[LETTERHEAD WVS FINANCIAL CORPORATION THE HOLDING COMPANY AND WEST
                           VIEW SAVINGS LOGO OMITTED]

                                      2003
                                 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                                        17

      Consolidated Balance Sheet                                            18

      Consolidated Statement of Income                                      19

      Consolidated Statement of Changes in Stockholders' Equity             20

      Consolidated Statement of Cash Flows                                  21

      Notes to the Consolidated Financial Statements                        22

      Common Stock Market Price and Dividend Information                    49

      Corporate Information                                                 50

<PAGE>
                          PAGE LEFT INTENTIONALLY BLANK

<PAGE>

      To Our Stockholders:

          During fiscal 2003, the economy continued to be adversely  impacted by
     a slow  recovery  from the economic  recession,  relatively  high levels of
     unemployment  and the war with Iraq.  In an attempt to restart the economy,
     the Federal Reserve  further reduced  interest rates to the lowest point in
     45 years. Federal income tax rates were also reduced, most notably in wages
     and dividends, to encourage consumer spending and capital investment. While
     these  efforts have  improved  equity  market  conditions  over last year's
     depressed  levels,  the  unemployment  rate  remains  stubbornly  high  and
     spending has only started to recover.  At this point it remains  unclear as
     to how strong the economic  recovery will be and when the unemployment rate
     will begin to improve.

          While  Company  earnings  were  impacted by the 45 year lows in market
     interest  rates,  at the end of fiscal  2003 our stock price  increased  by
     $2.18 or 13.78% and we  continued to pay  quarterly  cash  dividends  which
     yielded  over  3.50%.  We are also  gratified  to report that the July 2003
     issue of U.S. Banker  Magazine,  the Company was ranked #23 of the Nation's
     Top 200 Publicly Traded Community Banks, Ranked by 3-Year Average Return on
     Equity.

          During fiscal 2003,  West View Savings Bank completed its second phase
     of computer system upgrades.  The Bank's entire  telecommunication  network
     was  replaced to improve  customer  response  times.  Our branch and teller
     platforms  were also  replaced  with a PC based  system to better serve our
     customer  base.  During  the  first  half of  fiscal  2004,  we  anticipate
     completing the internet banking phase of our systems upgrades.

          We would also like to extend our thanks to Mrs.  Margaret VonDerau for
     completing 35 years of dedicated service as an employee of the Bank. During
     her  tenure,  Margaret  was  instrumental  in  managing  the Bank's  branch
     operations and human resources.  Margaret continues to be actively involved
     in the business by serving as Corporate Secretary and a member of our Board
     of Directors.

          Fiscal 2004 will undoubtedly  bring its own set of challenges.  Please
     know that the Board of Directors,  Senior  Management  and  Employees  will
     continue  to work  hard  to  earn a  competitive  rate  of  return  for our
     stockholders   while  meeting  the  banking  needs  of  our  borrowers  and
     depositors.  Please  continue to  recommend  West View Savings Bank to your
     family, friends and neighbors.


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

<PAGE>

                   FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED
                            FINANCIAL AND OTHER DATA

<TABLE>
<CAPTION>
                                                           As of or For the Year Ended June 30,
                                         -----------------------------------------------------------------------
                                            2003            2002           2001           2000           1999
                                         ----------      ----------     ----------     ----------     ----------
                                                      (Dollars in Thousands, except per share data)
<S>                                      <C>             <C>            <C>            <C>            <C>
Selected Financial Data:
Total assets                             $  367,188      $  404,911     $  396,440     $  409,618     $  348,408
Net loans receivable                         91,669         152,905        185,179        183,295        170,327
Mortgage-backed securities                  111,879          82,543         64,132         73,673         72,380
Investment securities                       147,482         151,384        129,593        137,502         92,166
Savings deposit accounts                    169,316         174,659        178,029        169,508        171,114
FHLB advances                               153,390         159,937        161,494        104,500        116,900
Other borrowings                              9,453          33,731         20,660        101,025         25,820
Stockholders' equity                         30,618          30,253         28,645         26,911         27,938
Non-performing assets and troubled
  debt restructurings(1)                      3,481           5,279          5,016          4,050            765

Selected Operating Data:
Interest income                          $   19,231      $   23,760     $   29,185     $   27,987     $   23,031
Interest expense                             11,810          14,025         18,561         16,933         12,739
                                         ----------      ----------     ----------     ----------     ----------
Net interest income                           7,421           9,735         10,624         11,054         10,292
Provision for loan losses                      (228)             57            788            150            ---
                                         ----------      ----------     ----------     ----------     ----------
Net interest income after provision
  for loan losses                             7,649           9,678          9,836         10,904         10,292
Non-interest income                             725             687            669            570            458
Non-interest expense                          3,956           4,104          3,787          4,626          4,285
                                         ----------      ----------     ----------     ----------     ----------
Income before income tax expense              4,418           6,261          6,718          6,848          6,465
Income tax expense                            1,070           1,813          1,956          2,469          2,434
                                         ----------      ----------     ----------     ----------     ----------
Net income                               $    3,348      $    4,448     $    4,762     $    4,379     $    4,031
                                         ==========      ==========     ==========     ==========     ==========

Per Share Information:
Basic earnings                           $     1.28      $     1.63     $     1.70     $     1.48     $     1.18
Diluted earnings                         $     1.28      $     1.63     $     1.69     $     1.47     $     1.17
Dividends per share                      $     0.64      $     0.64     $     0.64     $     0.64     $     0.63
Dividend payout ratio                         50.00%          39.26%         37.65%         43.24%         53.39%
Book value per share at period end       $    11.86      $    11.30     $    10.40     $     9.35     $     8.81
Average shares outstanding:
      Basic                               2,617,576       2,723,891      2,804,125      2,953,720      3,405,662
      Diluted                             2,624,395       2,732,491      2,815,867      2,977,089      3,435,738
</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                   As of or For the Year Ended June 30,
                                          ------------------------------------------------------
                                           2003        2002        2001        2000        1999
                                          ------      ------      ------      ------      ------
<S>                                       <C>         <C>         <C>         <C>         <C>
Selected Operating Ratios(2):
Average yield earned on interest-
  earning assets(3)                         5.36%       6.41%       7.51%       7.41%       7.32%
Average rate paid on interest-
  bearing liabilities                       3.57        4.13        5.21        4.91        4.64
Average interest rate spread(4)             1.79        2.28        2.30        2.50        2.68
Net interest margin(4)                      2.19        2.74        2.83        2.97        3.27
Ratio of interest-earning assets to
  interest-bearing liabilities            112.56      112.34      111.33      110.57      114.54
Non-interest expense as a percent of
  average assets                            1.05        1.07        0.94        1.20        1.35
Return on average assets                    0.89        1.16        1.19        1.14        1.27
Return on average equity                   10.97       14.85       17.17       16.27       13.01
Ratio of average equity to average
  assets                                    8.10        7.78        6.92        6.99        9.76
Full-service offices at end of period       6           6           6           6           6

Asset Quality Ratios(2):
Non-performing loans and troubled
  debt restructurings as a percent of
  net total loans(1)                        3.80%       3.30%       2.71%       2.21%       0.32%
Non-performing assets as a percent
  of total assets(1)                        0.95        1.30        1.27        0.99        0.22
Non-performing assets and troubled
  debt restructurings as a percent of
  total assets                              0.95        1.30        1.27        0.99        0.22
Allowance for loan losses as a
  percent of total loans receivable         2.68        1.77        1.47        1.06        1.07
Allowance for loan losses as a
  percent of non-performing loans          72.68       54.68       55.08       48.72      336.75
Charge-offs to average loans
  receivable outstanding during the
  period                                    0.00        0.04        0.01        0.01        0.02

Capital Ratios(2):
Tier 1 risk-based capital ratio            14.30%      13.42%      14.15%      14.05%      15.85%
Total risk-based capital ratio             15.57       14.66       15.40       15.11       16.90
Tier 1 leverage capital ratio               8.42        7.69        7.35        6.69        8.29
</TABLE>

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

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

(3)  Interest and yields on  tax-exempt  loans and  securities  (tax-exempt  for
     federal income tax purposes) are shown on a fully taxable equivalent basis.

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


                                       3
<PAGE>

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

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

FORWARD LOOKING STATEMENTS

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

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

GENERAL

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

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

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

The Company's strategic focus includes:

Interest  Rate  Risk  Management  - During  the past two  fiscal  years,  market
interest  rates have  plummeted  to 45 year lows.  The Federal  Reserve  Board's
accommodative  monetary policy,  coupled with increased fiscal stimulus,  should
lead to an economic recovery during fiscal 2004. History has shown that economic
recoveries are generally  accompanied by higher levels of market interest rates.
While these low market  interest rates have impacted net income,  the Company is
well positioned for an eventual rise in market interest rates.

Enhancing  Stockholder  Value - During fiscal 2003,  the  Company's  stock price
increased  by $2.18 or 13.78% and the  Company  maintained  its  quarterly  cash
dividends, which yielded over 3.50%.


                                       4
<PAGE>

Commitment to Capital  Management - The Company  continued to retain capital for
future  growth,  paying an  attractive  cash dividend and  supplementing  market
liquidity with our Sixth Common Stock Buyback Program.

Strong Net Income - During fiscal 2003, the Company earned $3.3 million or $1.28
per share  (basic and  diluted).  Fiscal  2003  return on average  stockholders'
equity was 10.97% while return on average assets  totaled  0.89%.  The July 2003
issue of US Banker  Magazine  ranked the  Company  #23 of the  Nation's  Top 200
Public Traded Community Banks, Ranked by 3-year Average Return on Equity.

Substantial  Core Deposits - As of June 30, 2003, $89.4 million or 52.8% of West
View's total  deposits  consisted of regular  savings and club  accounts,  money
market deposit accounts,  and checking accounts.  Approximately $44.2 million or
49.4% of core  deposits  consisted of regular  savings and club  accounts.  Core
deposits are considered to be more stable and lower cost funds than certificates
of deposit and other borrowings.

Community-based  Lending  - West  View  has  consistently  focused  its  lending
activities  on  generating  loans in its market  area.  Typical  loan  offerings
include  home  mortgages,  construction  loans,  and  consumer  loans  for  home
improvement,  automobile loans and home equity loans. West View's small business
lending  program  includes term loans,  business  inventory  loans and loans for
business equipment and machinery.

Strong  Non-interest  Expense Ratios - For the fiscal years ended June 30, 2003,
2002 and 2001, the Company's  ratios of  non-interest  expense to average assets
were 1.05%, 1.07% and 0.94%, respectively.  In fiscal 2003, the Company upgraded
its branch platform to a PC-based system to help streamline operations. Internet
banking will be rolled out during Fiscal 2004 to increase customer  satisfaction
and loyalty.

CHANGES IN FINANCIAL CONDITION

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

<TABLE>
<CAPTION>
                                                                           Change
                                      June 30,      June 30,      ------------------------
                                        2003          2002         Dollars      Percentage
                                        ----          ----         -------      ----------
                                             (Dollars in Thousands)
<S>                                   <C>           <C>           <C>             <C>
      Cash and interest-earning
         deposits                     $  2,815      $  3,177      $   (362)       -11.4%

      Investment securities(1)         155,279       159,665        (4,386)        -2.7

      Mortgage-backed securities       111,879        82,543        29,336         35.5

      Net loans receivable              91,669       152,905       (61,236)       -40.0

      Total assets                     367,188       404,911       (37,723)        -9.3

      Deposits                         170,926       177,672        (6,746)        -3.8

      FHLB and other borrowings        162,843       193,668       (30,825)       -15.9

      Total liabilities                336,570       374,658       (38,088)       -10.2

      Total equity                      30,618        30,253           365          1.2
</TABLE>

----------
(1)   Includes Federal Home Loan Bank stock.


                                       5
<PAGE>

General.  The $37.7  million or 9.3%  decrease  in total  assets  was  primarily
comprised  of a $61.2  million  decrease  in net  loans  receivable,  and a $4.4
million  decrease in investment  securities  and Federal Home Loan Bank ("FHLB")
stock,   which  were   partially   offset  by  a  $29.3   million   increase  in
mortgage-backed securities.

The $38.1 million or 10.2% decrease in total liabilities was primarily comprised
of a $30.8  million  decrease  in FHLB  advances  and other  borrowings,  a $6.7
million  decrease in deposits and a $249 thousand  decrease in accrued  interest
payable.

Total stockholders' equity increased $365 thousand or 1.2% primarily due to $3.3
million  of  Company  net  income,  and a  $197  thousand  increase  in  capital
attributable  to stock option  exercises  and  Recognition  and  Retention  Plan
("RRP") equity  contributions,  which were partially offset by the repurchase of
$1.6  million  of the  Company's  own  common  stock,  and $1.7  million of cash
dividends paid to stockholders.  The Company believes that the repurchase of its
common stock  represented  an attractive  investment  opportunity  and favorably
added to secondary market liquidity.

Cash on Hand and  Interest-earning  Deposits.  Cash on hand and interest-earning
deposits represent cash equivalents. Cash equivalents decreased $362 thousand or
11.4% to $2.8  million  at June 30,  2003 from $3.2  million  at June 30,  2002.
Decreases in these  accounts were  primarily  due to a  combination  of new loan
originations,  customer  withdrawals,  investment  purchases  and  repayments of
borrowings,  which were  partially  offset by increases  in these  accounts as a
result of a combination of customer  deposits,  loan and investment  repayments,
and proceeds from borrowings.

Investments.  The Company's overall investment portfolio increased $25.0 million
or 10.3% to $267.2  million  at June 30,  2003 from  $242.2  million at June 30,
2002.  Mortgage-backed  securities  increased  $29.3  million or 35.5% to $111.9
million at June 30,  2003.  This  increase  was due  primarily  to  purchases of
floating  rate  mortgage-backed  securities,  which  were  partially  offset  by
principal  repayments on the  portfolio.  Investment  securities  decreased $4.4
million or 2.7% to $155.3  million at June 30,  2003.  This  decrease was due to
calls of U.S.  Government  agency  securities,  maturities of  investment  grade
corporate bonds, and redemption of FHLB stock.

Net Loans Receivable.  Net loans receivable  decreased $61.2 million or 40.0% to
$91.7 million at June 30, 2003. The decrease in loans receivable was principally
the result of higher levels of  refinancing  activity due to record low mortgage
interest rates. As part of its asset/liability  management strategy, the Company
chose to invest  substantially  all of these proceeds into  adjustable  rate and
short-term investment and mortgage-backed securities.

Deposits.  Total  deposits  decreased  $6.7 million or 3.8% to $170.9 million at
June 30, 2003.  Certificates of deposit decreased  approximately $4.8 million or
5.6%,  and money  market  accounts  decreased  $152  thousand  or 1.0%.  Savings
accounts  increased  $2.5 million or 6.1%.  The Savings Bank believes that these
changes in depositor  liquidity  preferences are due to the relatively low level
of market interest rates and stock market volatility.

Borrowed  Funds.  Borrowed  funds  decreased  $30.8  million  or 15.9% to $162.8
million at June 30, 2003. Other short-term borrowings decreased $24.3 million or
72.0% to $9.5 million at June 30, 2003, and FHLB advances decreased $6.5 million
or 4.1% to $153.4  million  at June 30,  2003.  The  Company  repaid  these sums
through internal cash flows.

Stockholders' Equity. Total stockholders' equity increased $365 thousand or 1.2%
to $30.6 million at June 30, 2003.  The increase was  principally  the result of
$3.3  million of Company  net income  and a $197  thousand  increase  in capital
attributable to stock option exercises, and RRP equity contributions, which were
partially  offset by the  repurchase of $1.6 million of the Company's own common
stock and $1.7 million of cash dividends paid to stockholders.


                                       6
<PAGE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                              June 30, 2003        Change      June 30, 2002       Change       June 30, 2001
                              -------------        ------      -------------       ------       -------------
                                                           (Dollars in Thousands)
<S>                              <C>              <C>              <C>            <C>              <C>
Interest income                  $ 19,231         $(4,529)         $23,760        $(5,425)         $29,185
                                                    -19.1%                          -18.6%

Interest expense                 $ 11,810         $(2,215)         $14,025        $(4,536)         $18,561
                                                    -15.8%                          -24.4%

Net interest income              $  7,421         $(2,314)         $ 9,735        $  (889)         $10,624
                                                    -23.8%                           -8.4%

Provision for loan losses        $   (228)        $  (285)         $    57        $  (731)         $   788
                                                   -500.0%                          -92.8%

Non-interest income              $    725         $    38          $   687        $    18          $   669
                                                       5.5%                            2.7%

Non-interest expense             $  3,956         $  (148)         $ 4,104        $   317          $ 3,787
                                                     -3.6%                             8.4%

Income tax expense               $  1,070         $  (743)         $ 1,813        $  (143)         $ 1,956
                                                    -41.0%                           -7.3%

Net income                       $  3,348         $(1,100)         $ 4,448        $  (314)         $ 4,762
                                                    -24.7%                           -6.6%
</TABLE>

General. WVS reported net income of $3.3 million,  $4.4 million and $4.8 million
for the fiscal years ended June 30, 2003, 2002 and 2001, respectively.  The $1.1
million or 24.7%  decrease in net income  during  fiscal 2003 was  primarily the
result of a $2.3 million  decrease in net interest  income,  which was partially
offset by a $743  thousand  decrease  in income  tax  expense,  a $285  thousand
decrease  in the  provision  for  loan  losses,  a  $148  thousand  decrease  in
non-interest  expense,  and a $38  thousand  increase  in  non-interest  income.
Earnings per share totaled $1.28 (basic and diluted) for fiscal 2003 as compared
to $1.63 (basic and diluted) for fiscal 2002. The decrease in earnings per share
was due to a decrease in net income,  which was partially  offset by a reduction
in the weighted average number of shares  outstanding due to the Company's stock
repurchases during fiscal 2003.


                                       7
<PAGE>

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

<TABLE>
<CAPTION>
                                                                      For the Years Ended June 30,
                                              -----------------------------------------------------------------------------
                                                             2003                                     2002
                                              ------------------------------------     ------------------------------------
                                               Average                    Average       Average                    Average
                                               Balance     Interest     Yield/Rate      Balance     Interest     Yield/Rate
                                               -------     --------     ----------      -------     --------     ----------
                                                                         (Dollars in Thousands)
<S>                                           <C>           <C>           <C>          <C>           <C>           <C>
Interest-earning assets:
  Net loans receivable(1)                     $127,970      $ 9,524         7.44%      $172,824      $13,224         7.65%
  Net tax-free loans receivable(2)                 ---          ---         0.00            199           26        13.28
  Mortgage-backed securities                    82,427        2,854         3.46         65,372        3,341         5.11
  Investments - taxable                        131,193        5,228         3.98        112,948        5,553         4.92
  Investments - tax-free(2)                     28,610        2,340         8.18         28,543        2,323         8.14
  Interest-bearing deposits                      2,362           11         0.47          1,766           10         0.57
                                              --------      -------                    --------      -------
  Total interest-earning assets                372,562       19,957         5.36%       381,652       24,477         6.41%
                                                            -------       ======                     -------       ======
  Non-interest-earning assets                    4,113                                    3,386
                                              --------                                 --------
      Total assets                            $376,675                                 $385,038
                                              ========                                 ========

Interest-bearing liabilities:
  Interest-bearing deposits and escrows       $157,771      $ 3,312         2.10%      $163,338      $ 5,082         3.11%
  Borrowings                                   173,226        8,498         4.91        176,383        8,943         5.07
                                              --------      -------                    --------      -------
  Total interest-bearing liabilities           330,997       11,810         3.57%       339,721       14,025         4.13%
                                                            -------       ======                     -------       ======
  Non-interest-bearing accounts                 12,149                                   11,814
                                              --------                                 --------
  Total interest-bearing liabilities and
    non-interest-bearing accounts              343,146                                  351,535
  Non-interest-bearing liabilities               3,020                                    3,547
                                              --------                                 --------
      Total liabilities                        346,166                                  355,082
Retained income                                 30,509                                   29,956
                                              --------                                 --------
Total liabilities and retained income         $376,675                                 $385,038
                                              ========                                 ========
Net interest income                                         $ 8,147                                  $10,452
                                                            =======                                  =======
Interest rate spread                                                        1.79%                                    2.28%
                                                                          ======                                   ======
Net yield on interest-earning assets(3)                                     2.19%                                    2.74%
                                                                          ======                                   ======
Ratio of interest-earning assets to
   interest-bearing liabilities                                           112.56%                                  112.34%
                                                                          ======                                   ======

<CAPTION>
                                                  For the Years Ended June 30,
                                              ------------------------------------
                                                            2001
                                              ------------------------------------
                                               Average                    Average
                                               Balance     Interest     Yield/Rate
                                               -------     --------     ----------
                                                     (Dollars in Thousands)
<S>                                           <C>           <C>           <C>
Interest-earning assets:
  Net loans receivable(1)                     $185,203      $14,656         7.91%
  Net tax-free loans receivable(2)                 692           69         9.97
  Mortgage-backed securities                    70,403        4,835         6.87
  Investments - taxable                        114,000        8,205         7.20
  Investments - tax-free(2)                     24,785        1,993         8.04
  Interest-bearing deposits                      1,871           38         2.03
                                              --------      -------
  Total interest-earning assets                396,954       29,796         7.51%
                                                            -------       ======
  Non-interest-earning assets                    4,148
                                              --------
      Total assets                            $401,102
                                              ========

Interest-bearing liabilities:
  Interest-bearing deposits and escrows       $161,821      $ 6,820         4.21%
  Borrowings                                   194,749       11,741         6.03
                                              --------      -------
  Total interest-bearing liabilities           356,570       18,561         5.21%
                                                            -------       ======
  Non-interest-bearing accounts                 11,616
                                              --------
  Total interest-bearing liabilities and
    non-interest-bearing accounts              368,186
  Non-interest-bearing liabilities               5,179
                                              --------
      Total liabilities                        373,365
Retained income                                              27,737
                                                            -------
Total liabilities and retained income         $401,102
                                              ========
Net interest income                                         $11,235
                                                            =======
Interest rate spread                                                        2.30%
                                                                          ======
Net yield on interest-earning assets(3)                                     2.83%
                                                                          ======
Ratio of interest-earning assets to
   interest-bearing liabilities                                           111.33%
                                                                          ======
</TABLE>

----------
(1)   Includes non-accrual loans.

(2)  Interest and yields on  tax-exempt  loans and  securities  (tax-exempt  for
     federal income tax purposes) are shown on a fully taxable  equivalent basis
     utilizing a federal tax rate of 34%.

(3)   Net interest income divided by average interest-earning assets.


                                       8
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 Year Ended June 30,
                                                     -------------------------------------------------------------------------------
                                                                2003 vs. 2002                             2002 vs. 2001
                                                     -------------------------------------     -------------------------------------
                                                       Increase (Decrease)                       Increase (Decrease)
                                                             Due to               Total                Due to               Total
                                                     ----------------------      Increase      ----------------------      Increase
                                                      Volume         Rate       (Decrease)      Volume         Rate       (Decrease)
                                                     -------       -------      ----------     -------       -------      ----------
                                                                                 (Dollars in Thousands)
<S>                                                  <C>           <C>           <C>           <C>           <C>           <C>
Interest-earning assets:
       Net loans receivable                          $(3,349)      $  (377)      $(3,726)      $(1,021)      $  (454)      $(1,475)
       Mortgage-backed securities                        747        (1,234)         (487)         (325)       (1,169)       (1,494)
       Investments - taxable                             830        (1,155)         (325)          (76)       (2,576)       (2,652)
       Investments - tax-free                              6            11            17           305            25           330
       Interest-bearing deposits                           3            (2)            1            (3)          (25)          (28)
                                                     -------       -------       -------       -------       -------       -------
             Total interest-earning assets            (1,763)       (2,757)       (4,520)       (1,120)       (4,199)       (5,319)
                                                     -------       -------       -------       -------       -------       -------
Interest-bearing liabilities:
       Interest-bearing deposits and
          Escrows                                       (324)       (1,446)       (1,770)         (121)       (1,617)       (1,738)
       Other borrowings                                 (166)         (279)         (445)       (1,039)       (1,759)       (2,798)
                                                     -------       -------       -------       -------       -------       -------
             Total interest-bearing liabilities         (490)       (1,725)       (2,215)       (1,160)       (3,376)       (4,536)
                                                     -------       -------       -------       -------       -------       -------
Increase (decrease) in net interest
   Income                                            $(1,273)      $(1,032)      $(2,305)      $    40       $  (823)      $  (783)
                                                     =======       =======       =======       =======       =======       =======
</TABLE>

Net Interest Income. Net interest income is determined by the Company's interest
rate  spread   (i.e.   the   difference   between  the  yields   earned  on  its
interest-earning assets and the rates paid on its interest-bearing  liabilities)
and  the  relative  amounts  of  interest-earning  assets  and  interest-bearing
liabilities.

Interest Income. Total interest income decreased by $4.5 million or 19.1% during
fiscal 2003 and  decreased  by $5.4 million or 18.6%  during  fiscal  2002.  The
decrease  in fiscal  2003 was  primarily  a result of  historically  low  market
interest rates and higher levels of loan repayments, which were partially offset
by increased average balances of the investment and  mortgage-backed  securities
portfolios.  The decrease in fiscal 2002 was  primarily a result of decreases in
the weighted  average yield earned and the average  balances of the  investment,
mortgage-backed, and loan portfolios during the period.

Interest income on investment  securities and FHLB stock decreased $325 thousand
or 4.5% during  fiscal 2003 and  decreased  $2.4 million or 25.4% during  fiscal
2002.  The  decrease in fiscal 2003 was  primarily  attributable  to an 84 basis
point  decrease  in the  weighted  average  yield  on the  Company's  investment
securities,  which was  partially  offset  by a $18.3  million  increase  in the
average balance of the investment securities outstanding. The decrease in fiscal
2002 was primarily  attributable  to a 178 basis point  decrease in the weighted
average yield on the Company's investment  securities which was partially offset
by a $2.7 million  increase in the average balance of the investment  securities
outstanding.

Interest income on mortgage-backed  securities  decreased $487 thousand or 14.6%
during fiscal 2003 and decreased  $1.5 million or 30.9% during fiscal 2002.  The
decrease in fiscal 2003 was  attributable  to a 165 basis point  decrease in the
weighted average yield on the Company's  mortgage-backed  securities  portfolio,
which was partially offset by a $17.1 million increase in the average balance of
the  mortgage-backed  securities  portfolio.  The  decrease  in fiscal  2002 was
attributable to a 176 basis point decrease in the weighted  average yield on the
mortgage-backed  securities portfolio and a $5.0 million decrease in the average
outstanding balance of mortgage-backed securities.


                                       9
<PAGE>

Interest income on net loans  receivable  decreased $3.7 million or 28.1% during
fiscal 2003 and decreased  $1.5 million or 9.9% during fiscal 2002. The decrease
in fiscal  2003 was  attributable  to a $45.1  million  decrease  in the average
balance of net loans  outstanding  and a 22 basis point decrease in the weighted
average yield on the Company's loan  portfolio.  As part of its  asset/liability
management   strategy,   the  Company  previously  limited  its  origination  of
longer-term  fixed  rate  loans to  mitigate  its  exposure  to a rise in market
interest  rates.  The Company began to offer  longer-term  fixed rate loans on a
correspondent  basis  during  fiscal  2003.  The  decrease  in  fiscal  2002 was
attributable  to a $12.9  million  decrease in the average  balance of net loans
outstanding  and a 26 basis point decrease in the weighted  average yield on the
Company's loan portfolio.

Interest Expense.  Total interest expense decreased $2.2 million or 15.8% during
fiscal 2003 and  decreased  by $4.5 million or 24.4%  during  fiscal  2002.  The
decrease  in fiscal  2003 was  attributable  to a  decrease  of $1.8  million of
interest expense on deposits and a decrease of $445 thousand of interest expense
on borrowings. The decrease during fiscal 2002 was attributable to a decrease of
$2.8 million of interest  expense on borrowings  and a $1.7 million  decrease of
interest expense on deposits.

Interest  expense on  borrowings  decreased  $445 thousand or 5.0% during fiscal
2003 and  decreased  $2.8 million or 23.8% during  fiscal 2002.  The decrease in
fiscal  2003 was  attributable  to a 16 basis  point  decrease  in the  weighted
average yield on the Company's  borrowings,  and a $3.2 million  decrease in the
average  balance of borrowings  outstanding.  During fiscal 2003,  the Company's
borrowings  were  primarily  longer-term,  with  fixed  rates of  interest.  The
decrease in fiscal  2002 was  attributable  to a 96 basis point  decrease in the
weighted average yield on the Company's  borrowings and a $18.4 million decrease
in the average balance of borrowings outstanding.

Interest expense on interest-bearing deposits and escrows decreased $1.8 million
or 34.8% in fiscal 2003 and decreased  $1.7 million or 25.5% in fiscal 2002. The
decrease in fiscal 2003 was  attributable  to a 101 basis point  decrease in the
weighted average yield on the Company's deposits, and a $5.6 million decrease in
the average balance of  interest-bearing  deposits.  The decrease in fiscal 2002
was primarily attributable to a 110 basis point decrease in the weighted average
rate paid on the Company's  deposits and a $3.9 million  increase in the average
balance of interest bearing time deposits.

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 reduced its provision for
loan loss by $228 thousand during fiscal 2003, as compared to recording a
provision of $57 thousand during fiscal 2002. The Company's reduced provision in
fiscal 2003 was due to the reduced levels of net loans receivable and the payoff
of a large non-performing commercial real estate loan. The fiscal 2002 provision
was comparable to net charge-offs of $62 thousand.

Non-interest Income. Total non-interest income increased by $38 thousand or 5.5%
in  fiscal  2003 and  increased  by $18  thousand  or 2.7% in fiscal  2002.  The
increase in fiscal 2003 was primarily  attributable  to the sale of  investments
from the  Company's  investment  portfolio.  The  increase  in  fiscal  2002 was
primarily attributable to an increase in service charges on deposits.

Non-interest Expense. Total non-interest expense decreased $148 thousand or 3.6%
and increased  $317 thousand or 8.4% during fiscal 2003 and 2002,  respectively.
The decrease in fiscal 2003 was primarily  attributable to a decrease in payroll
related  costs,  which was  partially  offset by  increases  in data  processing
expenses  and fixed asset  costs.  The  increase  in fiscal  2002 was  primarily
attributable to increases in accrued legal fees,  charitable  contributions  for
local educational  programs,  PA Capital Stock Franchise taxes and other payroll
costs.

Income Taxes.  Income taxes  decreased $743 thousand or 41.0% during fiscal 2003
and decreased  $143 thousand or 7.3% during fiscal 2002.  The decrease in fiscal
2003 was primarily attributable to a decrease in


                                       10
<PAGE>

taxable income and  proportionately  higher  tax-free  interest  revenue on bank
qualified  municipal  securities.  Fiscal  year  2002  income  tax  expense  was
favorably  impacted by the higher  levels of tax-free bank  qualified  municipal
securities   in  the  Company's   investment   portfolio  and  a  $100  thousand
Pennsylvania  tax credit for charitable  contributions  made in support of local
educational  programs.  The  Company's  effective tax rate was 24.2% at June 30,
2003 and 29.0% at June 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is often analyzed by reviewing the cash flow statement.  Cash and cash
equivalents decreased by $362 thousand during fiscal 2003 primarily due to $40.8
million of net cash used for financing  activities.  These decreases were offset
by $33.4 million of net cash provided by investing activities,  and $7.1 million
of net cash provided by operating activities.

Funds provided by operating  activities  totaled $7.1 million during fiscal 2003
as compared to $4.5 million  during fiscal 2002.  Net cash provided by operating
activities was primarily  comprised of $3.3 million of net income,  $3.2 million
of  amortization  of  discounts,  premiums  and deferred  loan fees,  and a $1.1
million decrease in accrued interest receivable,  which were partially offset by
a $249  thousand  decrease  in accrued  interest  payable,  and a $228  thousand
decrease in provisions for loan loss.

Funds provided by investing  activities totaled $33.4 million during fiscal 2003
as compared to $9.1 million used for  investing  activities  during fiscal 2002.
Primary sources of funds during fiscal 2003 include $258.5 million in repayments
and sales of investment and  mortgage-backed  securities  (including FHLB stock)
and a $61.1  million  decrease  in net loans  receivable,  which were  partially
offset  by  $286.1  million  in  purchases  of  investment  and  mortgage-backed
securities  (including  FHLB stock).  The  investment  purchases  were primarily
comprised of investment  grade  commercial  paper and investment grade corporate
bonds that mature within two years.  The  mortgage-backed  securities  purchases
were floating rate instruments that generally reprice on a monthly basis.

Funds used for  financing  activities  totaled  $40.8 million for fiscal 2003 as
compared  to $4.8  million  provided by  financing  activities  in fiscal  2002.
Primary uses of funds for fiscal 2003 were a $30.8 million  decrease in FHLB and
other  borrowings,  a $6.7 million  decrease in  deposits,  $1.7 million of cash
dividends and $1.6 million in common stock repurchases.  During fiscal 2003, the
Company purchased 101,719 shares of common stock for approximately $1.6 million.
Management has determined  that it currently is maintaining  adequate  liquidity
and  continues to better  match  funding  sources  with  lending and  investment
opportunities.

The Company's primary sources of funds are deposits,  amortization,  prepayments
and  maturities of existing  loans,  mortgage-backed  securities  and investment
securities,  funds from operations, and funds obtained through FHLB advances and
other  borrowings.  At June  30,  2003,  the  total  approved  loan  commitments
outstanding amounted to $1.5 million. At the same date, commitments under unused
letters and lines of credit amounted to $6.5 million and the unadvanced  portion
of  construction  loans  approximated  $11.3  million.   The  Company  also  had
commitments   to  purchase   approximately   $21.1   million  of  floating  rate
mortgage-backed  securities.  Certificates of deposit scheduled to mature in one
year or less at June 30, 2003, totaled $56.9 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 access to the Federal  Reserve Bank Primary  Credit
Program.  Management  believes that the Company currently has adequate liquidity
available to respond to liquidity demands.

On July 29, 2003, the Company's  Board of Directors  declared a cash dividend of
$0.16 per share  payable on August  21,  2003 to  shareholders  of record at the
close of business on August 11, 2003. Dividends are


                                       11
<PAGE>

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,  2003,  WVS  Financial  Corp.  exceeded  all  regulatory  capital
requirements and maintained Tier I and total  risk-based  capital equal to $30.3
million  or  14.3%  and  $32.9   million  or  15.6%,   respectively,   of  total
risk-weighted  assets,  and Tier I leverage  capital of $30.3 million or 8.4% of
average total assets.

Non-performing assets consist of non-accrual loans and real estate owned. A loan
is placed on  non-accrual  status  when,  in the  judgment  of  management,  the
probability of collection of interest is deemed  insufficient to warrant further
accrual.  When a loan is placed on non-accrual  status,  previously  accrued but
uncollected  interest is deducted from interest  income.  Non-performing  assets
decreased  $1.8 million or 35.6% to $3.5 million,  or 0.95% of total assets,  at
June 30,  2003.  The  decrease  was  primarily  the result of a $1.2  million in
repayments,   $520  thousand  in  pending   payoffs,   $404  thousand  in  loans
reclassified as performing due to improved economic performance,  and a decrease
of $235  thousand  in real estate  owned,  which were  partially  offset by $362
thousand in loans reclassified as non-performing.

QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  primary  market risk  exposure  is interest  rate risk and, to a
lesser extent, liquidity risk. All of the Company's transactions are denominated
in US dollars with no specific foreign exchange  exposure.  The Savings Bank has
no agricultural  loan assets and therefore would not have a specific exposure to
changes in commodity prices.  Any impacts that changes in foreign exchange rates
and  commodity  prices would have on interest  rates are assumed to be exogenous
and will be analyzed on an ex post basis.
                           -------
Interest rate risk ("IRR") is the exposure of a banking organization's financial
condition to adverse movements in interest rates.  Accepting this risk can be an
important  source of  profitability  and shareholder  value,  however  excessive
levels  of IRR can pose a  significant  threat  to the  Company's  earnings  and
capital base.  Accordingly,  effective  risk  management  that  maintains IRR at
prudent levels is essential to the Company's safety and soundness.

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

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

During fiscal 2003 the level of market  interest rates  declined  further due to
the Federal  Reserve's  accommodative  monetary  policy and the  weakness in the
national economy. The marked decline in the


                                       12
<PAGE>

equity markets,  reduced corporate earnings and heightened geopolitical tensions
have caused a considerable disintermediation from the equity to the fixed income
markets,  further  compounding  the decline in market  interest rates across the
yield curve.

Due to  the  rapid  decline  in  market  interest  rates,  the  Company's  loan,
investment and  mortgage-backed  securities  portfolios  continued to experience
much higher then  anticipated  levels of  prepayments.  During fiscal 2003,  the
Federal  Reserve  reduced the Federal Funds rate an  additional  six times for a
total  of  250  basis  points.  Principal  repayments  on  the  Company's  loan,
investment  and  mortgage-backed  securities  portfolios  totaled $83.1 million,
$143.8 million and $113.3 million respectively.  In response to higher levels of
liquidity   the  Company   began  to   rebalance   its  loan,   investment   and
mortgage-backed  securities portfolios.  Due to the low level of market interest
rates,  the Company  began to reduce its  originations  of long-term  fixed rate
mortgages while continuing to offer consumer home equity and construction loans.
The Company began to purchase  investment  grade  commercial paper and corporate
bonds in order to earn a higher  return with a shorter  maturity  profile and to
reduce the  prepayment  risk within the  portfolio.  Within the  mortgage-backed
securities   portfolio,   the  Company  aggressively   purchased  floating  rate
securities in order to provide current income and protection against an eventual
rise in market interest rates. Each of the aforementioned strategies also helped
to better the  interest-rate  and liquidity  risks  associated  with the Savings
Bank's customers liquidity preference for shorter term deposit products.

The Company also makes available for origination residential mortgage loans with
interest rates which adjust pursuant to a designated  index,  although  customer
acceptance  has been somewhat  limited in the Savings  Bank's  market area.  The
Company  will  continue  to  selectively  offer  commercial  real  estate,  land
acquisition and development,  and shorter-term  construction loans, primarily on
residential  properties,  to partially increase its loan asset sensitivity.  The
Company  intends to emphasize  higher  yielding  home equity and small  business
loans to existing customers and seasoned prospective customers.

As of June 30, 2003, the implementation of these asset and liability  management
initiatives resulted in the following:

     1)   the  Company's  liquidity  profile  remains  high with the  investment
          portfolio's  stated  final  maturities  as follows:  less than 1 year:
          $79.2  million or 30.7%;  1-5  years:  $13.1  million or 5.1%;  over 5
          years: $165.3 million or 64.2%;

     2)   $97.4 million or 87.1% of the Company's  portfolio of  mortgage-backed
          securities  (including  collateralized  mortgage obligations - "CMOs")
          were secured by floating rate securities;

     3)   the maturity  distribution of the Company's  borrowings is as follows:
          less than 1 year:  $13.6 million or 8.4%;  1-5 years:  $7.2 million or
          4.4%; over 5 years: $142.1 million or 87.2%; and

     4)   an  aggregate  of $33.6  million  or 36.7% of the  Company's  net loan
          portfolio had adjustable  interest rates or maturities of less than 12
          months.

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


                                       13
<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,
                                                 --------------------------------------
                                                   2003           2002           2001
                                                 --------       --------       --------
                                                         (Dollars in Thousands)
<S>                                              <C>            <C>            <C>
Interest-earning assets maturing or
   repricing within one year                     $262,782       $252,467       $155,928
Interest-bearing liabilities maturing or
   repricing within one year                      133,418        142,823        137,232
                                                 --------       --------       --------

Interest sensitivity gap                         $129,364       $109,644       $ 18,696
                                                 ========       ========       ========
Interest sensitivity gap as a percentage of
   total assets                                      35.2%          27.1%           4.7%
Ratio of assets to liabilities
   maturing or repricing within one year            197.0%         176.8%         113.6%
</TABLE>

During fiscal 2003, the Company  managed its one year interest  sensitivity  gap
by:  (1)  limiting  the  origination  of  long-term  fixed rate  mortgages;  (2)
emphasizing  loans with shorter terms or repricing  frequencies;  (3) purchasing
investments  with maturities  within 2 years;  and (4) purchasing  floating rate
CMO's which reprice on a monthly basis.


                                       14
<PAGE>

The following table  illustrates  the Company's  estimated  stressed  cumulative
repricing gap - the difference between the amount of interest-earning assets and
interest-bearing  liabilities  expected to reprice at a given point in time - at
June 30, 2003. The table estimates the impact of an upward or downward change in
market interest rates of 100 and 200 basis points.

                       Cummulative Stressed Repricing Gap
                       ----------------------------------

<TABLE>
<CAPTION>
                          Month 3         Month 6         Month 12        Month 24        Month 36        Month 60        Long Term
                          -------         -------         --------        --------        --------        --------        ---------
                                                                   (Dollars in Thousands)
<S>                       <C>             <C>             <C>             <C>             <C>             <C>              <C>
Base Case Up 200 bp
-------------------
Cummulative
  Gap ($'s)               123,940         116,233         103,039         111,979         120,903         140,870          29,111
% of Total
  Assets                     33.7%           31.6%           28.0%           30.4%           32.9%           38.3%            7.9%
Base Case Up 100 bp
-------------------
Cummulative
  Gap ($'s)               134,488         129,591         120,308         150,867         162,576         167,911          29,111
% of Total
  Assets                     36.6%           35.2%           32.7%           41.0%           44.2%           45.6%            7.9%
Base Case No Change
-------------------
Cummulative
  Gap ($'s)               138,535         136,286         129,364         160,276         170,439         172,522          29,111
% of Total
  Assets                     37.7%           37.0%           35.2%           43.6%           46.3%           46.9%            7.9%
Base Case Down 100 bp
---------------------
Cummulative
  Gap ($'s)               140,996         140,230         134,229         166,166         175,930         175,585          29,111
% of Total
  Assets                     38.3%           38.1%           36.5%           45.2%           47.8%           47.7%            7.9%
Base Case Down 200 bp
---------------------
Cummulative
  Gap ($'s)               154,224         154,189         148,818         169,264         178,141         176,428          29,111
% of Total
  Assets                     41.9%           41.9%           40.5%           46.0%           48.4%           48.0%            7.9%
</TABLE>

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


                                       15
<PAGE>

The following  table presents the simulated  impact of a 100 and 200 basis point
upward or downward shift in market  interest  rates and the estimated  impact on
net interest income,  return on average equity, return on average assets and the
market value of portfolio equity at June 30, 2003 and June 30, 2002.

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

<TABLE>
<CAPTION>
                                                         Modeled Change in Market Interest Rates
                       -----------------------------------------------------------------------------------------------------------
                                           June 30, 2003                                          June 30, 2002
                       ----------------------------------------------------    ---------------------------------------------------
Estimated impact on:     -200        -100        0         +100       +200       -200       -100        0         +100       +200
--------------------   -------     -------    -------    -------    -------    -------    -------    -------    -------    -------
<S>                    <C>         <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Change in net            -47.6%      -35.0%      0.00%      24.8%      46.8%     -18.7%     -10.1%      0.00%       8.5%      24.2%
interest income

Return on average         0.31%       1.88%      6.16%      9.08%     11.62%      8.70%     10.37%     12.32%     13.94%     16.83%
equity

Return on average         0.02%       0.14%      0.47%      0.70%      0.91%      0.66%      0.79%      0.95%      1.08%      1.32%
assets

Market value of        $(4,248)    $ 5,191    $13,582    $19,086    $22,309    $21,523    $25,461    $28,182    $28,529    $28,793
equity (in thousands)
</TABLE>

The  table  below   provides   information   about  the  Company's   anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed  letters  and  lines  of  credit.  The  Company  used no  derivative
financial  instruments  to hedge such  anticipated  transactions  as of June 30,
2003.

                               Anticipated Transactions
      --------------------------------------------------------------------------
                                                          (Dollars in Thousands)
      Undisbursed construction and development loans
        Fixed rate                                               $ 3,483
                                                                    5.67%

        Adjustable rate                                          $ 7,865
                                                                    5.32%

      Undisbursed lines of credit
        Adjustable rate                                          $ 6,469
                                                                    4.80%

      Loan origination commitments
        Fixed rate                                               $ 1,222
                                                                    5.62%

        Adjustable rate                                          $   250
                                                                    3.75%

      Letters of credit
        Adjustable rate                                          $    51
                                                                    7.25%

      Commitments to purchase mortgage-backed securities
        Adjustable rate                                          $21,079
                                                                    2.52%
                                                                 -------
                                                                 $40,419
                                                                 =======


                                       16
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------

Board of Directors and Stockholders
WVS Financial Corp.

We have audited the  accompanying  consolidated  balance  sheet of WVS Financial
Corp. and subsidiary as of June 30, 2003 and 2002, 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, 2003. 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 auditing standards generally accepted
in the  United  States of  America.  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, 2003 and 2002, and the results of their operations
and their cash flows for each of the years in the  three-year  period ended June
30, 2003, in conformity with  accounting  principles  generally  accepted in the
United States of America.

/s/ S.R. Snodgrass, A.C.
------------------------
S.R. Snodgrass, A.C.
Wexford, PA
August 1, 2003


                                       17
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         June 30,
                                                                    2003          2002
                                                                 ---------     ---------
<S>                                                              <C>           <C>
ASSETS
  Cash and due from banks                                        $     921     $     879
  Interest-earning demand deposits                                   1,894         2,298
                                                                 ---------     ---------
  Total cash and cash equivalents                                    2,815         3,177
  Investment securities available for sale (amortized
     cost of $25,310 and $8,375) (Note 4)                           25,641         8,426
  Investment securities held to maturity (market value
     of $126,036 and $146,146) (Note 4)                            121,841       142,958
  Mortgage-backed securities available for sale
     (amortized cost of $4,219 and $6,196) (Note 5)                  4,387         6,450
  Mortgage-backed securities held to maturity
     (market value of $107,914 and $76,819) (Note 5)               107,492        76,093
  Net loans receivable (allowance for loan losses of
     $2,530 and $2,758) (Note 6)                                    91,669       152,905
  Accrued interest receivable (Note 8)                               2,800         3,903
  Federal Home Loan Bank stock, at cost (Note 9)                     7,797         8,281
  Premises and equipment (Note 10)                                   1,231           996
  Other assets                                                       1,515         1,722
                                                                 ---------     ---------

           TOTAL ASSETS                                          $ 367,188     $ 404,911
                                                                 =========     =========

LIABILITIES
  Deposits (Note 11)                                             $ 170,926     $ 177,672
  Federal Home Loan Bank advances (Note 12)                        153,390       159,937
  Other borrowings (Note 13)                                         9,453        33,731
  Accrued interest payable                                           1,449         1,698
  Other liabilities                                                  1,352         1,620
                                                                 ---------     ---------
TOTAL LIABILITIES                                                  336,570       374,658
                                                                 ---------     ---------

STOCKHOLDERS' EQUITY (Notes 16)
  Preferred stock, no par value; 5,000,000 shares authorized;
     none outstanding                                                    -             -
  Common stock, par value $.01; 10,000,000 shares authorized;
     3,736,750 and 3,729,858 shares issued                              37            37
  Additional paid-in capital                                        20,212        20,037
  Treasury stock (1,153,591 and 1,051,872 shares at cost)          (16,767)      (15,133)
  Retained earnings - substantially restricted                      26,857        25,183
  Accumulated other comprehensive income                               329           201
  Unallocated shares - Recognition and Retention Plans                 (50)          (72)
                                                                 ---------     ---------
TOTAL STOCKHOLDERS' EQUITY                                          30,618        30,253
                                                                 ---------     ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $ 367,188     $ 404,911
                                                                 =========     =========
</TABLE>

See accompanying notes to the consolidated financial statements.


                                       18
<PAGE>

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

<TABLE>
<CAPTION>
                                                            Year Ended June 30,
                                                     2003           2002          2001
                                                 -----------     ----------    ----------
<S>                                              <C>             <C>           <C>
INTEREST AND DIVIDEND INCOME
      Loans                                      $     9,524     $   13,242    $   14,704
      Investment securities                            6,590          6,735         9,075
      Mortgage-backed securities                       2,854          3,341         4,835
      Interest-earning demand deposits                    11             10            38
      Federal Home Loan Bank stock                       252            432           533
                                                 -----------     ----------    ----------
           Total interest and dividend income         19,231         23,760        29,185
                                                 -----------     ----------    ----------

INTEREST EXPENSE
      Deposits (Note 10)                               3,312          5,082         6,820
      Federal Home Loan Bank advances                  8,224          8,635         8,699
      Other borrowings                                   274            308         3,042
                                                 -----------     ----------    ----------
           Total interest expense                     11,810         14,025        18,561
                                                 -----------     ----------    ----------

NET INTEREST INCOME                                    7,421          9,735        10,624
Provision for loan losses (Note 6)                      (228)            57           788
                                                 -----------     ----------    ----------
NET INTEREST INCOME AFTER PROVISION
      FOR LOAN LOSSES                                  7,649          9,678         9,836
                                                 -----------     ----------    ----------

NONINTEREST INCOME
      Service charges on deposits                        361            403           348
      Investment securities gains, net                    64              -             -
      Other                                              300            284           321
                                                 -----------     ----------    ----------
           Total noninterest income                      725            687           669
                                                 -----------     ----------    ----------

NONINTEREST EXPENSE
      Salaries and employee benefits                   2,240          2,448         2,415
      Occupancy and equipment                            398            375           367
      Deposit insurance premium                           29             33            35
      Data processing                                    221            190           186
      Correspondent bank charges                         152            163           153
      Other                                              916            895           631
                                                 -----------     ----------    ----------
           Total noninterest expense                   3,956          4,104         3,787
                                                 -----------     ----------    ----------

Income before income taxes                             4,418          6,261         6,718

Income taxes (Note 18)                                 1,070          1,813         1,956
                                                 -----------     ----------    ----------

NET INCOME                                       $     3,348     $    4,448    $    4,762
                                                 ===========     ==========    ==========

EARNINGS PER SHARE:
      Basic                                      $      1.28     $     1.63    $     1.70
      Diluted                                           1.28           1.63          1.69

AVERAGE SHARES OUTSTANDING (Note 2):
      Basic                                        2,617,576      2,723,891     2,804,125
      Diluted                                      2,624,395      2,732,491     2,815,867
</TABLE>

See accompanying notes to the consolidated financial statements.


                                       19
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                      Retained
                                                                     Additional                       Earnings-      Unallocated
                                                       Common          Paid-in        Treasury      Substantially    Shares Held
                                                       Stock           Capital          Stock         Restricted        by ESOP
                                                      --------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>              <C>             <C>
Balance June 30, 2000                                 $     37        $ 19,548        $(11,770)        $ 19,513        $      -

Comprehensive income:
   Net income                                                                                             4,762
   Unrealized gain on available
     for sale securities, net of taxes of $157
Tax benefit from stock grants issued
   under RRPs                                                               39
Accrued compensation expense for RRPs
Exercise of stock options                                                  119
Tax benefit from exercise of stock options                                  36
Purchase of treasury stock                                                              (1,819)
Cash dividends declared ($0.64 per share)                                                                (1,797)
                                                      --------        --------        --------         --------        --------

Balance June 30, 2001                                       37          19,742         (13,589)          22,478               -

Comprehensive income:
   Net income                                                                                             4,448
   Unrealized gain on available
     for sale securities, net of taxes of $48
Tax benefit from stock grants issued
   under RRPs                                                               54
Accrued compensation expense for RRPs
Exercise of stock options                                                  212
Tax benefit from exercise of stock options                                  29
Purchase of treasury stock                                                              (1,544)
Cash dividends declared ($0.64 per share)                                                                (1,743)
                                                      --------        --------        --------         --------        --------

Balance June 30, 2002                                       37          20,037         (15,133)          25,183               -

Comprehensive income:
   Net income                                                                                             3,348
   Unrealized gain on available
     for sale securities, net of taxes of $66
Tax benefit from stock grants issued
   under RRPs                                                              104
Compensation expense for RRPs
Exercise of stock options                                                   71
Tax benefit from exercise of stock options
Purchase of treasury stock                                                              (1,634)
Cash dividends declared ($0.64 per share)                                                                (1,674)
                                                      --------        --------        --------         --------        --------

Balance June 30, 2003                                 $     37        $ 20,212        $(16,767)        $ 26,857        $      -
                                                      ========        ========        ========         ========        ========

<CAPTION>
                                                                       Accumulated
                                                      Unallocated         Other
                                                      Shares Held     Comprehensive
                                                        by RRP        Income (Loss)       Total
                                                      ------------------------------------------
<S>                                                    <C>              <C>             <C>
Balance June 30, 2000                                  $   (220)        $   (197)       $ 26,911

Comprehensive income:
   Net income                                                                              4,762
   Unrealized gain on available
     for sale securities, net of taxes of $157                               305             305
Tax benefit from stock grants issued
   under RRPs                                                                                 39
Accrued compensation expense for RRPs                                         89              89
Exercise of stock options                                                                    119
Tax benefit from exercise of stock options                                                    36
Purchase of treasury stock                                                                (1,819)
Cash dividends declared ($0.64 per share)                                                 (1,797)
                                                       --------         --------        --------

Balance June 30, 2001                                      (131)             108          28,645

Comprehensive income:
   Net income                                                                              4,448
   Unrealized gain on available
     for sale securities, net of taxes of $48                                 93              93
Tax benefit from stock grants issued
   under RRPs                                                                                 54
Accrued compensation expense for RRPs                        59                               59
Exercise of stock options                                                                    212
Tax benefit from exercise of stock options                                                    29
Purchase of treasury stock                                                                (1,544)
Cash dividends declared ($0.64 per share)                                                 (1,743)
                                                       --------         --------        --------

Balance June 30, 2002                                       (72)             201          30,253

Comprehensive income:
   Net income                                                                              3,348
   Unrealized gain on available
     for sale securities, net of taxes of $66                                128             128
Tax benefit from stock grants issued
   under RRPs                                                                                104
Compensation expense for RRPs                                22                               22
Exercise of stock options                                                                     71
Tax benefit from exercise of stock options
Purchase of treasury stock                                                                (1,634)
Cash dividends declared ($0.64 per share)                                                 (1,674)
                                                       --------         --------        --------

Balance June 30, 2003                                  $    (50)        $    329        $ 30,618
                                                       ========         ========        ========
</TABLE>

See accompanying notes to the consolidated financial statements.


                                       20
<PAGE>

                               WVS FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                        Year Ended June 30,
                                                                                  2003          2002          2001
                                                                               ---------     ---------     ---------
<S>                                                                            <C>           <C>           <C>
OPERATING ACTIVITIES
      Net income                                                               $   3,348     $   4,448     $   4,762
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Provision for loan losses                                                (228)           57           788
           Depreciation                                                              156           123           111
           Investment securities gains, net                                          (64)            -             -
           Amortization of discounts, premiums, and
             deferred loan fees                                                    3,205           766          (225)
           Amortization of ESOP and RRP deferred
             compensation                                                             22            59            89
           Deferred income taxes                                                      43           (93)         (370)
           Decrease (increase) in accrued interest receivable                      1,103           (66)          538
           Decrease in accrued interest payable                                     (249)         (743)         (263)
           Other, net                                                               (285)          (48)          555
                                                                               ---------     ---------     ---------
              Net cash provided by operating activities                            7,051         4,503         5,985
                                                                               ---------     ---------     ---------

INVESTING ACTIVITIES
      Available for sale:
           Purchase of investment and mortgage-backed
             securities                                                          (25,836)      (29,454)            -
           Proceeds from repayments of investment and
             mortgage-backed securities                                           10,313        24,793         1,767
           Proceeds from sales of investment and
            mortgage-backed securities                                               639             -             -
      Held to maturity:
           Purchase of investment and mortgage-backed
             securities                                                         (259,234)     (296,854)      (36,865)
           Proceeds from repayments of investment and
             mortgage-backed securities                                          246,069       260,973        53,438
      Net decrease (increase) in net loans receivable                             61,131        31,520        (2,873)
      Purchase of Federal Home Loan Bank stock                                    (1,021)         (131)       (2,925)
      Redemption of Federal Home Loan Bank stock                                   1,505             -             -
      Acquisition of premises and equipment                                         (391)         (118)          (62)
      Other, net                                                                     220           180             -
                                                                               ---------     ---------     ---------
              Net cash provided by (used for) investing activities                33,395        (9,091)       12,480
                                                                               ---------     ---------     ---------

FINANCING ACTIVITIES
      Net increase (decrease) in deposits                                         (6,746)       (3,667)        8,481
      Net increase (decrease) in Federal Home Loan Bank short-term advances        3,875       (14,836)       (1,663)
      Net increase (decrease) in other borrowings                                (24,278)       13,071       (80,365)
      Proceeds from Federal Home Loan Bank long-term advances                        578        23,279       108,657
      Repayments of Federal Home Loan Bank long-term advances                    (11,000)      (10,000)      (50,000)
      Net proceeds from exercise of stock options                                     71           212           119
      Cash dividends paid                                                         (1,674)       (1,743)       (1,797)
      Purchase of treasury stock                                                  (1,634)       (1,544)       (1,819)
                                                                               ---------     ---------     ---------
              Net cash provided by (used for) financing activities               (40,808)        4,772       (18,387)
                                                                               ---------     ---------     ---------

Increase (decrease) in cash and cash equivalents                                    (362)          184            78
CASH AND CASH EQUIVALENTS AT BEGINNING
      OF YEAR                                                                      3,177         2,993         2,915
                                                                               ---------     ---------     ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                       $   2,815     $   3,177     $   2,993
                                                                               =========     =========     =========

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
      Interest                                                                 $  12,059     $  14,768     $  18,823
      Taxes                                                                        1,049         1,735         2,140
</TABLE>

See accompanying notes to the consolidated financial statements.


                                       21
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

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


                                       22
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

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

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

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

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


                                       23
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

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

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

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

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

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

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

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

     The Company maintains stock option plans for key officers,  employees,  and
     non-employee directors.

     As permitted  under  Statement of Financial  Accounting  Standards  No. 123
     "Accounting  for  Stock-based  Compensation,"  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 the 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 Statement of Income.


                                       24
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

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

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

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

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

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

     In July 2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement of Financial Accounting Standards ("FAS") No. 146, Accounting for
     Costs Associated with Exit or Disposal Activities, which requires companies
     to recognize costs  associated  with exit or disposal  activities when they
     are incurred rather than at the date of a commitment to an exit or disposal
     plan. This statement  replaces EITF Issue No. 94-3,  Liability  Recognition
     for  Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an
     Activity  (Including  Certain Costs Incurred in a  Restructuring).  The new
     statement  is effective  for exit or disposal  activities  initiated  after
     December 31, 2002.  The adoption of this  statement did not have a material
     effect on the Company's financial position or results of operations.

     On October 1, 2002,  the FASB issued FAS No. 147,  Acquisitions  of Certain
     Financial  Institutions,  effective for all business combinations initiated
     after October 1, 2002.  This statement  addresses the financial  accounting
     and  reporting  for  the   acquisition  of  all  or  part  of  a  financial
     institution,   except  for  a  transaction   between  two  or  more  mutual
     enterprises. This statement removes acquisitions of financial institutions,
     other than transactions  between two or more mutual  enterprises,  from the
     scope of FAS No. 72,  Accounting  for  Certain  Acquisitions  of Banking or
     Thrift  Institutions,  and FASB Interpretation No. 9, Applying APB Opinions
     No. 16 and 17 When a Savings and Loan Association or a Similar  Institution
     Is Acquired in a Business Combination Accounted for by the Purchase Method.
     The  acquisition of all or part of a financial  institution  that meets the
     definition of a business combination shall be accounted for by the purchase
     method in accordance with FAS No. 141, Business  Combinations,  and FAS No.
     142,  Goodwill and Other  Intangible  Assets.  This statement also provides
     guidance  on the  accounting  for the  impairment  or  disposal of acquired
     long-term  customer-relationship  intangible  assets (such as depositor and
     borrower-relationship  intangible assets and credit  cardholder  intangible
     assets),  including  those  acquired  in  transactions  between two or more
     mutual  enterprises.  The  adoption  of FAS No. 147 did not have a material
     effect on the Company's financial position or results of operations.

     On  December  31,  2002,  the  FASB  issued  FAS No.  148,  Accounting  for
     Stock-Based Compensation - Transition and Disclosure,  which amends FAS No.
     123,  Accounting  for  Stock-Based  Compensation.  FAS No.  148  amends the
     disclosure  requirements  of FAS No. 123 to require more prominent and more
     frequent   disclosures  in  financial   statements  about  the  effects  of
     stock-based  compensation.  Under the provisions of FAS No. 123,  companies
     that adopted the preferable, fair value based method were required to apply
     that method  prospectively for new stock option awards. This contributed to
     a "ramp-up"  effect on  stock-based  compensation  expense in the first few
     years following adoption, which caused concern for


                                       25
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Recent Accounting Pronouncements (Continued)
     --------------------------------------------

     companies  and  investors  because of the lack of  consistency  in reported
     results.  To address that  concern,  FAS No. 148  provides  two  additional
     methods  of  transition   that  reflect  an  entity's  full  complement  of
     stock-based   compensation  expense  immediately  upon  adoption,   thereby
     eliminating the ramp-up  effect.  FAS No. 148 also improves the clarity and
     prominence  of  disclosures  about the pro forma  effects of using the fair
     value based  method of  accounting  for  stock-based  compensation  for all
     companies-regardless  of the accounting method used-by requiring that the
     data be presented more  prominently and in a more  user-friendly format in
     the  footnotes to the  financial  statements.  In addition,  the  statement
     improves  the  timeliness  of those  disclosures  by  requiring  that  this
     information be included in interim as well as annual financial  statements.
     The transition guidance and annual disclosure provisions of FAS No. 148 are
     effective  for fiscal years ending  after  December 15, 2002,  with earlier
     application  permitted  in certain  circumstances.  The interim  disclosure
     provisions  are  effective  for  financial  reports  containing   financial
     statements for interim periods beginning after December 15, 2002.

     In April 2003,  the FASB issued FAS No. 149,  Amendment of Statement 133 on
     Derivative  Instruments and Hedging  Activities.  This statement amends and
     clarifies   accounting  for  derivative   instruments,   including  certain
     derivative  instruments  embedded  in  other  contracts,  and  for  hedging
     activities  under FAS No.  133.  The  amendments  set forth in FAS No.  149
     improve  financial  reporting by requiring that  contracts with  comparable
     characteristics be accounted for similarly.  In particular,  this statement
     clarifies  under  what   circumstances  a  contract  with  an  initial  net
     investment meets the characteristic of a derivative as discussed in FAS No.
     133. In  addition,  it  clarifies  when a  derivative  contains a financing
     component that warrants  special  reporting in the statement of cash flows.
     FAS No. 149 amends  certain other  existing  pronouncements.  Those changes
     will result in more consistent  reporting of contracts that are derivatives
     in  their  entirety  or that  contain  embedded  derivatives  that  warrant
     separate accounting. This statement is effective for contracts entered into
     or modified  after June 30,  2003,  except as stated  below and for hedging
     relationships  designated  after  June 30,  2003.  The  guidance  should be
     applied prospectively.  The provisions of this statement that relate to FAS
     No.  133,  Implementation  Issues,  that have  been  effective  for  fiscal
     quarters that began prior to June 15, 2003,  should  continue to be applied
     in accordance with their respective  effective dates. In addition,  certain
     provisions relating to forward purchases or sales of when-issued securities
     or other  securities  that do not yet exist,  should be applied to existing
     contracts as well as new  contracts  entered into after June 30, 2003.  The
     adoption of this statement is not expected to have a material effect on the
     Company's financial position or results of operations.

     In May 2003, the FASB issued FAS No. 150,  Accounting for Certain Financial
     Instruments  with  Characteristics  of both  Liabilities  and Equity.  This
     statement  establishes  standards for how an issuer classifies and measures
     certain financial  instruments with characteristics of both liabilities and
     equity. It requires that an issuer classify a financial  instrument that is
     within its scope as a liability (or an asset in some  circumstances).  Such
     instruments may have been previously  classified as equity.  This statement
     is effective for financial  instruments  entered into or modified after May
     31, 2003,  and otherwise is effective at the beginning of the first interim
     period  beginning  after June 15, 2003.  The adoption of this statement has
     not and is not expected to have a material effect on the Company's reported
     equity.

     In  November,  2002,  the FASB issued  Interpretation  No. 45,  Guarantor's
     Accounting and Disclosure  Requirements for Guarantees,  Including Indirect
     Guarantees of Indebtedness of Others. This interpretation elaborates on the
     disclosures  to be made by a guarantor in its interim and annual  financial
     statements  about its  obligations  under  certain  guarantees  that it has
     issued.  This  interpretation  clarifies  that a  guarantor  is required to
     disclose (a) the nature of the guarantee, including the approximate term of


                                       26
<PAGE>

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

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Recent Accounting Pronouncements (Continued)
     --------------------------------------------

     the guarantee,  how the guarantee  arose,  and the events or  circumstances
     that would require the guarantor to perform  under the  guarantee;  (b) the
     maximum  potential  amount of future payments under the guarantee;  (c) the
     carrying amount of the liability,  if any, for the guarantor's  obligations
     under  the  guarantee;  and (d)  the  nature  and  extent  of any  recourse
     provisions  or  available  collateral  that would  enable the  guarantor to
     recover the amounts  paid under the  guarantee.  This  interpretation  also
     clarifies that a guarantor is required to recognize,  at the inception of a
     guarantee, a liability for the obligations it has undertaken in issuing the
     guarantee,  including its ongoing obligation to stand ready to perform over
     the term of the guarantee in the event that the specified triggering events
     or  conditions  occur.  The  objective of the initial  measurement  of that
     liability is the fair value of the guarantee at its inception.  The initial
     recognition and initial  measurement  provisions of this interpretation are
     applicable on a prospective  basis to guarantees  issued or modified  after
     December 31, 2002,  irrespective of the guarantor's  fiscal  year-end.  The
     disclosure  requirements in this interpretation are effective for financial
     statements of interim or annual periods ending after December 15, 2002. The
     adoption  of this  interpretation  did not have a  material  effect  on the
     Company's financial position or results of operations.

     In January,  2003, the FASB issued  Interpretation No. 46, Consolidation of
     Variable  Interest  Entities,  in an effort to expand  upon and  strengthen
     existing  accounting  guidance that addresses when a company should include
     in its financial  statements  the assets,  liabilities,  and  activities of
     another entity. The objective of this interpretation is not to restrict the
     use of variable  interest  entities but to improve  financial  reporting by
     companies involved with variable interest entities.  Until now, one company
     generally  has  included  another  entity  in  its  consolidated  financial
     statements only if it controlled the entity through voting interests.  This
     interpretation  changes that, by requiring a variable interest entity to be
     consolidated  by a company if that  company is subject to a majority of the
     risk of loss from the variable interest entity's  activities or entitled to
     receive  a  majority  of  the  entity's   residual  returns  or  both.  The
     consolidation  requirements  of this  interpretation  apply  immediately to
     variable   interest   entities   created  after   January  31,  2003.   The
     consolidation requirements apply to older entities in the first fiscal year
     or interim period beginning after June 15, 2003.  Certain of the disclosure
     requirements  apply in all  financial  statements  issued after January 31,
     2003, regardless of when the variable interest entity was established.  The
     adoption  of this  interpretation  has not  and is not  expected  to have a
     material  effect  on  the  Company's   financial  position  or  results  of
     operations.

2.    EARNINGS PER SHARE

      The following table sets forth the computation of basic and diluted
      earnings per share.

<TABLE>
<CAPTION>
                                                          2003           2002           2001
                                                       ----------     ----------     ----------
<S>                                                    <C>             <C>            <C>
      Weighted-average common shares
            outstanding                                 3,731,949      3,718,640      3,695,294

      Average treasury stock shares                    (1,114,373)      (994,749)      (891,169)

      Weighted-average common shares and
            common stock equivalents used to
            calculate basic earnings per share          2,617,576      2,723,891      2,804,125

      Additional common stock equivalents
            (stock options) used to calculate
            diluted earnings per share                      6,819          8,600         11,742
                                                       ----------     ----------     ----------

      Weighted-average common shares and
            common stock equivalents used
            to calculate diluted earnings per share     2,624,395      2,732,491      2,815,867
                                                       ==========     ==========     ==========
</TABLE>


                                       27
<PAGE>

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

2.    EARNINGS PER SHARE (Continued)

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

     Options to purchase  76,600 shares of common stock at prices from $14.00 to
     $15.625  were  outstanding  during  2001,  but  were  not  included  in the
     computation of diluted EPS because to do so would have been anti-dilutive.

3.    COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>
                                                                   2003      2002      2001
                                                                  ------    ------    ------
<S>                                                               <C>       <C>       <C>
      Net Income                                                  $3,348    $4,448    $4,762
      Other comprehensive Income:
           Unrealized gains on available for sale securities         258       141       462
           Less: Reclassification adjustment for gain included
                 in net income                                        64         -         -
                                                                  ------    ------    ------
      Other comprehensive income before tax                          258       141       462
      Income tax expense related to other comprehensive income        88        48       157
                                                                  ------    ------    ------
      Other comprehensive income, net of tax                         170        93       305
                                                                  ------    ------    ------
      Comprehensive income                                        $3,518    $4,541    $5,067
                                                                  ======    ======    ======
</TABLE>

4.    INVESTMENT SECURITIES

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

<TABLE>
<CAPTION>
                                               --------------------------------------------------------
                                                                 Gross         Gross          Estimated
                                               Amortized      Unrealized     Unrealized         Market
                                                  Cost           Gains         Losses           Value
                                               ---------      ----------     ----------       ---------
<S>                                             <C>            <C>            <C>             <C>
      2003
      ----
      AVAILABLE FOR SALE
      Preferred trust securities                $    128       $      3       $      -        $    131
      Corporate debt securities                    7,428             62             (2)          7,488
      Obligations of states and political
        subdivisions                               1,000              -              -           1,000
      Commercial paper                            15,442              -             (1)         15,441
      Equity securities                            1,312            269              -           1,581
                                                --------       --------       --------        --------

            Total                               $ 25,310       $    334       $     (3)       $ 25,641
                                                ========       ========       ========        ========

      HELD TO MATURITY
      U.S. Government agency securities         $ 24,097       $    601       $      -        $ 24,698
      Corporate debt securities                   66,978            487             (6)         67,459
      Commercial paper                             1,099              -              -           1,099
      Obligations of states and political
        subdivisions                              29,667          3,113              -          32,780
                                                --------       --------       --------        --------

            Total                               $121,841       $  4,201       $     (6)       $126,036
                                                ========       ========       ========        ========
</TABLE>


                                       28
<PAGE>

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

4.    INVESTMENT SECURITIES (Continued)

<TABLE>
<CAPTION>
                                               --------------------------------------------------------
                                                                 Gross         Gross          Estimated
                                               Amortized      Unrealized     Unrealized         Market
                                                  Cost           Gains         Losses           Value
                                               ---------      ----------     ----------       ---------
<S>                                             <C>            <C>            <C>             <C>
      2002
      ----
      AVAILABLE FOR SALE
      Preferred trust securities                $    860       $     17       $     (3)       $    874
      Commercial paper                             6,495              -              -           6,495
      Equity securities                            1,020             38             (1)          1,057
                                                --------       --------       --------        --------

            Total                               $  8,375       $     55       $     (4)       $  8,426
                                                ========       ========       ========        ========

      HELD TO MATURITY
      U.S. Government agency securities         $ 55,216       $  1,016       $    (22)       $ 56,210
      Corporate debt securities                   58,415            193            (51)         58,557
      Obligations of states and political
        subdivisions                              29,327          2,052              -          31,379
                                                --------       --------       --------        --------

            Total                               $142,958       $  3,261       $    (73)       $146,146
                                                ========       ========       ========        ========
</TABLE>

     In 2003, the Company recorded  investment  security gains of $64.  Proceeds
     from sales of investment securities during 2003 were $639.

     The amortized cost and estimated  market values of debt  securities at June
     30, 2003, 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               $ 22,870       $  1,000       $      -       $    128       $ 23,998
         Estimated market value         22,869          1,060              -            131         24,060

      HELD TO MATURITY
         Amortized cost               $ 56,313       $ 12,065       $  1,494       $ 51,969       $121,841
         Estimated market value         56,582         12,277          1,737         55,440        126,036
</TABLE>

     Investment  securities  with  amortized  cost of $17,624  and  $41,219  and
     estimated  market  values of $18,009 and $41,956 at June 30, 2003 and 2002,
     respectively,   were  pledged  to  secure   public   deposits,   repurchase
     agreements, and for other purposes as required by law.


                                       29
<PAGE>

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

5.    MORTGAGE-BACKED SECURITIES

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

<TABLE>
<CAPTION>
                                               --------------------------------------------------------
                                                                 Gross         Gross          Estimated
                                               Amortized      Unrealized     Unrealized         Market
                                                  Cost           Gains         Losses           Value
                                               ---------      ----------     ----------       ---------
<S>                                             <C>            <C>            <C>             <C>
      2003
      ----
      AVAILABLE FOR SALE
      Federal National Mortgage
        Association certificates                $  1,494       $     78       $      -        $  1,572
      Government National Mortgage
        Association certificates                   2,510             70              -           2,580
      Federal Home Loan Mortgage
        Corporation certificates                      47              3              -              50
      Collateralized mortgage obligations            168             17                            185
                                                --------       --------       --------        --------

           Total                                $  4,219       $    168       $      -        $  4,387
                                                ========       ========       ========        ========

      HELD TO MATURITY
      Federal National Mortgage
        Association certificates                $     29       $      1       $      -        $     30
      Government National Mortgage
        Association certificates                   2,603             81            (17)          2,667
      Federal Home Loan Mortgage
        Corporation certificates                      36              -              -              36
      Collateralized mortgage obligations        104,824            392            (35)        105,181
                                                --------       --------       --------        --------

           Total                                $107,492       $    474       $    (52)       $107,914
                                                ========       ========       ========        ========

<CAPTION>
                                               --------------------------------------------------------
                                                                 Gross         Gross          Estimated
                                               Amortized      Unrealized     Unrealized         Market
                                                  Cost           Gains         Losses           Value
                                               ---------      ----------     ----------       ---------
<S>                                             <C>            <C>            <C>             <C>
      2002
      ----
      AVAILABLE FOR SALE
      Federal National Mortgage
        Association certificates                $  3,228       $    106       $      -        $  3,334
      Government National Mortgage
        Association certificates                   2,627            128              -           2,755
      Federal Home Loan Mortgage
        Corporation certificates                      48              1              -              49
      Collateralized mortgage obligations            293             19              -             312
                                                --------       --------       --------        --------

           Total                                $  6,196       $    254       $      -        $  6,450
                                                ========       ========       ========        ========

      HELD TO MATURITY
      Federal National Mortgage
        Association certificates                $     35       $      3       $      -        $     38
      Government National Mortgage
        Association certificates                   4,069            190              -           4,259
      Federal Home Loan Mortgage
        Corporation certificates                      60              5              -              65
      Collateralized mortgage obligations         71,929            615            (87)         72,457
                                                --------       --------       --------        --------

           Total                                $ 76,093       $    813       $    (87)       $ 76,819
                                                ========       ========       ========        ========
</TABLE>


                                       30
<PAGE>

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

5.   MORTGAGE-BACKED SECURITIES (Continued)

     The  amortized  cost  and  estimated   market  values  of   mortgage-backed
     securities  at June 30, 2003,  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               $     -        $    -         $     25       $  4,194       $  4,219
         Estimated market value             -             -               26          4,361          4,387

      HELD TO MATURITY
         Amortized cost               $     -        $    -         $     34       $107,458       $107,492
         Estimated market value             -             -               35        107,879        107,914
</TABLE>

     At June 30, 2003 and 2002,  mortgage-backed  securities  with an  amortized
     cost of $67,746  and  $48,161 and  estimated  market  values of $68,179 and
     $49,099, were pledged to secure borrowings with the Federal Home Loan Bank.

6.    NET LOANS RECEIVABLE

      Major classifications of loans are summarized as follows:

                                                             2003        2002
                                                           --------    --------
      First mortgage loans:
            1 - 4 family dwellings                         $ 43,255    $ 89,889
            Construction                                     16,942      19,965
            Land acquisition and development                  7,437       6,691
            Multi-family dwellings                            5,196       6,173
            Commercial                                       17,949      25,439
                                                           --------    --------
                                                             90,779     148,157
                                                           --------    --------
      Consumer loans:
            Home equity                                       8,006      11,352
            Home equity lines of credit                       4,368       4,967
            Other                                             1,069       1,515
                                                           --------    --------
                                                             13,443      17,834
                                                           --------    --------

      Commercial loans                                        1,499       1,447
                                                           --------    --------

      Less:
            Undisbursed construction and land development    11,348      11,311
            Net deferred loan fees                              174         464
            Allowance for loan losses                         2,530       2,758
                                                           --------    --------
                                                             14,052      14,533
                                                           --------    --------

      Net loans receivable                                 $ 91,669    $152,905
                                                           ========    ========

     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  at June  30,  2003  and  2002,  is
     dependent upon the local economic conditions.


                                       31
<PAGE>

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

6.   NET LOANS RECEIVABLE (Continued)

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

                                             2003        2002        2001
                                            ------      ------      ------

      Principal outstanding                 $3,481      $5,044      $5,016
                                            ------      ------      ------
      Interest income that would
        have been recognized                $  256      $  408      $  422
      Interest income recognized                26         162         296
                                            ------      ------      ------

      Interest income foregone              $  230      $  246      $  126
                                            ======      ======      ======

     Included in total  nonaccrual  loans are  impaired  loans of  approximately
     $3,423 and $3,600 at June 30, 2003 and 2002. A related  allowance  for loan
     losses of $1,816 and $1,764 has been  reserved  for these  impaired  loans,
     respectively.  During  the years,  the  Company  had an average  balance of
     $3,441 and $3,586,  and recognized $23 and $116 in interest income on these
     loans, respectively.

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

                                                      2003           2002
                                                     -----          -----

      Balance, July 1                                $ 822          $ 894
           Additions                                    49            370
           Amounts collected                          (336)          (442)
                                                     -----          -----

      Balance, June 30                               $ 535          $ 822
                                                     =====          =====

7.    ALLOWANCE FOR LOAN LOSSES

      Changes in the allowance for loan losses are as follows:

                                              2003        2002       2001
                                            -------     -------    -------

      Balance, July 1                       $ 2,758     $ 2,763    $ 1,973
      Add:
            Provision for loan losses          (228)         57        788
            Recoveries                            -           6         19
      Less:
            Loans charged off                     -          68         17
                                            -------     -------    -------

      Balance, June 30                      $ 2,530     $ 2,758    $ 2,763
                                            =======     =======    =======


                                       32
<PAGE>

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

8.    ACCRUED INTEREST RECEIVABLE

      Accrued interest receivable consists of the following:

                                                          2003       2002
                                                         ------     ------

      Investment and mortgage-backed securities          $2,283     $2,996
      Loans receivable                                      517        907
                                                         ------     ------

            Total                                        $2,800     $3,903
                                                         ======     ======

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 ("FHLB") of Pittsburgh in an amount not less than 70
     basis  points of the  outstanding  unused FHLB  borrowing  capacity and one
     twentieth of its outstanding FHLB borrowings,  as calculated throughout the
     year.

10.   PREMISES AND EQUIPMENT

      Major classifications of premises and equipment are summarized as follows:

                                                         2003        2002
                                                        ------      ------

      Land and improvements                             $  264      $  264
      Buildings and improvements                         2,024       1,996
      Furniture, fixtures, and equipment                 1,069       1,035
                                                        ------      ------
                                                         3,357       3,295
      Less accumulated depreciation                      2,126       2,299
                                                        ------      ------
           Total                                        $1,231      $  996
                                                        ======      ======

Depreciation charged to operations was $156, $123, and $111, for the years ended
June 30, 2003, 2002, and 2001, respectively.


                                       33
<PAGE>

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

11.   DEPOSITS

      Deposit accounts are summarized as follows:

                                              2003                  2002
                                      --------------------  --------------------
                                                Percent of            Percent of
                                       Amount    Portfolio   Amount    Portfolio
                                      --------  ----------  --------  ----------
      Noninterest-earning checking    $ 11,302       6.6%   $ 12,615       7.0%
      Interest-earning checking         19,215      11.2      20,872      11.8
      Savings accounts                  44,152      25.8      41,620      23.4
      Money market accounts             14,691       9.0      14,843       8.4
      Advance payments by borrowers
         for taxes and insurance         1,610       0.8       3,013       1.7
                                      --------     -----    --------     -----
                                        90,970      53.4      92,963      52.3
                                      --------     -----    --------     -----
      Savings certificates:
            2.00% or less               34,419      20.1       7,726       4.3
            2.01 - 4.00%                27,443      16.0      49,500      27.9
            4.01 - 6.00%                15,685       9.1      23,955      13.5
            6.01 - 8.00%                 2,409       1.4       3,528       2.0
                                      --------     -----    --------     -----
                                        79,956      46.6      84,709      47.7
                                      --------     -----    --------     -----

            Total                     $170,926     100.0%   $177,672     100.0%
                                      ========     =====    ========     =====

      The maturities of savings certificates at June 30, 2003, are summarized as
      follows:

      Within one year                                              $56,887
      Beyond one year but within two years                          11,185
      Beyond two years but within three years                        4,583
      Beyond three years                                             7,301
                                                                   -------

           Total                                                   $79,956
                                                                   =======

      Savings certificates with balances of $100,000 or more amounted to $14,161
      and $12,277 on June 30, 2003 and 2002, respectively.

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

                                            2003         2002         2001
                                          ------       ------       ------

      Checking accounts                   $   66       $   94       $  135
      Savings accounts                       509          735          893
      Money market accounts                  183          257          329
      Savings certificates                 2,554        3,996        5,463
                                          ------       ------       ------

           Total                          $3,312       $5,082       $6,820
                                          ======       ======       ======


                                       34
<PAGE>

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

12.   FEDERAL HOME LOAN BANK ADVANCES

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

<TABLE>
<CAPTION>
                                                     Weighted           Stated interest
                           Maturity range             average              rate range
      Description        from           to         interest rate      from            to          2003          2002
      -----------      --------      --------      -------------      ----           ----       --------      --------
<S>                    <C>           <C>               <C>            <C>            <C>        <C>           <C>
      Convertible      02/20/08      06/22/16          5.35%          2.86%          6.10%      $144,500      $144,500
      Fixed rate       12/22/03      05/03/10          5.09           3.36           5.43          5,015        15,437
                                                                                                --------      --------

                                                                                                $149,515      $159,937
                                                                                                ========      ========
</TABLE>

     Maturities of FHLB  long-term  advances at June 30, 2003 are  summarized as
     follows:

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

             2004              $    279      3.36%
             2006                 4,157      5.42
             2008                 3,000      5.48
      2009 and thereafter       142,079      5.34
                                -------

             Total             $149,515      5.34%
                               ========

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

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

                                                           2003          2002
                                                         -------       -------
      FHLB revolving and short-term advances:
          Ending balance                                 $ 3,875       $     -
          Average balance during the year                  1,149         5,814
          Maximum month-end balance during the year       14,350        13,850
          Average interest rate during the year             1.64%         2.92%
          Weighted-average rate at year-end                 1.35%            -%

      At June 30, 2003, WVS had an unused borrowing capacity of approximately
      $24,906.

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


                                       35
<PAGE>

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

13.   OTHER BORROWINGS

     Other  borrowings  include  securities sold under  agreements to repurchase
     with securities brokers.  The outstanding  repurchase  agreements generally
     mature within one to ninety days from the  transaction  date and qualifying
     collateral has been delivered.  The Company pledged  investment  securities
     with a  carrying  value of $9,495 and  $33,075  at June 30,  2003 and 2002,
     respectively,  as collateral for the repurchase  agreements as explained in
     Notes 4 and 5. The following  table presents  information  regarding  other
     borrowings as of June 30:

                                                       2003          2002
                                                     -------       -------

      Ending balance                                 $ 9,453       $33,731
      Average balance during the year                 18,277        13,179
      Maximum month-end balance during the year       38,184        33,731
      Average interest rate during the year             1.50%         2.34%
      Weighted-average rate at year-end                 1.23%         1.84%

14.   COMMITMENTS AND CONTINGENT LIABILITIES

     Loan commitments

     In the normal course of business, there are various outstanding commitments
     and  certain   contingent   liabilities  that  are  not  reflected  in  the
     accompanying  consolidated balance sheet. Various loan commitments totaling
     $19,340  and  $19,542 at June 30,  2003 and 2002,  respectively,  represent
     financial   instruments  with  off-balance   sheet  risk.  The  commitments
     outstanding at June 30, 2003 contractually mature in less than one year.

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

     Commitments  to extend credit are  agreements to lend to a customer as long
     as  there  is no  violation  of  any  condition  established  in  the  loan
     agreement.  These  commitments  are 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 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.

     As of June 30,  2003,  the Company  had  committed  to purchase  $21,079 in
     investment securities.

      Litigation

     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.


                                       36
<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,   it  would  become  subject  to  a  series  of   increasingly
     restrictive regulatory actions.

     As of June 30, 2003 and 2002, 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 ten percent, six percent, and five percent, respectively.

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

<TABLE>
<CAPTION>
                                                                   June 30, 2003
                                                    --------------------------------------------
                                                            WVS                   West View
                                                    -------------------      -------------------
                                                    Amount       Ratio       Amount       Ratio
                                                    -------      -----       -------      -----
<S>                                                 <C>          <C>         <C>          <C>
      Total Capital (to Risk-weighted Assets)
      ---------------------------------------

      Actual                                        $32,941      15.57%      $27,738      13.38%
      To Be Well Capitalized                         21,176      10.00        20,737      10.00
      For Capital Adequacy Purposes                  16,941       8.00        16,590       8.00

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

      Actual                                        $30,290      14.30%      $25,202      12.15%
      To Be Well Capitalized                         12,706       6.00        12,442       6.00
      For Capital Adequacy Purposes                   8,470       4.00         8,295       4.00

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

      Actual                                        $30,290       8.42%      $25,202       7.07%
      To Be Well Capitalized                         17,967       5.00        17,819       5.00
      For Capital Adequacy Purposes                  14,373       4.00        14,255       4.00
</TABLE>


                                       37
<PAGE>

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

15.   REGULATORY CAPITAL (Continued)

<TABLE>
<CAPTION>
                                                                   June 30, 2002
                                                    --------------------------------------------
                                                            WVS                   West View
                                                    -------------------      -------------------
                                                    Amount       Ratio       Amount       Ratio
                                                    -------      -----       -------      -----
<S>                                                 <C>          <C>         <C>          <C>
      Total Capital (to Risk-weighted Assets)
      ---------------------------------------
      Actual                                        $32,826      14.66%      $27,119      12.25%
      To Be Well Capitalized                         22,400      10.00        22,144      10.00
      For Capital Adequacy Purposes                  17,920       8.00        17,715       8.00

      Tier I Capital (to Risk-weighted Assets)
      ----------------------------------------
      Actual                                        $30,052      13.42%      $24,360      11.00%
      To Be Well Capitalized                         13,440       6.00        13,286       6.00
      For Capital Adequacy Purposes                   8,960       4.00         8,857       4.00

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

      Actual                                        $30,052       7.69%      $24,360       6.29%
      To Be Well Capitalized                         19,519       5.00        19,361       5.00
      For Capital Adequacy Purposes                  15,615       4.00        15,489       4.00
</TABLE>

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

16.  STOCK BENEFIT PLANS

     Stock Option Plan

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


                                       38
<PAGE>

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

16.   STOCK BENEFIT PLANS (Continued)

      Stock Option Plan (Continued)

      The following table presents information related to the outstanding
      options:

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

      Outstanding, June 30, 2000        110,866           16,400         $11.56

            Granted                       4,000            2,000          12.73
            Exercised                   (16,310)          (7,000)          5.11
            Forfeited                      (160)               -           5.00
                                        -------          -------

      Outstanding, June 30, 2001         98,396           11,400         $13.89

            Granted                           -            1,214          15.77
            Granted                     (15,068)          (6,200)          9.96
            Granted                      (4,916)               -          15.63
                                        -------          -------

      Outstanding, June 30, 2002         78,412            6,414         $14.80

            Granted                           -                -
            Exercised                    (4,992)          (1,200)         11.40
            Forfeited                         -                -
                                        -------          -------

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

      Exercisable at year-end            73,420            5,214         $15.07
                                        =======          =======

      Available for future grant          5,174                -
                                        =======          =======

     At June 30,  2003,  for officers and  employees  there were 73,420  options
     outstanding,  exercisable at a  weighted-average  exercise price of $15.09,
     and a weighted-average remaining contractual life of 4.66 years.

     There were also 5,214 options  outstanding  and  exercisable  for directors
     with a  weighted-average  exercise price of $14.77,  and a weighted-average
     remaining contractual life of 6.12 years.


                                       39
<PAGE>

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

16.   STOCK BENEFIT PLANS (Continued)

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

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

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

     As of June 30, 2003,  7,580 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. Net compensation expense attributed
     to the RRPs  amounted  to $23,  $59,  and $89 for the years  ended June 30,
     2003, 2002, and 2001.

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

     WVS  maintains  an ESOP  for the  benefit  of  officers  and  Savings  Bank
     employees who have met certain eligibility  requirements related to age and
     length of service.  Compensation  expense for the ESOP was $100,  $200, and
     $200,  for the years ended June 30,  2003,  2002,  and 2001,  respectively.
     Total ESOP  shares as of June 30, 2003 and 2002 were  219,865 and  220,806,
     respectively.

17.   DIRECTOR, OFFICER, AND EMPLOYEE BENEFITS

     Profit Sharing Plan

     The Company  maintains a  non-contributory  profit sharing 401(k) plan (the
     "Plan") for its officers and  employees  who have met the age and length of
     service  requirements.  The Plan is a  defined  contribution  plan with the
     contributions  based on a percentage of salaries of the Plan  participants.
     The  Company's  contributions  to the Plan,  which were charged to expense,
     were $200 for the year ended June 30, 2000.

     Directors' Deferred Compensation Plan

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

     The Plan  allows  for the  deferred  amounts to be paid in shares of common
     stock at the  prevailing  market  price on the  date of  distribution.  For
     fiscal years ended June 30,  2003,  2002,  and 2001,  37,939,  48,311,  and
     46,961, shares respectively, were held by the Plan.


                                       40
<PAGE>

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

18.   INCOME TAXES

      The provision for income taxes consists of:

                                         2003         2002          2001
                                       -------      -------       -------
      Currently payable:
            Federal                    $   794      $ 1,667       $ 2,086
            State                          233          239           240
                                       -------      -------       -------
                                         1,027        1,906         2,326
      Deferred                              43          (93)         (370)
                                       -------      -------       -------

            Total                      $ 1,070      $ 1,813       $ 1,956
                                       =======      =======       =======

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

<TABLE>
<CAPTION>
                                                                     2003      2002
                                                                    ------    ------
<S>                                                                 <C>       <C>
      Deferred tax assets:
            Allowance for loan losses                               $  860    $  937
            Deferred compensation                                      314       297
            Other                                                      268       228
                                                                    ------    ------
                    Total gross deferred tax assets                  1,442     1,462
                                                                    ------    ------

      Deferred tax liabilities:
            Bad debt reserve for tax reporting purposes                 19        85
            Net unrealized gain on securities available for sale       169       104
            Deferred origination fees, net                             204       176
            Other                                                      117        56
                                                                    ------    ------
                    Total gross deferred tax liabilities               509       421
                                                                    ------    ------

            Net deferred tax assets                                 $  933    $1,041
                                                                    ======    ======
</TABLE>

     No valuation  allowance was  established at June 30, 2003 and 2002, in view
     of WVS's  ability to  carryback  to taxes paid in  previous  years,  future
     anticipated taxable income, which is evidenced by WVS's earnings potential,
     and deferred tax liabilities at June 30.


                                       41
<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>
                                                   2003                       2002                      2001
                                           ---------------------      --------------------      --------------------
                                                          % of                      % of                      % of
                                                         Pre-tax                   Pre-tax                   Pre-tax
                                             Amount      Income        Amount      Income        Amount      Income
                                           ---------------------      --------------------      --------------------
<S>                                         <C>          <C>          <C>           <C>         <C>           <C>
      Provision at statutory rate           $ 1,502       34.0%       $ 2,129       34.0%       $ 2,284       34.0%
      State income tax, net of federal
        tax benefit                             154        3.5            158        2.5            158        2.4
      Tax exempt income                        (549)     (12.4)          (555)      (8.9)          (493)      (7.3)
      Other, net                                (37)      (0.9)            81        1.4              7          -
                                            -------       ----        -------       ----        -------       ----

      Actual tax expense and
        effective rate                      $ 1,070       24.2%       $ 1,813       29.0%       $ 1,956       29.1%
                                            =======       ====        =======       ====        =======       ====
</TABLE>

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

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, 2003 and 2002, the Savings Bank had required  reserves of $763 and
     $809,  respectively.  The  required  reserves are held in the form of vault
     cash and a noninterest-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 that restricts
     the  availability  of surplus  for  dividend  purposes.  At June 30,  2003,
     surplus funds of $3,363 were not available for dividends.

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.


                                       42
<PAGE>

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

21.  FAIR VALUE OF FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>
                                                          2003                        2002
                                                 ----------------------      ----------------------
                                                 Carrying        Fair        Carrying        Fair
                                                  Amount         Value        Amount         Value
                                                 --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>
      FINANCIAL ASSETS
      Cash and due from banks and interest-
         earning demand deposits                 $  2,815      $  2,815      $  3,177      $  3,177
      Investment securities                       147,482       151,677       151,384       154,572
      Mortgage-backed securities                  111,879       112,301        82,543        83,269
      Net loans receivable                         91,669        98,108       152,905       160,517
      Accrued interest receivable                   2,800         2,800         3,903         3,903
      FHLB stock                                    7,797         7,797         8,281         8,281

      FINANCIAL LIABILITIES
      Deposits                                   $170,926      $171,830      $177,672      $178,357
      FHLB advances                               153,390       163,829       159,937       162,928
      Other borrowings                              9,453         9,453        33,731        33,731
      Accrued interest payable                      1,449         1,449         1,698         1,698
</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.

     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:


                                       43
<PAGE>

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

21.  FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

     Cash and Due from Banks, Interest-Earning Demand Deposits, Accrued Interest
     ---------------------------------------------------------------------------
     Receivable and Payable, and Other Borrowings
     --------------------------------------------

     The fair value approximates the current book value.

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

     The  fair  value  of  investment  and  mortgage-backed  securities  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.

     FHLB Advances

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

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

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


                                       44
<PAGE>

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

22.  PARENT COMPANY

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

                             CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                 June 30,
                                                                             2003         2002
                                                                           -------      -------
<S>                                                                        <C>          <C>
      ASSETS
           Interest-earning deposits with subsidiary bank                  $   718      $ 3,065
           Investment securities available for sale                          4,153        2,179
           Investment and mortgage-backed securities held to maturity          250            -
           Investment in subsidiary bank                                    25,310       24,457
           Loan receivable                                                     114          463
           Accrued interest receivable and other assets                        168          125
                                                                           -------      -------

      TOTAL ASSETS                                                         $30,713      $30,289
                                                                           =======      =======

      LIABILITIES AND STOCKHOLDERS' EQUITY
           Other liabilities                                               $    95      $    36
           Stockholders' equity                                             30,618       30,253
                                                                           -------      -------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $30,713      $30,289
                                                                           =======      =======
</TABLE>

                          CONDENSED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                     Year Ended June 30,
                                                                2003        2002        2001
                                                               ------      ------      ------
<S>                                                            <C>         <C>         <C>
      INCOME
           Loans                                               $   27      $   45      $    -
           Investment and mortgage-backed securities              111         118          84
           Dividend from subsidiary                             2,400       3,800       4,549
           Investment securities gains, net                        64           -           -
           Interest-earning deposits with subsidiary bank          33          50          76
                                                               ------      ------      ------

      Total income                                              2,635       4,013       4,709
                                                               ------      ------      ------

      OTHER OPERATING EXPENSE                                     111          96          51
                                                               ------      ------      ------

           Income before equity in undistributed
             earnings of subsidiary                             2,524       3,917       4,658
           Equity in undistributed earnings of subsidiary         840         558         136
                                                               ------      ------      ------

           Income before income taxes                           3,364       4,475       4,794
           Income taxes                                            16          27          32
                                                               ------      ------      ------

      NET INCOME                                               $3,348      $4,448      $4,762
                                                               ======      ======      ======
</TABLE>


                                       45
<PAGE>

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

22.   PARENT COMPANY (Continued)

                        CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                Year Ended June 30,
                                                                                         2003           2002           2001
                                                                                       --------       --------       --------
<S>                                                                                    <C>            <C>            <C>
      OPERATING ACTIVITIES
           Net income                                                                  $  3,348       $  4,448       $  4,762
           Adjustments to reconcile net income to net cash
             provided by operating activities:
               Undistributed net income of subsidiary                                      (840)          (558)          (136)
                Investment gains, net                                                       (64)             -              -
               Amortization (accretion) of investment discounts and premiums, net            22            (23)             -
               Amortization of ESOP and RRP deferred
                  compensation                                                               22             59             75
               Other, net                                                                    23             30            143
                                                                                       --------       --------       --------
           Net cash provided by operating activities                                      2,511          3,956          4,844
                                                                                       --------       --------       --------

      INVESTING ACTIVITIES
           Available for sale:
               Purchase of investment and
                  mortgage-backed securities                                             (4,934)        (9,148)        (2,503)
               Proceeds from repayments of investment and
                  mortgage-backed securities                                              2,582          8,159              -
               Proceeds from sales of investment securities                                 639              -              -
           Held to maturity:
               Purchases of investment and mortgage-backed
                  securities                                                             (1,817)        (7,789)             -
               Proceeds from repayments of investment and
                  mortgage-backed securities                                              1,555         10,304              -
               Net decrease (increase) in loans receivable                                  354           (469)             -
                                                                                       --------       --------       --------
           Net cash provided by (used for) investing activities                          (1,621)         1,057         (2,503)
                                                                                       --------       --------       --------

      FINANCING ACTIVITIES
           Net proceeds from exercise of stock options                                       71            212            119
           Cash dividends paid                                                           (1,674)        (1,743)        (1,797)
           Purchases of treasury stock                                                   (1,634)        (1,544)        (1,819)
                                                                                       --------       --------       --------
           Net cash used for financing activities                                        (3,237)        (3,075)        (3,497)
                                                                                       --------       --------       --------

           Increase (decrease) in cash and cash equivalents                              (2,347)         1,938         (1,156)

      CASH AND CASH EQUIVALENTS
        BEGINNING OF YEAR                                                                 3,065          1,127          2,283
                                                                                       --------       --------       --------

      CASH AND CASH EQUIVALENTS
        END OF YEAR                                                                    $    718       $  3,065       $  1,127
                                                                                       ========       ========       ========
</TABLE>


                                       46
<PAGE>

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

23.   SELECTED QUARTERLY FINANCIAL DATA (unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                              ---------------------------------------------------------------
                                               September         December         March              June
                                                 2002             2002             2003              2003
                                              -----------      -----------      -----------       -----------
<S>                                           <C>              <C>              <C>               <C>
      Total interest and dividend income      $     5,432      $     5,023      $     4,636       $     4,140
      Total interest expense                        3,188            3,018            2,841             2,763
                                              -----------      -----------      -----------       -----------

      Net interest income                           2,244            2,005            1,795             1,377
      Provision for loan losses                        18                -              (89)             (157)
                                              -----------      -----------      -----------       -----------

      Net interest income after
        provision for loan losses                   2,226            2,005            1,884             1,534

      Total noninterest income                        243              172              152               158
      Total noninterest expense                     1,120            1,045              975               816
                                              -----------      -----------      -----------       -----------

      Income before income taxes                    1,349            1,132            1,061               876
      Income taxes                                    349              351              329                41
                                              -----------      -----------      -----------       -----------

      Net income                              $     1,000      $       781      $       732       $       835
                                              ===========      ===========      ===========       ===========

      Per share data:
      Net income
            Basic                             $      0.38      $      0.30      $      0.28       $      0.32
            Diluted                                  0.37             0.30             0.28              0.32
      Average shares outstanding
            Basic                               2,661,933        2,631,112        2,593,546         2,582,813
            Diluted                             2,667,220        2,636,633        2,598,775         2,594,053
</TABLE>


                                       47
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                              ---------------------------------------------------------------
                                               September         December         March              June
                                                 2001             2001             2002              2002
                                              -----------      -----------      -----------       -----------
<S>                                           <C>              <C>              <C>               <C>
      Total interest and dividend income      $     6,551      $     6,091      $     5,574       $     5,544
      Total interest expense                        3,859            3,637            3,321             3,208
                                              -----------      -----------      -----------       -----------

      Net interest income                           2,692            2,454            2,253             2,336
      Provision for loan losses                        37               20                -                 -
                                              -----------      -----------      -----------       -----------

      Net interest income after
        provision for loan losses                   2,655            2,434            2,253             2,336

      Total noninterest income                        173              181              166               167
      Total noninterest expense                       976            1,109              978             1,041
                                              -----------      -----------      -----------       -----------

      Income before income taxes                    1,852            1,506            1,441             1,462
      Income taxes                                    611              397              476               329
                                              -----------      -----------      -----------       -----------

      Net income                              $     1,241      $     1,109      $       965       $     1,133
                                              ===========      ===========      ===========       ===========

      Per share data:
      Net income
            Basic                             $      0.45      $      0.40      $      0.36       $      0.42
            Diluted                                  0.45             0.40             0.35              0.42
      Average shares outstanding
            Basic                               2,753,358        2,740,451        2,714,480         2,686,663
            Diluted                             2,763,744        2,752,157        2,720,976         2,692,474
</TABLE>


                                       48
<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 Nasdaq Stock Market(SM)  National Market System under the
     symbol "WVFC".

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

                                     Market Price
                                ----------------------     Cash Dividends
            Quarter Ended         High           Low          Declared
            -------------       -------        -------     --------------
            June 03             $18.930        $16.200        $  0.16
            March 03             16.250         15.410           0.16
            December 02          16.250         15.100           0.16
            September 02         16.050         15.800           0.16

            June 02             $16.200        $13.990        $  0.16
            March 02             16.250         14.130           0.16
            December 01          16.250         15.700           0.16
            September 01         17.450         13.750           0.16

     There were six Nasdaq  Market  Makers in the  Company's  common stock as of
     June 30,  2003:  F. J.  Morrissey  & Co.,  Inc.;  Schwab  Capital  Markets;
     Goldman, Sachs & Company;  Morgan Stanley & Co, Inc; Ryan Beck & Co., Inc.;
     and Knight Securities L.P.

     According  to the  records  of the  Company's  transfer  agent,  there were
     approximately  828  shareholders of record at September 10, 2003. 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.


                                       49
<PAGE>

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

                                  COMMON STOCK
         The common stock of WVS Financial Corp. is traded on The Nasdaq
                     Stock MarketSM under the symbol "WVFC".

                                                  BOARD OF DIRECTORS

 TRANSFER    AGENT    &    REGISTRAR         David L. Aeberli  Funeral  Director
 Registrar  and Transfer  Company 10         McDonald-Aeberli Funeral Home, Inc.
 Commerce Drive  Cranford,  NJ 07016
 1-800-368-5948                              Arthur H.  Brandt  Retired - Former
                                             President     and    CEO     Brandt
 INVESTOR  RELATIONS Pamela M. Tracy         Excavating,   Inc.  and  Retired  -
 412-364-1911                                Former  President  and  CEO  Brandt
                                             Paving, Inc.
 COUNSEL Bruggeman & Linn
                                             David J. Bursic President and Chief
 SPECIAL   COUNSEL   Elias,    Matz,         Executive   Officer  WVS  Financial
 Tiernan    &     Herrick     L.L.P.         Corp. and West View Savings Bank
 Washington, DC
                                             Donald E. Hook Chairman  Pittsburgh
 WEST VIEW  SAVINGS  BANK 9001 Perry         Cut Flower Co.
 Highway   Pittsburgh,    PA   15237
 412-364-1911                                Lawrence M. Lehman Sole  Proprietor
                                             Newton-Lehman Insurance Agency
 WEST VIEW OFFICE 456 Perry  Highway
 412-931-2171                                John M. Seifarth  Senior Engineer -
                                             Consultant    Nichols    &   Slagle
 CRANBERRY    OFFICE   20531   Perry         Engineering, Inc.
 Highway 412-931-6080/724-776-3480
                                             Margaret     VonDerau     Corporate
 FRANKLIN  PARK  OFFICE  2566 Brandt         Secretary WVS Financial  Corp.  and
 School Road 724-935-7100                    West View Savings Bank

 BELLEVUE  OFFICE 572 Lincoln Avenue         EXECUTIVE OFFICERS
 412-761-5595
                                             Donald E. Hook Chairman
 SHERWOOD   OAKS   OFFICE    Serving
 Sherwood Oaks Cranberry Twp.                David J. Bursic President and Chief
                                             Executive Officer
 LENDING DIVISION 2566 Brandt School
 Road 724-935-7400                           Margaret     VonDerau     Corporate
                                             Secretary

                                             Edward  M.   Wielgus   Senior  Vice
                                             President and Chief Lending Officer

                                             Keith A.  Simpson  Vice  President,
                                             Treasurer   and  Chief   Accounting
                                             Officer

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

                                       50
<PAGE>

     [LETTERHEAD WVS FINANCIAL CORPORATION A TRADITION OF QUALITY BANKING]