SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

FORM 10-KSB (Mark One)

[X]  Annual report  pursuant to section 13 or 15 (d) of the Securities  Exchange
     Act of 1934 For the fiscal year ended           September 30, 2002
                                           -------------------------------------

                                      -OR-

[X]  Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange  Act of  1934  For  the  transition  period  from  ___________  to
     _____________.

                         Commission File Number: 0-49696
                                                 -------

                              RESERVE BANCORP, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


           Pennsylvania                                          23-3102103
-------------------------------                             --------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)


2000 Mt. Troy Road, Pittsburgh, Pennsylvania                             15212
--------------------------------------------                          ----------
(Address of Principal Executive Offices)                              (Zip Code)


Issuer's Telephone Number, Including Area Code:  (412) 322-6107
                                                 --------------

Securities registered under Section 12(b) of the Exchange Act:  None
                                                                ----

Securities registered under Section 12(g)
of the Exchange Act:                     Common Stock, par value $0.10 per share
                                         ---------------------------------------
                                                  (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. YES X  NO   .
                                                                      ---   ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year: $3.6 million.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant, based on the last sale price of the registrant's Common Stock on
December 16, 2002, was $8.6 million (648,136 shares at $13.25 per share).

     As of December  20,  2002,  there were  757,500  outstanding  shares of the
registrant's Common Stock.

     Transitional Small Business Disclosure Format (check one): YES     NO  X
                                                                    ---    ---

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     September 30, 2002. (Part II)
2.   Portions  of  the  Proxy   Statement   for  the  2003  Annual   Meeting  of
     Stockholders. (Part III)

<PAGE>


                                     PART I

Forward-Looking Statements

     Reserve Bancorp, Inc. (the "Company") may from time to time make written or
oral  "forward  looking  statements",  including  statements  contained  in  the
Company's  filings with the Securities and Exchange  Commission  (including this
Annual  Report on Form  10-KSB  and the  exhibits  thereto),  in its  reports to
stockholders and in other communications by the Company,  which are made in good
faith by the Company  pursuant to the "safe  harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995.

     These forward-looking  statements involve risks and uncertainties,  such as
statements  of the  Company's  plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in,  monetary  and fiscal  policies and
laws,  including interest rate policies of the Board of Governors of the Federal
Reserve System, inflation, interest rates, market and monetary fluctuations; the
timely development of and acceptance of new products and services of the Company
and the  perceived  overall  value of these  products  and  services  by  users,
including the features, pricing and quality as compared to competitors' products
and services;  the impact of changes in financial services' laws and regulations
(including  laws   concerning   taxes,   banking,   securities  and  insurance);
technological  changes;  acquisitions;  changes in consumer  spending and saving
habits;  and the  success of the Company at managing  the risks  resulting  from
these factors.

     The Company cautions that the listed factors are not exclusive. The Company
does not undertake to update any forward-looking  statement,  whether written or
oral, that may be made from time to time by or on behalf of the Company.

Item 1.  Description of Business.

General

     The Company is a Pennsylvania corporation organized in December 2001 at the
direction of Mt. Troy Bank (the "Bank") to acquire all of the capital stock that
the Bank  issued in its  conversion  from the mutual to stock form of  ownership
(the  "Conversion").  On April 5, 2002,  the Bank  completed the  Conversion and
became a wholly  owned  subsidiary  of the  Company.  The  Company  is a unitary
savings  and loan  holding  company  and  conducts  no  significant  business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and  investing the  Company's  portion of the net proceeds  obtained in the
Conversion.

     References  to the  Company or  Registrant  in this  Annual  Report on Form
10-KSB generally refer to the Company and the Bank, unless the context otherwise
indicates.

     The Bank is a federally  chartered  stock  savings  bank  headquartered  in
Reserve  Township,  near  Pittsburgh,  Pennsylvania,  with one branch  office in
Pittsburgh.  The Bank is subject to examination and comprehensive  regulation by
the Office of Thrift Supervision  ("OTS") and its deposits are federally insured
by the Savings Association Insurance Fund ("SAIF").  The Bank is a member of and
owns capital  stock in the FHLB of  Pittsburgh,  which is one of the 12 regional
banks in the FHLB System.


                                        2
<PAGE>

Market Area and Competition

     The  Bank  operates  from  its  main  office  in  Reserve  Township,   near
Pittsburgh,  Pennsylvania  and a  full-service  branch office  located  inside a
Shop'n  Save  supermarket  in  Pittsburgh.  The Bank's  primary  market  area is
Allegheny County,  Pennsylvania.  The Bank faces substantial  competition in its
attraction of deposits,  which are its primary source of funds for lending,  and
in the origination of consumer,  real estate,  and commercial  loans. The Bank's
competition for deposits and loans historically has come from local and regional
commercial banks, thrift  institutions,  and credit unions located in the Bank's
primary market area. The Bank also competes with mortgage banking  companies for
real estate loans,  and commercial  banks and savings  institutions for consumer
loans;  and faces  competition  for  investor  funds from mutual fund  accounts,
short-term money funds and corporate and government securities.

Lending Activities

     General.  The Bank primarily  originates  home  mortgages and  construction
loans  for its  own  portfolio.  The  Bank's  loan  portfolio  is  predominantly
comprised of one- to four-family  residential  real estate loans,  most of which
have fixed rates of interest.


                                        3

<PAGE>

     Loan Portfolio Composition. The following table analyzes the composition of
the Bank's loan portfolio by loan category at the dates indicated.


<TABLE>
                                                        At September 30,
                                             ----------------------------------------
                                                    2002                  2001
                                             ------------------    ------------------
                                              Amount    Percent     Amount    Percent
                                             --------   -------    --------   -------
                                                       (Dollars in Thousands)
<S>                                        <C>         <C>       <C>         <C>

Type of Loans:
First mortgage loans:
  One- to four family residential.........    $25,910     68.79%    $27,843     68.63%
  Multi-family............................        264      0.70         539      1.33
  Construction............................      4,935     13.10       6,156     15.17
  Commercial real estate..................      2,756      7.32       1,993      4.91

Home equity and second mortgage...........      2,632      6.99       2,701      6.66

Consumer loans:
  Secured.................................        330      0.88         490      1.21
  Unsecured...............................        217      0.58         245      0.60
  Share loans.............................        136      0.36         157      0.39

Commercial business loans.................        484      1.29         446      1.10
                                               ------    ------      ------    ------

Total loans...............................     37,664    100.00%     40,570    100.00%
                                                         ======                ======
Less:
  Undisbursed portions of
      construction loans..................      2,385                 2,568
  Net deferred loan origination fees......        182                   105
  Allowance for loan losses...............         80                   166
                                               ------                ------
Total loans, net..........................    $35,017               $37,731
                                               ======                ======

</TABLE>

                                        4

<PAGE>

     Loan  Maturity  Schedule.  The  following  table sets forth the maturity or
repricing of Bank's loan  portfolio at September 30, 2002.  Demand loans,  loans
having no stated maturity and overdrafts are shown as due in one year or less.

<TABLE>
                                                    Home Equity
                                                     and Second
                                   First Mortgage  Mortgage Loans  Consumer     Total
                                   --------------  --------------  --------   ---------
                                                      (In Thousands)
<S>                               <C>            <C>              <C>      <C>

Amounts Due:

Within 1 Year..................      $ 3,437        $  514           $153     $ 4,104
                                      ------         -----            ---      ------
After 1 year:
  1 to 3 years.................        3,262           297            191       3,750
  3 to 5 years.................        1,530           810            251       2,591
  5 to 10 years................        6,368           826             88       7,282
  10 to 15 years...............       14,380           669              -      15,049
  Over 15 years................        4,888             -              -       4,888
                                      ------         -----            ---      ------
Total due after one year.......       30,428         2,602            530      33,560
                                      ------         -----            ---      ------
Total amount due...............      $33,865        $3,116           $683     $37,664
                                      ======         =====            ===      ======
</TABLE>


     The following  table sets forth the dollar amount of all loans at September
30, 2002 due after September 30, 2003, which have fixed interest rates and which
have floating or adjustable interest rates.


                                                      Floating or
                                     Fixed Rates    Adjustable Rates   Total
                                     -----------    ----------------  --------
                                                     (In Thousands)

First Mortgage....................      $30,312          $116         $30,428
Home equity and second mortgage...        1,789           813           2,602
Consumer..........................          530             -             530
                                         ------           ---          ------
  Total...........................      $32,631          $929         $33,560
                                         ======           ===          ======


     Residential  Lending.  The Bank's primary lending activity  consists of the
origination of one- to  four-family  mortgage  loans,  the majority of which are
secured by property  located in Allegheny  County,  Pennsylvania.  The Bank will
generally  originate a mortgage loan in an amount up to 95% of the lesser of the
appraised  value or selling  price of a  mortgaged  property,  however,  private
mortgage insurance for the borrower is required on the amount financed in excess
of 80%.

     The Bank  originates  fixed rate mortgage loans for its own portfolio.  The
fixed rate mortgage  loans have terms of ten to thirty years.  Although the Bank
currently originates loans only for its own portfolio,  the Bank generally makes
its fixed rate mortgage loans to meet the secondary mortgage market standards of
the Federal Home Loan Mortgage Corporation  ("FHLMC").  The Bank also makes some
non- conforming loans in order to meet the needs of its community and customers.

     Substantially all of the Bank's residential mortgages include "due on sale"
clauses,  which  are  provisions  giving  the Bank the  right to  declare a loan
immediately payable if the borrower sells or


                                        5
<PAGE>

otherwise  transfers  an interest in the  property  to a third  party.  Property
appraisals on real estate securing the Bank's  single-family  residential  loans
are made by state certified or licensed  independent  appraisers approved by the
Board of  Directors.  Appraisals  are performed in  accordance  with  applicable
regulations  and policies.  The Bank requires  title  insurance  policies on all
first mortgage real estate loans originated.  All property secured loans require
fire and casualty insurance.  Loans made on property located in designated flood
zones require minimum flood insurance coverage based on the amount of the loan.

     Construction   Lending.   The  Bank  originates   construction   loans  for
single-family  residential  properties in the Bank's  market area.  Construction
loans are made to local builders on a speculative basis.  Construction loans and
the  permanent end mortgage  loan are made to owners for  construction  of their
primary residences. The Bank generally limits residential construction loans for
speculative  purposes to not more than two units per builder.  At September  30,
2002, the Bank had 12 construction  loans  outstanding with an aggregate balance
of  approximately  $4.9 million,  or 13.1% of the total loan portfolio.  Of such
amount, approximately $2.4 million was undisbursed at September 30, 2002.

     Construction  lending is generally considered to involve a higher degree of
credit risk than long- term permanent financing of residential  properties.  The
Bank's  risk of loss  on a  construction  loan is  dependent  largely  upon  the
accuracy  of the initial  estimate  of the  property's  value at  completion  of
construction  and  the  estimated  cost  of  construction.  If the  estimate  of
construction  cost and the  marketability of the property upon completion of the
project prove to be inaccurate,  the Bank may be compelled to advance additional
funds to  complete  the  construction.  Furthermore,  if the final  value of the
completed  property is less than the estimated amount, the value of the property
might not be sufficient to assure the repayment of the loan.

     Commercial  Real Estate  Loans.  The Bank  originates  a limited  number of
commercial  real  estate   mortgage  loans,   including  loans  on  multi-family
dwellings,  retail/service  space, and other income- producing  properties.  The
Bank requires no less than 20%  downpayment or equity for commercial real estate
mortgage loans. Typically these loans are made with fixed rates of interest with
terms of up to fifteen  years.  Essentially  all of the Bank's  commercial  real
estate loans are within the Bank's market area and all are within  Pennsylvania.
As of September 30, 2002, the Bank had commercial  real estate loans,  totalling
$2.8  million or 7.3% of the Bank's  total loan  portfolio.  The Bank's  largest
commercial real estate loan had a balance of approximately $499,000 on September
30,  2002 and was  secured by an office  building  located in the Bank's  market
area.

     Commercial   real  estate  loans   generally   are   considered  to  entail
significantly  greater risk than that which is involved  with single family real
estate  lending.  The  repayment  of these loans  typically  is dependent on the
successful  operations and income stream of the  commercial  real estate and the
borrower.  These risks can be significantly affected by economic conditions.  In
addition,  commercial  real  estate  lending  generally  requires  substantially
greater  evaluation and oversight  efforts  compared to residential  real estate
lending.

     Home Equity and Second  Mortgage  Loans.  Home  equity and second  mortgage
loans are  originated  in the Bank's  market area and have  maturities  of up to
fifteen  years.   Outside   professionals  are  generally  employed  to  conduct
appraisals for loans over $50,000. At September 30, 2002, the Bank's home equity
and second mortgage loans totaled $2.6 million, or 7.0% of total loans.

     Consumer  Loans.  At  September  30,  2002,   consumer  loans  amounted  to
approximately $683,000 or 1.8% of the Bank's total loan portfolio, most of which
are auto loans. Consumer loans also consist of

                                        6

<PAGE>

personal  loans  (unsecured),  savings  secured loans (share loans) and personal
lines of credit.  Consumer  loans are  originated  in the Bank's market area and
generally have  maturities of up to five years.  For share loans,  the Bank will
generally lend up to 90% of the account balance.

     Consumer loans  generally have shorter terms and higher interest rates than
residential  loans.  The consumer  loan market can be helpful in  improving  the
spread  between  average  loan  yield  and  costs of funds  and at the same time
improve the matching of the rate sensitive assets and liabilities.

     Consumer  loans  entail  greater  risks than  residential  mortgage  loans,
particularly  consumer  loans  secured by  rapidly  depreciable  assets  such as
automobiles  or  loans  that are  unsecured.  In these  cases,  any  repossessed
collateral from a defaulted loan may not provide an adequate source of repayment
of the outstanding loan balance,  since there is a greater likelihood of damage,
loss or  depreciation  of the  underlying  collateral.  Further,  consumer  loan
collections are dependent on the borrower's  continuing  financial stability and
are more  likely to be  adversely  affected  by job loss,  divorce,  illness  or
personal bankruptcy. Finally, the application of various federal laws, including
federal and state bankruptcy and insolvency laws, may limit the amount which can
be recovered on consumer loans in the event of a default.

     The underwriting  standards employed by the Bank for consumer loans include
a  determination  of the  applicant's  credit  history and an  assessment of the
applicant's  ability to meet existing  obligations  and payments on the proposed
loan.  The  stability of the  applicant's  monthly  income may be  determined by
verification of gross monthly income from primary  employment,  and additionally
from any verifiable  secondary income.  Creditworthiness  of the applicant is of
primary  consideration;  however,  the  underwriting  process  also  includes  a
comparison  of the value of the  collateral  in  relation to the  proposed  loan
amount. The Bank's president is authorized to approve consumer loan applications
up to  $10,000.  Consumer  loans  over  $10,000  are  approved  by the  Board of
Directors.

     Loans to One  Borrower.  Under  federal  law,  savings  institutions  have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the  institution's  unimpaired  capital and
surplus. Accordingly, as of September 30, 2002, the Bank's loans to one borrower
limit was approximately $1,311,000.

     Loan  Originations,  Purchases and Solicitation and Processing.  The Bank's
customary  sources of loan applications  include repeat  customers,  real-estate
broker referrals,  builders and "walk-in" customers. The Bank generally does not
purchase loans, except for a few commercial real estate participation  interests
from local financial institutions secured by real estate in its market area.

     The Bank periodically  purchases  participation  loans from local financial
institutions  and  sells  participation  interest  in loans in  connection  with
commercial real estate loans and construction  loans that would otherwise exceed
the Bank's  loan-to-one-borrower  limit.  At September  30,  2002,  the Bank had
approximately  $1.3 million,  or 3.5% of its total loan  portfolio,  in purchase
participation loans consisting  primarily of commercial real estate loans in its
market area.

     Loan  Commitments.  The  Bank  gives  written  commitments  to  prospective
borrowers on all  residential,  commercial  and  speculative  construction  real
estate loans.  Generally,  the commitment requires acceptance within thirty days
of the date of the  issuance.  The total  amount of the  Bank's  commitments  to
extend  credit for  mortgage and consumer  loans as of September  30, 2002,  was
approximately $1,277,000, excluding commitments on lines of credit.


                                        7
<PAGE>

     Loan  Origination  and Other Loan Fees.  In addition to interest  earned on
loans, the Bank may receive loan origination and commitment fees for originating
or purchasing  certain loans.  Except for  construction,  commercial real estate
loans and  balloon  mortgage  loans,  the Bank  generally  does not charge  loan
origination fees or points on loans.

     The Bank also receives other fees and charges  relating to existing  loans,
which include late charges,  and fees  collected in connection  with a change in
borrower  or  other  loan  modifications.   These  fees  and  charges  have  not
constituted a material source of income.

Non-Performing Loans and Problem Assets

     Collection  Procedures.  The  borrower  is  notified by mail when a loan is
thirty days delinquent.  If the delinquency  continues,  subsequent  efforts are
made to contact the delinquent  borrower and a second collection notice is sent.
When a loan is  ninety  days  delinquent,  it is  referred  to an  attorney  for
repossession and foreclosure.  All reasonable  attempts are made to collect from
borrowers prior to referral to an attorney for collection. In certain instances,
the Bank may modify the loan or grant a limited  moratorium  on loan payments to
enable the borrower to reorganize his financial affairs and the Bank attempts to
work  with  the  borrower  to  establish  a  repayment   schedule  to  cure  the
delinquency.

     As to mortgage loans, if a foreclosure  action is taken and the loan is not
reinstated, paid in full or refinanced, the property is sold at judicial sale at
which the Bank may be the buyer if there are no  adequate  offers to satisfy the
debt.  Any property  acquired as the result of foreclosure or by deed in lieu of
foreclosure  is  classified  as real estate  owned  ("REO")  until it is sold or
otherwise  disposed of by the Bank. When REO is acquired,  it is recorded at the
lower of the unpaid  principal  balance of the  related  loan or its fair market
value less  estimated  selling costs.  The initial  writedown of the property is
charged to the allowance for loan losses.  Adjustments  to the carrying value of
the  properties  that  result from  subsequent  declines in value are charged to
operations in the period in which the declines occur. At September 30, 2002, the
Bank held no real estate owned.

     Loans are  reviewed  on a regular  basis  and are  placed on a  non-accrual
status when they are more than ninety days delinquent.  Loans may be placed on a
non-accrual status at any time if, in the opinion of management,  the collection
of additional  interest is doubtful.  Interest  accrued and unpaid at the time a
loan is placed  on  non-accrual  status  is  charged  against  interest  income.
Subsequent  payments are either applied to the outstanding  principal balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility  of the loan. At September 30, 2002,  the Bank had  approximately
$385,000 of loans that were held on a non-accrual basis.

     Non-Performing  Assets. The following table provides information  regarding
the Bank's non- performing loans and other  non-performing  assets as of the end
of each of the last two fiscal  years.  As of each of the dates  indicated,  the
Bank did not  have any  troubled  debt  restructurings  within  the  meaning  of
Statement of Financial  Accounting  Standards  ("SFAS") 15 and no impaired loans
within the meaning of SFAS 114, as amended by SFAS 118.


                                        8


<PAGE>
                                                           At September 30,
                                                         -------------------
                                                          2002         2001
                                                         ------       ------
                                                         (Dollars in Thousands)
Loans accounted for on a non-accrual basis:
First mortgage loans................................      $384         $ 72
Home equity and second mortgage.....................         -            -
Consumer loans......................................         1            2
                                                           ---          ---
Total...............................................      $385         $ 74
                                                           ===          ===
Accruing loans which are contractually past
 due 90 days or more:
First mortgage loans................................      $  -         $  -
Home equity and second mortgage.....................         -            -
Consumer loans......................................         -            -
                                                           ===          ===
Total...............................................      $  -         $  -
                                                           ===          ===
Total non-performing loans..........................      $385         $ 74
                                                           ===          ===
Real estate owned...................................      $  -         $  -
                                                           ===          ===
Other non-performing assets.........................      $  -         $  -
                                                           ===          ===
Total non-performing assets.........................      $385         $ 74
                                                           ===          ===
Total non-performing loans to net loans.............      1.10%        0.20%
                                                          ====         ====
Total non-performing loans to total assets..........      0.64%        0.17%
                                                          ====         ====
Total non-performing assets to total assets.........      0.64%        0.17%
                                                          ====         ====


     For the year ended  September  30, 2002,  the amount of interest that would
have been recorded on loans accounted for on a non-accrual  basis if those loans
had been current according to the original loan agreements for the entire period
was $35,254.  This amount was not included in the Bank's interest income for the
period.  The amount of interest  income on loans  accounted for on a non-accrual
basis that was included in income  during the year ended  September 30, 2002 was
$10,268.

     Classified  Assets.  Management,  in compliance  with OTS  guidelines,  has
instituted an internal  loan review  program,  whereby  loans are  classified as
special  mention,  substandard,  doubtful or loss.  When a loan is classified as
substandard or doubtful, management is required to establish a valuation reserve
for loan losses in an amount considered  prudent by management.  When management
classifies  a portion  of a loan as loss,  a  reserve  equal to 100% of the loss
amount is required to be established or the loan is to be charged-off.

     An asset is considered "substandard" if it is inadequately protected by the
paying capacity and net worth of the obligor or the collateral  pledged, if any.
Substandard assets include those characterized by the distinct  possibility that
the insured  institution  will  sustain  some loss if the  deficiencies  are not
corrected.

                                        9
<PAGE>

Assets  classified  as  doubtful  have all of the  weaknesses  inherent in those
classified  substandard,  with the  added  characteristic  that  the  weaknesses
present  make  collection  or  liquidation  in  full,  highly  questionable  and
improbable,  on the basis of currently existing facts,  conditions,  and values.
Assets  classified as loss are those considered  uncollectible  and of so little
value that their  continuance as assets without the  establishment of a specific
loss reserve is not warranted.  Assets which do not currently expose the insured
institution to a sufficient  degree of risk to warrant  classification in one of
the  aforementioned  categories  but possess  credit  deficiencies  or potential
weaknesses are required to be designated special mention by management.

     Management's evaluation of the classification of assets and the adequacy of
the allowance for loan losses is reviewed by the Board on a regular basis and by
the regulatory  agencies as part of their examination  process. At September 30,
2002,  the Bank had $71,000 of loans  classified as  "substandard,"  $385,000 of
loans classified as "doubtful" and $0 of loans classified as "loss."

     Allowance  for Loan Losses.  The  allowance  for loan losses is a valuation
account that reflects the Bank's  evaluation of the losses known and inherent in
its loan portfolio that are both probable and reasonable to estimate  associated
both with lending  activities and particular  problem assets. The Bank maintains
the allowance  through  provisions for loan losses that are charged to income in
the period they are  established.  The Bank charges  losses on loans against the
allowance for loan losses when it believes the  collection of loan  principal is
unlikely.  Recoveries  on loans  previously  charged-off  are added  back to the
allowance.

     The Bank's evaluation of the appropriate  amount to provide for loan losses
includes  separate review of all loans on which the  collectibility of principal
may  not  be  reasonably  assured.  The  Bank  evaluates  all  classified  loans
individually  and bases its  determination of a loss factor on the likelihood of
collectibility  of  principal  including  consideration  of  the  value  of  the
underlying  collateral  securing the loan.  Larger loans,  which would generally
include  multi-family   mortgages,   other  commercial  real  estate  loans  and
construction  loans, are also generally  evaluated for impairment  individually.
The  Bank  also  segregates  loans  by loan  category  as part of its  allowance
evaluation, and evaluates homogenous loans as a group.

     Although  there may be other  factors  that also warrant  consideration  in
maintaining  an  allowance  at a level  sufficient  to provide for  probable and
reasonably  estimable  losses,  the Bank  considers  the  following  factors  in
connection with its determination of appropriate loss factors and as part of its
overall evaluation of the allowance for loan losses:

     o    its historical loan loss experience;
     o    internal analysis of credit quality;
     o    general levels of non-performing loans and delinquencies;
     o    changes in loan concentrations by loan category;
     o    current estimated collateral values;
     o    peer group information;
     o    evaluation   of   credit   quality   conducted   in  bank   regulatory
          examinations; and
     o    economic and market trends impacting the Bank's lending area.


     In recent years, the Bank's  charge-offs  have been low and,  consequently,
additions to the allowance have been more reflective of other factors.


                                       10
<PAGE>

     This evaluation is inherently  subjective as it requires estimates that are
susceptible to significant revisions as more information becomes available or as
future events change.  Future  additions to the allowance for loan losses may be
necessary if economic and other  conditions in the future  differ  substantially
from the current operating environment. In addition, the OTS as an integral part
of its examination process,  periodically reviews the Bank's loan and foreclosed
real estate  portfolios and the related  allowance for loan losses and valuation
allowance for foreclosed  real estate.  The OTS may require the Bank to increase
the  allowance for loan losses or the valuation  allowance for  foreclosed  real
estate  based  on  its  review  of  information  available  at the  time  of the
examination, which would negatively affect the Bank's earnings.

     It is the Bank's policy to review its loan  portfolio,  in accordance  with
regulatory   classification   procedures,   on  at  least  a  quarterly   basis.
Additionally,  the Bank maintains a program of reviewing loan applications prior
to making the loan and immediately after loans are made in an effort to maintain
loan quality.

     The  following  table sets  forth  information  with  respect to the Bank's
allowance for loan losses at the dates indicated:


<TABLE>
                                                                          At September 30,
                                                                         ------------------
                                                                          2002        2001
                                                                         -------    -------
                                                                        (Dollars in Thousands)
<S>                                                                   <C>        <C>

Allowance balance (at beginning of period)..........................     $   166    $   153
                                                                          ------     ------
Provision for loan losses...........................................          18         18
                                                                          ------     ------
Charge-offs:
  First mortgage....................................................           -          -
  Home equity and second mortgage...................................           -          -
  Consumer..........................................................           3          5
                                                                          ------     ------
Total charge-offs...................................................           3          5
Recoveries..........................................................           1          -
                                                                          ------     ------
Net (charge-offs) recoveries........................................          (2)        (5)
                                                                          ------     ------
Allowance balance (at end of period)................................     $   182    $   166
                                                                          ======     ======
Total loans outstanding.............................................     $37,664    $40,570
                                                                          ======     ======
Average loans outstanding...........................................     $38,493    $38,777
                                                                          ======     ======
Allowance for loan losses as a percent of total loans outstanding...        0.48%      0.41%
                                                                            ====       ====
Net loans charged off as a percent of average loans outstanding.....        0.01%      0.01%
                                                                            ====       ====
</TABLE>


     Allocation of Allowance for Loan Losses. The following table sets forth the
allocation of the Bank's allowance for loan losses by collateral and the percent
of  loans  in each  category  to  total  loans  receivable,  net,  at the  dates
indicated. Management determines the allocation of the Bank's allowance for loan
losses  based  on its  assessment  of the  risk  characteristics  of  each  loan
category.  The change in allocation of the allowance  from period to period also
reflects the relative balances at year end of each loan category. The portion of
the loan loss  allowance  allocated to each loan category does not represent the
total  available for losses which may occur within the loan  category  since the
total loan loss allowance is a valuation  reserve  applicable to the entire loan
portfolio. The allocation is subject to change as management's assessment of the
risk characteristics of each loan category may change from time to time.

                                       11

<PAGE>

<TABLE>
                                                       At September 30,
                                        --------------------------------------------
                                                2002                    2001
                                        --------------------    --------------------
                                                 Percent of              Percent of
                                                  Loans to                Loans to
                                         Amount  Total Loans    Amount   Total Loans
                                         ------  -----------    ------   -----------
                                                    (Dollars in Thousands)
<S>                                     <C>      <C>          <C>        <C>

At end of period allocated to:
First mortgage.........................    $168     92.31%       $144       90.04%
Home equity and second mortgage........       8      4.40          14        7.76
Consumer...............................       6      3.29           7        2.20
                                            ---    ------         ---      ------
Total allowance........................    $182    100.00%       $166      100.00%
                                            ===    ======         ===      ======
</TABLE>


Investment Activities

     General.  Federally chartered savings banks have the authority to invest in
various  types  of  liquid  assets,   including  United  States  Government  and
government  agency  obligations,  securities  of various  federal  agencies  and
government-sponsored    entities   (including   securities   collateralized   by
mortgages),  certificates of deposits of insured banks and savings institutions,
municipal securities and corporate debt securities.

     SFAS No.  115,  "Accounting  for  Certain  Investments  in Debt and  Equity
Securities,"  requires  that  securities be  categorized  as "held to maturity,"
"trading securities" or "available for sale," based on management's intent as to
the ultimate  disposition of each security.  SFAS No. 115 allows debt securities
to be classified  as "held to maturity" and reported in financial  statements at
amortized cost only if the reporting  entity has the positive intent and ability
to hold these securities to maturity.  Securities that might be sold in response
to changes in market interest rates, changes in the security's  prepayment risk,
increases in loan demand, or other similar factors cannot be classified as "held
to maturity."

     The Company does not currently use or maintain a trading account.  Debt and
equity  securities  not  classified  as "held to  maturity"  are  classified  as
"available  for  sale."  These  securities  are  reported  at  fair  value,  and
unrealized  gains and losses on the  securities  are excluded  from earnings and
reported,  net of deferred taxes, as a separate component of equity. The Company
consults  with  an  outside   investment  advisor  in  managing  its  investment
portfolio.

     All of the Company's  securities  carry market risk insofar as increases in
market rates of interest may cause a decrease in their market value. Investments
in  securities  are made  based on certain  considerations,  which  include  the
interest rate, tax  considerations,  yield,  settlement date and maturity of the
security,  the Company's  liquidity  position,  and  anticipated  cash needs and
sources.  The effect  that the  proposed  security  would have on the  Company's
credit and interest rate risk and  risk-based  capital is also  considered.  The
Company  purchases  securities to provide  necessary  liquidity  for  day-to-day
operations, and when funds available for investment exceed loan demand.

     The investment policy of the Company,  which is established by the Board of
Directors,  is designed to foster earnings and liquidity within prudent interest
rate risk guidelines,  while complementing  lending activities.  Generally,  the
Company's  investment  policy  is to  invest  funds  in  various  categories  of
securities

                                       12
<PAGE>


and  maturities  based  upon  the  Company's  liquidity  needs,  asset/liability
management   policies,   investment   quality,   marketability  and  performance
objectives. The Board of Directors reviews the Company's securities portfolio on
a monthly basis.

     The  Company's   securities   classified   as  held  to  maturity   totaled
approximately  $12.3 million at September 30, 2002,  and consisted  primarily of
approximately $1.9 million in municipal  obligations,  $1.1 million in corporate
bond obligations, $2.4 million in government agency obligations and $6.9 million
of  mortgage-backed   securities.   The  Company's   securities   classified  as
available-for-sale  totaled  $8.6  million  at  September  30,  2002,  including
approximately  $536,000 in municipal  obligations,  $1.5  million in  government
agency obligations,  $1.2 million in corporate bond obligations, $2.7 million of
mortgage- backed securities and $2.7 million in equity securities.

     The Company does not participate in hedging programs,  interest rate swaps,
or other activities  involving the use of off-balance sheet derivative financial
instruments.  Further,  the Company does not invest in securities  which are not
rated investment grade.

     The various  obligations  held in the Company's  securities  portfolio have
varying  characteristics  as to rate,  maturity  and call  provisions.  Callable
securities  totaled  approximately  $4.5 million at September 30, 2002,  and the
Company's investment yield could be reduced if these securities are called prior
to maturity.

     Mortgage-backed   Securities.   Mortgage-backed   securities   represent  a
participation  interest  in a  pool  of  one-  to  four-family  or  multi-family
mortgages,  although  the Company  focuses its  investments  on  mortgage-backed
securities secured by one- to four-family mortgages.

     The  mortgage  originators  use  intermediaries  (generally  United  States
Government agencies and government-sponsored  enterprises) to pool and repackage
the  participation  interests in the form of securities,  with investors such as
the Company receiving the principal and interest payments on the mortgages. Such
United States Government agencies and government-sponsored enterprises guarantee
the payment of principal and interest to investors.

     Mortgage-backed  securities  are  typically  issued with  stated  principal
amounts,  and the  securities  are backed by pools of mortgages  that have loans
with  interest  rates  that  are  within  a  specific  range  and  have  varying
maturities.   The  life  of  a   mortgage-backed   pass-through   security  thus
approximates the life of the underlying  mortgages.  The  characteristics of the
underlying pool of mortgages,  i.e.,  fixed-rate or adjustable-rate,  as well as
prepayment  risk,  are  passed  on to the  certificate  holder.  Mortgage-backed
securities are generally referred to as mortgage  participation  certificates or
pass-through  certificates.  The Company's  mortgage-backed  securities  consist
primarily of securities issued by the Government  National Mortgage  Association
("GNMA" or "Ginnie Mae"), the Federal Home Loan Mortgage Corporation ("FHLMC" or
"Freddie Mac") and the Federal National Mortgage  Association ("FNMA" or "Fannie
Mae").  Mortgage-backed  securities generally yield less than the mortgage loans
underlying  such  securities  because  of their  payment  guarantees  or  credit
enhancements which offer nominal credit risk to the security holder.

     At September 30, 2002,  the Company's  mortgage-backed  securities  totaled
$9.6 million.

     Expected  maturities  will  differ  from  contractual   maturities  because
borrowers may prepay obligations with and without prepayment penalties.

                                       13


<PAGE>

     Other  Securities.  Other  securities  held by the Company at September 20,
2002  consist  of  equity  securities   including   FHLMC/FNMA  stock  totalling
approximately  $439,000,  a mortgage securities mutual fund investment totalling
approximately  $2.3  million  and a $304,000  investment  in FHLB of  Pittsburgh
common stock (this amount is not shown in the securities portfolio). As a member
of the FHLB of  Pittsburgh,  ownership of FHLB of  Pittsburgh  common  shares is
required.  The mortgage  securities  mutual fund is composed of FHLMC,  FNMA and
GNMA mortgage-backed  related securities and U.S. Treasury  obligations,  and is
considered  a prudent  investment  because  the  underlying  mortgages  are high
quality,  the shares  owned are liquid and the  income  generates  a  sufficient
return on assets within acceptable risk limitations. The other equity securities
provide   diversification   and  complement  the  Company's  overall  investment
strategy.

Securities Portfolio

     The  following  table  sets  forth  the  carrying  value  of the  Company's
securities portfolio at the dates indicated.


                                                           At September 30,
                                                          ------------------
                                                            2002       2001
                                                          -------    -------
                                                            (In Thousands)
Securities Held to Maturity:

Government National Mortgage Association.............     $ 1,146    $  213
Federal Home Loan Mortgage Corporation...............           4         6
Federal National Mortgage Association................       5,742         4
Municipal bonds......................................       1,890       908
Government agency....................................       2,422         -
Corporate bonds......................................       1,093     1,254
                                                           ------     -----
  Total securities held to maturity..................      12,297     2,385
                                                           ------     -----
Securities available for sale (at fair value):

U.S. Government and government agency obligations....       1,524       201
Government National Mortgage Association.............         123       201
Federal Home Loan Mortgage Corporation...............         790       116
Federal National Mortgage Association................       1,752         -
Corporate bonds......................................       1,210         -
Municipal bonds......................................         536       795
Mortgage securities mutual fund......................       2,271       264
FHLMC/FNMA stock.....................................         439       385
                                                           ------     -----
 Total securities available for sale.................       8,645     1,962
                                                           ------     -----
    Total............................................     $20,942    $4,347
                                                           ======     =====


                                       14

<PAGE>

     Carrying  Values,  Yields and  Maturities.  The following  table sets forth
certain information  regarding the carrying values,  weighted average yields and
maturities of the Bank's investment and mortgage-backed  securities portfolio at
September 30, 2002.

<TABLE>
                                                                     At September 30, 2002
                         ---------------------------------------------------------------------------------------------------------
                         One Year or Less    One to Five Years  Five to Ten Years  More than Ten Years Total Investment Securities
                         -----------------  ------------------  -----------------  ------------------- ---------------------------
                         Carrying  Average  Carrying  Average   Carrying  Average  Carrying  Average   Carrying  Average   Market
                           Value    Yield    Value     Yield     Value     Yield    Value     Yield      Value    Yield    Value
                         --------  -------  --------  -------   --------  -------  --------  -------   --------  -------   ------
                                                                     (Dollars in Thousands)
<S>                     <C>       <C>    <C>         <C>     <C>         <C>     <C>         <C>     <C>         <C>    <C>


U.S. government agency
    securities..........   $    -    0.00%  $3,696      4.65%   $  250      6.00%   $     -     0.00%   $ 3,946     4.74%  $ 4,052

Mortgage-backed
    securities..........        -    0.00       28      8.35     1,016      5.70      8,513     5.61      9,557     5.63     9,652

Corporate bonds.........      250    2.03    1,539      6.89       165      7.00        349     6.07      2,303     6.25     2,351

Municipal bonds.........        -    0.00      444      3.58       279      4.30      1,703     5.08      2,426     4.72     2,539

Mortgage securities
    mutual fund ........    2,271    3.28        -      0.00         -      0.00          -     0.00      2,271     3.28     2,271

FHLMC/FNMA Stock........      439    5.00        -      0.00         -      0.00          -     0.00        439     5.00       439
                            -----            -----               -----               ------              ------             ------
  Total.................   $2,960    3.43%  $5,707      5.19%   $1,710      5.64%   $10,565     5.54%   $20,942     0.00%  $21,304
                            =====    ====    =====      ====     =====      ====     ======     ====     ======     ====    ======
</TABLE>


                                                        15
<PAGE>

Sources of Funds

     General.  Deposits are the major source of the Company's  funds for lending
and other investment purposes. In addition,  the Company derives funds from loan
and  mortgage-backed  securities  principal  repayments,  and proceeds  from the
maturity, call and sale of mortgage-backed securities and investment securities.
Loan and  mortgage-backed  securities payments are a relatively stable source of
funds,  while deposit inflows are  significantly  influenced by general interest
rates and money market  conditions.  Borrowings  (principally from the FHLB) are
also  periodically  used to  supplement  the  amount  of funds for  lending  and
investment.  At  September  30,  2002,  the  Company  had $4.9  million  in FHLB
borrowings.

     Deposits.  The Bank's current  deposit  products  include  certificates  of
deposit  accounts  ranging in terms  from three  months to five years as well as
checking,  savings,  money  market,  club  accounts  and  individual  retirement
accounts  ("IRAs").  Deposit  account  terms vary,  primarily as to the required
minimum balance amount, the amount of time that the funds must remain on deposit
and the  applicable  interest  rate. A majority of deposits  are in  fixed-term,
market-rate certificate accounts.

     Deposits are obtained  primarily  from residents of Allegheny  County.  The
Bank uses  traditional  methods of  advertising  to attract  new  customers  and
deposits,  including print media, direct mail and inserts included with customer
statements.  The Bank does not utilize the services of deposit brokers. The Bank
occasionally offers premiums or incentives for opening accounts.

     The Bank pays interest on its deposits  which are generally  competitive in
its  market.  The  determination  of  interest  rates is based  upon a number of
factors,  including:  (1) the  need for  funds  based  on loan  demand,  current
maturities  of  deposits  and other cash flow needs;  (2) a current  survey of a
selected  group of  competitors'  rates for  similar  products;  (3) the  Bank's
current  cost of funds and its yield on assets;  and (4) the  alternate  cost of
funds on a wholesale  basis,  in particular  the cost of advances from the FHLB.
Interest  rates are reviewed and set by the President and the Board of Directors
at semi-monthly meetings.

     The Bank has a  significant  percentage of  certificates  of deposit in its
deposit  portfolio  (46.3% at September 30, 2002). The Bank's liquidity could be
reduced if a significant  amount of certificates  of deposit,  maturing within a
short  period  of  time,  were  not  renewed.  A  significant   portion  of  the
certificates  of deposit  remain  with the Bank  after they  mature and the Bank
believes  that this  will  continue.  However,  the need to  retain  these  time
deposits could result in an increase in the Bank's cost of funds.

     Deposits in the Bank as of September 30, 2002, were  represented by various
types of savings programs described below.

                                       16

<PAGE>

<TABLE>

                                                    Balance at         Percentage of
Category                     Interest Rate(1)   September 30, 2002    Total Deposits
--------                     ----------------   ------------------    --------------
                                              (Dollars in Thousands)
<S>                            <C>                 <C>                  <C>

NOW Accounts(2)                   1.82%              $ 6,881               16.0%
Savings Accounts                  2.75                16,220               37.7

Certificates of Deposit(3):
2.00-2.99%                        2.62                 3,189                7.4
3.00-3.99%                        3.34                 4,676               10.9
4.00-4.99%                        4.43                 2,757                6.4
5.00-5.99%                        5.31                 4,570               10.6
6.00-6.99%                        6.32                 3,062                7.1
7.00-7.99%                        7.32                 1,631                3.8
                                                      ------              -----
     Total                        3.46               $42,986              100.0%
                                                      ======              =====
</TABLE>

_______________

(1)  Weighted average rate as of September 30, 2002.
(2)  Includes money market accounts.
(3)  Includes  jumbo  certificates  of  deposit  of $4.9  million.  See table of
     maturities of certificates of deposit of $100,000 or more.


     The following table sets forth the aggregate  maturities of certificates of
deposit at September 30, 2002.


                                                       (In Thousands)
                  2003....................                 $13,102
                  2004....................                   3,542
                  2005....................                   1,632
                  2006....................                     866
                  2007....................                     743
                                                            ------
                    Total                                  $19,885
                                                            ======


     The following table shows the amount of the Bank's  certificates of deposit
of $100,000 or more by time remaining until maturity as of September 30, 2002.

                                                       Certificates
          Maturity Period                               of Deposit
          ---------------                              -------------
                                                      (In Thousands)

          Within three months......................      $1,380
          Three through six months.................         956
          Six through twelve months................         961
          Over twelve months.......................       1,585
                                                          -----
                                                         $4,882
                                                          =====

     Borrowings.  Deposits  are the  primary  source  of funds of the  Company's
lending and investment  activities and for its general  business  purposes.  The
Company,  as  the  need  arises  or  in  order  to  take  advantage  of  funding
opportunities, borrows funds in the form of advances from the FHLB to supplement
its  supply of  lendable  funds  and to meet  deposit  withdrawal  requirements.
Advances from the FHLB are typically secured by the Bank's stock in the FHLB and
a portion of the Bank's residential mortgage loans

                                       17
<PAGE>

and may be secured by other assets,  mainly  securities which are obligations of
or  guaranteed  by the U.S.  Government.  The Bank has a line of credit for $4.0
million from the FHLB, maturing February 27, 2003 with an interest rate of 1.94%
at September 30, 2002. The Bank had draws of $0 and $0 on this line of credit at
September 30, 2002 and 2001, respectively.

     The  following  table  sets  forth  certain  information  regarding  Bank's
borrowed funds.


                                                        Year Ended September 30,
                                                        ------------------------
                                                           2002          2001
                                                         --------     ----------
FHLB Advances:                                            (Dollars in Thousands)

Average balance outstanding.........................      $1,651         $128
Maximum amount outstanding
  at any month-end during the period................       5,000          650
Balance outstanding at end of period................       4,883            -
Weighted average interest rate during the period....       3.591%        6.25%
Weighted average interest rate at end of period.....       3.591%           -%

Subsidiary Activity

     The Bank is  permitted  to invest  its assets in the  capital  stock of, or
originate secured or unsecured loans to, subsidiary corporations.

Personnel

     As of  September  30,  2002,  the  Bank  had 9  full-time  employees  and 1
part-time employee. The employees are not represented by a collective bargaining
unit. The Bank believes its relationship with its employees to be satisfactory.

Regulation

     Set forth below is a brief  description  of certain laws that relate to the
regulation of the Bank and the Company.  The description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.  The Bank and the Company operate in a highly  regulated  industry.
The U.S.  government  could adopt  regulations  or enact laws which restrict the
operations of the Bank and/or the Company or impose burdensome requirements upon
one or both of them.  This could  reduce the  profitability  of the Bank and the
Company and could impair the value of the Bank's  franchise which could hurt the
trading price of the Company's common stock.

Recent Legislation to Curtail Corporate Accounting Irregularities.

     On July 30, 2002,  President Bush signed into law the Sarbanes-Oxley Act of
2002 (the "Act"). The Securities and Exchange Commission (the "SEC") promulgated
certain  regulations  pursuant to the Act which were effective  August 29, 2002,
and will continue to propose additional  implementing or clarifying  regulations
as necessary in furtherance of the Act.

     The passage of the Act and the  regulations  implemented by the SEC subject
publicly-traded   companies  to  additional   and  more   cumbersome   reporting
regulations and disclosure. These new

                                       18
<PAGE>

regulations,  which are intended to curtail  corporate fraud,  require the chief
executive  officer  and chief  financial  officer of the  Company to  personally
certify  certain SEC filings and financial  statements  and to certify as to the
existence of disclosure  controls and procedures within the Company are designed
to ensure that  information  required to be  disclosed by the Company in its SEC
filings is processed, summarized and reported accurately.

     The Act and  regulations  promulgated  thereunder  by the SEC  also  impose
additional measures to be taken by the Company's officers, directors and outside
auditors and impose accelerated reporting requirements by officers and directors
of the Company in connection  with certain  changes in their equity  holdings of
the Company.  Implementation  of and compliance  with the Act and  corresponding
regulations will likely increase the Company's expenses.

Financial Modernization Legislation

     The  Gramm-Leach-Bliley  Financial Services  Modernization Act of 1999 (the
"GLB Act") repealed the prohibitions  against bank  affiliations with securities
and insurance firms. The GLB Act authorizes qualifying bank holding companies to
become financial  holding  companies and thereby affiliate with securities firms
and  insurance  companies and engage in other  activities  that are financial in
nature.   The  GLB  Act  defines  financial  in  nature  to  include  securities
underwriting,  dealing and market making; sponsoring mutual funds and investment
companies;  insurance underwriting and agency; merchant banking activities,  and
activities  that the Federal  Reserve Board has determined to be closely related
to banking. A qualifying  national bank also may engage,  subject to limitations
on investment,  in activities that are financial in nature, other than insurance
underwriting,  insurance company portfolio investment,  real estate development,
and real estate investment, through a financial subsidiary of the bank.

     The  GLB  Act  repeals  the  "unitary  savings  and  loan  holding  company
exemption"  from the  restrictions  imposed by the Home  Owners' Loan Act on the
business  activities  of savings and loan holding  companies.  As a result,  any
savings and loan holding  company formed after May 4, 1999, such as the Company,
is subject to statutory and regulatory restrictions on its business activities.

     In  addition,  the  GLB  Act  imposes  significant  new  financial  privacy
obligations and reporting requirements on all financial institutions,  including
federal savings banks.  Specifically,  the statute, among other things, requires
financial  institutions  (a) to establish  privacy policies and disclose them to
customers both at the  commencement of a customer  relationship and on an annual
basis  and  (b) to  permit  customers  to opt out of a  financial  institution's
disclosure of financial  information to nonaffiliated third parties. The federal
financial  regulators,  including the OTS, have  promulgated  final  regulations
implementing these provisions, which became effective July 1, 2001.

     Furthermore,  the GLB Act also  enacts  significant  changes to the Federal
Home Loan Bank System.  The GLB Act expands the permissible uses of Federal Home
Loan Bank advances by community  financial  institutions  (under $500 million in
assets) to include  funding  loans to small  businesses,  small  farms and small
agri-  businesses.  The GLB Act also makes membership in a regional Federal Home
Loan Bank voluntary for federal savings banks.


                                       19
<PAGE>

Regulation of Reserve Bancorp, Inc.

     General.  The  Company is a savings  and loan  holding  company  within the
meaning of Section 10(o) of the Home Owners' Loan Act. The Company is registered
as a savings  and loan  holding  company and files  reports  with the OTS and is
subject to  regulation  and  examination  by the OTS. In  addition,  the OTS has
enforcement   authority  over  the  Company  and  any  non-savings   institution
subsidiaries.  This permits the OTS to restrict or prohibit  activities  that it
determines  to be a  serious  risk to the  Bank.  This  regulation  is  intended
primarily  for the  protection  of the  depositors  and not for the  benefit  of
stockholders of the Company

     Activities Restrictions. As a savings and loan holding company formed after
May 4, 1999, the Company is not a grandfathered unitary savings and loan holding
company  under  the GLB Act.  As a  result,  the  Company  (and its  non-savings
institution  subsidiaries,  if any exist in the future) is subject to  statutory
and regulatory  restrictions on its business activities.  Under the Home Owners'
Loan Act, as amended by the GLB Act, the  nonbanking  activities  of the Company
are restricted to certain activities specified by OTS regulation,  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 (the "BHC Act") or  authorized
for financial holding companies pursuant to the GLB Act. Furthermore, no company
may  acquire  control of the Bank  unless the  acquiring  company  was a unitary
savings and loan holding company on May 4, 1999 (or became a unitary savings and
loan holding company pursuant to an application  pending as of that date) or the
company is only engaged in activities  that are  permitted for multiple  savings
and loan holding  companies or for financial holding companies under the BHC Act
as amended by the GLB Act.

     Mergers and  Acquisitions.  The Company must obtain  approval  from the OTS
before acquiring more than 5% of the voting stock of another savings institution
or savings and loan holding  company or acquiring such an institution or holding
company by merger,  consolidation  or purchase of its assets.  In  evaluating an
application for the Company to acquire control of a savings institution, the OTS
would  consider the financial and managerial  resources and future  prospects of
the Company and the target  institution,  the effect of the  acquisition  on the
risk to the insurance  funds, the convenience and the needs of the community and
competitive factors.

Regulation of Mt. Troy Bank

     General. As a federally  chartered,  SAIF-insured savings bank, the Bank is
subject to extensive  regulation by the OTS and the FDIC. Lending activities and
other   investments   must  comply  with  federal   statutory   and   regulatory
requirements.  The Bank is also subject to reserve  requirements  of the Federal
Reserve System.  Federal regulation and supervision  establishes a comprehensive
framework  of  activities  in which an  institution  can engage and is  intended
primarily  for the  protection  of the  SAIF  and  depositors.  This  regulatory
structure gives the regulatory  authorities  extensive  discretion in connection
with their  supervisory  and enforcement  activities and  examination  policies,
including  policies  regarding the classification of assets and the level of the
allowance for loan losses.

     The OTS  regularly  examines  the Bank and  prepares  reports to the Bank's
Board of Directors on deficiencies,  if any, found in its operations. The Bank's
relationship with its depositors and borrowers is also regulated by federal law,
especially in such matters as the ownership of savings accounts and the form and
content of the Bank's mortgage documents.

                                       20
<PAGE>

     The  Bank  must  file  reports  with the OTS and the  FDIC  concerning  its
activities and financial  condition,  and must obtain regulatory approvals prior
to entering into certain  transactions  such as mergers with or  acquisitions of
other financial institutions.  Any change in applicable statutory and regulatory
requirements,  whether by the OTS, the FDIC or the United States Congress, could
have  a  material  adverse  impact  on the  Company  and  the  Bank,  and  their
operations.

     Insurance of Deposit  Accounts.  The FDIC  administers two separate deposit
insurance  funds.  Generally,  the Bank  Insurance  Fund (the "BIF") insures the
deposits of  commercial  banks and the SAIF  ("SAIF")  insures  the  deposits of
savings  institutions.  The FDIC is  authorized  to increase  deposit  insurance
premiums if it  determines  such  increases  are  appropriate  to  maintain  the
reserves of either the SAIF or BIF or to fund the administration of the FDIC. In
addition,  the FDIC is authorized to levy emergency  special  assessments on BIF
and SAIF members. The assessment rate for most savings  institutions,  including
the Bank, is currently 0%.

     In addition, all FDIC-insured  institutions are required to pay assessments
to the FDIC at an annual  rate of  approximately  .0212% of insured  deposits to
fund interest payments on bonds issued by the Financing Corporation ("FICO"), an
agency of the Federal government  established to recapitalize the predecessor to
the SAIF. These assessments will continue until the FICO bonds mature in 2017.

     Regulatory Capital  Requirements.  OTS capital  regulations require savings
institutions to meet three capital standards: (1) tangible capital equal to 1.5%
of total  adjusted  assets,  (2) "Tier 1" or "core" capital equal to at least 4%
(3% if the  institution  has  received the highest  possible  rating on its most
recent  examination) of total adjusted assets,  and (3) risk-based capital equal
to 8% of total  risk-weighted  assets.  The  Bank is in  compliance  with  these
regulatory capital standards.

     In  addition,  the OTS may require  that a savings  institution  that has a
risk-based  capital  ratio  of less  than  8%,  a ratio  of  Tier 1  capital  to
risk-weighted  assets  of less  than 4% or a ratio  of Tier 1  capital  to total
adjusted  assets of less than 4% (3% if the institution has received the highest
rating on its most recent  examination)  take  certain  action to  increase  its
capital ratios. If the savings  institution's capital is significantly below the
minimum  required  levels of capital or if it is  unsuccessful in increasing its
capital ratios, the OTS may restrict its activities.

     For purposes of the OTS capital regulations, tangible capital is defined as
core capital less all intangible  assets except for certain  mortgage  servicing
rights.  Tier 1 or core  capital  is  defined  as common  stockholders'  equity,
noncumulative perpetual preferred stock and related surplus,  minority interests
in the equity accounts of consolidated subsidiaries, and certain nonwithdrawable
accounts and pledged  deposits of mutual savings  banks.  The Bank does not have
any  nonwithdrawable  accounts or pledged deposits.  Tier 1 and core capital are
reduced by an  institution's  intangible  assets,  with limited  exceptions  for
certain  mortgage and  nonmortgage  servicing  rights and purchased  credit card
relationships.  Both core and tangible  capital are further reduced by an amount
equal  to  the   savings   institution's   debt  and   equity   investments   in
"nonincludable"  subsidiaries  engaged in activities not permissible to national
banks other than  subsidiaries  engaged in  activities  undertaken  as agent for
customers  or  in  mortgage   banking   activities  and  subsidiary   depository
institutions or their holding companies.

     The  risk-based  capital  standard  for savings  institutions  requires the
maintenance of total capital of 8% of risk-weighted assets. Total capital equals
the sum of core and  supplementary  capital.  The  components  of  supplementary
capital  include,  among other  items,  cumulative  perpetual  preferred  stock,
perpetual   subordinated   debt,   mandatory   convertible   subordinated  debt,
intermediate-term preferred stock,

                                       21
<PAGE>


the portion of the  allowance for loan losses not  designated  for specific loan
losses and up to 45% of unrealized  gains on equity  securities.  The portion of
the allowance for loan and lease losses  includable in supplementary  capital is
limited to a maximum of 1.25% of risk-weighted  assets.  Overall,  supplementary
capital is limited to 100% of core capital.  For purposes of  determining  total
capital,  a savings  institution's  assets are  reduced by the amount of capital
instruments  held  by  other  depository  institutions  pursuant  to  reciprocal
arrangements and by the amount of the institution's  equity  investments  (other
than those deducted from core and tangible  capital) and its high  loan-to-value
ratio land loans and non-residential construction loans.

     A savings institution's  risk-based capital requirement is measured against
risk-weighted assets, which equal the sum of each on-balance-sheet asset and the
credit-equivalent  amount of each off-balance- sheet item after being multiplied
by an assigned  risk weight.  These risk weights  range from 0% for cash to 100%
for delinquent loans,  property acquired through foreclosure,  commercial loans,
and other assets.

     OTS rules require a deduction  from capital for savings  institutions  with
certain levels of interest rate risk.  The OTS calculates the  sensitivity of an
institution's  net portfolio value based on data submitted by the institution in
a schedule to its quarterly  Thrift Financial Report and using the interest rate
risk measurement  model adopted by the OTS. The amount of the interest rate risk
component,  if any, deducted from an institution's total capital is based on the
institution's  Thrift Financial Report filed two quarters  earlier.  The OTS has
indefinitely postponed  implementation of the interest rate risk component,  and
the Bank has not been  required  to  determine  whether it will be  required  to
deduct an interest rate risk component from capital.

     Prompt Corrective Regulatory Action. Under the OTS Prompt Corrective Action
regulations,   the  OTS  is  required  to  take   supervisory   actions  against
undercapitalized   institutions,   the  severity  of  which   depends  upon  the
institution's level of capital.  Generally, a savings institution that has total
risk-based  capital  of less than  8.0%,  or a  leverage  ratio or a Tier 1 core
capital ratio that is less than 4.0%, is  considered to be  undercapitalized.  A
savings  institution that has total risk-based  capital less than 6.0%, a Tier 1
core risk-based capital ratio of less than 3.0% or a leverage ratio that is less
than  3.0% is  considered  to be  "significantly  undercapitalized."  A  savings
institution  that has a tangible  capital to assets  ratio equal to or less than
2.0% is deemed  to be  "critically  undercapitalized."  Generally,  the  banking
regulator is required to appoint a receiver or  conservator  for an  institution
that is  "critically  undercapitalized."  The  regulation  also  provides that a
capital  restoration  plan must be filed with the OTS within  forty-five days of
the  date  an  institution  receives  notice  that  it  is   "undercapitalized,"
"significantly  undercapitalized" or "critically undercapitalized." In addition,
numerous  mandatory  supervisory  actions become  immediately  applicable to the
institution,  including, but not limited to, restrictions on growth,  investment
activities, capital distributions,  and affiliate transactions. The OTS may also
take  any  one  of  a  number  of  discretionary   supervisory  actions  against
undercapitalized institutions, including the issuance of a capital directive and
the replacement of senior executive officers and directors.

     Dividend  and  Other  Capital  Distribution  Limitations.  The OTS  imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends.

     A savings  institution  that is a subsidiary  of a savings and loan holding
company,  such as the Bank, must file an application or a notice with the OTS at
least thirty days before making a capital  distribution.  A savings  institution
must file an application for prior approval of a capital distribution if: (i) it
is not eligible for expedited treatment under the applications  processing rules
of the OTS;  (ii) the total amount of all capital  distributions,  including the
proposed capital distribution, for the applicable calendar year

                                       22
<PAGE>

would exceed an amount  equal to the savings  bank's net income for that year to
date plus the  institution's  retained net income for the  preceding  two years;
(iii) it would not adequately be capitalized after the capital distribution;  or
(iv) the  distribution  would  violate an agreement  with the OTS or  applicable
regulations.

     The Bank is required to file a capital  distribution  notice or application
with  the OTS  before  paying  any  dividend  to the  Company  However,  capital
distributions  by the Company,  as a savings and loan holding  company,  are not
subject to the OTS capital distribution rules.

     The OTS may  disapprove  a  notice  or deny an  application  for a  capital
distribution if: (i) the savings institution would be undercapitalized following
the capital  distribution;  (ii) the proposed capital distribution raises safety
and  soundness  concerns;  or (iii) the  capital  distribution  would  violate a
prohibition  contained in any statute,  regulation or agreement.  In addition, a
federal  savings  institution  cannot  distribute  regulatory  capital  that  is
required for its liquidation account.

     Qualified  Thrift Lender Test.  Federal  savings  institutions  must meet a
qualified  thrift  lender  ("QTL")  test or they become  subject to the business
activity  restrictions  and branching  rules  applicable to national  banks.  To
qualify as a QTL, a savings  institution  must  either (i) be deemed a "domestic
building and loan association" under the Internal Revenue Code by maintaining at
least 60% of its total  assets in  specified  types of assets,  including  cash,
certain  government  securities,  loans  secured by and other assets  related to
residential real property,  educational loans and investments in premises of the
institution or (ii) satisfy the statutory QTL test set forth in the Home Owners'
Loan Act by  maintaining  at least  65% of its  "portfolio  assets"  in  certain
"Qualified Thrift  Investments"  (defined to include  residential  mortgages and
related equity investments,  certain mortgage-related securities, small business
loans,  student  loans and  credit  card  loans,  and 50% of  certain  community
development loans). For purposes of the statutory QTL test, portfolio assets are
defined  as  total  assets  minus  intangible  assets,   property  used  by  the
institution in conducting its business,  and liquid assets equal to 20% of total
assets.  A savings  institution  must  maintain its status as a QTL on a monthly
basis in at least nine out of every twelve months.  The Bank met the QTL test as
of  September  30,  2002 and in each of the last twelve  months and,  therefore,
qualifies as a QTL.

     Transactions with Affiliates.  Generally, federal banking law requires that
transactions   between  a  savings  institution  or  its  subsidiaries  and  its
affiliates  must  be on  terms  as  favorable  to  the  savings  institution  as
comparable transactions with non-affiliates. In addition, certain types of these
transactions   are  restricted  to  an  aggregate   percentage  of  the  savings
institution's capital.  Collateral in specified amounts must usually be provided
by  affiliates  in order to  receive  loans  from the  savings  institution.  In
addition,  a savings  institution may not extend credit to any affiliate engaged
in  activities  not  permissible  for a bank  holding  company  or  acquire  the
securities of any affiliate that is not a subsidiary. The OTS has the discretion
to treat  subsidiaries  of savings  institutions as affiliates on a case-by-case
basis.

     Community  Reinvestment Act. Under the Community  Reinvestment Act ("CRA"),
every insured depository  institution,  including the Bank, has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire  community,  including  low and  moderate  income
neighborhoods.  The CRA does not  establish  specific  lending  requirements  or
programs  for  financial   institutions  nor  does  it  limit  an  institution's
discretion  to develop the types of products and  services  that it believes are
best suited to its particular community.  The CRA requires the OTS to assess the
depository institution's record of meeting the credit needs of its community and
to take such record into account in its  evaluation of certain  applications  by
such institution, such as a merger or the establishment of a branch by the Bank.
An unsatisfactory CRA examination rating may be used as the basis for the

                                       23
<PAGE>

denial of an application by the OTS. The Bank received a "satisfactory"  overall
rating in its most recent CRA examination.

     Federal  Home  Loan  Bank  System.  The  Bank is a  member  of the  FHLB of
Pittsburgh, which is one of twelve regional FHLBs. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from funds deposited by financial  institutions  and proceeds  derived
from the sale of consolidated  obligations of the FHLB System. It makes loans to
members  pursuant  to  policies  and  procedures  established  by the  board  of
directors of the FHLB.

     As a member,  the Bank is required to purchase  and  maintain  stock in the
FHLB of  Pittsburgh  in an amount  equal to the  greater of 1% of our  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations  at the  beginning  of each year or 5% of FHLB  advances.  We are in
compliance  with this  requirement.  The FHLB  imposes  various  limitations  on
advances  such as limiting  the amount of certain  types of real estate  related
collateral to 30% of a member's capital and limiting total advances to a member.

     The FHLBs are  required  to provide  funds for the  resolution  of troubled
savings  institutions  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected the level of FHLB dividends paid and could continue to do so
in the future.

     Federal Reserve System.  The Federal Reserve System requires all depository
institutions  to  maintain  non-interest-bearing  reserves at  specified  levels
against their  checking  accounts and  non-personal  certificate  accounts.  The
balances  maintained  to meet the  reserve  requirements  imposed by the Federal
Reserve System may be used to satisfy the OTS liquidity requirements.

     Savings  institutions  have  authority  to borrow from the Federal  Reserve
System "discount  window," but Federal Reserve System policy generally  requires
savings  institutions  to exhaust all other sources  before  borrowing  from the
Federal Reserve System.

Item 2.  Description of Property.

(a)      Properties.

     The  Bank's  main  office is located  at 2000 Mt.  Troy  Road,  Pittsburgh,
Pennsylvania.  The Bank also conducts its business through a full-service branch
office  located at 1930 Spring  Garden  Avenue,  Pittsburgh,  Pennsylvania.  The
Bank's branch office is located inside a Shop'n Save supermarket.  The Bank uses
an outside service company for its data processing.

     The  following  table sets forth the location of the Bank's main office and
branch  office,  the year the offices were opened and the net book value of each
office and its related equipment.


                             Year Facility  Leased or    Net Book Value at
      Office Location           Opened        Owned     September 30, 2002
      ---------------           ------      ---------   ------------------

      Main Office                1973         Owned          $281,038
      Branch Office              1976        Leased           11,254


                                       24
<PAGE>

(b)  Investment Policies.

     See "Item 1.  Description of Business"  above for a general  description of
the  Bank's  investment  policies  and any  regulatory  or Board  of  Directors'
percentage  of assets  limitations  regarding  certain  investments.  The Bank's
investments are primarily  acquired to produce  income,  and to a lesser extent,
possible capital gain.

     (1)  Investments  in Real Estate or Interests in Real Estate.  See "Item 1.
Description of Business - Lending  Activities and - Bank  Regulation," and "Item
2. Description of Property."

     (2)  Investments  in Real Estate  Mortgages.  See "Item 1.  Description  of
Business - Lending Activities and - Bank Regulation."

     (3) Investments in Securities of or Interests in Persons  Primarily Engaged
in Real  Estate  Activities.  See "Item 1.  Description  of  Business  - Lending
Activities and - Bank Regulation."

(c)  Description of Real Estate and Operating Data.

     Not Applicable.

Item 3. Legal Proceedings

     There are various  claims and lawsuits in which the Company or the Bank are
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which the Bank holds security  interests,  claims involving the
making and servicing of real property  loans,  and other issues  incident to the
Bank's business. In the opinion of management, no material loss is expected from
any of such pending claims or lawsuits.

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

     No matter was  submitted  to a vote of security  holders  during the fourth
quarter of the fiscal year.

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

     The  information   contained  under  the  section  captioned  "Stock  Price
Information" of the Company's  Annual Report to Stockholders for the fiscal year
ended  September  30,  2002 (the  "Annual  Report")  is  incorporated  herein by
reference.

Item 6. Management's Discussion and Analysis or Plan of Operation

     The  information  contained  under  the  section  captioned   "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report is incorporated herein by reference.



                                       25
<PAGE>

Item 7. Financial Statements

     The Registrant's financial statements listed under Item 13 are incorporated
herein by reference.

Item 8.  Changes  in  and  Disagreements  with  Accountants  On  Accounting  and
         Financial Disclosure.

     Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
        with Section 16(a) of the Exchange Act.

     The  information  contained  under the sections  captioned  "Section  16(a)
Beneficial  Ownership  Reporting  Compliance"  and  "Proposal  I -  Election  of
Directors"  in  the  Company's   Proxy  Statement  for  the  Annual  Meeting  of
Stockholders   for  the  Fiscal  Year  ended  September  30,  2002  (the  "Proxy
Statement") is incorporated herein by reference.

Item 10. Executive Compensation

     The  information  contained  under  the  section  captioned  "Director  and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     (a) Security Ownership of Certain Beneficial Owners

     Information  required by this item is  incorporated  herein by reference to
the first chart in the section captioned "Proposal I - Election of Directors" in
the Proxy Statement.

     (b) Security Ownership of Management

     Information  required by this item is  incorporated  herein by reference to
the first chart in the section captioned "Proposal I - Election of Directors" in
the Proxy Statement.

     (c) Management of the Registrant  knows of no  arrangements,  including any
pledge by any person of securities of the Registrant, the operation of which may
at a subsequent date result in a change in control of the Registrant.

     (d) Securities Authorized for Issuance Under Equity Compensation Plans

     Set forth below is  information  as of  September  30, 2002 with respect to
compensation   plans  under  which  equity  securities  of  the  Registrant  are
authorized for issuance.  As of September 30, 2002, the Registrant had no equity
compensation plans to be disclosed pursuant to this item.


                                       26
<PAGE>

<TABLE>
                                        EQUITY COMPENSATION PLAN INFORMATION
                                               (a)                      (b)                         (c)
                                                                                           Number of securities
                                      Number of securities        Weighted-average        remaining available for
                                        to be issued upon        exercise price of         future issuance under
                                           exercise of              outstanding             equity compensation
                                      outstanding options,       options, warrants      plans (excluding securities
                                      warrants and rights           and rights           reflected in column (a))
                                      --------------------       -----------------      ---------------------------
<S>                                     <C>                         <C>                        <C>

Equity compensation plans
  approved by shareholders.........             -                        -                           -
Equity compensation plans
  not approved
  by shareholders..................             -                        -                           -
     TOTAL........................              -                        -                           -

</TABLE>


Item 12. Certain Relationships and Related Transactions

     The information  required by this item is incorporated  herein by reference
to the section captioned "Certain Relationships and Related Transactions" in the
Proxy Statement.

Item 13. Controls and Procedures

     (a)  Evaluation  of  disclosure  controls  and  procedures.  Based on their
evaluation  as of a date within 90 days of the filing date of this Annual Report
on Form 10-KSB,  the  Registrant's  principal  executive  officer and  principal
financial officer have concluded that the Registrant's  disclosure  controls and
procedures  (as defined in Rules  13a-14(c) and 15d-14(c)  under the  Securities
Exchange  Act of 1934  (the  "Exchange  Act"))  are  effective  to  ensure  that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

     (b) Changes in internal controls.  There were no significant changes in the
Registrant's  internal  controls or in other  factors  that could  significantly
affect these controls subsequent to the date of their evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.

Item 14. Exhibits, List, and Reports on Form 8-K

     (a) Listed below are all financial statements and exhibits filed as part of
this report.

     1. The consolidated  statements of financial condition of the Company as of
September 30, 2002 and 2001 and the related  consolidated  statements of income,
stockholders' equity, and cash flows for the years then ended, together with the
related notes and the independent auditors' report.

     2. Schedules omitted as they are not applicable.

     3. The  following  exhibits  are  included in this  Report or  incorporated
herein by reference:

                                       27
<PAGE>

    (a) List of Exhibits:


    3(i)  Articles of Incorporation of Reserve Bancorp, Inc. *
    3(ii) Bylaws of Reserve Bancorp, Inc. *
    13    Annual Report to Stockholders  for the fiscal year ended September 30,
          2002
    21    Subsidiaries of the Registrant (See "Item 1. Description of Business)
    99    Certification  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

 _______________
     *    Incorporated by reference to the Company's  Registration  Statement on
          Form SB-2 (File No.  333- 75212  filed  with the SEC on  December  14,
          2001.

    (b) Reports on Form 8-K:

     None.




                                       28

<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
December 26, 2002.

                                        RESERVE BANCORP, INC.


                                        By:  /s/ Richard A. Sinewe
                                             -----------------------------------
                                             Richard A. Sinewe
                                             President
                                             (Duly Authorized Representative)

     Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,  as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of December 26, 2002.



/s/ Richard A. Sinewe             /s/ David P. Butler
-----------------------------     ----------------------------------------------
Richard A. Sinewe                 David P. Butler
President and Director            Chairman of the Board


/s/ Louis J. Slais                /s/ Robert B. Shust
-----------------------------     ----------------------------------------------
Louis J. Slais                    Robert B. Shust
Vice Chairman of the Board        Vice Chairman of the Board, Secretary and
                                  Director



/s/ Timothy Schneider             /s/ Robert B. Kastan
-----------------------------     ----------------------------------------------
Timothy Schneider                 Robert B. Kastan
Director                          Treasurer/Controller
                                  (Principal Accounting and Financial Officer)





<PAGE>

                            SECTION 302 CERTIFICATION

     I, Richard A. Sinewe, President, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Reserve Bancorp, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     (c)  presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.



Date: December 26, 2002                             /s/ Richard A. Sinewe
                                                    ----------------------------
                                                    Richard A. Sinewe, President



<PAGE>

                            SECTION 302 CERTIFICATION

     I, Robert B. Kastan, Treasurer/Controller, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Reserve Bancorp, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     (c)  presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.


Date: December 26, 2002                                 /s/ Robert B. Kastan
                                                        ------------------------
                                                        Robert B. Kastan
                                                        Treasurer/Controller