<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)
[ X ]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2003

                                       or

[   ]       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:  0-22399


                            WAYPOINT FINANCIAL CORP.
                            ------------------------
             (Exact name of registrant as specified in its charter)


                 PENNSYLVANIA                             25-1872581
                -------------                             ----------
        (State or other jurisdiction of                  (IRS Employer
        incorporation or organization)                 Identification No.)


 235 North Second Street, P.O. Box 1711, Harrisburg, Pennsylvania       17105
-----------------------------------------------------------------       -----
                  (Address of principal executive offices)            (Zip Code)


                                  717-236-4041
                                  ------------
              (Registrant's telephone number, including area code)


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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [_]

         Indicate by checkmark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [X] No [_]

         Indicate the number of shares outstanding of each of the Bank's classes
of common stock, as of the latest practicable date. 32,110,290 of stock, par
                                                    ------------------------
value of $.01 per share, outstanding at June 30, 2003.
------------------------------------------------------
<PAGE>


                                    CONTENTS

<TABLE>
<S>                                                                                                                    <C>
 Part I. Financial Information
   Item 1.       Financial Statements (Unaudited)
     Consolidated Statements of Financial Condition...................................................................    4
     Consolidated Statements of Income................................................................................    5
     Consolidated Statements of Shareholders' Equity..................................................................    6
     Consolidated Statements of Cash Flows............................................................................  7-8
     Notes to Consolidated Financial Statements....................................................................... 9-15

   Item 2.       Management's Discussion and Analysis of Financial Condition and Results of Operations
     I.       Forward-Looking Statements..............................................................................    16
     II.      Critical Accounting Policies............................................................................ 16-17
     III.     Market Risk and Interest Rate Sensitivity Management....................................................    17
     IV.      Liquidity...............................................................................................    18
     V.       Capital Resources....................................................................................... 18-19
     VI.      Results of Operations
              Comparison for the Three-Month Periods Ended June 30, 2003 and June 30, 2002
                Net Income............................................................................................    19
                Net Interest Income................................................................................... 19-22
                Noninterest Income....................................................................................    23
                Noninterest Expense...................................................................................    24
                Provision for Income Taxes............................................................................    24
              Comparison for the Six-Month Periods Ended June 30, 2003 and June 30, 2002
                Net Income............................................................................................    25
                Net Interest Income...................................................................................    25
                Noninterest Income....................................................................................    25
                Noninterest Expense...................................................................................    26
                Provision for Income Taxes............................................................................    26
     VII.     Financial Condition
                Marketable Securities.................................................................................    26
                Loans Receivable, Net.................................................................................    26
                Loan Commitments......................................................................................    26
                Loan Quality..........................................................................................    27
                Non-Performing Assets.................................................................................    27
                Allowance for Loan Losses.............................................................................    28
                Allocation of the Allowance for Loan Losses...........................................................    28
                Deposits..............................................................................................    28
                Other Borrowings......................................................................................    29

   Item 3.    Quantitative and Qualitative Disclosures about Market Risk..............................................    29

   Item 4.    Controls and Procedures.................................................................................    29

Part II. Other Information............................................................................................ 30-31
   Item 1.       Legal Proceedings
   Item 2.       Changes in Securities and Use of Proceeds
   Item 3.       Defaults Upon Senior Securities
   Item 4.       Submission of Matters to a Vote of Security Holders
   Item 5.       Other Information
   Item 6.       Exhibits and Reports on Form 8-K

Signatures............................................................................................................    32

Exhibits  - Certifications............................................................................................ 33-36
</TABLE>



                                       2
<PAGE>


Part I.  Financial Information.


Part 1, Item 1    Financial Statements.


               (Balance of this page is intentionally left blank)












                                       3
<PAGE>
                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                               June 30,         December 31,
                                                                                 2003               2002
                                                                           ------------------  ----------------
                                                                            (In thousands, except share data)
                                                                                       (Unaudited)
<S>                                                                              <C>                <C>
      Assets
      Cash and cash equivalents                                                  $   118,638       $    96,088
      Marketable securities available-for-sale                                     2,878,814         2,792,112
      Loans receivable, net                                                        2,379,562         2,310,106
      Loans held for sale, net                                                        38,333            30,328
      Loan servicing rights                                                            2,188             3,167
      Investment in real estate and other joint ventures                              18,455            14,811
      Premises and equipment, net of accumulated
         depreciation of $42,526 and $41,062                                          48,249            48,826
      Accrued interest receivable                                                     25,037            26,585
      Goodwill                                                                        14,785            10,302
      Other intangible assets                                                          2,998             1,676
      Other assets                                                                   112,304            91,012
                                                                           ------------------  ----------------
         Total assets                                                            $ 5,639,363       $ 5,425,013
                                                                           ==================  ================

      Liabilities and Stockholders' Equity
      Deposits                                                                   $ 2,581,661       $ 2,453,390
      Other borrowings                                                             2,459,577         2,414,480
      Escrow                                                                           4,968             3,348
      Accrued interest payable                                                        10,255            10,295
      Postretirement benefit obligation                                                2,307             2,310
      Deferred tax liability                                                           2,577             6,106
      Income taxes payable                                                             2,680                 -
      Other liabilities                                                              108,953            49,311
                                                                           ------------------  ----------------
         Total liabilities                                                         5,172,978         4,939,240
                                                                           ------------------  ----------------

      Company-obligated mandatorily redeemable preferred securities
         of subsidiary trust holding junior subordinated debentures of
         Waypoint ("Trust Preferred Securities")                                      43,839            29,102

      Preferred stock, 10,000,000 shares authorized but unissued
      Common stock, $ .01 par value, authorized 100,000,000 shares,
         40,687,433 shares issued and 32,110,290 outstanding
         at June 30, 2003, 40,502,372 shares issued
         and 34,702,206 shares outstanding at December 31, 2002                          407               404
      Paid in capital                                                                318,921           315,636
      Retained earnings                                                              265,148           249,177
      Accumulated other comprehensive income                                           8,330            11,710
      Employee stock ownership plan                                                  (14,460)          (14,460)
      Recognition and retention plans                                                 (6,723)           (6,977)
      Treasury stock, 8,577,143 shares at June 30, 2003
         and 5,800,166 shares at December 31, 2002                                  (149,077)          (98,819)
                                                                           ------------------  ----------------
          Total stockholders' equity                                                 422,546           456,671
                                                                           ------------------  ----------------
          Total liabilities and stockholders' equity                             $ 5,639,363       $ 5,425,013
                                                                           ==================  ================
</TABLE>


      See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                        Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                        Three Months Ended June 30,        Six Months Ended June 30,
                                                       -------------------------------   -------------------------------
                                                           2003             2002             2003             2002
                                                       --------------   --------------   --------------   --------------
                                                                      (In thousands, except share data)
                                                                                 (Unaudited)
<S>                                                        <C>               <C>             <C>               <C>
Interest Income:
  Loans                                                    $  37,198        $  41,767        $  74,592         $ 84,991
  Marketable securities and interest-earning cash             27,352           28,087           55,767           56,646
                                                       --------------   --------------   --------------   --------------
       Total interest income                                  64,550           69,854          130,359          141,637
                                                       --------------   --------------   --------------   --------------

Interest Expense:
  Deposits and escrow                                         13,465           18,260           27,949           37,228
  Borrowed funds                                              20,669           21,531           41,522           42,702
                                                       --------------   --------------   --------------   --------------
       Total interest expense                                 34,134           39,791           69,471           79,930
                                                       --------------   --------------   --------------   --------------

       Net interest income                                    30,416           30,063           60,888           61,707
Provision for loan losses                                      2,064            3,585            4,485            5,670
                                                       --------------   --------------   --------------   --------------
       Net interest income after provision for loan
         losses                                               28,352           26,478           56,403           56,037
                                                       --------------   --------------   --------------   --------------

Noninterest Income:
  Banking service and account fees                             3,924            3,156            7,313            5,986
  Financial services fees                                      2,348            1,649            4,393            3,636
  Residential mortgage banking                                 1,297            1,143            2,600            1,845
  Bank-owned life insurance                                    1,142            1,178            2,288            2,381
  Gain on securities and derivatives, net                      3,717            3,952            5,590            4,276
  Other                                                       (1,601)           1,667           (1,928)           1,835
                                                       --------------   --------------   --------------   --------------
      Total noninterest income                                10,827           12,745           20,256           19,959
                                                       --------------   --------------   --------------   --------------

Noninterest Expense:
  Salaries and benefits                                       11,597           10,999           22,914           22,047
  Equipment expense                                            1,849            1,789            3,620            3,559
  Occupancy expense                                            1,829            1,574            3,751            3,136
  Marketing                                                    1,215            1,183            2,306            2,181
  Amortization of intangible assets                              192              490              312              980
  Outside services                                             1,312            1,177            2,579            2,257
  Communications and supplies                                  1,296            1,102            2,622            2,324
  Other                                                        3,276            2,973            6,229            5,522
                                                       --------------   --------------   --------------   --------------
     Total noninterest expense                                22,566           21,287           44,333           42,006
                                                       --------------   --------------   --------------   --------------
  Income before income taxes                                  16,613           17,936           32,326           33,990
  Income tax expense                                           5,068            5,171            9,399            9,729
                                                       --------------   --------------   --------------   --------------
      Net Income                                           $  11,545        $  12,765        $  22,927         $ 24,261
                                                       ==============   ==============   ==============   ==============

  Basic earnings per share                                 $    0.37        $    0.35        $    0.72         $   0.66
                                                       ==============   ==============   ==============   ==============
  Diluted earnings per share                               $    0.36        $    0.34        $    0.70         $   0.65
                                                       ==============   ==============   ==============   ==============
</TABLE>

See accompanying notes to consolidated financial statements.



                                       5
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                 Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
                                                                            EMPLOYEE  RECOGNITION
                                                               ACCUMULATED   STOCK       AND
                                  COMMON   PAID IN  RETAINED  COMPREHENSIVE OWNERSHIP  RETENTION  TREASURY            COMPREHENSIVE
                                  STOCK    CAPITAL  EARNINGS   INCOME (LOSS)  PLAN     PLAN (RRP)  STOCK     TOTAL     INCOME (LOSS)
                                 --------- -------- ---------  ------------ ---------  ---------  --------- ---------  ------------
                                                          (IN THOUSANDS, EXCEPT SHARE DATA)
                                                                     (UNAUDITED)
<S>                                <C>    <C>       <C>          <C>        <C>       <C>        <C>         <C>
 Balance at December 31, 2001      $  402 $ 312,009  $215,600     $   (280) $(15,640)  $ (9,954)  $ (15,922)  $486,215

 Net income                                            24,261                                                   24,261      $24,261
 Dividends paid at $.20 per
  share                                                (7,506)                                                  (7,506)
 Exercised stock options
  (140,899 shares)                      2       944                                                                946
 Unrealized gains on
  securities, net of
  income tax of $4,425                                               8,218                                       8,218        8,218
                                                                                                                          ----------
 Comprehensive income                                                                                                     $  32,479
                                                                                                                          ==========
 Earned portion of RRP                                                                     (135)                  (135)
 Treasury stock purchased
  (1,942,833 shares)                                                                                (31,791)   (31,791)
 Dividend reinvestment plan, net               (173)                                                              (173)
                                 --------- -------- ---------  ------------ ---------  ---------  ---------- ----------
 Balance at June 30, 2002          $  404  $312,780  $232,355     $  7,938  $(15,640)  $(10,089)  $ (47,713)  $480,035
                                 ========= ======== =========  ============ =========  =========  ==========  =========


 Balance at December 31, 2002      $  404  $315,636  $249,177     $ 11,710  $(14,460)  $ (6,977)  $ (98,819)  $456,671

 Net income                                            22,927                                                   22,927      $22,927
 Dividends paid at $.22 per
  share                                                (6,956)                                                  (6,956)
 Exercised stock options
  (185,061 shares)                       3    2,795                                                               2,798
 Unrealized losses on
  securities, net of
  income tax of $(2,567)                                            (3,380)                                     (3,380)      (3,380)
                                                                                                                          ---------
 Comprehensive income                                                                                                     $  19,547
                                                                                                                          =========
 Earned portion of RRP                                                                      254                    254
 Tax benefit on exercised
   options                                     675                                                                 675
 Treasury stock purchased
   (2,776,977 shares)                                                                               (50,258)   (50,258)
 Dividend reinvestment plan, net             (185)                                                                (185)
                                 --------- -------- ---------- ------------ ---------- ---------- ----------  ----------
 Balance at June 30, 2003          $  407  $318,921  $265,148     $  8,330  $(14,460)  $ (6,723)  $(149,077)  $ 422,546
                                 ========= ======== ========== ============ ========== ========== ==========  ==========
</TABLE>

See accompanying notes to consolidated financial statements.



                                       6
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                   For the Six Months Ended
                                                                                           June 30,
                                                                            ---------------------------------------
                                                                                  2003                 2002
                                                                            -----------------   -------------------
                                                                                        (In thousands)
                                                                                         (Unaudited)
<S>                                                                               <C>                  <C>
Cash flows from operating activities:
   Net income                                                                   $     22,927           $    24,261
   Adjustments to reconcile net income to net cash provided by
     operating activities:
        Provision for loan losses                                                      4,485                 5,670
        Net depreciation, amortization and accretion                                   3,982                 3,102
        Loans originated for sale                                                   (250,299)             (167,452)
        Proceeds from sales of loans originated for sale                             245,708               195,990
        Origination of loan servicing rights                                            (525)                 (853)
        Net gain on loans and securities                                             (10,101)               (5,923)
        Gain on the sale of foreclosed real estate                                     (146)                  (394)
        Loss (gain) from joint ventures                                                2,747                (1,137)
        Decrease in accrued interest receivable                                        1,548                 1,779
        Decrease in accrued interest payable                                            (40)                  (452)
        Amortization of intangibles                                                      312                   980
        Earned ESOP expense                                                            1,111                   884
        Earned RRP expense                                                             1,242                 1,744
        Loss on the sale of premises and equipment                                         -                    72
        Provision for deferred income tax                                             (3,529)                5,217
        Increase in income taxes payable                                               2,752                 1,357
        Other, net                                                                     2,066                 5,730
                                                                            -----------------   -------------------
            Net cash provided by operating activities                                 24,240                70,575
                                                                            -----------------   -------------------

Cash flows from investing activities:
   Proceeds from maturities and principal reductions
      of marketable securities                                                     1,747,085               600,278
   Proceeds from sales of marketable securities available for sale                   323,073               473,791
   Purchase of marketable securities                                              (2,070,689)           (1,118,016)
   Loan (originations) net of principal payments on loans                           (102,058)               91,585
   Investments in real estate held for investment and other joint
    ventures                                                                          (6,255)               (1,418)
   Proceeds on real estate and premises and equipment                                  1,054                 1,971
   Purchases of premises and equipment, net                                           (2,494)               (3,058)
   Acquisition of business                                                            (6,000)                    -
                                                                            -----------------   -------------------
      Net cash (used in) provided by investing activities                           (116,284)                45,133
</TABLE>



                                       7
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (continued)
<TABLE>
<CAPTION>
                                                                                   For the Six Months Ended
                                                                                           June 30,
                                                                            ---------------------------------------
                                                                                  2003                 2002
                                                                            -----------------   -------------------
                                                                                        (In thousands)
                                                                                         (Unaudited)
<S>                                                                                  <C>                     <C>
Cash flows from financing activities:
   Proceeds from deposits                                                            117,781                 5,507
   Proceeds from other borrowings                                                    340,000               399,000
   Payments and maturities of other borrowings                                      (353,392)             (730,000)
   Net increase in other short term borrowings                                        48,467               210,789
   Net increase in escrow                                                              1,620                 1,717
   Net proceeds from issuance of Trust Preferred Securities                           14,719                     -
   Dividend reinvestment plan                                                           (185)                 (173)
   Cash dividends                                                                     (6,956)               (7,506)
   Payments to acquire treasury stock                                                (50,258)              (31,791)
   Proceeds from the exercise of stock options                                         2,798                   946
                                                                            -----------------   -------------------
      Net cash provided by (used in) financing activities                            114,594              (151,511)
                                                                            -----------------   -------------------

      Net increase (decrease) in cash and cash equivalents                            22,550               (35,803)

Cash and cash equivalents at beginning of period                                      96,088               116,583
                                                                            -----------------   -------------------
Cash and cash equivalents at end of period                                        $  118,638           $    80,780
                                                                            =================   ===================


Supplemental disclosures:

Cash paid during the period for:
    Interest on deposits, advances and other borrowings
      (includes interest credited to deposit accounts)                            $   69,511           $    80,382
    Income taxes                                                                       7,246                 8,365

Cash received during the period for:
    Income taxes                                                                  $      255           $         -

Non-cash investing activities:
     Transfers from loans to foreclosed real estate                               $      826           $     1,039
</TABLE>

See accompanying notes to financial statements.



                                       8
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)


(1) Summary of Significant Accounting Policies

The Consolidated Financial Statements include the accounts of Waypoint Financial
Corp. ("Waypoint Financial", "the Company", or "the Registrant") and its
wholly-owned subsidiaries Waypoint Bank, Waypoint Financial Investment
Corporation, New Service Corporation, Waypoint Service Corporation, Waypoint
Brokerage Services, Inc., Waypoint Insurance Group, Inc., and Lenders Support
Group, Inc. Waypoint Bank is the sole owner of the following subsidiaries:
Waypoint Investment Corporation, H.S. Service Corporation, First Harrisburg
Service Corporation, and C.B.L. Service Corporation. All significant
intercompany transactions and balances are eliminated in consolidation.

The accompanying interim financial statements have been prepared in accordance
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, consisting of normal recurring
accruals necessary for a fair presentation of the results of interim periods,
have been made. Operating results for the six-month period ended June 30, 2003
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2003 or any other interim period.

The accounting policies followed in the presentation of interim financial
results are consistent with those followed on an annual basis. These policies
are presented on pages 50 through 80 of the 2002 Annual Report on Form 10-K.

(2) Recently Issued Accounting Guidance

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to interests in variable interest entities created after January 31,
2003. For public enterprises such as Waypoint Financial, with an interest in a
variable interest entity created before February 1, 2003, the Interpretation is
applied to the enterprise no later than the end of the first annual or interim
reporting period beginning after June 15, 2003. The Interpretation requires
certain disclosures in financial statements issued after January 31, 2003 if it
is reasonably possible that an enterprise will consolidate or disclose
information about variable interest entities when the Interpretation becomes
effective. The application of this Interpretation is not expected to result in
consolidation of any variable interest entities.

In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends SFAS
133, "Accounting for Derivative Instruments and Hedging Activities" for certain
decisions made by the FASB Derivatives Implementation Group. In particular, SFAS
149 (1) clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative, (2) clarifies when a
derivative contains a financing component, (3) amends the definition of an
underlying to conform it to language used in FASB Interpretation No. 45, and (4)
amends certain other existing pronouncements. This Statement is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. In addition, most provisions of
SFAS 149 are to be applied prospectively. Waypoint Financial is currently
assessing the impact SFAS 149 may have on its consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" (SFAS No. 150).
SFAS 150 establishes standards for the classification and measurement of
financial instruments with characteristics of both liabilities and equity. This
standard is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise shall be effective beginning in the third quarter of
2003. Waypoint Financial's adoption of SFAS 150 will result in a
reclasssification of the Trust Preferred Securities to liabilities in the
consolidated statements of financial condition. Payments on the Trust Preferred
Securities will continue to be classified as interest expense in the
consolidated statements of income.




                                       9
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)


(3) Stock-Based Compensation

In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" (SFAS 148). SFAS 148 amends SFAS 123,
"Accounting for Stock-Based Compensation" (SFAS 123) to provide alternative
methods of transition for an entity that voluntarily changes to the fair
value-based method of accounting for stock-based employee compensation. It also
amends the disclosure provisions of SFAS 123 to require prominent disclosure
about the effects on reported net income of an entity's accounting policy
decisions with respect to stock-based employee compensation. Waypoint Financial
has not elected to change to the fair-value method of accounting for stock-based
compensation but has complied with the disclosure requirements herein.

Waypoint Financial accounts for the Option Plans under Accounting Principles
Board Opinion No. 25, and, accordingly, compensation expense generally has not
been recognized in the accompanying financial statements. Had compensation
expense for these plans been recorded in the financial statements of Waypoint
Financial consistent with the fair value provisions of Statement 123, net income
and net income per share would have been reduced to the following pro-forma
amounts (in thousands, except per-share data):
<TABLE>
<CAPTION>

                                             For the three month periods             For the six month periods
                                                   ended June 30,                         ended June 30,
                                          ----------------------------------     ----------------------------------
                                               2003               2002                2003               2002
                                          ---------------    ---------------     ---------------    ---------------
<S>                                              <C>                <C>                 <C>                <C>
    Net Income
        As reported                              $11,545            $12,765             $22,927            $24,261
        Deduct: Total stock-based
          employee compensation
          expense determined under
          fair value based method
          for all awards,(1) net of
          related tax effects                       (264)              (589)               (588)            (1,177)
                                                 -------            -------             -------            -------
        Pro forma                                $11,281            $12,176             $22,339            $23,084
    Basic earnings per share
        As reported                                $0.37              $0.35               $0.72              $0.66
        Pro forma                                  $0.36              $0.34               $0.71              $0.63
    Diluted earnings per share
        As reported                                $0.36              $0.34               $0.70              $0.65
        Pro forma                                  $0.35              $0.33               $0.69              $0.62
</TABLE>

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

    (1) All awards refers to awards granted, modified, or settled in fiscal
        periods beginning December 15, 1994 - that is, awards for which the fair
        value was required to be measured under Statement 123.



                                       10
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)


(4) Earnings Per Share

The following table shows the calculation of basic and diluted earnings per
share.
<TABLE>
<CAPTION>
                                                                                                Per Share
                                                                   Income          Shares         Amount
                                                              ----------------------------------------------
<S>                                                                 <C>             <C>             <C>
For the three months ended June 30, 2003:
  Basic earnings per share:
        Income available to common shareholders                     $   11,545      31,133,635      $ 0.37
        Dilutive effect of employee and director
         stock options                                                                 925,950       (0.01)
                                                              ----------------------------------------------
   Diluted earnings per share:
        Income available to common shareholders
           plus assumed conversions                                 $   11,545      32,059,585      $ 0.36
                                                              ==============================================

For the three months ended June 30, 2002:
  Basic earnings per share:
        Income available to common shareholders                     $   12,765      36,113,692      $ 0.35
        Dilutive effect of employee and director
          stock options                                                              1,120,276       (0.01)
                                                              ----------------------------------------------
   Diluted earnings per share:
        Income available to common shareholders
           plus assumed conversions                                 $   12,765      37,233,968      $ 0.34
                                                              ==============================================
</TABLE>

<TABLE>
<CAPTION>

                                                                                                Per Share
                                                                   Income          Shares         Amount
                                                              ----------------------------------------------
<S>                                                                 <C>             <C>             <C>
For the six months ended June 30, 2003:
  Basic earnings per share:
        Income available to common shareholders                     $   22,927      31,660,168      $ 0.72
        Dilutive effect of employee and director
          stock options                                                                924,689       (0.02)
                                                              ----------------------------------------------
   Diluted earnings per share:
        Income available to common shareholders
           plus assumed conversions                                 $   22,927      32,584,857      $ 0.70
                                                              ==============================================

For the six months ended June 30, 2002:
  Basic earnings per share:
        Income available to common shareholders                     $   24,261      36,503,406      $ 0.66
        Dilutive effect of employee and director
          stock options                                                                979,371       (0.01)
                                                              ----------------------------------------------
   Diluted earnings per share:
        Income available to common shareholders
           plus assumed conversions                                 $   24,261      37,482,777      $ 0.65
                                                              ==============================================
</TABLE>

Excluded from the computation of diluted earnings per share were anti-dilutive
options of 57,502 shares and 77,534 shares for the three months ended June 30,
2003 and June 30, 2002, respectively, and 136,570 shares and 242,621 shares for
the six months ended June 30, 2003 and June 30, 2002, respectively, because the
exercise prices were greater than the average market price of the common shares
during the respective period.



                                       11
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)

(5) Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value for available-for-sale securities by major security type
were as follows:
<TABLE>
<CAPTION>
                                                                   As of June 30, 2003
                                              ---------------------------------------------------------------
                                                                   Gross           Gross
                                                                Unrealized      Unrealized
                                                 Amortized        Holding         Holding          Fair
                                                   Cost            Gains          Losses           Value
                                               --------------------------------------------------------------
<S>                                               <C>              <C>             <C>            <C>
      U.S. Government and agencies               $   322,541       $   6,488      $    (104)     $   328,925
      Corporate bonds                                 66,357               -         (6,452)          59,905
      Municipal securities                            89,206           5,179            (96)          94,289
      FHLB stock                                     112,595               -              -          112,595
      Equity securities                              152,486           3,543            (68)         155,961
      Asset-backed securities                         31,629              56             (9)          31,676
      Mortgage-backed securities:
        Agency PC's & CMO's                          668,003           4,395         (1,176)         671,222
        Private issue CMO's                        1,420,921           3,723           (403)       1,424,241
                                               --------------  --------------  --------------  --------------
          Total mortgage-backed securities         2,088,924           8,118         (1,579)       2,095,463
                                               --------------  --------------  --------------  --------------
          Total securities available for sale    $ 2,863,738       $  23,384      $  (8,308)     $ 2,878,814
                                               ==============  ==============  ==============  ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                 As of December 31, 2002
                                              ---------------------------------------------------------------
                                                                   Gross          Gross
                                                                Unrealized     Unrealized
                                                 Amortized        Holding        Holding           Fair
                                                   Cost            Gains         Losses            Value
                                               --------------------------------------------------------------
<S>                                               <C>              <C>             <C>           <C>
      U.S. Government and agencies               $   337,316       $   7,469     $      (16)     $   344,769
      Corporate bonds                                 78,089              78        (10,951)          67,216
      Municipal securities                            94,235           4,475              -           98,710
      FHLB stock                                     109,807               -              -          109,807
      Equity securities                              125,173           6,260           (507)         130,926
      Asset-backed securities                         43,677           1,167              -           44,844
      Mortgage-backed securities:
        Commercial                                    23,599             803              -           24,402
        Agency PC's & CMO's                        1,054,131           7,948         (1,229)       1,060,850
        Private issue CMO's                          905,110           5,976           (498)         910,588
                                               --------------  --------------   ------------    -------------
          Total mortgage-backed securities         1,982,840          14,727         (1,727)       1,995,840
                                               --------------  --------------   ------------    -------------
          Total securities available for sale    $ 2,771,137       $  34,176     $  (13,201)     $ 2,792,112
                                               ==============  ==============   ============    =============
</TABLE>

                                       12
<PAGE>



                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)

(6) Loans Receivable, Net

The following table presents the composition of loans receivable, net, as of the
dates indicated:
<TABLE>
<CAPTION>
                                                                   June 30,            December 31,
                                                                     2003                  2002
                                                               -----------------     -----------------
<S>                                                                 <C>                   <C>
     Residential mortgage loans (principally conventional):
        Secured by 1-4 family residences                            $   473,191           $   697,505
        Construction (net of undistributed
           portion of $30,729 and $27,535)                               24,604                23,636
                                                               -----------------     -----------------
                                                                        497,795               721,141
     Less:
        Unearned discount                                                    68                    95
        Net deferred loan origination fees                                2,947                 3,616
                                                               -----------------     -----------------
              Total residential mortgage loans                          494,780               717,430
                                                               -----------------     -----------------
     Commercial loans:
        Commercial real estate                                          574,962               533,088
        Commercial business                                             355,535               307,655
        Construction and site development
          (net of undistributed portion of
          $64,365 and $15,974)                                           84,589                53,774
                                                               -----------------     -----------------
                                                                      1,015,086               894,517
     Less:
        Net deferred loan origination fees                                2,107                 1,308
                                                               -----------------     -----------------
              Total commercial loans                                  1,012,979               893,209
                                                               -----------------     -----------------
     Consumer and other loans:
        Manufactured housing                                             99,041               106,098
        Home equity and second mortgage                                 526,774               360,102
        Indirect automobile                                             153,237               138,530
        Other                                                            98,313                98,887
                                                               -----------------     -----------------
                                                                        877,365               703,617
     Plus:
        Net deferred loan origination fees                               (1,363)               (2,489)
        Dealer reserve                                                   24,619                25,845
                                                               -----------------     -----------------
           Total consumer and other loans                               900,621               726,973
                                                               -----------------     -----------------
     Less: Allowance for loan losses                                     28,818                27,506
                                                               -----------------     -----------------
     Loans receivable, net                                          $ 2,379,562           $ 2,310,106
                                                               =================     =================
</TABLE>


Loans having a carrying value of $583,399,000 were pledged as collateral for
FHLB advances at June 30, 2003.

Waypoint Financial conducts certain residential mortgage banking activities
including the origination of mortgage loans for securitization or sale to
investors and the servicing of mortgage loans for investors.

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans totaled $381,369,000 at June 30, 2003 and $476,990,000 at December
31, 2002.




                                       13
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)


Waypoint Financial's investment in loan servicing rights is included in the
accompanying consolidated statement of financial condition. Waypoint Financial
did not purchase or sell any mortgage servicing rights during the six-month
periods ended June 30, 2003 and 2002.

Waypoint Financial sold mortgage loans totaling $242,294,000 and $194,343,000
during the six-month periods ended June 30, 2003 and June 30, 2002,
respectively. Waypoint Financial did not exchange loans for mortgage-backed
securities during the six-month periods ended June 30, 2003 and 2002.

Investor custodial balances maintained in connection with the foregoing mortgage
servicing rights totaled $9,363,000 at June 30, 2003 and $10,831,000 at December
31, 2002.


(7) Deposits

The following table presents the composition of deposits, as of the dates
indicated:
<TABLE>
<CAPTION>

                                                                  June 30,               December 31,
                                                                    2003                     2002
                                                              ------------------       ------------------
<S>                                                                  <C>                      <C>
Savings                                                             $   259,949              $   250,780
Time                                                                  1,425,105                1,452,973
Transaction                                                             529,052                  379,211
Money market                                                            367,555                  370,426
                                                              ------------------       ------------------
     Total deposits                                                 $ 2,581,661              $ 2,453,390
                                                              ==================       ==================
</TABLE>



(8) Other Borrowings

The following table presents the composition of Waypoint Financial's other
borrowings as of the dates indicated:
<TABLE>
<CAPTION>
                                                             June 30,                    December 31,
                                                               2003                          2002
                                                         -----------------             -----------------
<S>                                                          <C>                            <C>
  FHLB advances                                              $  2,108,384                   $ 2,041,558
  Repurchase agreements                                           346,193                       372,897
  Other                                                             5,000                            25
                                                         -----------------             -----------------
    Total other borrowings                                   $  2,459,577                   $ 2,414,480
                                                         =================             =================
</TABLE>


(9) Other Liabilities

Other liabilities includes securities in process of $84,430,000 as of June 30,
2003 and no corresponding amount as of December 31, 2002. Securities in process
represent securities acquired in the ordinary course of business that have not
settled as of the dates presented.



                                       14
<PAGE>


                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
          (All dollar amounts presented in the tables are in thousands,
                             except per share data)
                                   (Unaudited)


(10) Acquisition

On April 1, 2003, Waypoint Financial announced the acquisition of privately-held
e3 Consulting, Inc. based in Mechanicsburg, Pennsylvania. This company develops
custom-tailored executive and employee benefit programs and qualified retirement
plans for businesses throughout the Mid-Atlantic region. Following the
acquisition, this company is doing business as Waypoint Benefits Consulting. The
price for this purchase acquisition totaled $6,000,000 paid on April 1, 2003
plus contingent consideration to be paid annually through the five-year period
ended March 31, 2008 if certain financial performance targets are achieved. Any
additional contingent consideration paid will be classified as goodwill in the
consolidated statements of financial condition.

This acquisition is not expected to have a material impact on Waypoint
Financial's results of operations. Accordingly, disclosures regarding pro-forma
results of operations have been omitted.


(11) Reclassifications

Certain amounts in the 2002 condensed financial statements and notes have been
reclassified to conform to the 2003 presentation.


(12) Stock Dividend

Waypoint Financial declared a 5% stock dividend on July 17, 2003, which will be
paid August 15, 2003 to shareholders of record on August 1, 2003. The
distribution date of the 5% stock dividend will occur subsequent to the issuance
of financial statements for the second quarter 2003. Accordingly, the per share
amounts reported herein do not reflect the effect of the stock dividend.


(13) Subsequent Events

On July 24, 2003, Waypoint Financial announced its agreement to acquire two
branches in Chambersburg, Pennsylvania. Terms of the agreement have not been
disclosed pending regulatory approval. On July 29, 2003, Waypoint Financial also
announced plans to open several additional branches in its Pennsylvania markets
during the remainder of 2003. These transactions, if consummated, are not
expected to have a material impact on Waypoint Financial's financial condition
or results of operations.



                                       15
<PAGE>

Item 2  Management's Discussion and Analysis of Financial Condition and
        Results of  Operations

The following is management's discussion and analysis of the significant changes
in the results of operations, capital resources and liquidity presented in its
accompanying interim consolidated financial statements for Waypoint Financial
Corp. and Subsidiaries. This discussion should be read in conjunction with the
2002 Annual Report on Form 10-K. Current performance does not guarantee and may
not be indicative of similar performance in the future.

I. Forward-Looking Statements

In addition to historical information, this report contains forward-looking
statements. The forward-looking statements contained in the following sections
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected in the forward-looking statements.
Important factors that might cause such a difference include, but are not
limited to, interest rate trends, the general economic climate in Waypoint
Financial's market area and the country as a whole, Waypoint Financial's ability
to control costs and expenses, competitive products and pricing, loan
delinquency rates and changes in federal and state regulation. Readers should
not place undue reliance on these forward-looking statements, as they reflect
management's analysis only as of the date of this report. Waypoint Financial has
no obligation to update or revise these forward-looking statements to reflect
events or circumstances that occur after the date of this report. Readers should
carefully review the risk factors described in other documents that Waypoint
Financial files periodically with the Securities and Exchange Commission.

II. Critical Accounting Policies

This section describes Waypoint Financial's critical accounting policies which
involve accounting estimates that: a) require assumptions about highly uncertain
matters, and b) could vary sufficiently to cause a material effect on Waypoint
Financial's financial condition or results of operations.

Allowance for Loan Losses. In originating loans, Waypoint Financial recognizes
that losses will be experienced on loans and that the risk of loss will vary
with, among other things, the type of loan being made, the creditworthiness of
the borrower over the term of the loan, general economic conditions and, in the
case of a secured loan, the quality of the security for the loan. Waypoint
Financial maintains an allowance for loan losses to absorb losses inherent in
the loan portfolio. The allowance for loan losses represents management's
estimate of probable losses based on information available as of the date of the
financial statements. The allowance for loan losses is based on management's
evaluation of the collectibility of the loan portfolio, including past loan loss
experience, known and inherent losses, information about specific borrower
situations and estimated collateral values, and economic conditions.

The loan portfolio and other credit exposures are regularly reviewed by
management in its determination of the allowance for loan losses. The
methodology for assessing the appropriateness of the allowance includes a review
of historical losses, peer group comparisons, industry data and economic
conditions. In addition, the regulatory agencies, as an integral part of their
examination process, periodically review Waypoint Financial's allowance for loan
losses and may require Waypoint Financial to make additional provisions for
estimated losses based upon judgments different from those of management.

In establishing the allowance for loan losses, loss factors are applied to
various pools of outstanding loans. Waypoint Financial segregates the loan
portfolio according to risk characteristics (i.e., mortgage loans, home equity
and consumer). Loss factors are derived using Waypoint Financial's historical
loss experience and may be adjusted for significant factors that, in
management's judgment, affect the collectibility of the portfolio as of the
evaluation date. Commercial loans are evaluated individually to determine the
required allowance for loan losses and to evaluate for potential impairment of
such loans under SFAS 114.

Although management believes that it uses the best information available to
establish the allowance for loan losses, future adjustments to the allowance for
loan losses may be necessary and results of operations could be adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations. Furthermore, while Waypoint Financial believes it has
established its existing allowance for loan losses in conformity with generally
accepted accounting principles, there can be no assurance that regulators, in
reviewing Waypoint Financial's loan



                                       16
<PAGE>
portfolio, will not request Waypoint Financial to increase its allowance for
loan losses. In addition, because future events affecting borrowers and
collateral cannot be predicted with certainty, there can be no assurance that
the existing allowance for loan losses is adequate or that increases will not be
necessary should the quality of any loans deteriorate as a result of the factors
discussed above. Any material increase in the allowance for loan losses may
adversely affect Waypoint Financial's financial condition and results of
operations.

The allowance review methodology is based on information known at the time of
the review. Changes in factors underlying the assessment could have a material
impact on the amount of the allowance that is necessary and the amount of
provision to be charged against earnings. Such changes could impact future
results.

Goodwill. Waypoint Financial has goodwill that is subject to annual impairment
evaluation under SFAS 142. Waypoint Financial applies the market approach under
SFAS 142 for impairment measurement which is highly sensitive to underlying
assumptions. Changes in assumptions and results due to economic conditions,
industry factors and reporting unit performance and cash flow projections could
result in different assessments of the fair values of reporting units and could
result in impairment charges in the future.

III. Market Risk and Interest Rate Sensitivity Management

Waypoint Financial monitors its interest rate risk position by utilizing
simulation analysis. Net interest income fluctuations and the net portfolio
value ratio are determined in various interest rate scenarios and monitored
against acceptable limitations established by management and approved by the
Board of Directors. Such rate scenarios include "ramped" rate changes adjusting
rates in +/- 100 basis point (bp) increments resulting in projected changes to
net interest income over the next 12 months and immediate rate shocks resulting
in projected net portfolio value ratios as indicated in the following table:

<TABLE>
<CAPTION>
                                              As of June 30, 2003                 As of December 31, 2002
                                      ----------------------------------   -----------------------------------
             Change in                Percent change            Net           Percent change         Net
           Interest rates             in net interest        portfolio       in net interest        portfolio
         (In basis points)               income (1)          ratio (2)          income (1)         ratio (2)
    --------------------------        ----------------  ----------------   -----------------  ----------------
<S>                                          <C>               <C>                 <C>                <C>
                +300                         7.29%             4.78%               6.95%              5.29%
                +200                         5.86              5.60                5.22               5.91
                +100                         2.88              5.84                3.62               6.20
                   0                          -                5.58                 -                 6.30
                (100)                       (4.89)             4.93               (3.45)              5.27
                (200)                       (9.07)             3.89               (6.74)              3.72
</TABLE>

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

(1)      The percentage change in this column represents an increase (decrease)
         in net interest income for 12 months in a stable interest rate
         environment versus net interest income for 12 months in the various
         rate scenarios.
(2)      The net portfolio value ratio in this column represents net portfolio
         value of Waypoint Financial in various rate scenarios, divided by the
         present value of expected net cash flows from existing assets in those
         same scenarios. Net portfolio value is defined as the present value of
         expected net cash flows from existing assets, minus the present value
         of expected net cash flows from existing liabilities, plus or minus the
         present value of expected net cash flows from existing
         off-balance-sheet contracts.

Simulation results are influenced by a number of estimates and assumptions with
regard to embedded options, prepayment behaviors, pricing strategies and
cashflows. As of these dates, the net portfolio ratio fell within the "minimal
risk" category established under OTS guidelines for interest rate risk
measurement.



                                       17
<PAGE>

IV. Liquidity

Waypoint Financial meets its liquidity needs by either reducing its assets or
increasing its liabilities. Sources of asset liquidity include short-term
investments, securities available for sale, maturing and repaying loans, and
monthly cash flows from mortgage-backed securities. The loan portfolio provides
an additional source of liquidity due to Waypoint Financial's participation in
the secondary mortgage market and resulting ability to sell loans as necessary.
Waypoint Financial also meets its liquidity needs by attracting deposits and
utilizing borrowing arrangements with the FHLB of Pittsburgh and the Federal
Reserve Bank of Philadelphia for short and long- term loans as well as other
short-term borrowings. Waypoint Financial also occasionally uses brokered
deposits to supplement other sources of funds to the extent such deposits are
determined to have more favorable interest cost and risk characteristics at the
time of purchase relative to other sources of funding.

During the six months ended June 30, 2003, securities available for sale
increased $86.7 million and loans receivable, net increased by $69.5 million.
Within securities available for sale, $84.4 million of securities were acquired
on a trade date basis but did not settle as of June 30, 2003, and therefore such
amounts were offset by securities in process, which is included in other
liabilities. Funding for Waypoint Financial's asset growth was provided by
growth in deposits totaling $128.3 million and borrowings totaling $45.1
million. Waypoint Financial also acquired treasury stock totaling $50.3 million,
which was funded in part by $14.7 million of proceeds from the issuance of
additional trust preferred securities. At June 30, 2003, Waypoint Financial had
$2,108.4 million in FHLB loans outstanding, an increase of $66.8 million during
the six months then ended.

Waypoint Bank is required by OTS regulations to maintain sufficient liquidity to
ensure its safe and sound operation. Waypoint Bank had sufficient liquidity
during the six-month periods ended June 30, 2003 and June 30, 2002. The sources
of liquidity previously discussed are deemed by management to be sufficient to
fund outstanding loan commitments and meet other obligations.


V. Capital Resources

Stockholders' equity at June 30, 2003, totaled $422.5 million compared to $456.7
million at December 31, 2002, a decrease of $34.2 million. Stockholders' equity
was increased by net income of $22.9 million and by stock plan activity totaling
$3.7 million. Offsetting these increases were treasury stock purchases of $50.3
million, cash dividends of $6.9 million, a decrease in Waypoint Financial's
unrealized gains on available for sale securities of $3.4 million, net of tax,
and $.2 million in dividend reinvestment activity.

Under OTS regulations a savings association must satisfy three minimum capital
requirements: Total capital, Tier 1 capital to risk weighted assets and Tier 1
capital to average assets. Savings associations must meet all of the standards
in order to comply with the capital requirements. At June 30, 2003, and December
31, 2002, Waypoint Bank met all three minimum capital requirements to be well
capitalized.


RISK-BASED CAPITAL RATIOS AND LEVERAGE RATIOS
<TABLE>
<CAPTION>

         WAYPOINT BANK                                          Minimum Requirement       Minimum Requirement to
                                              Actual            for Capital Adequacy       be "Well Capitalized
                                     ---------------------     ----------------------     ----------------------
     As of June 30, 2003              Amount         Ratio       Amount         Ratio        Amount         Ratio
     -------------------              ------         -----       -------        -----        -------        -----
                                  (in thousands)              (in thousands)             (in thousands)
<S>                                      <C>          <C>          <C>           <C>           <C>           <C>
  Total Capital
   (to Risk Weighted Assets)             $438,049     12.6%         $277,098      8.0%          $346,372     10.0%
 Tier 1 Capital
   (to Risk Weighted Assets)              407,668     11.8           138,549      4.0            207,823      6.0
 Tier 1 Capital
   (to Average Assets)                    407,668      7.5           216,039      4.0            270,049      5.0
</TABLE>




                                       18
<PAGE>
<TABLE>
<S>                                      <C>           <C>          <C>            <C>          <C>          <C>
    As of December 31, 2002
 Total Capital
    (to Risk Weighted Assets)            $441,066     13.7%        $257,395       8.0%          $321,744     10.0%
 Tier 1 Capital
   (to Risk Weighted Assets)              410,953     12.8          128,697       4.0            193,046      6.0
 Tier 1 Capital
   (to Average Assets)                    410,953      7.8          210,333       4.0            262,916      5.0
</TABLE>


         A reconciliation of Waypoint Bank's regulatory capital to capital using
accounting principles generally accepted in the United States (GAAP) as of June
30, 2003 follows:
<TABLE>
<CAPTION>
                                                                                                     TIER 1
                                                                                      TANGIBLE       (CORE)      RISK-BASED
                                                                                       CAPITAL       CAPITAL      CAPITAL
                                                                                      --------      ---------    ----------
<S>                                                                                   <C>           <C>            <C>
GAAP capital at Waypoint Financial                                                     $422,546     $422,546       $422,546
Capital attributed to affiliates                                                          4,246        4,246          4,246
                                                                                       --------     --------       --------
GAAP capital at Waypoint Bank                                                           426,792      426,792        426,792

Capital adjustments:
     Unrealized gains, net of taxes, on securities available for sale                    (9,054)      (9,054)        (9,054)
     Allowance for loan losses                                                                -            -         28,818
     Certain intangible assets                                                          (10,034)      10,034)       (10,034)
     Disallowed servicing assets                                                            (36)         (36)           (36)
     Allowable unrealized gains, net of taxes, on equity securities available
       for sale                                                                              -             -          1,563
                                                                                       --------     --------       --------
     Regulatory capital at Waypoint Bank                                               $407,668     $407,668       $438,049
                                                                                       ========     ========       ========
</TABLE>

VI. Results of Operations

COMPARISON FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 2003 AND JUNE 30, 2002

NET INCOME
Net income for the three months ended June 30, 2003 was $11.5 million or $.36
per share as compared to $12.8 million or $.34 per share for the three months
ended June 30, 2002. The increase in net income per share of $.02 resulted
primarily from treasury stock repurchases during 2002 and the first six months
of 2003, which substantially reduced the amount of equivalent shares
outstanding. The calculation of earnings per share is presented in Note 4 of the
accompanying Notes to Consolidated Financial Statements. The following
paragraphs include a discussion of the components of net income.

NET INTEREST INCOME
Waypoint Financial's principle source of revenue is net interest income, which
represents the difference between interest income generated by earning assets
such as loans and marketable securities and interest expense on interest-bearing
liabilities such as deposits and borrowings. Net interest income can be
significantly impacted by movements in market interest rates.

Net interest income before provision for loan losses totaled $30.4 million for
the three months ended June 30, 2003, as compared to $30.1 million for the
quarter ended June 30, 2002. Waypoint's net interest income trend reflects the
challenge facing commercial banks from the continued decline in market interest
rates to the lowest levels in almost five decades. Provision expense for loan
losses decreased to $2.1 million for the current quarter relative to $3.6
million recorded for the quarter ended June 30, 2002. The provision for loan
losses for the quarter ended June 30, 2002 increased due to increased
charge-offs during that period. Waypoint Financial's provision expense and
allowance for loan losses are discussed in further detail in the Asset Quality
section of this report.

Table 1 presents, on a tax-equivalent basis, Waypoint Financial's average asset
and liability balances, interest rates, interest income and interest expense for
each of the three-month and six-month periods ended June 30, 2003 and June 30,
2002. Table 2 presents a rate-volume analysis of changes in net interest income
on a tax-equivalent basis for the three and six-month periods ended June 30,
2003 and June 30, 2002.



                                       19
<PAGE>

TABLE 1A - AVERAGE BALANCE SHEETS, RATES AND INTEREST INCOME AND EXPENSE SUMMARY
           (THREE-MONTH PERIODS)
<TABLE>
<CAPTION>
                                                                           For the three months ended,
                                                       ---------------------------------------------------------------------
                                                                 June 30, 2003                      June 30, 2002
                                              Rate     ---------------------------------------------------------------------
                                             as of                               Average                           Average
                                            June 30,     Average                 Yield/     Average                 Yield/
                                              2003       Balance     Interest(2)  Cost      Balance   Interest (2)   Cost
                                           ----------- ---------------------------------------------------------------------
                                                                      (All dollar amounts are in thousands)
<S>                                             <C>     <C>            <C>          <C>   <C>             <C>         <C>
Assets:
Interest-earning assets:
  Loans, net (1) (5)                            5.94%   $ 2,420,366    $ 37,383     6.17% $ 2,409,525     $ 41,959    6.97%
  Marketable securities - taxable                3.96     2,631,129      26,099      4.17   2,407,139       26,779     4.45
  Marketable securities - tax-free               7.18        89,634       1,695      7.57      99,927        2,055     8.23
  Other interest-earning assets                  1.05        66,404         151      1.05      64,014          279     1.74
                                           -----------  ---------------------------------------------------------------------
Total interest-earning assets                    4.98     5,207,533      65,328      5.06   4,980,605       71,072     5.71
                                           -----------              ----------------------            ----------------------
Noninterest-earning assets                                  233,851                           187,288
                                                       -------------                      ------------
Total assets                                            $ 5,441,384                       $ 5,167,893
                                                       =============                      ============
Liabilities and stockholders' equity:
Interest-bearing liabilities:

  Savings deposits                               0.44     $ 262,658         314      0.48   $ 242,488          757     1.25
  Time deposits                                  3.27     1,392,343      11,686      3.37   1,525,972       15,704     4.12
  Transaction and money market deposits          0.75       836,419       1,456      0.70     788,109        1,790     0.91
  Escrow                                         0.87         4,400           9      0.86       5,911            9     0.61
  Borrowed funds                                 3.55     2,469,623      20,669      3.32   2,106,091       21,531     4.09
                                           -----------  ---------------------------------------------------------------------
Total interest-bearing liabilities               2.81     4,965,443      34,134      2.74   4,668,571       39,791     3.41
                                           -----------              ----------------------            ----------------------
Noninterest-bearing liabilities                              49,976                            53,493
                                                       -------------                      ------------
Total liabilities                                         5,015,419                         4,722,064
Stockholders' equity                                        425,965                           445,829
                                                       -------------                      ------------
Total liabilities and
  stockholders' equity                                  $ 5,441,384                       $ 5,167,893
                                                       =============                      ============

Net interest income, tax-equivalent                                      31,194                             31,281
Interest rate spread, tax-equivalent (3)        2.17%                               2.32%                             2.30%
                                           ===========                          ==========                         =========
Net interest-earning assets                               $ 242,090                         $ 312,034
                                                       =============                      ============
Net interest margin, tax-equivalent (4)                                             2.44%                             2.51%
                                                                                ==========                         =========
Ratio of interest-earning assets
  to interest-bearing liabilities                              1.05 x                            1.07 x
                                                       =============                      ============

Adjustment to reconcile tax-equivalent
   net interest income to net interest
   income                                                                  (778)                            (1,218)
                                                                    ------------                      -------------
Net interest income before
   provision for loan losses                                           $ 30,416                           $ 30,063
                                                                    ============                      =============
</TABLE>

(1)  Includes net income (expense) recognized on deferred loan fees and costs of
     $726,000 for the three months ended June 30, 2003, and $(52,000) for the
     three months ended June 30, 2002.
(2)  Interest income and yields are shown on a tax-equivalent basis using an
     effective tax rate of 35%.
(3)  Represents the difference between the average yield on interest-earning
     assets and the average cost on interest-bearing liabilities.
(4)  Represents the annualized net interest income before the provision for loan
     losses divided by average interest-earning assets.
(5)  Includes loans on nonaccrual status and loans held for sale.



                                       20
<PAGE>

TABLE 1B - AVERAGE BALANCE SHEETS, RATES AND INTEREST INCOME AND EXPENSE SUMMARY
           (SIX-MONTH PERIODS)
<TABLE>
<CAPTION>
                                                                          For the six months ended,
                                                 -----------------------------------------------------------------------------
                                                             June 30, 2003                         June 30, 2002
                                                 -----------------------------------------------------------------------------
                                                                              Average                                Average
                                                    Average          (2)       Yield/     Average          (2)       Yield/
                                                    Balance       Interest      Cost      Balance       Interest      Cost
                                                 -----------------------------------------------------------------------------
                                                                    (All dollar amounts are in thousands)
<S>                                                  <C>             <C>         <C>       <C>             <C>          <C>
ASSETS:
Interest, earning assets:
  Loans, net (1)(5)                                  $2,391,181      $ 74,944     6.28%    $2,446,961      $ 85,378      6.98%
  Marketable securities - taxable                     2,628,424        53,181     4.25      2,405,029        54,164      4.50
  Marketable securities - tax-free                       91,386         3,495     7.65         97,172         4,015      8.26
  Other interest-earning assets                          65,286           314     1.12         60,089           540      1.80
                                                 -----------------------------------------------------------------------------
Total interest-earning assets                         5,176,277       131,934     5.15      5,009,251       144,097      5.75
                                                                -----------------------               ------------------------
Noninterest-earning assets                              220,886                               186,992
                                                 ---------------                       ---------------
Total assets                                        $ 5,397,163                            $5,196,243
                                                 ===============                       ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
  Savings deposits                                    $ 260,043           628     0.49      $ 233,404         1,452      1.24
  Time deposits                                       1,395,538        24,706     3.57      1,514,185        31,923      4.22
  Transaction and money market deposits                 801,614         2,597     0.65        799,924         3,837      0.96
  Escrow                                                  4,135            18     0.88          5,861            16      0.55
  Borrowed funds                                      2,453,724        41,522     3.37      2,142,578        42,702      3.99
                                                 -----------------------------------------------------------------------------
Total interest-bearing liabilities                    4,915,054        69,471     2.83      4,695,952        79,930      3.40
                                                                -----------------------               ------------------------
Noninterest-bearing liabilities                          49,314                                49,005
                                                 ---------------                       ---------------
Total liabilities                                     4,964,368                             4,744,957
Stockholders' equity                                    432,795                               451,286
                                                 ---------------                       ---------------
Total liabilities and
  stockholders' equity                              $ 5,397,163                           $ 5,196,243
                                                 ===============                       ===============

Net interest income, tax-equivalent                                    62,463                                64,167
Interest rate spread, tax-equivalent (3)                                          2.32%                                  2.35%
                                                                              =========                             ==========
Net interest-earning assets                          $  261,223                            $  313,299
                                                 ===============                        ==============
Net interest margin, tax-equivalent (4)                                           2.45%                                  2.56%
                                                                              =========                             ==========
Ratio of interest-earning assets
  to interest-bearing liabilities                          1.05 x                                1.07 x
                                                 ===============                       ===============

Adjustment to reconcile tax-equivalent net
  interest income to net interest income                               (1,575)                               (2,460)
                                                                --------------                        --------------

Net interest income before provision for
  loan losses                                                        $ 60,888                              $ 61,707
                                                                ==============                        ==============
</TABLE>


(1)  Includes net income (expense) recognized on deferred loan fees and costs of
     $1,359,000 for the six months ended June 30, 2003, and $(315,000) for the
     six months ended June 30, 2002.
(2)  Interest income and yields are shown on a tax equivalent basis using an
     effective tax rate of 35%.
(3)  Represents the difference between the average yield on interest-earning
     assets and the average cost on interest-bearing liabilities.
(4)  Represents the annualized net interest income before the provision for loan
     losses divided by average interest-earning assets.
(5)  Includes loans on nonaccrual status and loans held for sale.



                                       21
<PAGE>

TABLE 2  RATE/VOLUME ANALYSIS OF CHANGES IN NET INTEREST INCOME
<TABLE>
<CAPTION>

                                           Three Months Ended June 30, 2003             Six Months Ended June 30, 2003
                                                     Compared to                                 Compared to
                                           Three Months Ended June 30, 2002             Six Months Ended June 30, 2002
                                                 Increase (Decrease)                         Increase (Decrease)
                                       -----------------------------------------   -----------------------------------------

                                          Volume         Rate           Net          Volume          Rate          Net
                                       ------------- -------------  ------------   ------------  ------------- -------------
                                                                  (Dollar amounts in thousands)
<S>                                         <C>         <C>           <C>            <C>            <C>           <C>
Interest-earning assets:
  Loans, net                                $   552     $  (5,128)     $ (4,576)      $ (1,910)      $(8,524)     $(10,434)
  Marketable securities - taxable             5,036        (5,716)         (680)         4,738        (5,721)         (983)
  Marketable securities - tax-free             (202)         (158)         (360)          (232)         (288)         (520)
  Other interest-earning assets                  29          (157)         (128)            44          (270)         (226)
                                       ------------- -------------  ------------   ------------  ------------- -------------
  Total interest-earning assets               5,415       (11,159)       (5,744)         2,640       (14,803)      (12,163)
                                       ------------- -------------  ------------   ------------  ------------- -------------

Interest-bearing liabilities:
  Savings deposits                              169          (612)         (443)           149          (973)         (824)
  Time deposits                              (1,293)       (2,725)       (4,018)        (2,361)       (4,856)       (7,217)
  Transaction and money market
      deposits                                  277          (611)         (334)             8        (1,248)       (1,240)
  Escrow                                         (5)            5             -             (6)            8             2
  Borrowed funds                              7,188        (8,050)         (862)         5,792        (6,972)       (1,180)
                                       ------------- -------------  ------------   ------------  ------------- -------------
  Total interest-bearing liabilities          6,336       (11,993)       (5,657)         3,582       (14,041)      (10,459)
Change in tax-equivalent
    net interest income                    $   (921)       $  834      $    (87)       $  (942)       $ (762)     $ (1,704)
                                       ============= =============  ============   ============  ============= =============
</TABLE>


As presented in Table 1a, the net interest margin ratio on a tax-equivalent
basis was 2.44% for the quarter ended June 30, 2003 as compared to 2.51% for the
quarter ended June 30, 2002. During the current quarter relative to the
comparable prior quarter, Waypoint was able to maintain the spread between its
average interest yield and its average interest cost. However, the net interest
margin decreased 7 basis points as growth in interest-bearing liabilities
exceeded growth in interest-earning assets by $69.9 million, due in part to
decreased stockholders' equity resulting from planned capital management
activities.



                                       22
<PAGE>


NONINTEREST INCOME

The table below presents a comparison of noninterest income for the three-month
and six-month periods ended June 30, 2003 and 2002.

TABLE 3  CHANGES IN NONINTEREST INCOME
<TABLE>
<CAPTION>

                                                                        Three months ended June 30
                                                          -------------------------------------------------------
                                                             2003            2002         Change          %
                                                          -----------     ------------  ------------  -----------
                                                                      (Dollar amounts in thousands)
<S>                                                         <C>               <C>           <C>              <C>
     Banking services and account fees                      $  3,924         $  3,156      $    768          24.3%
     Financial services fees                                   2,348            1,649           699          42.4
     Residential mortgage banking                              1,297            1,143           154          13.5
     Bank-owned life insurance                                 1,142            1,178           (36)         (3.1)
     Gain on securities and derivatives, net                   3,717            3,952          (235)         (5.9)
     Other                                                    (1,601)           1,667        (3,268)       (196.0)
                                                          -----------     ------------  ------------  ------------
     Total                                                  $ 10,827         $ 12,745      $ (1,918)        (15.0)%
                                                          ===========     ============  ============  ============
</TABLE>

<TABLE>
<CAPTION>
                                                                         Six months ended June 30
                                                          -------------------------------------------------------
                                                             2003            2002         Change          %
                                                          -----------     ------------  ------------  -----------
                                                                      (Dollar amounts in thousands)
<S>                                                         <C>              <C>           <C>               <C>
     Banking services and account fees                      $  7,313         $  5,986      $  1,327          22.2%
     Financial services fees                                   4,393            3,636           757          20.8
     Residential mortgage banking                              2,600            1,845           755          40.9
     Bank-owned life insurance                                 2,288            2,381          (93)          (3.9)
     Gain on securities and derivatives, net                   5,590            4,276         1,314          30.7
     Other                                                    (1,928)           1,835        (3,763)       (205.1)
                                                          -----------     ------------  ------------  ------------
     Total                                                  $ 20,256         $ 19,959       $   297           1.5%
                                                          ===========     ============  ============  ============
</TABLE>


Noninterest income was $10.8 million for the quarter ended June 30, 2003, as
compared to $12.7 million for the quarter ended June 30, 2002. Notable changes
in the quarter ended June 30, 2003 versus the quarter ended June 30, 2002
included:

     -    Banking services and account fees totaled $3.9 million, up $.8 million
          on increased monthly service charges and ATM/debit card fees,
          increased commercial deposit fees, and increased overdraft and NSF
          fees.

     -    Financial services fees totaled $2.3 million, up $.7 million. Within
          this category, insurance fees were $1.7 million, up $1.0 million. This
          increase in insurance fees included $.6 million from Waypoint Benefits
          Consulting, acquired on April 1, 2003, and $.4 million in combined
          increases from title insurance and property and casualty insurance
          sales. These increases were partially offset by a decrease of $.3
          million in retail brokerage fees on decreased sales of alternative
          investment products and decreased commissioned transaction volume.

     -    Residential mortgage banking income totaled $1.3 million, up $.2
          million. Within this category, net gains on the sale of loans totaled
          $1.5 million, up $.8 million on continued high refinancing activity
          during the current quarter. Increases in loan selling gains were
          partially offset by a $.6 million reduction in income from loan
          servicing. The rapid refinancing of mortgage loans serviced for others
          resulted in decreased servicing revenue and increased net expense from
          the amortization and valuation of capitalized loan servicing rights.

     -    Gains on securities and derivatives were $3.7 million in the current
          quarter, down $.2 million. During the current quarter, a $1.1 million
          loss was recognized on the fair value of an interest rate cap that was
          acquired during the current quarter to manage interest rate risk
          associated with valuation of marketable securities.

     -    Other totaled a net loss of $1.6 million, down $3.3 million from a net
          gain of $1.7 million in the comparable prior quarter. This net change
          resulted primarily from Waypoint's equity investment in a small
          business investment corporation (SBIC) partnership, upon which
          Waypoint recognized a loss of $1.5 million in the current quarter as
          compared to a gain of $1.5 million in the comparable prior quarter.



                                       23
<PAGE>

NONINTEREST EXPENSE

The following table presents a comparison of noninterest expense for the
three-month and six-month periods ended June 30, 2003 and 2002.

TABLE 4  CHANGES IN NONINTEREST EXPENSE
<TABLE>
<CAPTION>
                                                                       Three months ended June 30
                                                          -----------------------------------------------------
                                                             2003          2002         Change          %
                                                          -----------   -----------   -----------   -----------
                                                                     (Dollar amounts in thousands)
<S>                                                         <C>            <C>           <C>               <C>
     Salaries and benefits                                  $ 11,597      $ 10,999      $    598           5.4%
     Equipment expense                                         1,849         1,789            60           3.4
     Occupancy expense                                         1,829         1,574           255          16.2
     Marketing                                                 1,215         1,183            32           2.7
     Amortization of intangible assets                           192           490          (298)        (60.8)
     Outside services                                          1,312         1,177           135          11.5
     Communications and supplies                               1,296         1,102           194          17.6
     Other                                                     3,276         2,973           303          10.2
                                                          -----------   -----------   -----------   -----------
     Total                                                  $ 22,566      $ 21,287      $  1,279           6.0%
                                                          ===========   ===========   ===========   ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                        Six months ended June 30
                                                          -----------------------------------------------------
                                                             2003          2002         Change          %
                                                          -----------   -----------   -----------   -----------
                                                                     (Dollar amounts in thousands)
<S>                                                         <C>           <C>            <C>               <C>
     Salaries and benefits                                  $ 22,914      $ 22,047      $    867           3.9%
     Equipment expense                                         3,620         3,559            61           1.7
     Occupancy expense                                         3,751         3,136           615          19.6
     Marketing                                                 2,306         2,181           125           5.7
     Amortization of intangible assets                           312           980          (668)        (68.2)
     Outside services                                          2,579         2,257           322          14.3
     Communications and supplies                               2,622         2,324           298          12.8
     Other                                                     6,229         5,522           707          12.8
                                                          -----------   -----------   -----------   -----------
     Total                                                  $ 44,333      $ 42,006      $  2,327           5.5%
                                                          ===========   ===========   ===========   ===========
</TABLE>


Noninterest expense was $22.6 million for the quarter ended June 30, 2003, up
$1.3 million or 6.1% from $21.3 million for the quarter ended June 30, 2002.
Notable changes in the quarter ended June 30, 2003 relative to the quarter ended
June 30, 2002 included:

     -    Salaries and benefits expense totaled $11.6 million, up $.5 million.
          Increases for annual merit raises, staffing increases in the financial
          services group and increased benefits expense for health insurance and
          employer matching contributions for Waypoint's defined contribution
          retirement plan ("401K plan") were partially offset by increased
          capitalized costs on higher consumer loan origination volume.

     -    Occupancy and equipment expenses increased a combined $.3 million
          primarily due to banking and financial services business expansion.

     -    Amortization of other intangible assets was down $.3 million as
          identified intangible assets associated with certain Maryland branches
          became fully amortized in September, 2002.

     -    Other noninterest expense totaled $3.3 million, up $.3 million from
          the comparable prior quarter primarily on increased loan expenses
          from increases in commercial and consumer loan portfolios and related
          origination volume.

PROVISION FOR INCOME TAXES

Income tax expense for the current quarter totaled $5.1 million, or an effective
tax rate of 30.5% on income before taxes of $16.6 million. This compares to
income taxes of $5.2 million and an effective tax rate of 28.8% for the
comparable prior quarter. The increase in the effective tax rate resulted
primarily from decreased income on tax-preferenced securities.




                                       24
<PAGE>

COMPARISON FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2003 AND JUNE 30, 2002

NET INCOME
Net income for the six months ended June 30, 2003 was $22.9 million or $.70 per
share as compared to $24.3 million or $.65 per share for the six months ended
June 30, 2002. The increase in net income per share of $.05 resulted primarily
from treasury stock repurchases during 2002 and the first six months of 2003,
which substantially reduced the amount of equivalent shares outstanding. The
calculation of earnings per share is presented in Note 4 of the accompanying
Notes to Consolidated Financial Statements. The following paragraphs include a
discussion of the components of net income.

NET INTEREST INCOME
Net interest income before provision for loan losses totaled $60.9 million for
the six months ended June 30, 2003, which represents a decrease of $.8 million
or 1.3% from $61.7 million for the six months ended June 30, 2002. Waypoint's
net interest income trend reflects the challenge facing commercial banks from
the continued decline in market interest rates to the lowest levels in almost
five decades. Provision expense for loan losses decreased to $4.5 million for
the current six months relative to $5.7 million recorded for the six months
ended June 30, 2002. The provision for loan losses for the six months ended June
30, 2002 increased due to increased charge-offs during that period, specifically
during the last three months. Waypoint Financial's provision expense and
allowance for loan losses are discussed in further detail in the Asset Quality
section of this report.

As presented in Table 1b, the net interest margin ratio on a tax-equivalent
basis was 2.45% for the six-month period ended June 30, 2003 as compared to
2.56% for the six-month period ended June 30, 2002. Waypoint Financial was able
to limit its decrease in interest rate spread to 3 basis points despite the
continuation of historically low interest rates. However, the net interest
margin decreased 11 basis points as growth in interest-bearing liabilities
exceeded growth in interest-earning assets by $52.1 million, due in part to
decreased stockholders' equity resulting from capital management activities.

NONINTEREST INCOME

Noninterest income was $20.3 million for the six months ended June 30, 2003, up
$.3 million or 1.5% from $20.0 million for the comparable prior period. Notable
changes in the six months ended June 30, 2003 versus the six months ended June
30, 2002 included:

     -    Banking services and account fees totaled $7.3 million, up $1.3
          million on increased monthly service charges, commercial deposit fees
          and increased overdraft and NSF fees.

     -    Financial services fees totaled $4.4 million, up $.8 million. Within
          this category, insurance fees were $2.7 million, up $1.2 million.
          Insurance fees increased $.6 million due to the April 1, 2003
          acquisition of Waypoint Benefits Consulting and $.5 million on
          increased title insurance fees. These increases were partially offset
          by a decrease of $.6 million in retail brokerage fees on decreased
          sales of alternative investment products and decreased commissioned
          transaction volume.

     -    Residential mortgage banking income totaled $2.6 million, up $.8
          million. Within this category, net gains on the sale of loans totaled
          $3.4 million, up $1.8 million on historically high refinancing
          activity during the period. Increases in loan selling gains were
          partially offset by a $1.0 million increase in net loss on loan
          servicing. The rapid refinancing of mortgage loans serviced for others
          resulted in decreased servicing revenue and increased expense from the
          amortization of capitalized loan servicing rights.

     -    Gains on securities and derivatives were $5.6 million in the period,
          up $1.3 million. During the current period, Waypoint Financial
          recognized a $1.1 million loss on the fair value of an interest rate
          cap that was acquired to manage interest rate risk associated with the
          valuation of marketable securities.

     -    Other noninterest income totaled a net loss of $1.9 million, down
          from a gain of $1.8 million in the comparable prior period. This net
          change of $3.7 million resulted primarily from Waypoint Financial's
          equity investment in an SBIC partnership, which resulted in a $1.5
          million loss in the current period versus a $1.5 million gain in the
          comparable prior period. Also, losses from low income housing
          partnerships increased $1.2 million, although these partnership losses
          were substantially offset by tax credits and deductions totaling $.9
          million that were applied to reduce corporate income tax expense
          during the period.



                                       25
<PAGE>


NONINTEREST EXPENSE

Noninterest expense was $44.3 million for the six months ended June 30, 2003, up
$2.3 million or 5.5% from $42.0 million for the comparable prior period. Notable
changes in the six months ended June 30, 2003 relative to the six months ended
June 30, 2002 included:

     -    Salaries and benefits expense totaled $22.9 million, up $.9 million.
          Increases for annual merit raises, staffing increases in the banking
          and financial services business lines, and increased benefits expense
          for health insurance and employer matching contributions for
          Waypoint's defined contribution retirement plan ("401K plan") were
          partially offset by increased capitalized costs on higher loan
          origination volume.

     -    Occupancy and equipment expense increased a combined $.7 million on
          banking and financial services expansion and increased maintenance
          expenses associated with the harsh 2003 winter conditions.

     -    Amortization of other intangible assets was down $.7 million as
          identified intangible assets associated with certain Maryland branches
          became fully amortized in September, 2002.

     -    Other noninterest expense totaled $6.2 million, up $.7 million from
          the comparable prior period. Loan expenses were up $.6 million on
          increased loan portfolio and increased loan origination volume.

PROVISION FOR INCOME TAXES

Income tax expense for the six months ended June 30, 2003 totaled $9.4 million,
or an effective tax rate of 29.1% on income before taxes of $32.3 million. This
compares to income taxes of $9.7 million and an effective tax rate of 28.6% for
the comparable prior period. The increase in the effective tax rate resulted
primarily from decreased income on tax-preferenced securities.


VII. Financial Condition

MARKETABLE SECURITIES

Marketable securities, excluding the Federal Home Loan Bank cash account,
totaled $2.879 billion at June 30, 2003 and $2.792 billion at December 31, 2002.
This increase of $132.7 million during the six months ended June 30, 2003
resulted primarily from advance purchases of securities totaling $84.4 million
that were made to partly offset anticipated prepayments on mortgage backed
securities and a related tightening of supply for acceptable investment
instruments. This temporary increase in marketable securities is expected to be
reduced by prepayments during the third quarter of 2003. Note (5) of the Notes
to Consolidated Financial Statements presents the composition of the marketable
securities portfolio as of June 30, 2003 and December 31, 2002.

LOANS RECEIVABLE, NET

Waypoint Financial continued to increase the weighting of commercial and
consumer loans in the loan portfolio during the six months ended June 30, 2003.
Commercial loans increased $120.6 million or 13.5% and consumer and other loans
increased $173.7 million or 24.7%. Waypoint Financial attributes the substantial
growth in the consumer loan portfolio primarily to a special program for home
equity loans that was implemented to mitigate the effects of rapid mortgage
prepayments. This program also contributed to growth in low cost savings and
transaction deposits. Offsetting these increases, residential mortgage loans
decreased $223.3 million or 31.0% as Waypoint Financial continued to sell
substantially all residential mortgage originations and prepayments continued at
a historically high level on mortgage loans held in portfolio. The composition
of loans receivable, net is included in Note (6) of the accompanying Notes to
Consolidated Financial Statements.

LOAN COMMITMENTS

Waypoint Financial issues loan commitments to prospective borrowers conditioned
on the occurrence of certain events. Commitments are made in writing on
specified terms and conditions and are generally honored for up to 60 days from
approval. Waypoint Financial had loan commitments and unadvanced loans and lines
of credit totaling $725.1 million at June 30, 2003 and $638.5 million at
December 31, 2002. Discussion regarding the composition and funding of loan
commitments is presented in Note (15) of the consolidated financial statements
in the 2002 Annual Report on Form 10-K.



                                       26
<PAGE>

LOAN QUALITY

Despite continuing uncertainty with respect to the national economy during the
six months ended June 30, 2003, Waypoint Financial continued to maintain
excellent credit quality in its loan portfolio. Management attributes this
performance to strong underwriting standards and credit and collections
management, as well as a diversified economy in its local market area. Waypoint
Financial follows a comprehensive loan policy that details credit underwriting,
credit management and loan loss provisioning techniques.

NON-PERFORMING ASSETS

The following table sets forth information regarding non-accrual loans, loans
delinquent 90 days or more and still accruing, and other non-performing assets
as of the dates indicated:
<TABLE>
<CAPTION>
                                                               As of                     As of
                                                           June 30, 2003           December 31, 2002
                                                        -----------------------------------------------
                                                                    (Amounts in thousands)
<S>                                                             <C>                        <C>
Non-accrual residential mortgage loans                          $       600                $       792
Non-accrual commercial loans                                          9,117                      9,331
Non-accrual consumer and other loans                                     97                        126
                                                        --------------------      ---------------------
     Total non-accrual loans                                          9,814                     10,249
Loans 90 days or more delinquent and still accruing                   9,246                      9,743
                                                        --------------------      ---------------------
     Total non-performing loans                                      19,060                     19,992

     Total foreclosed other assets                                      416                        505
     Total foreclosed real estate                                       540                        492
                                                        --------------------      ---------------------
Total non-performing assets                                     $    20,016                $    20,989
                                                        ====================      =====================

     Total non-performing loans to total loans                         0.80%                      0.86%
                                                        ====================      =====================

     Allowance for loan losses to non-performing loans               151.20%                    137.59%
                                                        ====================      =====================

     Total non-performing assets to total assets                       0.35%                      0.39%
                                                        ====================      =====================
</TABLE>




                                       27
<PAGE>

ALLOWANCE FOR LOAN LOSSES

The following table summarizes the activity in Waypoint Financial's allowance
for loan losses for the periods indicated:
<TABLE>
<CAPTION>

                                                    For the                                 For the
                                               three months ended                       six months ended
                                       June 30, 2003       June 30, 2002        June 30, 2003      June 30, 2002
                                      -------------------------------------   -------------------------------------
                                                                 (Amounts in thousands)
<S>                                        <C>                 <C>                  <C>                <C>
Balance at beginning of period             $    27,898         $    23,674          $    27,506        $    23,069
Provision for loan losses                        2,064               3,585                4,485              5,670

Charge-offs:
   Residential mortgage loans                      (99)               (195)                (319)              (563)
   Commercial loans                               (136)             (1,114)              (1,113)            (1,509)
   Consumer and other loans                     (1,227)             (1,059)              (2,502)            (2,187)
                                      -----------------  ------------------   ------------------  -----------------
      Total charge-offs                         (1,462)             (2,368)              (3,934)            (4,259)
                                      -----------------  ------------------   ------------------  -----------------
Recoveries:
   Residential mortgage loans                       68                  45                   81                 48
   Commercial loans                                 29                 110                  292                265
   Consumer and other loans                        221                 155                  388                408
                                      -----------------  ------------------   ------------------  -----------------
      Total recoveries                             318                 310                  761                721
                                      -----------------  ------------------   -----------------   -----------------
            Net charge-offs                     (1,144)             (2,058)              (3,173)            (3,538)
                                      -----------------  ------------------   ------------------  -----------------

Balance at the end of period               $    28,818         $    25,201          $    28,818        $    25,201
                                      =================  ==================   ==================  =================
Annualized net charge-offs
   to average loans outstanding                   0.19%               0.34%                0.27%              0.29%
                                      =================  ==================   ==================  =================
Allowance for loan losses as
   a percentage of total loans                    1.20%               1.06%                1.20%              1.06%
                                      =================  ==================   ==================  =================
</TABLE>


ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

The following table sets forth the composition of the allowance for loan losses
as of the dates indicated:

<TABLE>
<CAPTION>

                                                        As of June 30, 2003       As of December 31, 2002
                                        -----------------------------------------------------------------------
                                                            (Dollar amounts in thousands)
                                                            % of Total                           % of Total
                                            Amount           Reserves            Amount           Reserves
                                        ---------------   ---------------     --------------   ----------------
<S>                                           <C>                  <C>            <C>                    <C>
Residential mortgage loans                   $     862              2.99%         $   1,201               4.37%
Commercial loans                                18,908             65.61             19,235              69.93
Consumer and other loans                         6,126             21.26              4,424              16.08
General                                          2,922             10.14              2,646               9.62
                                        ---------------   ---------------     --------------   ----------------
     Total                                   $  28,818            100.00%         $  27,506             100.00%
                                        ===============   ===============     ==============   ================
</TABLE>


DEPOSITS

During the six months ended June 30, 2003, deposits increased $128.3 million
from $2.453 billion at December 31, 2002. Within the deposit portfolio, Waypoint
Financial experienced substantial growth in its lower-cost savings and
transaction deposits, which increased a combined $159.0 million or 25.2%. This
growth in savings and transaction deposit balances resulted from Waypoint
Financial's increased marketing and sales emphasis on these deposit product
lines. Time deposits decreased $27.9 million and money market accounts decreased
$2.9 million as Waypoint Financial continued to actively manage its cost of
funds. The composition of the deposit portfolio is included in Note (7) of the
accompanying Notes to Consolidated Financial Statements.



                                       28
<PAGE>

OTHER BORROWINGS

Other borrowings increased to $2.460 billion as of June 30, 2003, up $45.1
million from $2.414 billion as of December 31, 2002. This increase came
primarily in FHLB advances, which increased $66.8 million to $2.108 billion as
of June 30, 2003. Note (8) of the accompanying Notes to Consolidated Financial
Statements presents the composition of borrowings as of June 30, 2003 and
December 31, 2002.



Item 3   Quantitative and Qualitative Disclosures about Market Risk

Reference Item 2, Section III.



Item 4   Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures

     Waypoint Financial's Chief Executive Officer and Chief Financial Officer
     have concluded that Waypoint Financial's disclosure controls and procedures
     (as defined in Rule 13a-14(C) under the Securities Exchange Act of 1934, as
     amended), based on their evaluation of these controls and procedures as of
     a date within (90) days prior to the filing date of this Form 10-Q, are
     effective.

(b)  Changes in Internal Controls

     There have been no significant changes in Waypoint Financial's internal
     controls or in other factors that could significantly affect these controls
     subsequent to the date of the evaluation thereof, including any corrective
     actions with regard to significant deficiencies and material weaknesses.






                                       29
<PAGE>


PART II. OTHER INFORMATION

     Item 1. Legal Proceedings.
             None.

     Item 2. Changes in Securities and Use of Proceeds.
             None.

     Item 3. Defaults Upon Senior Securities.
             None.

     Item 4. Submission of Matters to a Vote of Security Holders.
             None.

     Item 5. Other information.
             None.

     Item 6. Exhibits and Reports on Form 8-K

             (a)  Exhibits

                    31.1 Certification of the Company's Chief Executive Officer
                         pursuant to Rule 13a-15 or 15d-15 of the Securities
                         Exchange Act of 1934, as adopted pursuant to Section
                         302 of the Sarbanes-Oxley Act of 2002.

                    31.2 Certification of the Company's Chief Financial Officer
                         pursuant to Rule 13a-15 or 15d-15 of the Securities
                         Exchange Act of 1934, as adopted pursuant to Section
                         302 of the Sarbanes-Oxley Act of 2002.

                    32.1 Certification of the Company's Chief Executive Officer
                         pursuant to 18 U. S. C. Section 1350, as adopted
                         pursuant to Section 906 of the Sarbanes-Oxley Act of
                         2002.

                    32.2 Certification of the Company's Chief Financial Officer
                         pursuant to 18 U. S. C. Section 1350, as adopted
                         pursuant to Section 906 of the Sarbanes-Oxley Act of
                         2002.

             (b)  Reports on Form 8-K

                  1.   Incorporated by reference, the Company's Report on Form
                       8-K dated April 1, 2003, reported the completion of its
                       acquisition of e3 Consulting, Inc., a provider of
                       executive and employee benefit programs and qualified
                       retirement plans.

                  2.   Incorporated by reference, the Company's Report on Form
                       8-K dated April 17, 2003, reported first quarter
                       financial results and the declaration of a regular
                       quarterly cash dividend.

                  3.   Incorporated by reference, the Company's Report on Form
                       8-K dated May 12, 2003 reported a change in independent
                       public accountants for certain Company employee benefit
                       plans.

                  4.   Incorporated by reference, the Company's Report on Form
                       8-K dated May 21, 2003 reported the promotion of David
                       E. Zuern to the position of Chief Executive Officer and
                       President of the Company, succeeding Charles C.
                       Pearson, Jr., who remains as Chairman of the Board of
                       the Company. Also, James H. Moss, Chief Financial
                       Officer, and Andrew S. Samuel, Banking Division
                       President, were named Senior Executive Vice Presidents
                       of the Company.



                                       30
<PAGE>

                  5.   Incorporated by reference, the Company's Report on Form
                       8-K dated July 17, 2003 reported second quarter
                       financial results, the declaration of a 5% stock
                       dividend, and the declaration of an increased regular
                       quarterly cash dividend.

                  6.   Incorporated by reference, the Company's Report on Form
                       8-K dated July 29, 2003 reported the agreement to
                       acquire two bank branches in Chambersburg, Pennsylvania
                       and reported certain other expansion activities planned
                       for the remainder of 2003.





                                       31
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                  WAYPOINT FINANCIAL CORP.
                                                        (Registrant)


                            By                       /s/ David E. Zuern
                                                     ------------------
                                                      David E. Zuern,
                                                       President and
                                                  Chief Executive Officer


                            By                       /s/ James H. Moss
                                                     -----------------
                                                        James H. Moss,
                                                Senior Executive Vice President
                                                  and Chief Financial Officer

Dated:  August 14, 2003


                                       32