortgage loans:
    1 - 4 family dwellings ...........................     $104,849     $116,663
    Construction and land development ................       25,012       24,381
    Multi-family dwellings ...........................        4,012        3,499
    Commercial .......................................       20,291       14,669
                                                           --------     --------
                                                            154,164      159,212
                                                           --------     --------
Consumer loans:
    Home equity ......................................        7,801        6,701
    Home equity lines of credit ......................        5,812        5,557
    Education loans ..................................          591          516
    Other ............................................        2,336        1,403
                                                           --------     --------
                                                             16,540       14,177
                                                           --------     --------

Commercial loans and leases ..........................          290           93
                                                           --------     --------

Obligations of state and political subdivisions ......          730            -
                                                           --------     --------
Less:
    Undisbursed construction and land development ....       11,312       12,505
    Net deferred loan fees ...........................          815          834
    Allowance for loan losses ........................        1,860        2,009
                                                           --------     --------
                                                             13,987       15,348
                                                           --------     --------

Net loans receivable .................................     $157,737     $158,134
                                                           ========     ========
</TABLE>

The Company's  primary  business  activity is with customers  located within its
local trade area of Northern Allegheny and Southern Butler counties. The Company
has  concentrated  its lending efforts by granting  residential and construction
mortgage  loans to customers  throughout  its immediate  trade area. The Company
also selectively  funds and participates in commercial and residential  mortgage
loans  outside  of its  immediate  trade  area,  provided  such  loans  meet the
Company's  credit policy  guidelines.  In general,  the Company's loan portfolio
performance is dependent upon the local economic conditions.
<PAGE>
Total nonaccrual loans and troubled debt restructurings and the related interest
for the years ended June 30, are as follows:

                                                  1998         1997         1996
                                                  ----         ----         ----

Principal outstanding ...................         $603         $274         $980
Interest income that would
    have been recognized ................           64           35           84
Interest income recognized ..............           44           20           75
                                                  ----         ----         ----

    Interest income foregone ............         $ 20         $ 15         $  9
                                                  ====         ====         ====

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

6. NET LOANS RECEIVABLE (Continued) 

At June 30, 1996, the recorded  investment in loans which were  considered to be
impaired was $877 of which $274 was  considered to be  nonaccrual.  In addition,
$131 of the related  allowance for loan losses was allocated for these  impaired
loans. The average  recorded  investment in impaired loans during the year ended
June 30, 1996 was approximately $871. For the year ended June 30, 1996, interest
income  totaling $73 was  recognized  on impaired  loans both on the accrual and
cash basis of income recognition.  There were no material impaired loans at June
30, 1998 and 1997.

Certain  officers,  directors,  and their  associates were customers of, and had
transactions with the Company in the ordinary course of business. All loans were
made on substantially the same terms,  including  interest rates and collateral,
as  those  prevailing  at  the  time  for  comparable  transactions  with  other
customers.  A summary of loan activity for those directors,  executive officers,
and their  associates  with  aggregate  loan  balances  outstanding  of at least
$60,000 during the years ended June 30 are as follows:


                                                      1998                1997
                                                    -------             -------

Balance, July 1 ........................            $ 1,458             $ 1,635
    Additions ..........................                335                 240
    Amounts collected ..................               (129)               (417)
                                                    -------             -------

Balance, June 30 .......................            $ 1,664             $ 1,458
                                                    =======             =======
   
7. ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses are as follows:

                                                1998          1997         1996
                                              -------       -------      -------

Balance, July 1 ........................      $ 2,009       $ 1,964      $ 1,836
Add:
    Provision charged to operations ....         (120)           60          150
    Recoveries .........................           10             3            7
Less loans charged off .................           39            18           29
                                              -------       -------      -------

Balance, June 30 .......................      $ 1,860       $ 2,009      $ 1,964
                                              =======       =======      =======
<PAGE>   
8. ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following:

                                                             1998          1997
                                                            ------        ------

Investment and mortgage-backed securities ..........        $1,352        $1,820
Loans receivable ...................................         1,062           989
                                                            ------        ------

    Total ..........................................        $2,414        $2,809
                                                            ======        ======
 
                                       38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

9. FEDERAL HOME LOAN BANK STOCK

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

 
10. PREMISES AND EQUIPMENT

Major classifications of premises and equipment are summarized as follows:

                                                           1998            1997
                                                          ------          ------
 
Land and improvements ..........................          $  226          $  226
Buildings and improvements .....................           1,923           1,930
Furniture, fixtures, and equipment .............             915           1,041
                                                          ------          ------
                                                           3,064           3,197
Less accumulated depreciation ..................           1,885           1,899
                                                          ------          ------

     Total .....................................          $1,179          $1,298
                                                          ======          ======
  
Depreciation charged to operations was $126, $134, and $133, for the years ended
June 30, 1998, 1997, and 1996, respectively.

During 1998,  having  satisfied  the criteria  defined in Statement of Financial
Accounting  Standards No. 66,  "Accounting for Sales of Real Estate," a deferred
gain on the sale of branch office  property of $136 was  recognized and included
in other noninterest income on the Consolidated Statements of Income.
<PAGE>
11. DEPOSITS

Deposit accounts are summarized as follows:
<TABLE>
<CAPTION>
                                           1998                         1997
                                  ------------------------      ----------------------- 
                                                Percent of                   Percent of
                                   Amount       Portfolio        Amount      Portfolio
                                  --------      ----------      --------     ----------     
<S>                               <C>           <C>             <C>          <C>     
Noninterest-earning checking      $  7,528             4.5      $  7,283            4.3%    
Interest-earning checking           15,347             9.1        15,177            8.9     
Savings accounts                    37,966            22.6        36,591           21.4     
Money market accounts               13,259             7.9        12,103            7.1 
                                  --------      ----------      --------     ----------     
                                    74,100            44.1        71,154           41.7  
                                  --------      ----------      --------     ----------     
                                                                                        
Savings Certificates:                                                                   
    5.00% or less                   12,819             7.7        15,321            9.0     
    5.01 - 6.00%                    66,527            39.7        67,858           39.7     
    6.01 - 7.00%                     7,812             4.7         8,930            5.2     
    7.01 or more                     6,412             3.8         7,616            4.4  
                                  --------      ----------      --------     ----------     
                                    93,570            55.9        99,725           58.3   
                                  --------      ----------      --------     ----------     
                                                                                        
    Total                         $167,670           100.0      $170,879          100.0%    
                                  ========       =========      ========     ==========               
</TABLE>

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

11. DEPOSITS (Continued)

The  maturities  of savings  certificates  at June 30,  1998 are  summarized  as
follows:


Within one year .............................................            $63,001
Beyond one year but within two years ........................             16,167
Beyond two years but within three years .....................              7,866
Beyond three years ..........................................              6,536
                                                                         -------

     Total ..................................................            $93,570
                                                                         =======
 
Savings  certificates with balances of $100 thousand or more amounted to $10,250
and $11,061 on June 30, 1998 and 1997.  The Company  does not have any  brokered
deposits.

Interest  expense  by  deposit  category  for the years  ended  June 30,  are as
follows:
                                             1998           1997           1996
                                            ------         ------         ------

Checking accounts .................         $  136         $  127         $  195
Savings accounts ..................            957            940            998
Money market accounts .............            309            327            302
Savings certificates ..............          5,497          5,647          5,890
                                            ------         ------         ------

     Total ........................         $6,899         $7,041         $7,385
                                            ======         ======         ======
 
12. FEDERAL HOME LOAN BANK ADVANCES

The following table presents information regarding FHLB term advances as of June
30:
<TABLE>
<CAPTION>
                                          Weighted                           Weighted
     Maturing during                       Average                            Average
   fiscal year ended                      Interest                            Interest
        June 30:               1998         Rate             1997              Rate
        --------             -------        ----           -------             ----
<S>                          <C>            <C>            <C>                 <C>    
          1998               $     -           - %         $ 5,000             6.05 %  
          1999                 6,357        5.16             1,357             6.19  
          2000                 8,000        5.89             8,000             5.89  
          2002                51,500        5.75            53,500             5.74  
          2008                23,000        5.05                 -                -    
                             -------                       -------                   
                                                                                     
                             $88,857                       $67,857                      
                             =======                       =======                      
</TABLE>
                                       40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

12. FEDERAL HOME LOAN BANK ADVANCES (Continued)

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

                                                            1998          1997
                                                          -------       -------

FHLB revolving and short-term advances:
    Ending Balance .................................      $    -        $10,000
    Average balance during the year ................        3,523         8,800
    Maximum month-end balance during the year ......       13,355        25,000
    Average interest rate during the year ..........         5.72%         5.15%
    Weighted average rate at year end ..............            -          5.64%

At June 30, 1998, WVS had unused revolving  borrowing  capacity of approximately
$41,223.

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

13. OTHER BORROWINGS

Other  borrowings  include  Treasury,  Tax, and Loan  ("TT&L")  demand notes and
securities sold under  agreements to repurchase with  securities  brokers.  TT&L
notes amounted to $889 and $848 at June 30, 1998 and 1997. Repurchase agreements
amounted to $5,936 as of June 30,  1997.  There were no  outstanding  repurchase
agreements at June 30, 1998. The  outstanding  repurchase  agreements  generally
mature within one to ninety-two  days from the  transaction  date and qualifying
collateral has been delivered.  The Company pledged investment securities with a
carrying  value of $6,006 at June 30, 1997,  as  collateral  for the  repurchase
agreements  as explained in Note 4. The  following  table  presents  information
regarding repurchase agreements as of June 30:
 
                                                           1998           1997
                                                         -------        -------

Ending Balance ...................................       $     -        $ 5,936
Average balance during the year ..................         5,616          9,165
Maximum month-end balance during the year ........        11,195         17,196
Average interest rate during the year ............          5.69%          5.19%
Weighted average rate at year end ................             -           5.60%

14. COMMITMENTS AND CONTINGENT LIABILITIES

Loan commitments

In the normal course of business,  there are various outstanding commitments and
certain  contingent  liabilities  which are not  reflected  in the  accompanying
consolidated financial statements. Various loan commitments totaling $23,789 and
$21,686 at June 30, 1998 and 1997, respectively, represent financial instruments
with off-balance-sheet risk.
                                       41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

14. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

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

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the loan agreement.  These
commitments are comprised  primarily of the undisbursed  portion of construction
and land development loans (Note 6),  residential,  commercial real estate,  and
consumer loan originations.

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

Litigation

A settlement agreement was entered into during the fourth quarter of fiscal 1995
in connection  with a class action  lawsuit  against the Company and the Savings
Bank. The Company entered into the settlement to, among other reasons, avoid the
cost of and  disruption of the continuing  litigation.  On January 16, 1996, the
Company's  insurance  carrier agreed to pay the Savings Bank, as designee of the
officers and directors,  the sum of approximately  $391 to reimburse the Company
and the Savings Bank for  litigation  and  settlement  costs incurred or accrued
through December 1, 1995. In addition,  the insurance  carrier agreed to pay 50%
of the amount of future defense costs and expenses  relating to the lawsuit that
may arise after  December 1, 1995, for a one year period  beginning  January 15,
1996.  Such  reimbursed  costs are reflected in the  consolidated  statements of
income under the caption of unusual items.

On March 27, 1995, the United States District Court for the Western  District of
Pennsylvania  entered an Opinion and Orders dismissing in its entirety a lawsuit
brought by Plaintiff William S. Karn, who is a depositor of the Savings Bank and
a stockholder of the Company, which alleged,  among other things,  antitrust and
securities laws violations in connection with the Savings Bank's mutual-to-stock
conversion.  The court also dismissed this same Plaintiff's  federal claims in a
second and substantially  similar lawsuit while remanding to the court of Common
Pleas of Allegheny County any cognizable  state law claims.  On February 6, 1998
the state law claims were also dismissed.

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

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

15. REGULATORY CAPITAL

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

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

As of June 30, 1998 and 1997,  the FDIC  categorized  the  Savings  Bank as well
capitalized under the regulatory  framework for prompt corrective  action. To be
classified as a well capitalized financial institution, Total risk-based, Tier 1
risk-based and Tier 1 leverage  capital ratios must be at least 10%, 6%, and 5%,
respectively.

The  Company and Savings  Bank's  actual  capital  ratios are  presented  in the
following tables, which shows that both met all regulatory capital requirements.
<TABLE>
<CAPTION>
                                                                               June 30, 1998
                                                        ------------------------------------------------------------- 
                                                           WVS Financial Corp.               West View Savings Bank
                                                        -------------------------          -------------------------- 
                                                          Amount            Ratio           Amount             Ratio
                                                         -------             ----          -------              ----     
<S>                                                      <C>                 <C>           <C>                  <C>      
    Total Capital (to Risk-Weighted Assets)

       Actual                                            $34,681             22.1%         $29,665              19.4%   
       To be "Well Capitalized"                           15,700             10.0           15,298              10.0   
       For Capital Adequacy Purposes                      12,560              8.0           12,238               8.0   
                                                                                                                       
    Tier I Capital (to Risk-Weighted Assets)                                                                           
                                                                                                                       
       Actual                                            $32,821             20.9%         $27,805              18.2% 
       To be "Well Capitalized"                            9,420              6.0            9,179               6.0   
       For Capital Adequacy Purposes                       6,280              4.0            6,119               4.0   
                                                                                                                       
    Tier I Capital (to Average Total Assets)                                                                           
                                                                                                                       
       Actual                                            $32,821             11.0%         $27,805               9.4%  
       To be "Well Capitalized"                           14,941              5.0           14,712               5.0   
       For Capital Adequacy Purposes                      11,952              4.0           11,770               4.0   
                                                                                   
</TABLE>
                                       43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

15. REGULATORY CAPITAL (Continued)
<TABLE>
<CAPTION>
                                                                            June 30, 1997
                                                       -------------------------------------------------------- 
                                                          WVS Financial Corp.           West View Savings Bank
                                                       ----------------------        -------------------------- 
                                                        Amount         Ratio          Amount              Ratio
                                                       -------          ----         -------               ----     
<S>                                                    <C>              <C>          <C>                   <C>      
    Total Capital (to Risk-Weighted Assets)

       Actual                                          $34,759          25.8%        $26,259               19.9%    
       To be "Well Capitalized"                         13,487          10.0          13,215               10.0  
       For Capital Adequacy Purposes                    10,790           8.0          10,572                8.0  
                                                                                                                 
    Tier I Capital (to Risk-Weighted Assets)                                                                     
                                                                                                                 
       Actual                                          $33,069          24.5%        $24,603               18.6% 
       To be "Well Capitalized"                          8,092           6.0           7,929                6.0  
       For Capital Adequacy Purposes                     5,395           4.0           5,286                4.0  
                                                                                                                 
    Tier I Capital (to Average Total Assets)                                                                     
                                                                                                                 
       Actual                                          $33,069          11.4%        $24,603                8.8% 
       To be "Well Capitalized"                         14,454           5.0          14,016                5.0  
       For Capital Adequacy Purposes                    11,563           4.0          11,213                4.0  
</TABLE>

16. STOCK BENEFIT PLANS

Stock Option and Stock Appreciation Plans

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

Stock  appreciation  rights (SARs) were also authorized under the Plans, and may
be granted in  conjunction  with stock options or in lieu of exercising all or a
portion of a stock option.  An SAR entitles the holder to receive cash or shares
of WVS common stock, or combinations thereof, at a value equal to the difference
between the fair market value of all or part of the shares  subject to option on
the date the right is exercised and the options  exercise price.  Exercise of an
option or companion SAR  automatically  cancels the related option or right.  No
SARs have been issued under the Plans.

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

16. STOCK BENEFIT PLANS (Continued)

The following table presents share data related to the outstanding options:
<TABLE>
<CAPTION>
                                        Officers' and                      Weighted
                                         Employees'       Directors'        Average
                                            Stock            Stock         Exercise
                                           Options          Options         Price
                                           -------          -------       --------- 
<S>                                        <C>              <C>           <C>      
Outstanding, June 30, 1996 ........        169,440          75,600        $    5.07

    Granted .......................           --             2,800            11.59
    Exercised .....................        (21,040)           --               5.00
    Forfeited .....................         (1,000)           --               5.00
                                           -------          ------         
 
Outstanding, June 30, 1997 ........        147,400          78,400        $    5.15

    Granted .......................         91,084           2,800            15.63
    Exercised .....................        (71,960)        (50,600)            5.19
    Forfeited .....................        (12,640)           --              15.63
                                           -------          ------         
  
Outstanding, June 30, 1998 ........        153,884          30,600        $    9.82
                                           =======          ======         
 
Exercisable at year end ...........         83,120          30,600
                                           =======          ======         
 
Available for future grant ........         12,640           5,614
                                           =======          ======         
</TABLE>
Effective July 1, 1996, the Company  adopted  Statement of Financial  Accounting
Standards  Statement No. 123,  "Accounting  for  Stock-based  Compensation."  As
permitted  under  Statement  123, the Company has elected to continue  following
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"   ("APB  25"),  and  related   Interpretations,   in  accounting  for
stock-based awards to employees. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant,  no  compensation  expense is  recognized in the Company's
financial statements.  Had compensation expense included stock option plan costs
determined  based on the fair value at the grant dates for options granted under
these plans consistent with Statement No. 123, pro forma net income and earnings
per share would not have been  materially  different  than that presented on the
consolidated statements of income.

Retention and Recognition Plans (RRP)

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

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

16. STOCK BENEFIT PLANS (Continued)

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.  Officers,  employees,  and directors who terminate
their  association  with the Company  forfeit the right to any shares which were
awarded but not earned.

As of June 30, 1998,  11,572 RRP shares were available for future issuance.  RRP
costs are accrued to operations,  and added back to stockholders' equity, over a
four to ten year vesting period.

Employee Stock Ownership Plan ("ESOP")

WVS  maintains  an ESOP for the benefit of officers and  employees  who have met
certain eligibility  requirements  related to age and length of service. An ESOP
Trust was created,  and acquired  161,000 shares of common stock in WVS' initial
public  offering,  using  proceeds  of a loan  obtained  from WVS,  which  bears
interest at one quarter point over the prime rate, adjusted quarterly. The loan,
which is secured by the shares of stock purchased,  calls for quarterly interest
and principal payments over a ten year term.

The Company  makes  quarterly  contributions  to the Trust to allow the Trust to
make the required  loan  payments to WVS.  Shares are released  from  collateral
based upon the  proportion  of annual  principal  payments made on the loan each
year  and  allocated  to  qualified  employees.  As  shares  are  released  from
collateral,  the Company  reports  compensation  expense  based upon the amounts
contributed  or  committed  to be  contributed  each year and the shares  become
outstanding  for earnings per share  computations.  Dividends  paid on allocated
ESOP shares are recorded as a reduction of retained earnings.  Dividends paid on
unallocated   shares  are  added  to   participant   accounts  and  reported  as
compensation.  Compensation expense for the ESOP was $680, $487 and $291 for the
years ended June 30, 1998, 1997 and 1996, respectively.

The following table presents the components of the ESOP shares at June 30:
<TABLE>
<CAPTION>
                                        
                                           1998          1997           1996
                                         ---------     ---------      ---------
<S>                                         <C>           <C>            <C>   
Allocated shares ...................        70,398        45,208         28,174

Shares released for allocation .....        28,176        26,124         16,100

Shares distributed .................          --            (934)          (266)

Unallocated shares .................        62,424        90,600        116,726
                                         ---------     ---------      ---------

    Total ESOP shares ..............       160,998       160,998        160,734
                                         =========     =========      =========

Fair value of unreleased ESOP shares     $     999     $   1,246      $   1,211
                                         =========     =========      =========
</TABLE>
During fiscal 1997, the ESOP  purchased an additional  1200 shares of WVS stock,
which is included in the allocated  share balance as of June 30, 1997.  The 1200
shares were purchased using vested participant funds.

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

17. DIRECTOR, OFFICER AND EMPLOYEE BENEFITS

Profit Sharing Plan

The Company  maintains a  non-contributory  profit sharing 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.  In conjunction with the profit sharing plan,
an integrated 401(k) employee savings plan was also  implemented.  Employees may
contribute  up to the maximum  allowed by law.  The  Company  may make  matching
contributions  as  approved at the  discretion  of the Board of  Directors.  The
Company has made no matching contributions to date. The Company's  contributions
to the profit sharing plan, which were charged to expense,  were $200, $172, and
$115 for the years ended June 30, 1998, 1997 and 1996, respectively.

Directors' Deferred Compensation Plan

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

The plan allows for the deferred amounts to be paid in shares of common stock at
the  prevailing  market  price on the date of  payment.  In  addition,  the plan
permits  directors of the Company,  who are also employees to defer receipt of a
portion of their other  compensation,  including salary and bonuses.  For fiscal
years ended June 30, 1998,  1997, and 1996,  41,598,  40,798,  and 40,798 shares
respectively were held by the Deferred Compensation Plan.

18. INCOME TAXES

The provision for income taxes consists of:

                                         1998             1997             1996
                                       -------          -------          -------

Currently payable:
Federal ......................         $ 2,064          $ 1,747          $ 1,687
State ........................             247              235              291
                                       -------          -------          -------
                                         2,311            1,982            1,978
Deferred .....................            (202)             (52)              88
                                       -------          -------          -------

    Total ....................         $ 2,109          $ 1,930          $ 2,066
                                       =======          =======          =======

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

18. INCOME TAXES (Continued)

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

                                                                1998       1997
                                                               ------     ------
Deferred tax assets:
    Allowance for loan losses ............................     $  646     $  685
    Deferred origination fees, net .......................         22         68
    Net unrealized loss on securities available for sale .          -         93
    Deferred compensation ................................        387        158
    Other ................................................         22         26
                                                               ------     ------
        Total gross deferred tax assets ..................      1,077      1,030
                                                               ------     ------

Deferred tax liabilities:
    Bad debt reserve for tax reporting purposes ..........        353        393
    Net unrealized gain on securities available for sale .         81          -
    Other ................................................         76         98
                                                               ------     ------
        Total gross deferred tax liabilities .............        510        491
                                                               ------     ------

    Net deferred tax assets ..............................     $  567     $  539
                                                               ======     ======

On August 20, 1996, the Small Business Job Protection Act (the "Act") was signed
into law. The Act eliminated the percentage of taxable income bad debt deduction
for thrift institutions for tax years beginning after December 31, 1995. The Act
provides that excess bad debt reserves accumulated prior to 1988 are exempt from
recapture. The recapture tax will be paid over six years beginning with the 1998
tax year. The Savings Bank had $1,174 in bad debt reserves in excess of the base
year.  Subject  to  prevailing  corporate  tax  rates,  the  Savings  Bank  owes
approximately  $353 in federal  income taxes at June 30, 1998 which is reflected
as a deferred tax liability.

No valuation  allowance  was  established  at June 30, 1998 and 1997, in view of
WVS' ability to carryback to taxes paid in previous  years,  future  anticipated
taxable income, which is evidenced by WVS' earnings potential,  and deferred tax
liabilities at June 30.

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

18. 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>
                                                     1998                      1997                      1996
                                             ---------------------     --------------------      ---------------------     
                                                            % of                      % of                       % of
                                                           Pretax                    Pretax                     Pretax
                                              Amount       Income       Amount       Income        Amount       Income
                                              ------       ------       ------       ------        ------       ------
<S>                                           <C>           <C>         <C>           <C>          <C>          <C>  
Provision at statutory rate .............     $1,904        34.0%       $1,662        34.0%        $1,918       34.0%
State income tax, net of federal
     tax benefit ........................        163         2.9           155         3.2            192        3.4
Non - deductible (taxable) litigation and
   settlement costs (reimbursements) ....         --          --            --          --           (123)      (2.2)
Other, net ..............................         42         0.8           113         2.2             79        1.4
                                               ------       -----       ------       ------        ------       ---- 

Actual tax expense and
     effective rate .....................     $2,109        37.7%      $ 1,930        39.4%        $2,066       36.6%
                                              ======        ====       =======       =====         ======       ==== 
</TABLE>

19. 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,
1998  and  1997,  the  Savings  Bank had  required  reserves  of $577 and  $560,
respectively.  The  required  reserves  are held in the form of vault cash and a
non-interest  bearing depository  balance  maintained  directly with the Federal
Reserve.

Loans

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

Dividend Restrictions

The Savings Bank is subject to the Pennsylvania Banking Code which restricts the
availability of surplus for dividend  purposes.  At June 30, 1998, surplus funds
of $3,363 were not available for dividends.

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

20. CONVERSION AND REORGANIZATION

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

21. SAVINGS ASSOCIATION INSURANCE FUND RECAPITALIZATION

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

22. SUBSEQUENT EVENT - REPURCHASE OF COMMON STOCK

On July  28,  1998,  the  Board  of  Directors  of the  Company  authorized  the
repurchase  of up to 183,156  shares,  or  approximately  five  percent,  of the
Company's   outstanding   common  stock  during  the  next  twelve  months.  The
repurchased  shares  will be held in  treasury  stock  and may be  reserved  for
issuance pursuant to the Company's stock benefit plans.

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

23. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values at June 30 are as follows:
<TABLE>
<CAPTION>
                                                        1998                     1997
                                              ---------------------   ----------------------- 
                                              Carrying       Fair       Carrying       Fair
                                               Amount        Value       Amount        Value
                                              --------     --------     --------     --------
<S>                                           <C>          <C>          <C>          <C> 
Financial Assets
Cash, due from banks and interest-earning
    demand deposits .....................     $  2,506     $  2,506     $  2,571     $  2,571
Investment securities ...................       81,268       81,515       87,548       87,442
Mortgage - backed securities ............       46,314       46,818       37,490       37,661
Net loans receivable ....................      157,737      168,150      158,134      160,835
Accrued interest receivable .............        2,414        2,414        2,809        2,809
Federal Home Loan Bank stock ............        4,675        4,675        3,927        3,927
                                              --------     --------     --------     --------

    Total financial assets ..............     $294,914     $306,078     $292,479     $295,245
                                              ========     ========     ========     ========

Financial Liabilities
Deposits ................................     $167,670     $167,882     $170,879     $170,897
FHLB Advances ...........................       88,857       88,071       77,857       77,207
Other borrowings ........................          889          889        6,784        6,784
Advance payments by borrowers
    for taxes and insurance .............        3,312        3,312        3,531        3,531
Accrued interest payable ................        1,874        1,874        1,768        1,768
                                              --------     --------     --------     --------

    Total financial liabilities .........     $262,602     $262,028     $260,819     $260,187
                                              ========     ========     ========     ========
</TABLE>
 
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.

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

23. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

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

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

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

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

The fair value approximates the current book value.

Investment Securities,  Mortgage-backed Securities and FHLB stock

The fair value of investment and mortgage-backed  securities held to maturity is
equal to the  available  quoted  market  price.  If no  quoted  market  price is
available,  fair value is  estimated  using the quoted  market price for similar
securities.  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.

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

23. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

FHLB Advances

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

Commitments to Extend Credit

These financial instruments are generally not subject to sale and estimated fair
values are not readily  available.  The carrying  value,  represented by the net
deferred  fee  arising  from the  unrecognized  commitment,  and the fair  value
determined by  discounting  the remaining  contractual  fee over the term of the
commitment  using fees currently  charged to enter into similar  agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded  commitments  are  presented  in Note 14 to these  financial
statements.

24. PARENT COMPANY

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

 
                                                                     June 30,
                                                                 1998        1997
                                                               -------     -------
<S>                                                            <C>         <C>    
ASSETS
Interest-earning deposits with subsidiary bank ...........     $   502     $   404
Investment securities available for sale .................       4,264       1,286
Investment and mortgage-backed securities held to maturity         616       7,169
Investment in subsidiary bank ............................      27,200      23,273
Loan receivable from ESOP ................................         312         493
Accrued interest receivable and other assets .............         101         282
                                                               -------     -------

TOTAL ASSETS .............................................     $32,995     $32,907
                                                               =======     =======

LIABILITIES AND STOCKHOLDERS' EQUITY
    Other liabilities ....................................     $    17     $    18
    Stockholders' equity .................................      32,978      32,889
                                                               -------     -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............     $32,995     $32,907
                                                               =======     =======
</TABLE>
                                       53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)

24. PARENT COMPANY (Continued)
<TABLE>
<CAPTION>
                                 CONDENSED STATEMENT OF INCOME


                                                                       Year Ended June 30,
                                                                   1998        1997         1996
                                                                 -------     -------      -------
<S>                                                              <C>         <C>          <C>    
INCOME
Loans ......................................................     $    33     $    47      $    56
Investment and mortgage-backed securities ..................         442         627          671
Dividend from subsidiary ...................................           -       3,500            - 
Interest-earning deposits with subsidiary bank .............          31          16           51
Investment securities gain .................................           -           4           54
                                                                 -------     -------      -------

Total income ...............................................         506       4,194          832
                                                                 -------     -------      -------

OPERATING EXPENSE
Unusual items:
    Shareholder litigation settlement ......................           -          (5)        (123)
    Shareholder litigation costs ...........................           -           -          (20)
Other ......................................................         111          91          100
                                                                 -------     -------      -------
Total operating expense ....................................         111          86          (43)
                                                                 -------     -------      -------

Income before equity in undistributed earnings of subsidiary         395       4,108          875
Equity in undistributed earnings of subsidiary .............       3,202        (913)       2,994
                                                                 -------     -------      -------

Income before income taxes .................................       3,597       3,195        3,869
Income taxes ...............................................         105         236          292
                                                                 -------     -------      -------

NET INCOME .................................................     $ 3,492     $ 2,959      $ 3,577
                                                                 =======     =======      =======

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

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


                                                              Year Ended June 30,
                                                        1998          1997          1996
                                                      --------      --------      --------
<S>                                                   <C>           <C>           <C>     
OPERATING ACTIVITIES
Net income ......................................     $  3,492      $  2,959      $  3,577
Adjustments to reconcile net income to net cash
    provided by operating activities:
Undistributed net income of subsidiary ..........       (3,202)          913        (2,994)
Amortization of investment discounts and premiums         (120)           16            34
Amortization of ESOP and RRP deferred and
     unearned compensation ......................          360           184            76
Investment securities gains .....................            -            (4)          (54)
Decrease in accrued interest receivable .........           63             8            76
Other ...........................................          293          (130)         (168)
                                                      --------      --------      --------
Net cash provided by operating activities .......          886         3,946           547
                                                      --------      --------      --------
INVESTING ACTIVITIES
Available for sale:
    Purchase of investment and mortgage-backed
        securities ..............................      (12,735)       (1,258)         (247)
    Proceeds from sale of investment securities .            -            13           301
    Proceeds from repayments of investment and
        mortgage-backed securities ..............        9,842             -             - 
Held to maturity:
    Purchases of investment and mortgage-backed 
        securities ..............................       (7,579)            -       (11,403)
    Proceeds from repayments of investment and
        mortgage-backed securities ..............       14,156         2,021        12,148
ESOP loan repayments ............................          141           111            80
                                                      --------      --------      --------
Net cash provided by investing activities .......        3,825           887           879
                                                      --------      --------      --------

FINANCING ACTIVITIES
Net proceeds from issuance of common stock ......          636           105             4
Cash dividends paid .............................       (5,249)       (4,920)       (3,344)
                                                      --------      --------      --------
Net cash used for financing activities ..........       (4,613)       (4,815)       (3,340)
                                                      --------      --------      --------

Increase (decrease) in cash and cash equivalents            98            18        (1,914)

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD ...          404           386         2,300
                                                      --------      --------      --------

CASH AND CASH EQUIVALENTS END OF PERIOD .........     $    502      $    404      $    386
                                                      ========      ========      ========
</TABLE>
                                       55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except shares and per share data)

25. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
<TABLE>
<CAPTION>
                                                            Three Months Ended
                                       ------------------------------------------------------------- 
                                        September       December            March           June
                                           1997            1997             1998            1998
                                       -----------     -----------      -----------     -----------

<S>                                    <C>             <C>              <C>             <C>        
Total interest and dividend income     $     5,550     $     5,484      $     5,515     $     5,597
Total interest expense ...........           2,969           2,939            2,892           2,981
                                       -----------     -----------      -----------     -----------

Net interest income ..............           2,581           2,545            2,623           2,616
Provision for loan losses ........               -            (120)               -               - 
                                       -----------     -----------      -----------     -----------

Net interest income after
    provision for loan losses ....           2,581           2,665            2,623           2,616

Investment securities gains ......               -               -                -               - 
Total noninterest income .........              90             106               98             244
Total noninterest expense ........           1,126           1,316            1,276           1,704
                                       -----------     -----------      -----------     -----------

Income before income taxes .......           1,545           1,455            1,445           1,156
Income taxes .....................             610             459              571             469
                                       -----------     -----------      -----------     -----------

Net income .......................     $       935     $       996      $       874     $       687
                                       ===========     ===========      ===========     ===========

Per Share Data:
Net Income
    Basic ........................     $      0.27     $      0.29      $      0.25     $      0.20
    Diluted ......................            0.26            0.28             0.24            0.20
Average shares outstanding
    Basic ........................       3,407,641       3,418,340        3,513,627       3,551,460
    Diluted ......................       3,531,473       3,547,240        3,593,231       3,633,379

</TABLE>

                                       56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except shares and per share data)

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

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

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

Investment securities gains ......             26              -              -              4
Total noninterest income .........             84             97             78             85
Total noninterest expense ........          2,203          1,079          1,126          1,258
                                       ----------     ----------     ----------     ----------

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

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

Per Share Data:
Net Income
    Basic ........................     $     0.07     $     0.27     $     0.27     $     0.27
    Diluted .......................          0.07           0.26           0.26           0.26
Average shares outstanding
    Basic ........................      3,358,306      3,362,608      3,367,269      3,391,179
    Diluted ......................      3,471,146      3,484,144      3,497,379      3,508,414
</TABLE>


                                       57
<PAGE>
               COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION

          WVS Financial  Corp.'s common stock is traded on the  over-the-counter
market and quoted on the National  Association of Securities  Dealers  Automated
Quotation  ("Nasdaq")  Stock MarketSM  under the symbol "WVFC".  The bid and ask
quotations for the common stock on September 11, 1998 were:

                            Bid            Ask
                         --------        -------
                         $15 5/16        $15 3/4

         The following table sets forth the high and low market prices, and cash
dividends  declared,  for the periods indicated.  All data has been adjusted for
the two-for-one stock split paid on May 22, 1998.

                                    Market Price  
                                ---------------------         Cash Dividends
       Quarter Ended              High          Low               Declared
       -------------              ----          ---               --------
 June 98                        $20 3/8       $16                  $0.15
 March 98                        19 1/2        16 3/8               1.10(1)
 December 97                     17 5/8        14 1/8               0.15
 September 97                    14 5/8        12 5/8               0.10

       Quarter Ended
       -------------
 June 97                        $13 5/8       $11 3/4              $1.25(1)
 March 97                        13 1/4        12                   0.10
 December 96                     12 1/2        10 3/4               0.10
 September 96                    11 1/4        10 1/8               0.05
 
         (1) Includes special cash dividends of $0.95 and $1.15 per share,  paid
during the quarter ended March 31, 1998, and June 30, 1997, respectively.


          The Company's stock commenced trading on November 29, 1993. There were
seven Nasdaq Market Makers in the Company's common stock as of June 30, 1998: F.
J.  Morrissey & Co.,  Inc.;  Legg Mason Wood  Walker,  Inc.;  Sandler  O'Neill &
Partners;  Capital Resources,  Inc.; Herzog,  Heine,  Geduld, Inc.; Ryan, Beck &
Co., Inc.; and Parker/Hunter, Inc.

          According to the records of the Company's  transfer agent,  there were
approximately  1042  shareholders of record at September 11, 1998. 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.

                                       58
<PAGE>
                               WVS FINANCIAL CORP.
                              CORPORATE INFORMATION

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



 

                                  COMMON STOCK
                The  common  stock of WVS  Financial  Corp.  is
                traded on The  Nasdaq  Stock  MarketSM  under the     
                symbol "WVFC".                                        
                                                               
                           TRANSFER AGENT & REGISTRAR
                         Registrar and Transfer Company
                                10 Commerce Drive
                               Cranford, NJ 07016
                                 1-800-368-5948
                                                               
                               INVESTOR RELATIONS
                               Janet L. Campisino
                                  (412)364-1911
                                                               
                                     COUNSEL
                                Bruggeman & Linn
                                                               
                                 SPECIAL COUNSEL
                      Elias, Matz, Tiernan & Herrick L.L.P.
                                                               
                             WEST VIEW SAVINGS BANK
                               9001 Perry Highway
                              Pittsburgh, PA 15237
                                  (412)364-1911
                                                               
                                WEST VIEW OFFICE
                                456 Perry Highway
                                  (412)931-2171
                                                               
                                CRANBERRY OFFICE
                               20531 Perry Highway
                           (412)931-6080/(724)776-3480

                              FRANKLIN PARK OFFICE
                             2566 Brandt School Road
                                  (724)935-7100
                                                               
                                 BELLEVUE OFFICE
                               572 Lincoln Avenue
                                  (412)761-5595
                                                               
                              SHERWOOD OAKS OFFICE
                              Serving Sherwood Oaks
                                 Cranberry Twp.
                                                               
                                LENDING DIVISION
                             2566 Brandt School Road
                                  (724)935-7400
                                                               
<PAGE>
                               BOARD OF DIRECTORS
                                                                     
                                David L. Aeberli
                                    President
                       McDonald-Aeberli Funeral Home, Inc.
                                Arthur H. Brandt
                  President and CEO Brandt Excavating, Inc. and
                       Retired - Former President and CEO
                               Brandt Paving, Inc.
                                William J. Hoegel
                                 Sole Proprietor
                         William J. Hoegel & Associates
                                 Donald E. Hook
                                    Chairman
                            Pittsburgh Cut Flower Co.
                              James S. McKain, Jr.
                      Retired - Former Chairman & President
                          Barden McKain Ford, Inc. and
                     Jim McKain Car and Truck Leasing, Inc.
                                James H. Ritchie
                             Retired - Former Owner
                                Ingomar Pharmacy
                                John M. Seifarth
                          Senior Engineer - Consultant
                       Nichols & Slagle Engineering, Inc.
                                 David J. Bursic
                      President and Chief Executive Officer
                             WVS Financial Corp. and
                             West View Savings Bank
                                Margaret VonDerau
                 Senior Vice President, Treasurer and Secretary
                             WVS Financial Corp. and
                             West View Savings Bank
                                                                     
                               EXECUTIVE OFFICERS
                                                                     
                              James S. McKain, Jr.
                                    Chairman
                                                                     
                                 David J. Bursic
                                  President and
                             Chief Executive Officer
                                                                     
                                Margaret VonDerau
                      Senior Vice President, Treasurer and
                               Corporate Secretary
                                                                     
                                Edward M. Wielgus
                            Senior Vice President and
                              Chief Lending Officer

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