RSV Bancorp, Inc.

                       2004 ANNUAL REPORT TO STOCKHOLDERS



<PAGE>



RSV Bancorp, INC.
2004 Annual Report



TABLE OF CONTENTS
                                                                          Page

Letter to Stockholders.......................................................1

Corporate Profile............................................................2

Stock Price Information......................................................2

Selected Financial and Other Data............................................3

Management's Discussion and Analysis
         of Financial Condition and Results of Operations....................4

Report of Independent Registered Public Accounting Firm....................F-1

Consolidated Financial Statements..........................................F-2

Notes to Consolidated Financial Statements.................................F-7

Corporate Information........................................Inside Back Cover

<PAGE>

                         [RSV Bancorp, Inc. letterhead]

Dear Fellow Stockholders:

On behalf of our Board of Directors and employees, we are pleased to present the
2004 Annual Report to the  Stockholders of RSV Bancorp,  Inc. and its operations
and those of its  wholly-owned  subsidiary,  Mt.  Troy Bank  (collectively,  the
"Company").

During 2004,  there were a number of challenges and transitions for the Company.
In February,  a new branch office was opened in the North Hills area. The branch
is located in  McCandless  Township  at the  Festival  Foods  store in  McIntyre
Square.  Our branch  successfully  acquired  $6.5 million in new deposits in its
first seven months of operation.

As you know,  the Company  went  through a name change that was  reversed at the
request of a regulatory agency. However, we are proud to say that in the end, we
decided to retain the name Mt. Troy Bank and to change the holding  company name
to RSV  Bancorp,  Inc.  This  resulted in a new  trading  symbol of RSVI for the
holding company stock.

During the year,  earnings  remained stable with net income of $702,000 compared
to $734,000 for 2003. The expenses incurred  involving the name change and other
non-recurring  expenses  prevented  the  Company  from  surpassing  last  year's
earnings.  Assets grew in 2004 by 7.3%,  an  increase  of $5 million  over 2003,
fueled by deposit growth primarily from our new North Hills branch of 17.6%. The
loan portfolio grew by 9.0%, or by $3.1 million from last year.

This positive  financial  performance  brought about an increase in  shareholder
value as  earnings  per share  increased  2.8% from $1.06 per share last year to
$1.09 per share for 2004.  We continued  to enhance  shareholder  value  through
repurchases  of the  Company's  stock and  increased  the  semi-annual  dividend
payment to $0.15 per share.

Our President for the last sixteen years, Mr. Richard A. Sinewe, has retired and
we thank him for his service and wish him a long and happy  retirement.  Our new
President,  Gerard R.  Kunic,  brings  over  thirty  years of  in-depth  banking
experience to the position.

Leadership,  vision  and  "Respect  for  Tradition"  have  made  the  Company  a
successful  community bank and created the  foundation  for a better future.  On
behalf  of the  directors,  officers  and  employees,  we  thank  you  for  your
investment and for your continued support.

Sincerely,


/s/David P. Butler                                            /s/Gerard R. Kunic

David P. Butler                                               Gerard R. Kunic
Chairman of the Board                                         President


                                       1

<PAGE>

CORPORATE PROFILE

The Company was formed as a  Pennsylvania  corporation  in December 2001 for the
purpose of acquiring  all of the capital  stock issued by the Bank in connection
with the Bank's  conversion from mutual to stock form of ownership.  On April 5,
2002, the Bank  completed its  conversion as part of the $7.575 million  initial
public offering of the Company's  common stock. The Company is a unitary savings
and loan holding company which, under existing laws, is subject to statutory and
regulatory restrictions on its business activities.  Under the Home Owners' Loan
Act, as amended by the  Gramm-Leach-Bliley  Financial Services Modernization Act
of 1999,  the  nonbanking  activities  of the Company are  restricted to certain
activities specified by the regulations of the Office of Thrift Supervision (the
"OTS"),  which  include  performing  services and holding  properties  used by a
savings  institution  subsidiary,  activities  authorized  for  savings and loan
holding companies as of March 5, 1987, and nonbanking activities permissible for
bank  holding  companies  pursuant  to the Bank  Holding  Company Act of 1956 or
authorized for financial  holding companies  pursuant to the  Gramm-Leach-Bliley
Act.  At the present  time,  the Company  conducts  no  significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank.

The  Bank  was  originally  founded  in  1891 as the Mt.  Troy  Building  & Loan
Association.  The Bank is a  federally-chartered  stock savings bank,  providing
traditional retail banking services,  one-to-four  family  residential  mortgage
loans,  residential  construction  loans,  commercial  real  estate  loans,  and
consumer loan products,  including home equity,  auto, and personal  loans.  The
Bank conducts its operations from its main office in Reserve Township and from a
full-service branch office in the North Hills area of Pittsburgh, Pennsylvania.

The Bank is subject to examination and  comprehensive  regulation by the OTS and
its deposits are federally insured by the Federal Deposit Insurance  Corporation
(the "FDIC") under the Savings Association Insurance Fund (the "SAIF"). The Bank
is a member  of,  and owns  capital  stock in the  Federal  Home  Loan Bank (the
"FHLB") of Pittsburgh.

STOCK PRICE INFORMATION

Since it  commenced  trading on April 8, 2002,  the  Company's  common stock has
traded  in  the  over-the-counter   market  with  quotations  available  on  the
OTC-Electronic  Bulletin Board under the trading symbol "RSVB." On July 1, 2004,
the Company's  trading  symbol changed to "RSVI".  The following  table reflects
high and low bid prices for the  calendar  quarters  indicated.  The  quotations
reflect inter-dealer prices, without retail mark-up,  markdown or commission and
may not represent actual transactions.

                                                                  Dividends
           Quarter Ended                   High          Low      Per Share
           -------------                   ----          ---      ---------

           June 30, 2002
              (beginning April 8, 2002)   $12.95       $11.30        $   -
           September 30, 2002             $12.95       $12.40            -
           December 31, 2002              $13.45       $12.65         0.05
           March 31, 2003                 $17.35       $16.90            -
           June 30, 2003                  $17.60       $16.00         0.10
           September 30, 2003             $17.10       $16.35            -
           December 31, 2003              $19.47       $16.61         0.10
           March 31, 2004                 $20.32       $18.44            -
           June 30, 2004                  $19.58       $17.10         0.15
           September 30, 2004             $19.00       $16.00            -

                                       2

<PAGE>

The number of stockholders  of record as of December 15, 2004 was  approximately
293.  This does not reflect the number of persons or entities  who held stock in
nominee or "street" name through various  brokerage firms. At December 15, 2004,
there were 568,060 shares of the Company's common stock outstanding.

There were  dividends  of $0.25 per share paid to  stockholders  during the year
ended  September  30, 2004.  On December 2, 2004,  the Board of Directors of the
Company declared a $0.15 per share  semi-annual cash dividend to stockholders of
record as of December 15, 2004,  payable on December  31,  2004.  The  Company's
ability to pay dividends to stockholders is largely dependent upon the dividends
it receives  from the Bank.  The Bank may not declare or pay a cash  dividend on
any of its stock if the effect thereof would cause the Bank's regulatory capital
to be  reduced  below  (1)  the  amount  required  for the  liquidation  account
established  in  connection  with  its  mutual-to-stock  conversion,  or (2) the
regulatory requirements imposed by the OTS.

SELECTED FINANCIAL AND OTHER DATA

The following  financial  information  and other data in this section is derived
from the audited consolidated financial statements for the years ended September
30, 2004 and 2003 and should be read  together with the  consolidated  financial
statements and the notes thereto included in this annual report.  The historical
financial  and other data at or for the years ended  September 30, 2004 and 2003
may not be  indicative  of results for the year ended  September 30, 2005 or for
any other period.

<TABLE>
<CAPTION>
                                                                 At or For the Year Ended
                                                                       September 30,
                                                                ---------------------------
                                                                  2004                2003
                                                                 ------              ------
                                                                       (In thousands)
 <S>                                                           <C>                 <C>
        Balance Sheet Data:
         Assets.................................................$77,195             $71,939
         Loans receivable, net.................................. 37,975              34,827
         Securities............................................. 31,380              30,646
         Interest-bearing deposits in other banks...............    998               1,397
         Cash and cash equivalents..............................  4,929               3,350
         Deposits............................................... 59,338              50,468
         FHLB advances..........................................  5,515               8,378
         Total equity........................................... 11,963              12,597

         Summary of Operations:
         Interest and dividend income........................... $3,864              $3,811
         Interest expense.......................................  1,524               1,670
                                                                 ------              ------
         Net interest income....................................  2,340               2,141
         Provision for loan losses..............................     18                  18
                                                                 ------              ------
         Net interest income after provision for loan losses....  2,322               2,123
         Noninterest income.....................................    250                 238
         Noninterest expense....................................  1,499               1,263
                                                                 ------              ------
         Income before income taxes.............................  1,073               1,098
         Income taxes...........................................    371                 364
                                                                 ------              ------
         Net income............................................. $  702              $  734
                                                                 ======              ======
         Earnings per share - basic............................. $ 1.09              $ 1.06
         Earnings per share - diluted........................... $ 1.04              $ 1.04

         Actual number (not in thousands):

         Real estate loans outstanding..........................    331                 335
         Deposit accounts.......................................  5,424               5,448
         Full service offices...................................
                                                                      2                   1
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                                                   At for the Year Ended
                                                                                       September 30,
                                                                                   -----------------------
                                                                                     2004           2003
                                                                                   --------      ---------
<S>                                                                             <C>            <C>
     Performance Ratios:
       Return on average assets (net income divided by
          Average total  assets).........................................            0.94%          1.08%

       Return on average equity (net income divided by
          average equity)................................................             5.72           5.84

       Net interest rate spread..........................................             2.81           2.66

       Net interest margin (net interest income as a
          percentage of average interest-earning assets..................             3.20           3.21

       Average interest-earning assets to average
          interest-bearing liabilities...................................           118.50         122.02

       Efficiency ratio (noninterest expense divided by the
          sum of net interest income and noninterest income).............            57.90          53.09

       Dividend payout ratio.............................................            25.10          15.50

     Asset Quality Ratios:
       Non-performing loans to total loans, net..........................             0.20           0.17

       Non-performing assets to total assets.............................             0.10           0.08

       Net charge-offs to average loans outstanding......................             0.03           0.02

       Allowance for loan losses to total loans..........................             0.52           0.50

     Capital Ratios:
       Average equity to average assets ratios
          (average equity divided by average total assets)...............            16.41          18.53

       Equity to assets at period end....................................            15.50          17.51

</TABLE>

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

The following discussion of the consolidated  financial condition and results of
operations of the Company  should be read in conjunction  with the  accompanying
Consolidated Financial Statements.

General

Our earnings are  primarily  dependent  upon net interest  income,  which is the
difference  between  the  interest  income  earned on  interest-earning  assets,
primarily loans,  mortgage-backed  securities, and investment securities and the
interest  expense  on  interest-bearing  liabilities,   primarily  deposits  and
borrowings.  Net  interest  income  may be  affected  significantly  by  general
economic  and  competitive  conditions  and  policies  of  regulatory  agencies,
particularly  those  with  respect  to market  interest  rates.  The  results of
operations are also significantly influenced by the level of noninterest income,
such as loan-related fees, fees on deposit-related  services,  and the provision
for loan losses.

The Management's  Discussion and Analysis section of this Annual Report contains
certain  forward-looking  statements  (as  defined  in  the  Private  Securities
Litigation  Reform Act of 1995).  These

                                       4

<PAGE>

forward-looking  statements  may  involve  risks  and  uncertainties.   Although
management  believes  that the  expectations  reflected in such  forward-looking
statements are  reasonable,  actual results may differ from the results in these
forward-looking  statements.  We do not undertake to update any  forward-looking
statement, whether written or oral, that may be made from time to time.

Changes in Financial Condition

The  Company's  total  assets  of $77.2  million  at  September  30,  2004,  are
reflective  of an increase of $5.3 million or 7.4% as compared to $71.9  million
at  September  30,  2003.  The  increase in total assets was due to increases in
interest-bearing  cash,  net  loans,  and  mortgage-backed  securities,  and was
partially  offset by a decrease in investment  securities  and  interest-bearing
deposits in other banks. The increase in the liabilities was primarily due to an
increase in savings accounts and certificates of deposit offset by a decrease in
advances  from the Federal  Home Loan Bank.  Stockholders'  equity  decreased by
$634,000 to $12.0 million at September 30, 2004, as compared to $12.6 million at
September 30, 2003. Changes in the components of assets,  liabilities and equity
are discussed herein.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing  deposits with original maturities of
three months or less, totaled $4.9 million at September 30, 2004, an increase of
$1.6 million or 47.1% as compared to $3.4 million at  September  30, 2003.  This
increase was primarily due to increased  interest-bearing deposits maintained at
the Federal Home Loan Bank.

Interest-bearing  Deposits in Other  Banks.  Interest-bearing  deposits in other
banks  totaled  $1.0  million at  September  30, 2004, a decrease of $400,000 or
28.6% as compared to $1.4 million at September 30, 2003.

Investment Securities.  Investment securities totaled $18.0 million at September
30,  2004,  a decrease  of $700,000  or 3.7%,  as  compared to $18.7  million at
September 30, 2003.  This was  primarily a result of proceeds  from  maturities,
calls and payments  totaling $3.0 million and proceeds from sales  totaling $5.4
million, offset by purchases of $8.0 million.

Mortgage-backed Securities.  Mortgage-backed securities totaled $13.4 million at
September 30, 2004,  an increase of $1.4 million or 11.7%,  as compared to $12.0
million at September  30, 2003.  The increase was due  primarily to purchases of
$11.9 million offset by principal payments totaling $6.1 million and proceeds of
sales of $4.2 million.

Loans Receivable,  Net. Net loans receivable at September 30, 2004 totaled $38.0
million,  an increase of $3.1 million or 8.9%,  as compared to $34.9  million at
September  30, 2003.  The increase was  primarily  due to net  originations  and
participation loans purchased.

Deposits.  Total deposits,  after interest  credited,  increased $8.8 million or
17.4% to $59.3  million at September  30, 2004,  as compared to $50.5 million at
September  30, 2003.  The increase was due to increases in savings  accounts and
certificates of deposit partially offset by a decrease in NOW accounts.

Federal  Home Loan Bank  Advances.  Federal  Home Loan Bank  advances  were $5.5
million at  September  30, 2004,  as compared to $8.4  million at September  30,
2003. The decrease in borrowings was the result of maturing advances.

                                       5

<PAGE>

Stockholders'  Equity.  Stockholders'  equity totaled $12.0 million at September
30, 2004, as compared to $12.6  million at September  30, 2003.  The decrease of
$634,000 or 5.0% was due to the purchase of treasury stock totaling  $1,186,000,
a decrease in accumulated other comprehensive income of $157,000,  and dividends
paid of $176,000,  offset by earnings for the year ended  September  30, 2004 of
$702,000,  an  increase  of $59,000  from the  release of ESOP  shares,  and the
awarding of RSP shares unearned of $85,000.

Results of Operations for the Years Ended September 30, 2004 and 2003.

Net Income.  Net income was $702,000 for the year ended  September  30, 2004, as
compared to $734,000 for the year ended  September 30, 2003. The $32,000 or 4.4%
decrease for the year ended  September  30, 2004 was  primarily the result of an
increase in non-interest expense,  offset by an increase in net interest income.
Changes in the components of income and expense are discussed herein.

Net Interest Income. Net interest income increased $199,000 or 9.3% for the year
ended  September 30, 2004, as compared to the year ended September 30, 2003. The
average  balance of  interest-earning  assets  increased  $6.7 million or 10.0%,
whereas the rate earned thereon  decreased 44 basis points.  The average balance
of interest-bearing  liabilities increased by $7.2 million or 13.3%, whereas the
rate paid thereon decreased 59 basis points.

The net  interest  rate  spread,  which is the  difference  between the yield on
average  interest-earning  assets  and  the  cost  of  average  interest-bearing
liabilities, increased to 2.81% for the year ended September 30, 2004 from 2.66%
for the year ended September 30, 2003.

Interest Income.  Interest income increased $53,000 or 1.4% to $3.86 million for
the year ended  September  30, 2004,  as compared to $3.81  million for the year
ended September 30, 2003.

Interest  on loans  receivable  decreased  $65,000  or 2.6%  for the year  ended
September  30, 2004,  as compared to the year ended  September  30,  2003.  This
decrease  was the result of a $1.9  million  increase in the average  balance of
loans receivable and a 55 basis point decrease in the yield earned.

Interest income on  mortgage-backed  securities  decreased $134,000 or 26.1% for
the year ended  September 30, 2004, as compared to the year ended  September 30,
2003.  This  decrease was the result of a 194 basis point  decrease in the yield
earned  on  mortgage-backed  securities,  partially  offset  by a  $3.3  million
increase in the average balance of thereof.

Interest  income on investment  securities  increased  $258,000 or 33.1% for the
year ended September 30, 2004, as compared to the year ended September 30, 2003.
The increase was the result of a $1.9 million increase in the average balance of
investment  securities and a 95 basis point increase in the average yield earned
thereon.

Interest income on other  interest-earning  assets decreased $5,000 or 13.5% for
the year ended  September 30, 2004, as compared to the year ended  September 30,
2003.  The decrease was primarily  due to 3 basis point  decrease in the average
yield earned partially  offset by a $443,000  decrease in the average balance of
other interest-earning assets.

The average yield on  interest-earning  assets was 5.28% and 5.72% for the years
ended September 30, 2004 and 2003, respectively.

                                       6

<PAGE>

Interest  Expense.  Interest  expense  totaled  $1.5  million for the year ended
September 30, 2004, as compared to $1.7 million for the year ended September 30,
2003.  The  $146,000  or 8.7%  decrease  was  primarily  due to a 59 basis point
decrease in the average  rate paid on  interest-bearing  liabilities,  partially
offset by a $7.2 million increase in the average balance.

Interest  expense on deposits  totaled $1.3 million for the year ended September
30, 2004, as compared to $1.4 million for the year ended September 30, 2003. The
$132,000 or 9.7% decrease was primarily due to a 176 basis point decrease in the
average cost, partially offset by a $7.2 million increase in the average balance
of deposits.

Interest expense on FHLB advances decreased $14,000 for the year ended September
30, 2004, as compared to the year ended September 30, 2003. The decrease was due
to a $294,000  increase in the average  balance and a 32 basis point decrease in
the average rate paid on FHLB advances during the year ended September 30, 2004.

Provision for Loan Losses.  During the years ended  September 30, 2004 and 2003,
the provision for loan losses was $18,000 per year. This reflected  management's
evaluation of the underlying  credit risk of the loan portfolio and the level of
allowance for loan losses.

At September 30, 2004, the allowance for loan losses  totaled  $199,000 or 0.52%
and  261.8% of total  loans and  total  non-performing  loans,  as  compared  to
$193,000  or 0.50% and 321.7%,  at  September  30,  2003.  Non-performing  loans
(non-accrual  loans and accruing loans 90 days or more overdue)  totaled $76,000
and $60,000 at September 30, 2004 and September  30, 2003,  respectively,  which
represented 0.20% and 0.17% of total loans. Our ratio of non-performing loans to
total assets was 0.10% and 0.08% at September 30, 2004 and September 30, 2003.

Noninterest Income. During the year ended September 30, 2004, noninterest income
increased  $11,000 or 4.6%,  as compared to the year ended  September  30, 2003,
primarily  due to an  increase  in gains on the sale of  investments  offset  by
decreases in service charges and other fees.

Noninterest  Expense.  Total noninterest  expense increased by $236,000 or 18.7%
during  the year  ended  September  30,  2004,  as  compared  to the year  ended
September  30,  2003.  The  increase was  primarily  attributable  to a $121,000
increase in compensation and benefits, including $42,000 attributable to the RSP
plan. Occupancy and equipment cost increased by $38,000 while legal,  accounting
and other fees  increased  $48,000 due to activities  relating to being a public
company.

Income Tax Expense.  The provision for income tax totaled  $371,000 for the year
ended  September 30, 2004, a $7,000 or 1.9% increase as compared to $364,000 for
the year ended September 30, 2003. The increase in income tax expense was due to
the lower amount of tax exempt securities held by the Company.

                                       7

<PAGE>

Average Balance Sheet

The  following  table sets forth a summary  of  average  balances  of assets and
liabilities as well as average yield and rate information.  Average balances are
derived primarily from month-end balances,  however, management does not believe
the use of month-end  balances differs  significantly from an average based upon
daily balances.

<TABLE>
<CAPTION>
                                                                                 Year Ended September 30,
                                                        ---------------------------------------------------------------------------
                                                                      2004                                    2003
                                                        ----------------------------------      -----------------------------------

                                                        Average                   Average       Average                    Average
                                                        Balance     Interest    Yield/Cost      Balance      Interest    Yield/Cost
                                                        -------     --------    ----------      -------      --------    ----------
                                                                               (Dollars in thousands)
<S>                                                  <C>          <C>             <C>         <C>          <C>             <C>
Interest-earning assets:
 Loans receivable net (1)......................         $36,495      $2,412          6.61%       $34,586      $2,477          7.16%
 Mortgage-backed securities....................          14,678         379           2.58        11,338         513           4.52
 Investment securities (2).....................          17,517       1,038           5.93        15,662         780           4.98
 Other interest earning assets.................           4,535          35           0.77         4,978          40           0.80
                                                        -------      ------         ------       -------      ------           ----
  Total interest-earning assets................          73,225       3,864           5.28        66,564       3,810           5.72
                                                                     ------                                   ------
Non-interest-earning assets....................           1,533                                    1,200
                                                        -------                                  -------
  Total assets.................................         $74,758                                  $67,764
                                                        =======                                  =======
Interest-bearing liabilities:
 NOW accounts..................................         $ 7,825          70           0.89       $ 7,037         118           1.61
 Savings accounts..............................          24,778         496           2.00        18,558         437           2.35
 Certificates of deposit.......................          21,880         748           3.42        21,670         891           4.11
 FHLB advances.................................           7,312         210           2.87         7,018         224           3.19
                                                        -------      ------         ------       -------      ------           ----
  Total interest-bearing liabilities..........           61,795       1,524           2.47        54,553       1,670           3.06
                                                                     ------                                   ------
Non-interest-bearing liabilities...............             692                                      651
                                                        -------                                  -------
 Total liabilities.............................          62,487                                   55,204
Stockholders' equity...........................          12,271                                   12,560
                                                        -------                                  -------

 Total liabilities and stockholders' equity....         $74,758                                  $67,764
                                                        =======                                  =======
Net interest income............................                      $2,340                                   $2,140
                                                                     ======                                   ======
Interest rate spread(3)........................                                      2.81%                                    2.66%
                                                                                   ======                                   ======
Net yield on interest-earning  assets(4).......                                      3.20%                                    3.21%
                                                                                   ======                                   ======
Ratio of average interest-earning assets
   to average interest-bearing liabilities.....                                    118.50%                                  122.02%
                                                                                   ======                                   ======
</TABLE>

-------------------------------
(1)  Non-accruing  loans have been included in loans receivable,  and the effect
     of such inclusion was not material.
(2)  Includes  government  securities,  corporate  bonds and equity  securities.
     There have been no tax equivalent adjustments made to yields.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       8

<PAGE>

Rate/Volume Analysis

The relationship between the volume and rates of the Company's  interest-earning
assets and  interest-bearing  liabilities  influence  the Company's net interest
income.  The following table reflects the sensitivity of the Company's  interest
income and  interest  expense to  changes in volume and in  prevailing  interest
rates during the periods  indicated.  Each category reflects the: (1) changes in
volume (changes in volume  multiplied by old rate); (2) changes in rate (changes
in rate  multiplied by old volume);  (3) changes in rate/volume  (change in rate
multiplied  by the  change  in  volume);  and (4)  net  change.  The net  change
attributable  to the  combined  impact  of  volume  and rate has been  allocated
proportionally to the absolute dollar amounts of change in each.

<TABLE>
<CAPTION>
                                                                       Year Ended September 30,
                                                            -----------------------------------------------
                                                                            2004 vs. 2003
                                                            -----------------------------------------------
                                                                          Increase (Decrease)
                                                                               Due to
                                                            -----------------------------------------------
                                                                                          Rate/
                                                                 Volume        Rate      Volume       Net
                                                                 ------        ----      ------       ---
                                                                        (Dollars in thousands)
<S>                                                              <C>        <C>          <C>       <C>
Interest and dividend income:
   Loans receivable, net...............................            $137       $(191)       $(11)     $ (65)
   Investment securities and other.....................             198         (70)        (10)       118
                                                                   ----       -----        ----      -----
      Total interest-earning assets....................            $335       $(261)       $(21)     $  53
                                                                   ====       =====        ====      =====

Interest expense:
   NOW accounts........................................            $  8       $ (53)       $ (4)     $ (49)
   Savings accounts....................................             146         (66)        (22)        58
   Certificates of deposit.............................               9        (150)         (1)      (142)
   Advances from FHLB and other borrowings.............               9         (22)         (1)       (14)
                                                                   ----       -----        ----      -----
      Total interest-bearing liabilities...............            $172       $(291)       $(28)     $(147)
                                                                   ====       =====        ====      =====

Change in net interest income..........................            $163       $  30        $  7      $ 200
                                                                   ====       =====        ====      =====
</TABLE>

Market Risk Analysis

Qualitative Analysis.  Because the majority of the Bank's assets and liabilities
are sensitive to changes in interest rates,  the Bank's most significant form of
market risk is interest  rate risk,  or changes in interest  rates.  The Bank is
vulnerable to an increase in interest rates to the extent that  interest-bearing
liabilities  mature or reprice more rapidly than  interest-earning  assets.  The
lending  activities of the Bank have historically  emphasized the origination of
long-term,  fixed rate loans  secured by  single-family  residences.  The Bank's
primary source of funds has been deposits with substantially shorter maturities.
While having  interest-bearing  liabilities  that reprice more  frequently  than
interest-earnings assets is generally beneficial to net interest income during a
period of declining interest rates, this type of an asset/liability  mismatch is
generally detrimental during periods of rising interest rates.

The Board of Directors  has  established  an  asset/liability  committee,  which
consists of the Bank's  president,  treasurer/controller  and two members of the
Board of Directors.  The committee meets periodically to review loan and deposit
pricing and  production  volumes,  interest  rate risk  analysis,  liquidity and
borrowing needs, and a variety of other assets and liability management topics.

                                       9

<PAGE>

To reduce the effect of interest rate changes on net interest  income,  the Bank
has  adopted  various  strategies  to  enable  it to  improve  the  matching  of
interest-earning asset maturities to interest-bearing  liability maturities. The
main elements of these strategies include seeking to:

o    originate  loans with  adjustable  rate  features  or fixed rate loans with
     short maturities;

o    lengthen the maturities of its liabilities  when it would be cost effective
     through  the  pricing  and  promotion  of   certificates   of  deposit  and
     utilization of FHLB advances;

o    attract low cost checking and transaction  accounts,  which tend to be less
     interest rate sensitive when interest rates rise;

o    when market  conditions  permit,  to  originate  and hold in its  portfolio
     adjustable rate loans which have annual interest rate adjustments; and

o    maintain an investment  portfolio that provides a stable cash flow, thereby
     providing investable funds in varying interest rate cycles.

The Bank has also made a significant  effort to maintain its level of lower cost
deposits as a method of enhancing profitability. At September 30, 2004, the Bank
had  approximately  59.3% of its deposits in lower cost savings accounts and NOW
accounts.  These deposits have traditionally  remained relatively stable and are
expected to be only moderately affected in a period of rising interest rates.

Quantitative  Analysis.  Exposure to interest rate risk is actively monitored by
management.   The  Bank's  objective  is  to  maintain  a  consistent  level  of
profitability  within  acceptable  risk  tolerances  across  a  broad  range  of
potential interest rate environments.  The Bank uses the OTS Net Portfolio Value
("NPV")  Model to  monitor  its  exposure  to  interest  rate  risk.  This model
calculates  changes in net portfolio value.  Reports  generated from assumptions
provided  and  modified  by  management  are  reviewed  by  the  Asset/Liability
Management  Committee  and  reported to the Board of  Directors  quarterly.  The
Interest  Rate  Sensitivity  of Net  Portfolio  Value Report shows the degree to
which balance sheet line items and net portfolio value are potentially  affected
by a 100 to 300 basis point (1/100th of a percentage  point) upward and downward
shift (shock) in the Treasury yield curve.

The following  table  presents the Bank's NPV as of September 30, 2004.  The NPV
was calculated by the OTS, based on information provided by the Bank.

                                                       NPV as % of Present
                 (Net Portfolio Value ("NPV")            Value of Assets
              -----------------------------------     -------------------------
Change                                                             Basis Point
in Rates(1)   $ Amount   $ Change      % Change       NPV Ratio       Change
-----------   --------   --------      --------       ---------    -----------
                                (Dollars in thousands)
    +300 bp    10,679      -3,086       -22.42%         14.06%        -301 bp
    +200 bp    11,923      -1,842       -13.38          15.34         -173
    +100 bp    12,974        -791        -5.75          16.36          -71
       0 bp    13,765                                   17.07
    -100 bp    13,971         206        +1.47          17.16           +9

--------------
(1)The -200bp and -300bp scenarios are not shown due to low prevailing  interest
     rate environment.

                                       10

<PAGE>

Future  interest  rates or their  effect on NPV or net  interest  income are not
predictable.  Computations of prospective effects of hypothetical  interest rate
changes are based on numerous  assumptions,  including relative levels of market
interest rates, prepayments, and deposit run-offs, and should not be relied upon
as indicative of actual results.  Certain shortcomings are inherent in this type
of  computation.  Although  certain  assets  and  liabilities  may have  similar
maturity  or  periods of  repricing,  they may react at  different  times and in
different  degrees to changes in the market interest rates. The interest rate on
certain types of assets and  liabilities  may fluctuate in advance of changes in
market interest rates,  while rates on other types of assets and liabilities may
lag behind changes in market interest  rates.  Certain assets such as adjustable
rate  mortgages,  generally  have features,  which restrict  changes in interest
rates on a  short-term  basis and over the life of the asset.  In the event of a
change in interest rates,  prepayments and early withdrawal levels could deviate
significantly  from  those  assumed  in making  calculations  set  forth  above.
Additionally,  an  increase  in credit  risk may  result as the  ability of many
borrowers to service  their debt may decrease in the event of a rise in interest
rates.

Liquidity and Capital Resources

The Company's primary sources of funds are new deposits, proceeds from principal
and interest payments on loans, and repayments on investment and mortgage-backed
securities.   While  maturities  and  scheduled  amortization  of  loans  are  a
predictable source of funds,  deposit flows and mortgage  repayments are greatly
influenced by general interest rates,  economic conditions and competition.  The
Company   maintained   liquidity  levels  adequate  to  fund  loan  commitments,
investment  opportunities,  deposit withdrawals and other financial commitments.
At September 30, 2004,  the Company had  obligations  to fund  outstanding  loan
commitments of approximately $3.7 million, including unused lines of credit, for
which adequate  resources were available.  At September 30, 2004,  approximately
$9.2 million of the Bank's time  deposits  were  scheduled to mature  within the
next 12 months. The Bank expects such deposits to be renewed at market rates. In
addition  to this  source of  continuing  funding,  the Bank has the  ability to
obtain advances from the FHLB of Pittsburgh.

At September  30,  2004,  management  had no knowledge of any trends,  events or
uncertainties  that will have or are reasonably  likely to have material effects
on the  liquidity,  capital  resources or operations of the Company.  Further at
September 30, 2004,  management was not aware of any current  recommendations by
the regulatory authorities, which, if implemented, would have such an effect.

                                       11

<PAGE>
PARENTE RANDOLPH
The Power of Ideas



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Board of Directors and Shareholders
RSV Bancorp, Inc.:

We have audited the accompanying consolidated balance sheet of RSV Bancorp, Inc.
and  subsidiary  (the  "Company")  as of  September  30, 2004 and 2003,  and the
related consolidated  statements of income,  changes in shareholders' equity and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of RSV Bancorp,  Inc.
and  subsidiary  as of  September  30,  2004 and 2003,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.


/s/Parente Randolph, LLC

Pittsburgh, Pennsylvania
October 22, 2004


                                      F-1
<PAGE>

                                RSV BANCORP, INC.

                           CONSOLIDATED BALANCE SHEET
                           SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                                                     2004           2003
-------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>
                                     ASSETS
                                     ------
Cash and cash equivalents:
     Interest-bearing                                          $  4,381,220    $  3,118,784
     Noninterest-bearing                                            547,782         231,185
                                                               ------------    ------------
            Total cash and cash equivalents                       4,929,002       3,349,969
Interest-bearing total deposits in other banks                      998,000       1,397,485
Securities held-to-maturity (fair value of
     $4,267,008 and $4,574,916)                                   4,101,875       4,301,648
Mortgage-backed securities held-to-maturity (fair
     value of $2,426,694 and $3,997,025)                          2,372,774       3,929,953
Securities available-for-sale, at fair value                     13,875,900      14,351,220
Mortgage-backed securities available-for-sale, at fair value     11,029,449       8,063,083
Loans, net of allowance for loan losses of
     $199,024 and $192,519                                       37,974,650      34,827,413
Federal Home Loan Bank stock, at cost                               636,100         674,500
Accrued interest receivable                                         534,997         500,626
Premises and equipment, net                                         439,805         281,411
Real estate held for investment                                     146,532         154,302
Prepaid expenses and other assets                                   155,496         107,642
                                                               ------------    ------------

                      TOTAL                                    $ 77,194,580    $ 71,939,252
                                                               ============    ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------


Deposits                                                       $ 59,337,619    $ 50,468,363
Federal Home Loan Bank advances                                   5,515,260       8,378,469
Advances from borrowers for taxes and insurance                      80,194          76,998
Accrued interest payable                                            114,960         122,542
Other liabilities                                                   183,870         296,131
                                                               ------------    ------------

            Total liabilities                                    65,231,903      59,342,503
                                                               ------------    ------------

Commitments and contingencies

Preferred stock, no par value; 2,000,000 authorized;
     none outstanding                                                     -               -
Common stock, par value $.10 per share; 8,000,000
     shares authorized; 757,500 shares issued                        75,750          75,750
Additional paid-in-capital                                        7,167,218       7,128,170
Retained earnings - substantially restricted                      6,801,745       6,275,671
Accumulated other comprehensive (loss) income, net of
     applicable income taxes of ($9,515) and $102,203               (13,655)        143,485
Treasury stock, at cost (83,766 and 20,450 shares)               (1,527,993)       (342,033)
Unallocated shares held by Employee Stock Ownership
     Plan (ESOP)                                                   (413,016)       (472,008)
Unearned shares held by Restricted Stock Plan (RSP)                (127,372)       (212,286)
                                                               ------------    ------------

            Net shareholders' equity                             11,962,677      12,596,749
                                                               ------------    ------------

                      TOTAL                                    $ 77,194,580    $ 71,939,252
                                                               ============    ============

-------------------------------------------------------------------------------------------
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-2

<PAGE>

                                RSV BANCORP, INC.

                        CONSOLIDATED STATEMENT OF INCOME
                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003

---------------------------------------------------------------------------
                                                        2004         2003
---------------------------------------------------------------------------

INTEREST AND DIVIDEND INCOME:
     Loans                                          $2,411,663   $2,476,776
     Investments                                     1,037,991      780,464
     Mortgaged-backed securities                       379,254      513,399
     Federal Home Loan Bank stock                        9,566       13,125
     Interest-earning demand deposits                   25,258       27,150
                                                    ----------   ----------

           Total interest and dividend income        3,863,732    3,810,914
                                                    ----------   ----------

INTEREST EXPENSE:
     Deposits                                        1,313,992    1,446,461
     Advances from Federal Home Loan Bank              209,787      223,744
                                                    ----------   ----------

           Total interest expense                    1,523,779    1,670,205
                                                    ----------   ----------

                  Net interest income                2,339,953    2,140,709

PROVISION FOR LOAN LOSSES                               18,000       18,000
                                                    ----------   ----------

                     Net interest income after
                        provision for loan losses    2,321,953    2,122,709
                                                    ----------   ----------

NONINTEREST INCOME:
     Service charges and other fees                    116,659      206,883
     Income from real estate rental                     11,175       10,400
     Gain on sale of investments                       121,608       20,870
                                                    ----------   ----------

           Total noninterest income                    249,442      238,153
                                                    ----------   ----------

NONINTEREST EXPENSE:
     Compensation and benefits                         781,320      660,814
     Occupancy and equipment                           148,215      110,639
     Federal insurance premiums                         32,532       27,305
     Data processing                                    94,412      105,876
     Professional and supervisory fees                 165,580      117,169
     Loss on sale of real estate owned                  11,495            -
     Other                                             265,121      241,057
                                                    ----------   ----------

           Total noninterest expense                 1,498,675    1,262,860
                                                    ----------   ----------

INCOME BEFORE INCOME TAX EXPENSE                     1,072,720    1,098,002

INCOME TAX EXPENSE                                     370,758      363,738
                                                    ----------   ----------

NET INCOME                                          $  701,962   $  734,264
                                                    ==========   ==========

EARNINGS PER SHARE - BASIC                          $     1.09   $     1.06
                                                    ==========   ==========

EARNINGS PER SHARE - DILUTED                        $     1.04   $     1.04
                                                    ==========   ==========

WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC              641,245      693,732
                                                    ==========   ==========

WEIGHTED AVERAGE SHARES OUTSTANDING-DILUTED            674,070      705,095
                                                    ==========   ==========

---------------------------------------------------------------------------

        See Notes to Consolidated Financial Statements

                                      F-3
<PAGE>

                                          RSV BANCORP, INC.

                       CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                `           FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                             ACCUMULATED                                    UNEARNED
                                     ADDITIONAL                 OTHER                         UNALLOCATED    SHARES
                          COMMON      PAID-IN     RETAINED  COMPREHENSIVE       TREASURY      SHARES HELD   HELD BY
                           STOCK      CAPITAL     EARNINGS  INCOME (LOSS)         STOCK         BY ESOP       RSP          TOTAL
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>      <C>          <C>             <C>            <C>             <C>           <C>         <C>
BALANCE AT
  SEPTEMBER 30, 2002     $75,750  $ 7,089,908  $ 5,654,945     $  60,340      $         -     $ (531,000)   $        -  $12,349,943
                                                                                                                        -----------

COMPREHENSIVE INCOME:
  Net income                   -            -     734,264              -                -              -             -      734,264
  Change in
    unrealized gain
    (loss) on
    securities
    available-for-sale,
    net of applicable
    income taxes
    of $86,815                 -            -           -        120,470                -              -             -      120,470
  Reclassification
      adjustment, net
      of income tax
      of $(26,898)             -            -           -        (37,325)               -              -             -      (37,325)
                                                                                                                        -----------

      Total
        comprehensive
        income                                                                                                              817,409
                                                                                                                        -----------

RSP shares awarded             -            -          87              -                -              -      (254,743)    (254,656)
Compensation expense
  for RSP                      -            -           -              -                -              -        42,457       42,457
ESOP shares allocated          -       38,262           -              -                -         58,992             -       97,254
Purchase of
  treasury stock               -            -           -              -         (342,033)             -             -     (342,033)
Cash dividend declared
  $0.15 per share)             -            -    (113,625)             -                -              -             -     (113,625)
                          ------    ---------   ----------       -------      -----------       --------     ---------  -----------

BALANCE AT
  SEPTEMBER 30, 2003      75,750    7,128,170   6,275,671        143,485         (342,033)      (472,008)     (212,286)  12,596,749
                                                                                                                        -----------

COMPREHENSIVE INCOME:
  Net income                   -            -     701,962              -                -              -             -      701,962
  Change in
    unrealized gain
    (loss) on
    securities
    available-for-sale,
    net of applicable
    income taxes
    of $(69,162)               -            -           -        (97,281)               -              -             -      (97,281)
  Reclassification
    adjustment, net of
    income tax
    of $(42,556)               -            -           -        (59,859)               -              -             -      (59,859)
                                                                                                                         ----------

      Total comprehensive
        income                                                                                                              544,822
                                                                                                                         ----------

Compensation
  expense for RSP              -            -           -              -                -              -        84,914       84,914
ESOP shares allocated          -       39,048           -              -                -         58,992             -       98,040
Purchase of
  treasury stock               -            -           -              -       (1,185,960)             -             -   (1,185,960)
Cash dividend declared
  ($0.25 per share)            -            -    (175,888)             -                -              -             -     (175,888)
                         -------  -----------  -----------     ---------      ------------    ----------    ----------  -----------
BALANCE AT
  SEPTEMBER 30, 2004     $75,750  $ 7,167,218  $ 6,801,745     $ (13,655)     $ (1,527,993)   $ (413,016)   $ (127,372) $11,962,677
                         =======  ===========  ===========     =========      ============    ==========    ==========  ===========

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-4

<PAGE>

                                RSV BANCORP, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                            2004            2003
---------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                                     $    701,962    $    734,264
      Adjustments to reconcile change in net income to
          net cash provided by operating activities:
              Amortization of:
                  Deferred loan origination fees                          (51,190)        (66,927)
                  Premiums and discounts on investment securities         227,347        (235,592)
              Provision for loan losses                                    18,000          18,000
              Depreciation of premises and equipment                       57,886          50,457
              Compensation expense - ESOP and RSP                         182,954         139,711
              Net gain on sales of securities available-for-sale         (121,608)        (20,870)
              Loss on sale of real estate owned                            11,495               -
              Deferred income taxes                                        17,063         (22,949)
              (Increase) decrease in:
                  Accrued interest receivable                             (34,371)        (78,891)
                  Prepaid expenses                                        (12,656)        (29,827)
              Increase (decrease) in:
                  Accrued interest payable                                 (7,582)          2,901
                  Other liabilities                                      (112,261)        137,641
                                                                     ------------    ------------

                      Net cash provided by operating activities           877,039         627,918
                                                                     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from maturities of interest-bearing deposits
          in other banks                                                  400,000         399,000
      Proceeds from maturities and calls of
          securities held-to-maturity                                     195,000       1,450,000
      Proceeds from principal repayments of
          mortgage-backed securities held-to-maturity                   1,536,805       2,922,951
      Purchases of securities held-to-maturity                                  -        (350,000)
      Proceeds from sales of securities available-for-sale              6,436,662       1,558,399
      Proceeds from maturities and calls of
          securities available-for-sale                                   339,027       2,086,851
      Proceeds from principal repayments of
          mortgage-backed securities available-for-sale                 2,974,610       2,108,361
      Purchases of securities available-for-sale                       (3,452,500)    (11,642,433)
      Purchases of mortgage-backed securities available-for-sale      (16,527,045)     (7,537,236)
      Proceeds from sales of mortgage backed
          securities available-for-sale                                 7,388,235          98,108
      Purchases of premises and equipment                                (208,510)        (39,576)
      Proceeds from sale of real estate owned                              47,962               -
      Increase in real estate held for investment                               -         (77,357)
      (Increase) decrease in Federal Home Loan Bank stock                  38,400        (370,900)
      Net loan originations and principal repayments on loans          (3,114,047)        178,841
                                                                     ------------    ------------

                      Net cash used in investing activities            (3,945,401)     (9,214,991)
                                                                     ------------    ------------
</TABLE>

                                      F-5

<PAGE>

RSV BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net (decrease) increase in FHLB advances                       $ (2,863,209)   $  3,495,157
      Net increase in deposits                                          8,869,256       7,481,876
      Net increase in advances from borrowers
          for taxes and insurance                                           3,196          15,163
      Dividends paid                                                     (175,888)       (113,625)
      Purchase of RSP shares                                                    -        (254,656)
      Purchase of treasury stock                                       (1,185,960)       (342,033)
                                                                     ------------    ------------

                      Net cash provided by financing activities         4,647,395      10,281,882
                                                                     ------------    ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                               1,579,033       1,694,809

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                            3,349,969       1,655,160
                                                                     ------------    ------------

CASH AND CASH EQUIVALENTS, END OF YEAR                               $  4,929,002    $  3,349,969
                                                                     ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
      INFORMATION:
          Cash paid for:
              Interest on deposits, advances, and other borrowings   $  1,531,361    $  1,667,304
                                                                     ============    ============

              Income taxes                                           $    298,000    $    359,598
                                                                     ============    ============

          Loans transferred to foreclosed real estate owned          $          -    $     59,457
                                                                     ============    ============

---------------------------------------------------------------------------------------------------

</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-6

<PAGE>

                                RSV BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


 1.   NATURE OF OPERATIONS AND SUMMARY OF
      SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION

         The  consolidated  financial  statements  include the accounts  of  RSV
         Bancorp,  Inc.  and  its   wholly-owned   subsidiary,   Mt.  Troy  Bank
         (collectively,  the "Company"). All intercompany transactions have been
         eliminated in consolidation.

         The accounting and reporting policies of the Company and the methods of
         applying those policies  conform with accounting  principles  generally
         accepted in the United States of America  (GAAP).  The  accounting  and
         reporting  policies and the methods of applying  those  policies  which
         significantly  affect the determination of financial position,  results
         of operations, and cash flows are summarized below.

      USE OF ESTIMATES

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         management to make estimates and  assumptions  that affect the reported
         amounts of assets and liabilities,  disclosure of contingent assets and
         liabilities  as of the balance  sheet date and the reported  amounts of
         revenues and expenses during the reporting period. Actual results could
         differ from those estimates.

         Material  estimates  that are  particularly  susceptible to significant
         change relate to the determination of the allowance for loan losses and
         the  valuation  of  foreclosed  real  estate.  In  connection  with the
         determination  of the  allowance  for loan losses and the  valuation of
         foreclosed real estate management  obtains  independent  appraisals for
         significant properties.

         A majority of the Company's  loan portfolio  consists of  single-family
         residential  loans in the  Pittsburgh  area.  The  regional  economy is
         currently stable and consists of various types of industry. Real estate
         prices  in  this  market  are  also  stable,   however,   the  ultimate
         collectibility of a substantial portion of the Company's loan portfolio
         are susceptible to changes in local market conditions.

                                      F-7


<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

         While  management  uses available  information  to recognize  losses on
         loans and foreclosed  real estate,  further  reductions in the carrying
         amounts  of loans  and  foreclosed  assets  may be  necessary  based on
         changes in local economic conditions. In addition, regulatory agencies,
         as an integral part of their examination  process,  periodically review
         the estimated losses on loans and foreclosed real estate. Such agencies
         may require the Company to recognize  additional  losses based on their
         judgments  about  information  available  to them at the  time of their
         examination.  Because of these factors,  it is reasonably possible that
         the  estimated  losses on loans and  foreclosed  real estate may change
         materially in the near term. However,  the amount of the change that is
         reasonably possible cannot be estimated.

      BUSINESS

         RSV Bancorp,  Inc. was incorporated  under the laws of the Commonwealth
         of Pennsylvania  for the purpose of becoming the holding company of Mt.
         Troy Bank  (Bank)  in  connection  with the  Bank's  conversion  from a
         federally  chartered mutual savings bank to a federally chartered stock
         savings bank, pursuant to its Plan of Conversion. The Company commenced
         operations on April 5, 2002, the date of a Subscription Offering of its
         shares   in   connection   with  the   conversion   of  the  Bank  (the
         "Conversion").  The operating  results of the Company depend  primarily
         upon the operating results of the Bank and, to a lesser extent,  income
         from interest-earning assets such as investment securities.

         Mt. Troy Bank is a federally-chartered, SAIF-insured stock savings bank
         conducting  business  from two office  locations in  Allegheny  County,
         Pennsylvania.  The 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 Bank is  subject  to  regulation  and  supervision  by the  Federal
         Deposit  Insurance   Corporation   (FDIC)  and  the  Office  of  Thrift
         Supervision (OTS).

      RECLASSIFICATION OF COMPARATIVE FIGURES

         Certain  comparative  amounts for prior years have been reclassified to
         conform to current year presentations.  Such  reclassifications  had no
         effect on net income or shareholders' equity.

      CASH AND CASH EQUIVALENTS

         For purposes of reporting  cash flows,  the Company  considers cash and
         deposits in other financial  institutions  with original  maturities of
         three months or less when acquired to be cash and cash equivalents.

                                       F-8

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      INTEREST-BEARING DEPOSITS IN OTHER BANKS

         Interest-bearing deposits in other banks are carried at cost.

      INVESTMENT AND MORTGAGE-BACKED SECURITIES

         The Company follows the provisions of Statement of Financial Accounting
         Standards  No.  115,  Accounting  for Certain  Investments  in Debt and
         Equity Securities.  Accordingly,  management determines the appropriate
         classification  of securities  at the time of purchase and  reevaluates
         such  designation  as of each balance sheet date.  Debt  securities are
         classified as held-to-maturity when the Company has the positive intent
         and  ability  to hold  the  securities  to  maturity.  Held-to-maturity
         securities are stated at amortized cost. Debt securities not classified
         as    held-to-maturity    are    classified   as    available-for-sale.
         Available-for-sale  securities  are  stated  at fair  value,  with  the
         unrealized  gains  and  losses,  net of  tax,  reported  as a  separate
         component of shareholders' equity.

         The amortized cost of debt securities classified as held-to-maturity or
         available-for-sale   is  adjusted  for  amortization  of  premiums  and
         accretion of discounts to maturity,  or in the case of  mortgage-backed
         securities,  over  the  contractual  life of the  security,  which  are
         computed using the interest  method.  Such  amortization is included in
         interest income from  investments.  Interest and dividends are included
         in interest  income from  investments.  Realized gains and losses,  and
         declines in value  judged to be  other-than-temporary  are  included in
         gain  (loss) on sale of  investments.  The cost of  securities  sold is
         based on the specific identification method.

      LOANS

         Loans are stated at unpaid principal  balances,  less the allowance for
         loan losses and net deferred loan fees.

         Loan  origination  and  commitment  fees,  as  well as  certain  direct
         origination  costs,  are deferred and  amortized as a yield  adjustment
         over the  contractual  lives of the related  loans  using the  interest
         method.  Amortization of deferred loan fees is discontinued when a loan
         is placed on nonaccrual status.

         Interest income generally is not recognized on specific  impaired loans
         unless the  likelihood  of further  loss is remote.  Interest  payments
         received on such loans are applied as a reduction of the loan principal
         balance.  Interest income on other impaired loans is recognized only to
         the extent of interest payments received.

                                       F-9
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      ALLOWANCE FOR LOAN LOSSES

         The allowance for loan losses is established as losses are estimated to
         have occurred  through a provision for loan losses charged to earnings.
         Loan losses are charged against the allowance when management  believes
         the  uncollectibility  of  a  loan  balance  is  confirmed.  Subsequent
         recoveries, if any, are credited to the allowance.

         The  allowance  for loan  losses is  evaluated  on a  regular  basis by
         management  and is  based  upon  management's  periodic  review  of the
         collectibility  of the  loans in light of  historical  experience,  the
         nature and volume of the loan  portfolio,  adverse  situations that may
         affect  the  borrower's  ability  to  repay,  estimated  value  of  any
         underlying   collateral  and  prevailing  economic   conditions.   This
         evaluation is inherently  subjective as it requires  estimates that are
         susceptible  to  significant   revision  as  more  information  becomes
         available.

         A loan is considered  impaired when,  based on current  information and
         events,  it is probable  that the Company will be unable to collect the
         scheduled  payments of principal or interest  when due according to the
         contractual  terms  of  the  loan  agreement.   Factors  considered  by
         management in determining impairment include payment status, collateral
         value,  and the  probability  of  collecting  scheduled  principal  and
         interest payments when due. Loans that experience insignificant payment
         delays and payment shortfalls generally are not classified as impaired.
         Management  determines the  significance  of payment delays and payment
         shortfalls on a case-by-case  basis,  taking into  consideration all of
         the circumstances surrounding the loan and the borrower,  including the
         length of the delay,  the reasons for the delay,  the borrower's  prior
         payment  record,  and the amount of the  shortfall  in  relation to the
         principal and interest  owed.  Impairment is measured on a loan by loan
         basis for all loans by either the present value of expected future cash
         flows  discounted at the loan's  effective  interest  rate,  the loan's
         obtainable  market  price,  or the fair value of the  collateral if the
         loan is collateral dependent.

      FORECLOSED REAL ESTATE OWNED

         Real  estate  acquired  by  foreclosure  or  voluntary  deed in lieu of
         foreclosure  is  initially  carried  at the lower of fair  value  minus
         estimated  disposal costs or the balance of the loan on the property at
         the date of  acquisition.  Any  write-downs  based on the asset's  fair
         value at date of  acquisition  are  charged to the  allowance  for loan
         losses.  Subsequent  costs  directly  related  to  the  development  or
         improvement of real estate are capitalized.

      FEDERAL HOME LOAN BANK STOCK

         Investment  in stock of a Federal  Home Loan Bank is required by law of
         every  federally   insured  savings  and  loan  or  savings  bank.  The
         investment  is carried at cost.  No ready market  exists for the stock,
         and it has no quoted market value.

                                      F-10

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      PREMISES AND EQUIPMENT

         Land is carried at cost. Buildings,  building  improvements,  leasehold
         improvements,  and  furniture,  fixtures,  and equipment are carried at
         cost,  less  accumulated  depreciation  and  amortization.   Buildings,
         building improvements, leasehold improvements, and furniture, fixtures,
         and equipment are depreciated  using the  straight-line and accelerated
         methods over the  estimated  useful  lives of the assets,  which are as
         follows:

             Building                                            50 years
             Building improvements                           5 - 32 years
             Leasehold improvements                              15 years
             Furniture, fixtures, and equipment              2 - 10 years

      INCOME TAXES

         Income  taxes are  provided  for the tax  effects  of the  transactions
         reported in the financial statements and consist of taxes currently due
         plus deferred taxes related primarily to differences  between the basis
         of  allowance  for  loan  losses,   benefit  plans,   and   accumulated
         depreciation  for financial  reporting and income tax. The deferred tax
         assets and liabilities  represent the future tax return consequences of
         those differences,  which will either be taxable or deductible when the
         assets and  liabilities  are recovered or settled.  Deferred tax assets
         and  liabilities  are  reflected at income tax rates  applicable to the
         period in which the deferred tax assets or liabilities  are expected to
         be realized or  settled.  As changes in tax laws or rates are  enacted,
         deferred tax assets and  liabilities  are adjusted  through  income tax
         expense.

      STOCK OPTIONS

         The Company  accounts for the stock  option plan under the  recognition
         and measurement  principles of APB Opinion No. 25, Accounting for Stock
         Issued  to  Employees,  and  related  interpretations.  No  stock-based
         employee  compensation  cost is reflected in net income, as all options
         granted under the plan have an exercise price equal to the market value
         of the underlying  common stock on the date of the grant. The following
         table  illustrates  the effect on net income and  earnings per share if
         the  Company  applies  the fair value  recognition  provisions  of FASB
         statement No. 123,  Accounting  for  Stock-Based  Compensation,  to the
         stock option plan.

                                      F-11

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       YEAR ENDED
                                                                   2004         2003
                                                                   ----         ----
<S>                                                            <C>          <C>
      Net income, as reported                                    $701,962     $734,264
      Deduct total stock-based employee compensation expense
            determined under fair value based methods for all
            awards, net of related tax effects                     (5,304)      (6,629)
                                                                 --------     --------

      Pro forma net income                                       $696,658     $727,635
                                                                 ========     ========

      Earnings per share:
          Basic-as reported                                         $1.09        $1.06
                                                                    =====        =====
          Basic-pro forma                                           $1.09        $1.05
                                                                    =====        =====

          Diluted-as reported                                       $1.04        $1.04
                                                                    =====        =====
          Diluted-pro forma                                         $1.03        $1.03
                                                                    =====        =====
</TABLE>

      For the purpose of computing  the pro forma effects of stock option grants
      under the fair value accounting method, the fair value of the stock option
      grant  was  estimated  on the date of the grant  using  the Black  Scholes
      option pricing model. The weighted average  grant-date fair value of stock
      options granted during fiscal year 2003 was $.89 per share.  The following
      weighted  average  assumptions were used for option grants made during the
      year ended September 30, 2003:

      Risk-free interest rate                                        4.25%
      Expected life (years)                                          9.50
      Expected volatility                                           20.00%
      Dividend yield                                                  .89%

      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
         Statement of Changes in Shareholders' Equity.

                                      F-12

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


      EARNINGS PER SHARE

         Earnings  per share  (EPS)  have  been  calculated  using the  weighted
         average  number  of  shares  outstanding.  For  purposes  of  computing
         weighted-average  shares  outstanding,  unallocated  shares  under  the
         Company's Employee Stock Ownership Plan and unvested shares held by the
         Bank's Restricted Stock Plan are not considered  outstanding until they
         are committed to be released for allocation.

      CONVERSION TO STOCK FORM OF OWNERSHIP

         The Company was incorporated under Pennsylvania law in December 2001 to
         acquire and hold all the outstanding  common stock of the Bank, as part
         of the Bank's conversion from a federally chartered mutual savings bank
         to a federally  chartered  stock savings  bank. In connection  with the
         conversion,  which was consummated on April 5, 2002, the Company issued
         and sold 757,500  shares of common stock at a price of $10.00 per share
         for total net  proceeds  of  $7,157,829  after  conversion  expenses of
         $417,171.  The Company retained $2,967,829 of the proceeds and used the
         remaining  proceeds to purchase the newly issued  capital  stock of the
         Bank in the amount of $3,600,000  and  originated a loan to the ESOP of
         $590,000.

         The Bank may not declare or pay a cash  dividend if the effect  thereof
         would  cause its net  worth to be  reduced  below  either  the  amounts
         required for the liquidation  account discussed below or the regulatory
         capital requirements imposed by federal and state regulations.

         At the time of conversion,  the Bank established a liquidation  account
         in an amount ($5.27  million) equal to its retained income as reflected
         in the latest  consolidated  balance sheet used in the final conversion
         prospectus.  The  liquidation  account is maintained for the benefit of
         eligible  account  holders  who  continue  to  maintain  their  deposit
         accounts  in the Bank  after  conversion.  In the  event of a  complete
         liquidation  of  the  Bank  (and  only  in  such  an  event),  eligible
         depositors  who  continue  to  maintain  accounts  shall be entitled to
         receive  a  distribution  from  the  liquidation   account  before  any
         liquidation may be made with respect to common stock.

                                      F-13

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      RECENT ACCOUNTING PRONOUNCEMENTS

         In December  2003 the Financial  Accounting  Standards  Board  ("FASB")
         revised FAS No. 132,  Employers'  Disclosures  About  Pension and Other
         Postretirement Benefit. This statement retains the disclosures required
         by FAS No. 132,  which  standardized  the disclosure  requirements  for
         pensions and other  postretirement  benefits to the extent  practicable
         and  requires   additional   information  on  changes  in  the  benefit
         obligations  and fair  value  of plan  assets.  Additional  disclosures
         include  information  describing  the types of plan assets,  investment
         strategy,  measurement  date(s),  plan  obligations,  cash  flows,  and
         components  of net periodic  benefit  cost  recognized  during  interim
         periods.  This statement  retains reduced  disclosure  requirements for
         nonpublic entities from FAS No. 132, and it includes reduced disclosure
         for certain of the new  requirements.  This  statement is effective for
         financial  statements with fiscal years ending after December 15, 2003.
         The interim  disclosures  required by this  statement are effective for
         interim periods  beginning after December 15, 2003. The Company adopted
         the  disclosure  provisions  of revised  FAS No. 132 for the year ended
         September 30, 2004.

         In  December   2003  the  American   Institute   of  Certified   Public
         Accountants,  Inc.  issued  Statement of Position (SOP) 03-3 Accounting
         for Certain Loans or Debt Securities  Acquired in a Transfer.  This SOP
         addresses accounting for differences between contractual cash flows and
         cash  flows  expected  to  be  collected  from  an  investors   initial
         investment in loans or debt securities (loan) acquired in a transfer if
         those  differences  are  attributable,  at  least in  part,  to  credit
         quality.   It  includes  such  loans  acquired  in  purchase   business
         combinations and applies to all  non-governmental  entities,  including
         not-for-profit  organizations.   This  SOP  does  not  apply  to  loans
         originated by the entity.  This SOP is effective for loans  acquired in
         fiscal years beginning on or before December 2004, and within the scope
         of Practice  Bulletin 6,  paragraphs 7 and 9 of this SOP, as they apply
         to  decrease  in cash  flows  expected  to be  collected,  should it be
         applied  prospectively  for fiscal years  beginning  after December 15,
         2004.  The  Company  will  evaluate  how this SOP will  apply to future
         acquisitions of loans, if any.

         In November  2003,  the  Emerging  Issues Task Force (EITF) of the FASB
         issued  EITF  Abstract  03-1,   The  Meaning  of   Other-Than-Temporary
         Impairment and its Application to Certain  Investments (EIFT 03-1). The
         quantitative  and qualitative  disclosure  provisions of EITF 03-1 were
         effective for years ending after  December 15, 2003. In March 2004, the
         EITF issued a Consensus on Issue 03-1  requiring that the provisions of
         EITF 03-1 be applied for  reporting  periods  beginning  after June 15,
         2004 to  investments  accounted  for  under  SFAS No.  115 and 124.  On
         September  30,  2004,  the  FASB  delayed  the  effective  date for the
         measurement and recognition  guidance  contained in paragraphs 10-20 of
         EITF 03-1. EITF 03-1 establishes a three-step  approach for determining
         whether an investment is considered  impaired,  whether that impairment
         is other-than-temporary, and the measurement of an impairment loss. The
         Company is in the process of determining  the impact that this EITF may
         have on its financial statements.

                                      F-14

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

 2.   SECURITIES HELD-TO-MATURITY

      The  amortized  cost and  fair  value of  securities  held-to-maturity  at
September 30, are summarized as follows:

                              ....................2004........................
                                            GROSS        GROSS
                             AMORTIZED   UNREALIZED    UNREALIZED      FAIR
                               COST        GAINS         LOSSES        VALUE
                            ----------   ----------   ----------    ----------
        Government agency   $1,510,767   $   50,530   $        -    $1,561,297
        Municipal bonds      2,041,020      107,952            -     2,148,972
        Corporate bonds        550,088       11,366       (4,715)      556,739
                            ----------   ----------   ----------    ----------

                 Total      $4,101,875   $  169,848   $   (4,715)   $4,267,008
                            ==========   ==========   ==========    ==========

                              ....................2003........................
                                            GROSS        GROSS
                             AMORTIZED   UNREALIZED    UNREALIZED      FAIR
                               COST        GAINS         LOSSES        VALUE
                            ----------   ----------   ----------    ----------

        Government agency   $1,516,430   $   98,417   $        -    $1,614,847
        Municipal bonds      2,040,533      132,132            -     2,172,665
        Corporate bonds        744,685       42,719            -       787,404
                            ----------   ----------   ----------    ----------

                 Total      $4,301,648   $  273,268   $        -    $4,574,916
                            ==========   ==========   ==========    ==========


      The  amortized  cost and  fair  value of  securities  held-to-maturity  at
      September 30, 2004, by contractual maturity are shown below.

                                                      .......SECURITIES.........
                                                      AMORTIZED         FAIR
                                                        COST           VALUE
                                                      ----------      ----------

         Due within one year                          $  100,000      $  101,856
         Due from one to five                            645,486         653,679
         Due from five to ten                          1,700,119       1,767,871
         Due after ten years                           1,656,270       1,743,602
                                                      ----------      ----------

                    Total                             $4,101,875      $4,267,008
                                                      ==========      ==========

                                      F-15

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

 3.   MORTGAGE-BACKED SECURITIES HELD-TO-MATURITY

      The  amortized   cost  and  fair  value  of   mortgage-backed   securities
      held-to-maturity at September 30, are summarized as follows:

<TABLE>
<CAPTION>
                                ........................2004..........................
                                                  GROSS        GROSS
                                 AMORTIZED     UNREALIZED    UNREALIZED      FAIR
                                   COST          GAINS         LOSSES        VALUE
                                ----------     ----------   ----------    ----------
<S>                           <C>           <C>           <C>            <C>
Government National Mortgage
   Association                 $   641,142   $     2,777   $    (1,916)   $   642,003
Federal Home Loan Mortgage
   Corporation                         918            72             -            990
Federal National Mortgage
   Association                   1,730,714        52,987             -      1,783,701
                               -----------   -----------   -----------    -----------

         Total                 $ 2,372,774   $    55,836   $    (1,916)   $ 2,426,694
                               ===========   ===========   ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                ........................2003..........................
                                                  GROSS        GROSS
                                 AMORTIZED     UNREALIZED    UNREALIZED      FAIR
                                   COST          GAINS         LOSSES        VALUE
                                ----------     ----------   ----------    ----------
<S>                           <C>           <C>           <C>            <C>
Government National Mortgage
   Association                 $   879,007   $     3,869   $    (2,954)   $   879,922
Federal Home Loan Mortgage
   Corporation                       1,768            71            (1)         1,838
Federal National Mortgage
   Association                   3,049,178        66,087             -      3,115,265
                               -----------   -----------   -----------    -----------

         Total                 $ 3,929,953   $    70,027   $    (2,955)   $ 3,997,025
                               ===========   ===========   ===========    ===========
</TABLE>


                                      F-16

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      The  amortized   cost  and  fair  value  of   mortgage-backed   securities
      held-to-maturity at September 30, 2004, by contractual  maturity are shown
      below.

                                                         MORTGAGE-BACKED
                                                    .......SECURITIES.........
                                                    AMORTIZED            FAIR
                                                      COST              VALUE
                                                   ----------        ----------

         Due within one year                       $      854        $      844
         Due from one to five                          22,306            22,406
         Due from five to ten                         288,526           297,383
         Due after ten years                        2,061,088         2,106,061
                                                   ----------        ----------

                    Total                          $2,372,774        $2,426,694
                                                   ==========        ==========


 4.   SECURITIES AVAILABLE-FOR-SALE

      The  amortized  cost and fair value of  securities  available-for-sale  at
      September 30, are summarized as follows:

<TABLE>
<CAPTION>
                                ........................2004...........................
                                                  GROSS          GROSS
                                   AMORTIZED   UNREALIZED      UNREALIZED      FAIR
                                     COST        GAINS           LOSSES        VALUE
                                  ----------   ----------     ----------    ----------

<S>                             <C>           <C>           <C>            <C>
Government agency                $ 5,986,799   $    15,186   $   (50,299)   $ 5,951,686
Corporate bonds                    4,223,780        27,524       (18,522)     4,232,782
Municipal bonds                      235,000        12,696             -        247,696
                                 -----------   -----------   -----------    -----------

       Total debt securities      10,445,579        55,406       (68,821)    10,432,164
                                 -----------   -----------   -----------    -----------

FHLMC/FNMA stock                     354,400         3,300        (8,000)       349,700
Mortgage security mutual fund      1,491,892             -       (19,477)     1,472,415
Corporate stock                    1,525,943       117,578       (21,900)     1,621,621
                                 -----------   -----------   -----------    -----------

       Total equity securities     3,372,235       120,878       (49,377)     3,443,736
                                 -----------   -----------   -----------    -----------

              Total              $13,817,814   $   176,284   $  (118,198)   $13,875,900
                                 ===========   ===========   ===========    ===========
</TABLE>

                                      F-17
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                ........................2003..........................
                                                  GROSS          GROSS
                                   AMORTIZED   UNREALIZED      UNREALIZED      FAIR
                                     COST        GAINS           LOSSES        VALUE
                                  ----------   ----------     ----------    ----------
<S>                             <C>           <C>           <C>            <C>

Government agency                $ 1,996,939   $    21,336   $   (13,819)   $ 2,004,456
Corporate bonds                    8,773,940       266,332        (7,948)     9,032,324
Municipal bonds                      165,000        13,144             -        178,144
                                 -----------   -----------   -----------    -----------

       Total debt securities      10,935,879       300,812       (21,767)    11,214,924
                                 -----------   -----------   -----------    -----------

FHLMC/FNMA stock                     408,100         4,000       (15,350)       396,750
Mortgage security mutual fund      1,996,964          --         (14,035)     1,982,929
Corporate stock                      752,250        47,115       (42,748)       756,617
                                 -----------   -----------   -----------    -----------

       Total equity securities     3,157,314        51,115       (72,133)     3,136,296
                                 -----------   -----------   -----------    -----------

              Total              $14,093,193   $   351,927   $   (93,900)   $14,351,220
                                 ===========   ===========   ===========    ===========
</TABLE>


      The amortized cost and fair value of debt securities available-for-sale at
      September 30, 2004 by  contractual  maturity are shown below.  Mutual fund
      shares and stocks have no maturity date.

                                                      .......SECURITIES.........
                                                      AMORTIZED        FAIR
                                                        COST           VALUE
                                                      ----------     ----------

         Due within one year                         $ 2,875,647    $ 2,890,085
         Due from one to five                          1,579,679      1,611,960
         Due from five to ten                          3,812,756      3,772,306
         Due after ten years                           2,177,497      2,157,813
                                                     -----------     ----------

                    Total                            $10,445,579    $10,432,164
                                                     ===========    ===========

                                      F-18
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

 5.   MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE

      The  amortized   cost  and  fair  value  of   mortgage-backed   securities
      available-for-sale at September 30, are summarized as follows:

<TABLE>
<CAPTION>
                                ....................2004........................
                                                GROSS        GROSS
                                 AMORTIZED   UNREALIZED    UNREALIZED      FAIR
                                   COST        GAINS         LOSSES        VALUE
                                ----------   ----------   ----------    ----------
<S>                        <C>           <C>           <C>            <C>
Federal National Mortgage
   Association               $ 7,865,819   $    16,076   $   (50,930)   $ 7,830,965
Federal Home Loan Mortgage
   Corporation                 3,244,887         4,701       (51,104)     3,198,484
                             -----------   -----------   -----------    -----------

         Total               $11,110,706   $    20,777   $  (102,034)   $11,029,449
                             ===========   ===========   ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                ....................2003........................
                                                GROSS        GROSS
                                 AMORTIZED   UNREALIZED    UNREALIZED      FAIR
                                   COST        GAINS         LOSSES        VALUE
                                ----------   ----------   ----------    ----------
<S>                        <C>           <C>           <C>            <C>
Federal National Mortgage
   Association               $ 7,706,131   $    45,533   $   (20,305)   $ 7,731,359
Federal Home Loan Mortgage
   Corporation                   369,291             -       (37,567)       331,724
                             -----------   -----------   -----------    -----------

         Total               $ 8,075,422   $    45,533   $   (57,872)   $ 8,063,083
                             ===========   ===========   ===========    ===========
</TABLE>


      The  amortized   cost  and  fair  value  of   mortgage-backed   securities
      available-for-sale  at September  30, 2004,  by  contractual  maturity are
      shown below.

                                                       AMORTIZED      FAIR
                                                         COST         VALUE
                                                      ----------   ----------
         Due within one year                         $         -   $        -
         Due from one to five                          1,256,972    1,251,918
         Due from five to ten                            832,700      833,161
         Due after ten years                           9,021,034    8,944,370
                                                      ----------   ----------

                    Total                            $11,110,706  $11,029,449
                                                     ===========  ===========

                                      F-19

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

 6.   UNREALIZED LOSSES ON SECURITIES

      The following table shows the Company's gross  unrealized  losses and fair
      value,  aggregated  by  category  and  length of time that the  individual
      securities have been in continuous  unrealized loss position, at September
      30, 2004.

<TABLE>
<CAPTION>
Securities Available-For-Sale              Less than 12 months           12 months of more                 Total
-----------------------------              -------------------           -----------------                 -----
                                            Fair        Unrealized       Fair        Unrealized       Fair       Unrealized
                                            Value         Losses         Value         Losses        Value         Losses
                                            -----         ------         -----         ------        -----         ------
<S>                                      <C>            <C>            <C>           <C>          <C>           <C>
Government agency                         $1,963,210     $(36,790)      $ 486,491     $(13,509)    $2,449,701    $ (50,299)
Corporate bonds                                    -            -       1,929,325      (18,522)     1,929,325      (18,522)
                                          ----------     --------       ---------     --------     ----------    ---------

     Total debt securities                 1,963,210      (36,790)      2,415,816      (32,031)     4,379,026      (68,821)

FHLMC/FNMA Stock                              92,000       (8,000)              -            -         92,000       (8,000)
Mortgage security mutual fund                      -      (19,477)      1,472,416            -      1,472,416      (19,477)
Corporate stock                              187,120            -               -      (21,900)       187,120      (21,900)
                                          ----------     --------       ---------     --------     ----------    ---------

     Total equity securities                 279,120      (27,477)      1,472,416      (21,900)     1,751,536      (49,377)
                                          ----------     --------       ---------     --------     ----------    ---------

Total temporarily impaired
   securities                             $2,242,330     $(64,267)     $3,888,232     $(53,931)    $6,130,562    $(118,198)
                                          ==========     ========      ==========     ========     ==========    =========

Mortgage-Backed Securities
Available-for-Sale                         Less than 12 months           12 months of more                 Total
------------------                         -------------------           -----------------                 -----
                                           Fair        Unrealized       Fair        Unrealized       Fair      Unrealized
                                           Value         Losses         Value         Losses        Value        Losses
                                           -----         ------         -----         ------        -----        ------

FNMA                                      $4,294,668     $(40,359)     $1,706,599     $(10,571)    $6,001,267   $ (50,930)
FHLMC                                      3,008,141      (51,104)              -            -      3,008,141     (51,104)
                                          ----------     --------       ---------     --------     ----------    ---------
     Total temporarily impaired
         securities                       $7,302,809     $(91,463)     $1,706,599     $(10,571)    $9,009,408   $(102,034)
                                          ==========     ========      ==========     ========     ==========   =========

Securities Held-to-Maturity                Less than 12 months           12 months of more                 Total
---------------------------                -------------------           -----------------                 -----
                                             Fair        Unrealized       Fair        Unrealized       Fair      Unrealized
                                             Value         Losses         Value         Losses        Value        Losses
                                             -----         ------         -----         ------        -----        ------

Corporate bonds                             $196,131      $(4,715)          $   -         $   -      $196,131      $(4,715)
                                            --------      -------           -----         -----      --------      -------
     Total temporarily impaired
        securities                          $196,131      $(4,715)          $   -         $   -      $196,131      $(4,715)
                                            ========      =======           =====         =====      ========      =======
</TABLE>

                                      F-20
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Mortgage-Backed Securities
Held-to-Maturity                           Less than 12 months           12 months of more                 Total
----------------                           -------------------           -----------------                 -----
                                              Fair        Unrealized       Fair        Unrealized       Fair      Unrealized
                                              Value         Losses         Value         Losses        Value        Losses
                                              -----         ------         -----         ------        -----        ------

<S>                                        <C>           <C>              <C>           <C>         <C>          <C>
GNMA                                        $255,851      $(1,709)         $5,546        $(207)      $261,397     $(1,916)
                                            --------      -------          ------        -----       --------     -------

     Total temporarily impaired
        Securities                          $255,851      $(1,709)         $5,546        $(207)      $261,397     $(1,916)
                                            ========      ========         ======        ======      ========     ========
</TABLE>

      The  policy  of the  Company  is to  recognize  an  other  than  temporary
      impairment on equity securities when the fair value has been significantly
      below cost for three consecutive quarters.  For fixed maturity investments
      with  unrealized  losses due to  interest  rates when the  Company has the
      positive  intent and ability to hold the  investment  for a period of time
      sufficient  to allow a market  recovery,  declines in value below cost are
      not assumed to be other than  temporary.  The Company reviews its position
      quarterly  and has  asserted  that at  September  30,  2004,  the declines
      outlined in the above table represent  temporary  declines and the Company
      does have the  intent  and  ability  to hold  those  securities  either to
      maturity or to allow a market recovery.The  Company has concluded that any
      impairment  of its  investment  securities  portfolio  is not  other  than
      temporary but is the result of interest rate changes, sector credit rating
      changes,  or  company-specific  rating  changes  that are not  expected to
      result in the non-collection of principal and interest during the period.

                                      F-21

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

 7.   LOANS, NET

      Loans, net at September 30 are summarized as follows:

<TABLE>
<CAPTION>
                                                                            2004               2003
                                                                        -----------        -----------
<S>                                                                   <C>                <C>
         First mortgage loans:
             One to four family                                         $25,204,583        $24,927,305
             Multi-family                                                   399,201            247,681
             Construction loans                                           5,643,683          5,543,356
             Commercial real estate                                       5,262,887          3,684,310
         Home equity and second mortgage                                  2,661,179          2,209,334
         Consumer loans:
             Secured                                                        225,023            264,823
             Unsecured                                                      199,596            184,626
             Share loans                                                    122,525            117,878
         Commercial business loans                                        1,080,928          1,388,803
                                                                        -----------        -----------

                Total                                                    40,799,605         38,568,116

         Less:      Undisbursed portion of construction loans             2,583,246          3,478,144
                    Allowance for loan losses                               199,024            192,519
                    Net deferred loan origination fees                       42,685             70,040
                                                                        -----------        -----------

                           Loans, net                                   $37,974,650        $34,827,413
                                                                        ===========        ===========
</TABLE>

     As of September 30, 2004,  the majority of the Company's loan portfolio was
     secured  by  properties  located  in  western  Pennsylvania.   The  Company
     evaluates  each  customer's  credit  worthiness  on a  case-by-case  basis.
     Collateral  held includes  mortgages on  residential  and  income-producing
     properties.  The Company does not believe it has significant  concentration
     of credit risk to any one group of  borrowers  given its  underwriting  and
     collateral requirements.

     In accordance with SFAS No. 114,  Accounting by Creditors for Impairment of
     a Loan, no loans in  non-homogenous  groups were  determined to be impaired
     for the years ended  September 30, 2004 and 2003.  Commercial  real estate,
     multi-family residential,  construction,  and commercial business loans are
     included in the non-homogenous group.

     Loans  which  are  contractually   past  due  ninety  days  or  more  total
     approximately $75,000 at September 30, 2004.

                                      F-22

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

      An analysis of the allowance for loan losses is as follows:

<TABLE>
<CAPTION>
                                                                         2004           2003
                                                                       --------       --------

<S>                                                                    <C>            <C>
         Beginning balance                                             $192,519       $181,835
         Provision for loan losses                                       18,000         18,000
         Charge-offs                                                    (11,495)        (7,316)
                                                                       --------       --------

         Ending balance                                                $199,024       $192,519
                                                                       ========       ========
</TABLE>

 8.   ACCRUED INTEREST RECEIVABLE

      Accrued interest receivable at September 30, is summarized as follows:

<TABLE>
<CAPTION>
                                                                        2004             2003
                                                                      --------        --------
<S>                                                                  <C>             <C>
         Loans receivable                                             $193,195        $190,376
         Investment securities                                         345,268         316,383
                                                                      --------        --------

                Total                                                  538,463         506,759

         Allowance for uncollectible interest                           (3,466)         (6,133)
                                                                      --------        --------

                                                                      $534,997        $500,626
                                                                      ========        ========
</TABLE>

 9.   PREMISES AND EQUIPMENT

      Premises and equipment at September 30, are summarized as follows:

<TABLE>
<CAPTION>
                                                                      2004               2003
                                                                  ----------          --------
<S>                                                              <C>                 <C>
         Land                                                     $   10,000          $ 10,000
         Buildings and improvements                                  552,292           429,713
         Furniture, fixtures, and equipment                          639,942           554,010
                                                                  ----------          --------

                       Total                                       1,202,234           993,723

         Accumulated depreciation                                   (762,429)         (712,312)
                                                                  ----------          --------

                              Premises and equipment, net         $  439,805          $281,411
                                                                  ==========          ========
</TABLE>

                                      F-23

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

10.   REAL ESTATE HELD FOR INVESTMENT

      Real estate held for investment at September 30 is summarized as follows:

<TABLE>
<CAPTION>
                                                                      2004               2003
                                                                    --------           --------
<S>                                                                <C>               <C>
         Land                                                        $32,100           $ 32,100
         Building                                                    122,202            122,202
                                                                    --------           --------

                                                                     154,302            154,302
         Less accumulated depreciation                                (7,770)                 -
                                                                    --------           --------

                       Total                                        $146,532           $154,302
                                                                    ========           ========
</TABLE>

      Rental income received from the use of the real estate was $5,775 for 2004
      and $4,800 for 2003.

11.   DEPOSITS

      Deposits at September 30, are summarized as follows:

<TABLE>
<CAPTION>
                                  .................2004...................     ..................2003.....................
                                  WEIGHTED                       PERCENT          WEIGHTED                      PERCENT
                                  INTEREST                          OF           INTEREST                          OF
                                    RATE          AMOUNT        PORTFOLIO         RATE          AMOUNT         PORTFOLIO
                                    ----          ------        ---------         ----          ------         ---------
<S>                              <C>          <C>             <C>              <C>           <C>                <C>
      NOW accounts                  0.90%        $ 7,525,285     12.6%            0.87%        $ 7,606,297         15.1%
      Savings accounts              2.00%         27,719,259     46.7%            2.00%         21,498,173         42.6%
                                                 -----------     ----                          -----------         -----

                                    1.76%         35,244,544     59.3%            1.71%         29,104,470         57.7%
                                                 -----------     ----                          -----------         -----
      Certificates of deposit:
         1.00% to 1.99%             1.51%          3,617,035      6.1%            1.56%          2,414,005          4.8%
         2.00% to 2.99%             2.55%          4,379,493      7.4%            2.50%          4,933,480          9.8%
         3.00% to 3.99%             3.45%          8,175,204     13.8%            3.42%          6,534,795         12.9%
         4.00% to 4.99%             4.19%          5,379,574      9.1%            4.17%          3,033,935          6.0%
         5.00% to 5.99%             5.22%          1,257,332      2.1%            5.23%          2,513,743          5.0%
         6.00% to 6.99%             6.43%            411,519       .7%            6.44%            903,914          1.8%
         7.00% to 7.99%             7.52%            872,918      1.5%            7.40%          1,030,021          2.0%
                                                 -----------     ----                          -----------         -----

                                    3.22%         24,093,075     40.7%            3.46%         21,363,893         42.3%
                                                 -----------     ----                          -----------         -----

                                    2.36%        $59,337,619    100.0%            2.45%        $50,468,363        100.0%
                                                 ===========    =====                          ===========        ======
</TABLE>

                                      F-24

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     At September 30, 2004, the aggregate  maturities of certificates of deposit
     are as follows:


         YEARS ENDING SEPTEMBER 30
         -------------------------

             2005                                  $ 9,154,176
             2006                                    5,397,005
             2007                                    4,186,109
             2008                                    1,957,783
             2009                                    3,398,002
                                                   -----------

                       Total                       $24,093,075
                                                   ===========

     Deposits in excess of $100,000 are not insured by the SAIF.  The  aggregate
     amount  of  certificates  of  deposit  at  September  30,  2004 and 2003 in
     denominations  of  $100,000  or more  totaled  $6,791,067  and  $5,941,890,
     respectively.  At  September  30,  2004,  the  Bank had  deposits  from its
     officers and directors totaling $196,353.

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


                                                    2004              2003
                                                 ----------       ----------

         NOW accounts                            $   69,778       $  118,250
         Savings accounts                           495,738          436,855
         Certificates of deposit                    748,476          891,356
                                                 ----------       ----------

                       Total                     $1,313,992       $1,446,461
                                                 ==========       ==========

                                      F-25

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

12.  ADVANCES FROM FEDERAL HOME LOAN BANK

     At September 30, 2004 the  following  advances  were  outstanding  from the
     Federal Home Loan Bank:


      LOAN          MATURITY      INTEREST
      TYPE            DATE          RATE            2004           2003
      ----            ----          ----            ----           ----

      Line          1/31/2004       1.31%           $    -     $1,234,394
      Term         10/27/2003       1.15%                -        500,000
      Term          3/18/2004       1.39%                -        628,815
      Term          6/14/2004       3.54%                -        500,000
      Term          3/18/2005       1.88%          754,475        754,475
      Term          6/13/2005       4.11%          500,000        500,000
      Term          7/25/2005       1.80%          500,000        500,000
      Term          3/20/2006       2.38%          754,475        754,475
      Term          6/13/2006       4.52%          500,000        500,000
      Term          3/19/2007       2.92%          503,155        503,155
      Term          6/13/2007       4.80%          500,000        500,000
      Term          3/18/2008       3.26%          503,155        503,155
      Term          6/13/2008       5.03%          500,000        500,000
      Term          6/15/2009       5.20%          500,000        500,000
                                                   -------        -------

                                                $5,515,260     $8,378,469
                                                ==========     ==========

                                                     2004           2003
                                                     ----           ----
                                                       (in thousands)

      Average balance during the year               $7,312        $ 7,018
      Maximum month-end balance during the year      8,333          9,489
      Average interest rate during the year           2.87%          3.19%
      Weighted-average rate at year-end               3.43%          2.85%

     The Bank has a line of credit of $4,000,000 from the Federal Home Loan Bank
     of Pittsburgh  (FHLB),  maturing  January 28, 2005 with an interest rate of
     1.99% at September  30, 2004.  The Bank had draws of $0 and  $1,234,394  on
     this line of credit at September 30, 2004 and 2003, respectively.

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

                                      F-26

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

13.   Financial Institutions Thrift Plan

      The Company participates in a Financial Institutions Thrift Plan. The Plan
      permits employees to contribute  various  percentages of their salary as a
      contribution to the Plan. The Company also contributes 50% of the member's
      contribution  to a maximum of 6% of the employees  eligible  compensation.
      Thrift  plan  expense  for the years  ended  September  30,  2004 and 2003
      amounted to $16,772 and $11,596, respectively.

14.   Income Taxes

      Income  tax  expense  (benefit)  for the  years  ended  September  30,  is
      summarized as follows:

                                                        2004            2003
                                                      --------       --------

         Federal:
             Current                                  $293,116       $320,998
             Deferred                                   16,794        (22,949)
                                                      --------       --------

                    Total                             $309,910       $298,049
                                                      ========       ========

         State,
             Current                                   $60,848        $65,689
                                                       =======        =======

         Totals:
             Current                                  $353,964       $386,687
             Deferred                                   16,794        (22,949)
                                                      --------       --------

                                                      $370,758       $363,738
                                                      ========       ========

      The differences  between actual income tax expense and the amount computed
      by applying the federal  statutory income tax rate of 34% to income before
      income taxes for the years ended September 30, are reconciled as follows:

                                                        2004           2003
                                                      --------       --------

         Computed income tax expense                  $364,725       $373,320
         Increase (decrease) resulting from:
             Federal tax-exempt income                 (34,586)       (34,318)
             State taxes (net of federal benefit)       40,160         43,462
             Other, net                                    459        (18,726)
                                                      --------       --------

         Actual income tax expense                    $370,758       $363,738
                                                      ========       ========

         Effective tax rate                               34.5%          33.1%
                                                          ====           ====

                                      F-27
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     The components of net deferred tax assets and  liabilities at September 30,
     are as follows:

<TABLE>
<CAPTION>
                                                                 2004        2003
                                                               --------    --------
<S>                                                          <C>         <C>
     Deferred tax assets:
         Allowance for loan losses                             $ 67,668    $ 65,456
         Directors' retirement plan/ESOP accrual                 26,090      17,903
         Impairment loss on securities held-to-maturity          31,502      31,502
         Unrealized loss on securities available-for-sale         9,515           -
         Other                                                    8,724       5,201
                                                               --------    --------

                Total                                           143,499     120,062
                                                               --------    --------

     Deferred tax liabilities:
         Premises and equipment                                 (43,527)    (12,542)
         Unrealized gain on securities available-for-sale             -    (102,203)
                                                               --------    --------

                Total                                           (43,527)   (114,745)
                                                               --------    --------

     Net deferred asset                                        $ 99,972    $  5,317
                                                               ========    ========
</TABLE>

     No valuation  allowance was  established at September 30, 2004 and 2003, in
     view of the Company's  ability to carryback  taxes paid in previous  years,
     future  anticipated  taxable  income,  which is evidenced by the  Company's
     earnings potential, and deferred tax liabilities at September 30.

     The  Company's  annual  addition to its reserve for bad debts allowed under
     the  Internal  Revenue  Code  may  differ  significantly  from the bad debt
     expense used for financial statement purposes. Such bad debt deductions for
     income tax purposes  are included in taxable  income of later years only if
     the bad debt  reserves are used for purposes  other than to absorb bad debt
     losses.  Since the Company  does not intend to use the reserve for purposes
     other than to absorb losses, no deferred income taxes have been provided on
     the amount of bad debt  reserves for tax  purposes  that arose in tax years
     beginning before December 31, 1987, in accordance with SFAS No. 109.

                                      F-28

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

15.  Other Noninterest Expense

     Other  noninterest  expense amounts are summarized as follows for the years
     ended September 30, 2004 and 2003:

                                                            2004          2003
                                                          --------     --------

         FHLB bank account expense                         $21,294      $25,568
         Advertising and promotion                          48,225       13,756
         Loan expenses                                       3,958        7,488
         Printing, stationery, and supplies                 21,750       11,708
         Telephone and postage                              30,357       26,011
         Seminars and training                              15,121       25,700
         Other insurance                                    22,578       15,149
         Cash (over) and short                                 404          178
         Bank transportation service                         5,404        6,453
         NOW expenses                                       25,563       29,793
         ATM and internet banking                           35,098       30,250
         Other                                              35,369       49,003
                                                          --------     --------

                    Total                                 $265,121     $241,057
                                                          ========     ========

16.  Regulatory Matters

     The  Company is not  required to  maintain  any  minimum  level of capital;
     however,  the Bank is subject to various  regulatory  capital  requirements
     administered  by its primary  regulator,  The Office of Thrift  Supervision
     (OTS).  Failure to meet minimum capital  requirements  can initiate certain
     mandatory,  and possibly  additional  discretionary,  actions by regulators
     that, if undertaken,  could have a direct  material effect on the Company's
     financial statements.  Under capital adequacy guidelines and the regulatory
     framework for prompt corrective action, the Bank must meet specific capital
     guidelines  that  involve  quantitative  measures  of  the  Bank's  assets,
     liabilities,  and  certain  off-balance-sheet  items  as  calculated  under
     regulatory   accounting   practices.   The  Bank's   capital   amounts  and
     classification are also subject to qualitative  judgments by the regulators
     about components, risk weightings, and other factors.

     Quantitative  measures established by regulation to ensure capital adequacy
     require  the  maintenance  of minimum  amounts and ratios (set forth in the
     table below) of total and Tier I capital (as defined in the regulations) to
     risk-weighted  assets (as  defined),  and of Tier I capital (as defined) to
     average assets (as defined). Management believes, as of September 30, 2004,
     that  the Bank  meets  all  capital  adequacy  requirements  to which it is
     subject.

                                      F-29

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     As of  September  30,  2004,  the  most  recent  notification  from the OTS
     categorized the Bank as "well capitalized"  under the regulatory  framework
     for prompt corrective  action. To be categorized as "well  capitalized" the
     Bank must maintain minimum total risk-based,  Tier I risk-based, and Tier I
     leverage ratios as set forth in the table below. There are no conditions or
     events since that notification that management  believes have changed those
     categories.

     OTS regulations impose  limitations upon all capital  distributions such as
     cash  dividends,  payments  to  repurchase  its  shares,  and  payments  to
     shareholders  of  another  institution  in a  cash-out  merger.  Under  the
     regulation, an application to and the approval of the OTS is required prior
     to any capital  distribution if the institution  does not meet the criteria
     for "expedited  treatment" of  applications  under OTS  regulations.  If an
     application  is not  required,  the  institution  must still  provide prior
     notice to the OTS of the capital  distribution  if, like the Bank,  it is a
     subsidiary of a holding company. In the event the Bank's capital fell below
     its regulatory  requirements  or the OTS notified it that it was in need of
     more  than  normal   supervision,   the  Bank's  ability  to  make  capital
     distributions  could be restricted.  In addition,  the OTS could prohibit a
     proposed capital distribution by any institution,  which would otherwise be
     permitted by the regulation,  if the OTS determines that such  distribution
     would  constitute an unsafe or unsound  practice.  The Bank paid $1,500,000
     and $0 in dividends to the Company in 2004 or 2003.

     The Bank's capital amounts are as follows:

<TABLE>
<CAPTION>
                                                                                                 TO BE WELL CAPITALIZED
                                                                     FOR CAPITAL ADEQUACY        UNDER PROMPT CORRECTIVE
                                           .......ACTUAL......        ......PURPOSES......     ...ACTION PROVISIONS....
                                             AMOUNT     RATIO           AMOUNT     RATIO          AMOUNT        RATIO
                                             ------     -----           ------     -----          ------        -----
<S>                                      <C>           <C>          <C>           <C>         <C>              <C>
As of September 30, 2004:
    Total Risk-Based Capital (to
      Risk-Weighted Assets)                $8,863,126    24.2%        $2,932,960    8.0%        $3,666,200       10.0%

    Tier I Capital
      (to Risk-Weighted Assets)            $8,664,102    23.6%        $1,466,480    4.0%        $2,199,720       6.0%

    Tier I Capital
      (to Adjusted Total Assets)           $8,664,102    11.5%        $3,002,505    4.0%        $3,753,131       5.0%

    Tangible Capital
      (to Adjusted Total Assets)           $8,664,102    11.5%        $1,125,939    1.5%        $3,753,131       5.0%

</TABLE>

                                      F-30

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     The following is a reconciliation of GAAP capital to regulatory capital:

         GAAP equity                                               $8,599,680
         Plus (less):
             Accumulated other comprehensive income                    64,422
                                                                   ----------

         Tangible capital                                           8,664,102

         Plus allowance for loan losses                               199,024
                                                                   ----------

         Total risk-based capital                                  $8,863,126
                                                                   ==========

<TABLE>
<CAPTION>
                                                                                                 TO BE WELL CAPITALIZED
                                                                     FOR CAPITAL ADEQUACY        UNDER PROMPT CORRECTIVE
                                           .......ACTUAL......        ......PURPOSES......     ...ACTION PROVISIONS....
                                             AMOUNT     RATIO           AMOUNT     RATIO          AMOUNT        RATIO
                                             ------     -----           ------     -----          ------        -----
<S>                                      <C>           <C>          <C>           <C>         <C>              <C>

As of September 30, 2003:
    Total Risk-Based Capital (to
      Risk-Weighted Assets)                $9,474,756    24.8%        $3,052,880    8.0%        $3,816,100       10.0%

    Tier I Capital
      (to Risk-Weighted Assets)            $9,282,237    24.3%        $1,526,440    4.0%        $2,289,660       6.0%

    Tier I Capital
      (to Adjusted Total Assets)           $9,282,237    13.3%        $2,787,407    4.0%        $3,484,259       5.0%

    Tangible Capital
      (to Adjusted Total Assets)           $9,282,237    13.3%        $1,045,278    1.5%        $3,484,259       5.0%
</TABLE>


     The following is a reconciliation of GAAP capital to regulatory capital:


         GAAP equity                                             $9,427,791
         Plus (less):
             Accumulated other comprehensive income                (145,554)
                                                                 ----------

         Tangible capital                                         9,282,237

         Plus allowance for loan losses                             192,519
                                                                 ----------

         Total risk-based capital                                $9,474,756
                                                                 ==========


                                      F-31

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

17.  Branch Office

     The Company  leases its branch  office  facility  under an operating  lease
     which expires February 20, 2007. Rent expense was $9,600 and $7,520 for the
     years ended September 30, 2004 and 2003, respectively.

18.  Commitments And Contingencies

     In the normal  course of  business,  the Company  has  various  outstanding
     commitments  and  contingent  liabilities  that  are not  reflected  in the
     accompanying financial statements. The financial commitments of the Company
     are as follows:

     The Company has outstanding commitments to originate loans as follows:

                                                        2004             2003
                                                        ----             ----

         Fixed rate first mortgage loans             $ 947,000         $536,000

         Variable rate:
             Home equity lines of credit               875,753          511,000
             Commercial business loans               1,856,155        1,389,000

     The range of interest rates on fixed rate first  mortgage loan  commitments
     were 5.375% to 7.00% as of September 30, 2004.

19.  Related Party Transactions

     Some of the  Company's  directors,  principal  officers,  and their related
     interests  had  transactions  with the  Company in the  ordinary  course of
     business during the fiscal year 2004. All loans and commitments to loans in
     such  transactions  were made on  substantially  the same terms,  including
     collateral  and  interest  rates,  as  those  prevailing  at the  time  for
     comparable transactions.  In the opinion of management,  these transactions
     do not involve  more than normal risk of  collectibility  or present  other
     unfavorable  features.  It is anticipated  that further such  extensions of
     credit will be made in the future.

     The aggregate  amount of credit  extended to these  directors and principal
     officers  was  $301,901  and  $321,503  at  September  30,  2004 and  2003,
     respectively.

                                      F-32

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     The  following is an analysis of loans to these  parties  during the fiscal
     year 2004:

         Balances at October 1, 2003                   $321,503
         Advances                                             -
         Repayments                                     (19,602)
                                                       --------

         Balances at September 30, 2004                $301,901
                                                       ========


20.  Directors' Retirement Plan

     Effective January 1, 2001, the Company  established a nonqualified  defined
     benefit  retirement plan which provides  benefits to its board of directors
     upon their retirement from the board.  The compensation  cost is recognized
     on the projected unit credit method over the remaining service lives of the
     individual  directors.  The Company  recorded  expense  related to the plan
     totaling  $30,729  during  the years  ended  September  30,  2004 and 2003,
     respectively.  The  following  table sets forth the  plan's  funded  status
     amounts recognized in the Company's balance sheet at September 30:

     The Company uses a September 30 measurement  date for its  plan.

     Obligations and Funded Status

     At September 30,

<TABLE>
<CAPTION>
                                                                        2004             2003
                                                                      --------         --------
<S>                                                                 <C>              <C>
         Change in benefit obligation:
             Benefit obligation at beginning of year                  $133,043         $154,095
             Service cost                                                2,811            2,811
             Interest cost                                               8,423            8,423
             Experience (gains)/losses including assumption changes    (21,772)         (22,986)
             Benefits paid                                              (9,300)          (9,300)
                                                                      --------         --------

             Benefit obligation at end of year                         113,205          133,043
                                                                      --------         --------

         Change in plan assets:
             Fair value of plan assets at beginning of year                  -                -
             Actual return on plan assets                                    -                -
             Employer contribution                                       9,300            9,300
             Benefits paid                                              (9,300)          (9,300)
                                                                      --------         --------

             Fair value of plan assets at end of year                        -                -
                                                                      --------         --------


                                      F-33

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

             Funded status                                             (113,966)        (133,804)
             Unrecognized net actuarial loss (gain)                     (28,650)          (6,878)
             Unrecognized prior service cost (benefit)                   86,571          101,000
                                                                      ---------        ---------

             Net amount recognized                                    $ (56,045)       $ (39,682)
                                                                      =========        =========
</TABLE>

     Amounts recognized in the balance sheet consist of:

<TABLE>
<CAPTION>
                                                                         2004             2003
                                                                       --------         --------
<S>                                                                  <C>              <C>
         Prepaid benefit cost                                          $      -         $      -
         Accrued benefit cost                                           (56,045)         (39,682)
         Intangible assets                                                    -                -
         Accumulated other comprehensive income                               -                -
                                                                       --------         --------

         Net amount recognized                                         $(56,045)        $(39,682)
                                                                       ========         ========
</TABLE>

     The  accumulated  benefit  obligation was $84,895 and $107,950 at September
     30, 2004 and 2003, respectively.

     Information for plans with an accumulated  benefit  obligation in excess of
     plan assets is as follows:

                                                               September 30,
                                                               -------------
                                                            2004          2003
                                                            ----          ----

         Projected benefit obligation                     $113,966      $133,804
         Accumulated benefit obligation                     84,895       107,950
         Fair value of plan assets                               -             -

      Components of Net Periodic Benefit Cost:

                                                             2004          2003
                                                             ----          ----

         Service cost                                       $2,811        $2,811
         Interest cost                                       8,423         8,423
         Expected return on plan assets                          -             -
         Amortization of prior service cost                 14,429        14,429
         Amortization of net (gain) loss                         -             -
                                                           -------       -------

         Net periodic benefit cost                         $25,663       $25,663
                                                           =======       =======

                                      F-34

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     Assumptions:

     Weighted-average  assumptions  used to  determine  benefit  obligations  at
     September 30 are as follows:


                                                             2004          2003
                                                             ----          ----

         Discount rate                                       6.25%         6.75%
         Rate of compensation increase                       5.00          5.00

     Weighted-average  assumptions  used to determine net periodic  benefit cost
     for years ended September 30, are as follows:

                                                             2004          2003
                                                             ----          ----

         Discount rate                                       6.25%         6.75%
         Expected long-term return on plan assets            7.00          7.00
         Rate of compensation increase                       5.00          5.00

     Contributions:The  Company  expects  to  contribute  $0  to  the  directors
     retirement plan in fiscal 2005.

     Estimated Future Benefit Payments:

     The  following   benefit   payments  which  reflect  future   service,   as
     appropriate, are expected to be paid:

         2005                                                $      -
         2006                                                       -
         2007                                                       -
         2008                                                       -
         2009                                                       -
         Years 2010 and thereafter                            113,966
                                                             --------
                                                             $113,966
                                                             ========

                                      F-35

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

21.  Earnings Per Share

     Earnings  per share is  computed  by  dividing  net income by the  weighted
     average number of common shares  outstanding,  less unallocated shares held
     by the Company's  Employee Stock  Ownership Plan (ESOP) and unvested shares
     held by the Bank's Restricted Stock Plan (RSP), during the period.  Diluted
     earnings  per share is  calculated  by dividing  net income by the weighted
     average number of common shares outstanding,  including the effect of stock
     options,  if dilutive,  in accordance  with SFAS 128.  Shareholders  of the
     Company ratified the adoption of the 2003 Stock Option Plan at a meeting of
     shareholders  on April 8,  2003.  The  computation  of basic  and  dulutive
     earnings per share is shown in the table below:

<TABLE>
<CAPTION>
                                                                   2004             2003
                                                                 --------         --------
<S>                                                            <C>              <C>
         Basic EPS Computation:
             Numerator-net income                                $701,962         $734,264
                                                                 ========         ========
             Denominator-weighted average number of shares
                outstanding                                       641,245          693,732
                                                                 --------         --------

             Basic EPS                                           $   1.09         $   1.06
                                                                 ========         ========

         Diluted EPS Computation:
             Numerator-net income                                $701,962         $734,264
                                                                 ========         ========
             Denominator-weighted average number of shares
                outstanding                                       641,245          693,732
             Dilutive stock options                                25,250                -
             Dilutive unvested RSP                                  7,575           11,363
                                                                 --------         --------
             Weighted average common shares and common stock
               equivalents                                        674,070          705,095
                                                                 ========         ========

             Diluted EPS                                         $   1.04         $   1.04
                                                                 ========         ========
</TABLE>

22.  Employee Stock Ownership Plan

     As part of the conversion  discussed in Note 1, an Employee Stock Ownership
     Plan (ESOP) was  established  for all employees who have completed one year
     of service and have attained the age of 21. The ESOP borrowed $590,000 from
     the Company and used the funds to purchase 59,000 shares of common stock of
     the Company  issued in the  offering.  The loan will be repaid  principally
     from the Company's  contributions to the ESOP over a period of 10 years. On
     September 30, 2004, the loan had an outstanding  balance of $472,000 and an
     interest  rate of  4.75%.  The loan  obligation  of the ESOP is  considered
     unearned  compensation  and,  as  such,  recorded  as a  reduction  of  the
     Company's  shareholders'  equity. Both the loan obligation and the unearned
     compensation  are reduced by an amount of the loan  repayments  made by the
     ESOP.  Shares  purchased with loan proceeds are held in a suspense  account
     for allocation among participants as the loan is

                                      F-36
<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     repaid.  Contributions  to the ESOP and shares  released  from the suspense
     account are allocated  among  participants  on the basis of compensation in
     the year of  allocation.  Benefits  become  fully vested at the end of five
     years of service under the terms of the ESOP Plan.  Benefits may be payable
     upon retirement,  death, disability,  or separation from service. Since the
     Company's annual  contributions are  discretionary,  benefits payable under
     the ESOP cannot be  estimated.  Compensation  expense is  recognized to the
     extent of the fair value of shares committed to be released.

     At  September  30,  2004,  14,750 ESOP shares  have been  allocated  to the
     participating  employees.  For purposes of computing  net income per share,
     the remaining  44,250  unallocated  shares are not  considered  outstanding
     until they are  committed-to-be-released  for  allocation.  The  Company is
     recognizing as compensation  expense the fair value of the Company's common
     stock allocated to participating employees. Compensation expense recognized
     by the  Company  during the years  ended  September  30,  2004 and 2003 was
     $98,040 and $97,254 respectively.

23.  Restricted Stock Plan (RSP)

     The Company  maintains a RSP for directors,  officers,  and employees.  The
     objective  of this plan is to enable the Company and the Bank to retain its
     corporate  directors,  officers,  and employees who have the experience and
     ability  necessary  to manage  these  entities.  Directors,  officers,  and
     employees  who are selected by members of a  Board-appointed  committee are
     eligible to receive benefits under the RSP. The  non-employee  directors of
     the  Company  and the Bank  serve  as  trustees  for the RSP,  and have the
     responsibility  to invest  all funds  contributed  by the Bank to the Trust
     created for the RSP.The Trust is authorized to purchase up to 30,300 shares
     for award.  The Trust acquired  15,150 shares and granted a total of 15,150
     shares of common  stock of which 3,787  shares  became  immediately  vested
     under the plan with the remaining  shares vesting over a three-year  period
     beginning  April 8,  2004.  A total  of  7,575  shares  were  vested  as of
     September 30, 2004.  The RSP shares  purchased  initially are excluded from
     shareholder's  equity. The Company recognizes  compensation  expense in the
     amount of fair value of the common stock at the grant date, pro rata,  over
     the years  during  which the shares are payable and recorded as an addition
     to  the  shareholder's  equity.  Directors,  officers,  and  employees  who
     terminate their association with the Company shall forfeit the right to any
     shares,  which  were  awarded  but  not  earned.

     Net compensation  expense attributable to the RSP's amounted to $84,914 and
     $42,457 for the years ended September 30, 2004 and 2003, respectively.

                                      F-37

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

24.  Stock Option Plan

     The Company maintains a Stock Option Plan for the directors,  officers, and
     employees.  An aggregate of 75,750 shares of authorized but unissued common
     stock of the Company were reserved for future issuance under this Plan. The
     stock  options  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.  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.

     The  following  table  presents  information  related  to  the  outstanding
     options:

<TABLE>
<CAPTION>
                                                  OFFICER'S     DIRECTOR'S
                                                    STOCK          STOCK          EXERCISE
                                                   OPTIONS        OPTIONS          PRICE
                                                   -------        -------          -----
<S>                                                <C>            <C>            <C>
      Outstanding, September 30, 2002                15,150         22,725         $17.00
             Granted                                      -              -            N/A
             Exercised                                    -              -            N/A
             Forfeited                                    -              -            N/A
                                                     ------         ------
      Outstanding, September 30, 2003                15,150         22,725         $17.00
             Granted                                      -              -            N/A
             Exercised                                    -              -            N/A
             Forfeited                                    -              -            N/A
                                                     ------         ------
      Outstanding, September 30, 2004                15,150         22,725         $17.00
                                                     ======         ======         ======

      Exercisable at year end                        10,100         15,150         $17.00
      Available for future grant                     15,150         22,725            N/A
</TABLE>

     There were 15,150 options  outstanding  for officers with an exercise price
     of $17.00 and a remaining  contractual  life of 8.5 years. The options vest
     1/3 at the date of the grant and 1/3 annually  thereafter.  There were also
     22,725 options  outstanding  for directors with an exercise price of $17.00
     and a remaining  contractual life of 8.5 years. The options vest 1/3 at the
     date of the grant and 1/3 annually thereafter.

25.  Financial Instruments With Off-Balance Sheet Risk

     The Company is a party to financial instruments with off-balance-sheet risk
     in the  normal  course  of  business  to meet  the  financing  needs of its
     customers.  These  financial  instruments  include  commitments  to  extend
     credit. These instruments  involve, to varying degrees,  elements of credit
     and interest  rate risk in excess of the amounts  recognized in the balance
     sheets.

                                      F-38

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     The Company's exposure to credit loss in the event of nonperformance by the
     other party to the financial  instruments  for commitments to extend credit
     is represented by the contractual notional amount of those instruments (See
     Note 18). The Company uses the same credit  policies in making  commitments
     and   conditional   obligations   as   it   does   for   on-balance   sheet
     instruments.Commitments  to  extend  credit  are  agreements  to  lend to a
     customer as long as there is no violation of any condition  established  in
     the contract.

     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do  not  necessarily  represent  future  cash  requirements.   The  Company
     evaluates each customer's  creditworthiness  on a case-by-case  basis.  The
     amount and type of collateral obtained,  if deemed necessary by the Company
     upon  extension  of  credit,  varies  and is based on  management's  credit
     evaluation of the counterparty.

26.  Fair Value Of Financial Instruments

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

<TABLE>
<CAPTION>
                                                     ...............2004................  ...........2003.............
                                                          NOTIONAL OR                        NOTIONAL OR
                                                           CARRYING           FAIR         CARRYING          FAIR
                                                           AMOUNT             VALUE          AMOUNT         VALUE

<S>                                                    <C>               <C>             <C>            <C>
      ASSETS:
         Cash and cash equivalents                       $ 4,929,002       $ 4,929,002     $3,349,969     $3,349,969
         Interest-bearing deposits in other
             banks                                           998,000           998,000      1,397,485      1,397,485
         Investment and mortgage backed
             securities                                   31,379,998        31,599,051     30,645,904     30,986,244
         Net loans receivable                             37,974,650        36,073,240     34,827,413     36,397,051
         FHLB stock                                          636,100           636,100        674,500        674,500
         Accrued interest receivable                         534,997           534,997        500,626        500,626

      LIABILITIES:
         Deposits                                        $59,337,619       $59,569,068    $50,468,363    $50,949,981
         FHLB advances                                     5,515,260         5,602,429      8,378,469      8,332,979
         Advances from borrowers for taxes and
             insurance                                        80,194            80,194         76,998         76,998
         Accrued interest payable                            114,960           114,960        122,542        122,542

      OFF BALANCE SHEET:
         Loan commitments                                 $3,679,000           $     -     $2,436,000        $     -
</TABLE>

                                      F-39

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     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 the Company are not
     considered financial instruments, but have value, this estimated fair value
     of financial  instruments  would not represent the full market value of the
     Company.

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

     Cash and  Cash  Equivalents,  Interest-bearing  Deposits  in  Other  Banks,
     Accrued  Interest  Receivable and Payable,  and Advances from Borrowers for
     Taxes and  Insurance  - The fair value  approximate  the  current  carrying
     value.

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

                                      F-40

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

     Loans  - For  variable-rate  loans  that  reprice  frequently  and  with no
     significant  change in  credit  risk,  fair  values  are based on  carrying
     amounts.  The fair values for other loans are  estimated  using  discounted
     cash flow  analysis,  based on interest rates  currently  being offered for
     loans with similar terms to borrowers of similar credit quality.  Loan fair
     value estimates include judgments regarding future expected loss experience
     and risk  characteristics.  Fair values for  impaired  loans are  estimated
     using discounted cash flow analysis or underlying  collateral values, where
     applicable.

     Deposits  -  The  fair  values   disclosed  for  demand  deposits  are,  by
     definition,  equal to the amount  payable on demand at the  reporting  date
     (that is, their carrying  amounts).  The carrying amounts of variable-rate,
     fixed-term  money-market  accounts and certificates of deposit  approximate
     their fair values.  Fair values for fixed-rate  certificates of deposit are
     estimated using a discounted cash flow  calculation  that applies  interest
     rates  currently  offered  on  certificates  to a  schedule  of  aggregated
     expected monthly maturities on time deposits.

     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.

     Commitments to Extend Credit - These  financial  instruments  are generally
     not subject to sale and  estimated  fair values are not readily  available.
     The  carrying  value 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 18 to  these  financial
     statements.

                                      F-41

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

27.  Parent Company Only

     Condensed  financial  information of RSV Bancorp,  Inc. on a parent company
     only basis is as follows:


                             CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
                                                       .........SEPTEMBER 30,........
                                                              2004           2003
                                                              ----           ----

<S>                                                     <C>            <C>
      ASSETS:
         Interest-bearing cash and cash equivalents      $     7,382    $   308,416
         Interest-bearing deposits in other banks            100,000        300,000
         Securities available-for-sale                     1,612,567        756,617
         Mortgage-backed securities available-for-sale       296,456        721,134
         Investment in subsidiary bank                     8,599,680      9,427,791
         Loan receivable                                     472,000        531,000
         Accrued interest receivable and other assets        754,692        414,072
         Premises and equipment, net                         146,532        154,302
                                                         -----------    -----------

                           TOTAL                         $11,989,309    $12,613,332
                                                         ===========    ===========

      LIABILITIES AND SHAREHOLDERS' EQUITY:
         Other liabilities                                 $  26,632       $ 16,583
         Shareholders' equity                             11,962,677     12,596,749
                                                         -----------    -----------

                           TOTAL                         $11,989,309    $12,613,332
                                                         ===========    ===========
</TABLE>

                                      F-42

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

                          CONDENSED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                                        YEARS ENDED
                                                              .........SEPTEMBER 30,........
                                                                  2004               2003
                                                                  ----               ----
<S>                                                         <C>                <C>
      INCOME:
         Loans                                                $   25,936         $  30,652
         Investment and mortgage-backed securities                54,333            93,835
         Interest-bearing cash and cash equivalents                  324             3,783
         Dividends from subsidiary                             1,500,000                 -
                                                              ----------         ---------

                Total income                                   1,580,593           128,270

      OTHER OPERATING REVENUE                                      5,553             5,005
      OTHER OPERATING EXPENSE                                   (119,782)         (140,470)
                                                              ----------         ---------

      INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
         EARNINGS OF SUBSIDIARY                                1,466,364            (7,195)

      EQUITY IN UNDISTRIBUTED EARNINGS
         OF SUBSIDIARY                                          (764,402)          738,744
                                                              ----------         ---------

      INCOME BEFORE INCOME TAXES                                 701,962           731,549

      INCOME TAXES (BENEFIT) EXPENSE                                   -            (2,715)
                                                              ----------         ---------

      NET INCOME                                              $  701,962         $ 734,264
                                                              ==========         =========
</TABLE>

                                      F-43

<PAGE>

RSV BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

                        CONDENSED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>

                                                                            YEARS ENDED
                                                                    ........SEPTEMBER 30.........
                                                                         2004           2003
                                                                    -----------    -----------
<S>                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                       $   701,962    $   734,264
   Adjustments to reconcile net income to net cash
       provided by operating activities:
          Undistributed net income of subsidiary                        764,402       (738,744)
          Amortization of investment discounts and premiums              21,337            622
          Depreciation                                                    7,770              -
          Compensation expense                                           98,040         46,091
          Gain on sale of investments                                   (32,643)             -
          Other                                                        (428,114)      (287,889)
                                                                    -----------    -----------

              Net cash provided by (used in) operating activities     1,132,754       (245,656)
                                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of investment and mortgage-backed
     securities available-for-sale                                     (933,448)      (752,250)
   Proceeds from repayments, calls, and maturities of
     investment and mortgage-backed securities available-for-sale       410,715      1,237,201
   Proceeds from sales of securities available-for-sale                 191,793              -
   Proceeds from maturities of interest bearing deposits in
     other banks                                                        200,000        299,000
   Purchase of premises and equipment                                         -        (77,357)
   ESOP loan                                                             59,000         59,000
                                                                    -----------    -----------

              Net cash (used in) provided by investing activities       (71,940)       765,594
                                                                    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITES
   Purchase of treasury stock                                        (1,185,960)      (342,033)
   Dividends paid                                                      (175,888)      (113,625)
                                                                    -----------    -----------

              Net cash used in financing activities                  (1,361,848)      (455,658)
                                                                    -----------    -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                  (301,034)        64,280

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                            308,416        244,136
                                                                    -----------    -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                              $     7,382    $   308,416
                                                                    ===========    ===========
</TABLE>

                                      F-44
<PAGE>

Corporate Information
---------------------

                                RSV BANCORP, INC.
                               2000 Mt. Troy Road
                         Pittsburgh, Pennsylvania 15212
                                 (412) 322-6107

                                  MT. TROY BANK
          Main Office                                     Branch Office
      2000 Mt. Troy Road                               7900 McKnight Road
Pittsburgh, Pennsylvania 15212                           McIntyre Square
        (412) 322-6107                           Pittsburgh, Pennsylvania  15237
                                                         (412) 366-4427


                               Board of Directors

                            David P. Butler, Chairman

                         Robert B. Shust, Vice Chairman

                                Timothy Schneider

                                 Brian S. Allen


                               Executive Officers

                           Gerard R. Kunic, President

                     Robert B. Kastan, Treasurer/Controller

                           Robert B. Shust, Secretary


                            Officers of Mt. Troy Bank

                   Debra S. Lafferty, Vice President - Lending

        Diane L. Edgar, Assistant Vice President and Assistant Secretary

                  Celeste P. Templin, Assistant Vice President

                            ------------------------

  Solicitor                                       Independent Auditor
  C L Tuttle, Attorney at Law                     Parente Randolph, LLC
  P.O. Box 24530                                  9401 McKnight Road
  Pittsburgh, Pennsylvania 15234                  Pittsburgh, Pennsylvania 15237

  Special Counsel                                 Transfer Agent and Registrar
  Malizia Spidi & Fisch, PC                       Registrar and Transfer Company
  1100 New York Avenue, N.W.                      10 Commerce Drive
  Suite 340 West                                  Cranford, New Jersey 07016
  Washington, D.C. 20005

------------------------
The Company's  Annual Report on Form 10-KSB for the fiscal year ended  September
30, 2004 is available  without  charge upon written  request.  For a copy of the
Form 10-KSB,  please write or call Mr.  Gerard R. Kunic,  President.  The Annual
Meeting of  Stockholders  will be held on January  25, 2005 at 11:00 a.m. at the
offices of Mt. Troy Bank, 2000 Mt. Troy Road, Pittsburgh, Pennsylvania.