<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 September 30, 2001

                                      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,             17105
        Harrisburg, Pennsylvania                    -----
---------------------------------------           (Zip Code)
  (Address of principal executive offices)

                                 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 the number of shares outstanding of each of the Bank's classes of
common stock, as of the latest practicable date. 39,158,428 shares of stock, par
                                                 -------------------------------
value of $.01 per share, outstanding at October 31, 2001.
--------------------------------------------------------

                                    Page 1
<PAGE>

Part I.  Financial Information.


Part 1, Item 1    Financial Statements.


               (Balance of this page is intentionally left blank)

                                    Page 2
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                              September 30,    December 31,
                                                                                  2001              2000
                                                                           -----------------  --------------
                                                                           (In thousands, except share data)
                                                                                       (Unaudited)
<S>                                                                              <C>            <C>
Assets
------
Cash and cash equivalents                                                        $    78,272    $    99,837
Marketable securities held-to-maturity                                                  --           22,709
Marketable securities available-for-sale                                           2,347,294      1,854,872
Loans receivable, net                                                              2,517,828      2,591,527
Loans held for sale, net                                                              13,148         18,415
Loan servicing rights                                                                  4,410          6,376
Investment in real estate and other joint ventures                                    11,781         14,276
Premises and equipment, net of accumulated
   depreciation of $36,809 and $34,470                                                44,748         45,837
Accrued interest receivable                                                           26,505         30,505
Intangible assets                                                                     14,116         16,356
Income taxes receivable                                                                 --            2,335
Deferred tax asset, net                                                                 --            7,914
Other assets                                                                         132,251         47,227
                                                                                 -----------    -----------
   Total assets                                                                  $ 5,190,353    $ 4,758,186
                                                                                 ===========    ===========

Liabilities and Stockholders' Equity
------------------------------------
Deposits                                                                         $ 2,443,445    $ 2,625,720
Other borrowings                                                                   2,199,769      1,625,329
Escrow                                                                                 2,826          6,461
Accrued interest payable                                                              19,018         21,927
Postretirement benefit obligation                                                      2,765          2,712
Income taxes payable                                                                   3,944           --
Deferred tax liability, net                                                            9,221           --
Other liabilities                                                                     18,331         30,469
                                                                                 -----------    -----------
   Total liabilities                                                               4,699,319      4,312,618
                                                                                 -----------    -----------

Preferred stock, 10,000,000 shares authorized but unissued
Common stock, $ .01 par value, authorized 100,000,000 shares,
   39,652,527 shares issued and 39,158,390 outstanding
   at September 30, 2001, 39,018,962 shares issued
   and 38,737,325 shares outstanding at December 31, 2000                                393            391
Paid in capital                                                                      296,821        295,008
Retained earnings                                                                    208,790        189,745
Accumulated other comprehensive income (loss)                                         10,768        (16,327)
Employee stock ownership plan                                                        (16,255)       (16,365)
Recognition and retention plans                                                         (438)          (427)
Treasury stock, 494,137 shares at September 30, 2001
   and 281,637 shares at December 31, 2000                                            (9,045)        (6,457)
                                                                                 -----------    -----------
    Total stockholders' equity                                                       491,034        445,568
                                                                                 -----------    -----------
    Total liabilities and stockholders' equity                                   $ 5,190,353    $ 4,758,186
                                                                                 ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                    Page 3
<PAGE>

                   WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                       Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                               Three Months Ended               Nine Months Ended
                                                                   September 30,                   September 30,
                                                       -------------------------------   -------------------------------
                                                           2001             2000             2001             2000
                                                       --------------   --------------   --------------   --------------
                                                                      (In thousands, except share data)
                                                                                 (Unaudited)
<S>                                                    <C>              <C>                  <C>              <C>
Interest Income:
  Loans                                                    $  48,741        $  52,302        $ 150,657        $ 147,620
  Marketable securities and interest-earning cash             32,015           31,490           99,231           91,501
                                                       --------------   --------------   --------------   --------------
       Total interest income                                  80,756           83,792          249,888          239,121
                                                       --------------   --------------   --------------   --------------
Interest Expense:
  Deposits and escrow                                         25,349           33,645           85,471           93,401
  Borrowed funds                                              26,447           25,481           79,976           70,937
                                                       --------------   --------------   --------------   --------------
       Total interest expense                                 51,796           59,126          165,447          164,338
                                                       --------------   --------------   --------------   --------------
       Net interest income                                    28,960           24,666           84,441           74,783
Provision for loan losses                                      1,599            1,207            5,297            3,383
                                                       --------------   --------------   --------------   --------------
       Net interest income after provision for loan
       losses                                                 27,361           23,459           79,144           71,400
                                                       --------------   --------------   --------------   --------------
Noninterest Income:
  Service charges on deposits                                  1,489            1,499            4,766            4,901
  Other service charges, commissions, fees                     3,073            1,977            7,899            5,037
  Loan servicing, net                                          (144)              292              155            1,041
  Gain on sale of securities                                     334            1,343            2,213            2,623
  Gain on sale of loans                                        1,201              365            2,924              130
  Other                                                        1,642            1,695            3,225            2,861
                                                       --------------   --------------   --------------   --------------
      Total noninterest income                                 7,595            7,171           21,182           16,593
                                                       --------------   --------------   --------------   --------------
Noninterest Expense:
  Salaries and benefits                                        9,846            9,808           29,292           29,644
  Equipment expense                                            1,793            2,107            5,333            5,071
  Occupancy expense                                            1,627            2,133            4,931            6,275
  Advertising and public relations                               579              875            1,923            2,769
  FDIC insurance                                                 121              134              379              391
  (Income) expense from real estate operations                  (69)              144            (490)              759
  Amortization of intangibles                                    751              720            2,255            2,160
  Consulting and other fees                                      717            1,024            2,221            2,725
  Supplies, telephone and postage                              1,261            1,194            4,307            3,720
  Other                                                        2,523            2,094            7,503            6,894
                                                       --------------   --------------   --------------   --------------
     Total noninterest expense                                19,149           20,233           57,654           60,408
                                                       --------------   --------------   --------------   --------------
  Income before income taxes                                  15,807           10,397           42,672           27,585
  Income tax expense                                           5,304            3,383           13,633            7,245
                                                       --------------   --------------   --------------   --------------
      Net Income                                           $  10,503        $   7,014        $  29,039        $  20,340
                                                       ==============   ==============   ==============   ==============
  Basic earnings per share                                  $   0.28         $   0.19         $   0.78         $   0.54
                                                       ==============   ==============   ==============   ==============
  Diluted earnings per share                                $   0.28         $   0.19         $   0.77         $   0.54
                                                       ==============   ==============   ==============   ==============

  Average equivalent shares - basic                       37,555,818       37,859,000       37,455,196       38,283,602
                                                       ==============   ==============   ==============   ==============
  Average equivalent shares - diluted                     37,958,743       38,197,000       37,815,436       38,627,585
                                                       ==============   ==============   ==============   ==============

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

                                    Page 4
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                    For the Nine Months Ended
                                                                           September 30,
                                                                       2001           2000
                                                                   -----------    -----------
                                                                          (In thousands)
                                                                            (Unaudited)

<S>                                                                <C>            <C>
Cash flows from operating activities:
   Net income                                                      $    29,039    $    20,340
   Adjustments to reconcile net income to net cash provided by
     operating activities:
        Provision for loan losses                                        5,297          3,383
        Net depreciation, amortization and accretion                     5,995          2,762
        Loans originated for sale                                     (142,226)       (79,184)
        Proceeds from sales of loans originated for sale               147,493         69,439
        Origination of loan servicing rights                               623         (1,546)
        Net gain on sales of loans                                      (2,924)          (130)
        Net gain on sales of marketable securities                      (2,213)        (2,623)
        Net gain on sales of loan servicing rights                           -           (100)
        (Gain) loss on the sale of foreclosed real estate                 (614)           382
        Losses from joint ventures                                         635          1,423
        Decrease (increase) in accrued interest receivable               4,000         (3,617)
        (Decrease) increase in accrued interest payable                 (2,909)        15,602
        Amortization of intangibles                                      2,255          2,160
        Earned ESOP Shares                                                 410            335
        Earned RRP Shares                                                    8             51
        Gain on the sale of premises and equipment                        (412)          (891)
        Provision (benefit) for deferred income tax                     17,135         (2,266)
        Increase (decrease) in income taxes payable/receivable           6,279         (2,770)
        Other, net                                                     (15,808)        17,321

                                                                   -----------    -----------
   Net cash provided by operating activities                            39,505         40,071
                                                                   -----------    -----------


Cash flows from investing activities:
   Proceeds from maturities and principal reductions of
      marketable securities                                            363,621         32,750
   Proceeds from sales of marketable securities                        431,756        199,934
   Purchase of marketable securities available for sale             (1,250,325)      (247,265)
   Loans sold                                                           31,334         23,426
   Net decrease (increase) in loan originations less principal
     payments of loans                                                  44,154       (333,075)
   Loan servicing rights sold                                                -          6,425
   Investment in real estate held for investment/joint ventures             82         (1,081)
   Proceeds from payments on real estate, premises and equipment         6,023          6,050
   Purchase of premises and equipment                                   (5,449)       (12,373)
   Purchase of bank-owned life insurance                               (60,000)             -
                                                                   -----------    -----------
     Net cash used in investing activities                            (438,804)      (325,209)
                                                                   -----------    -----------
</TABLE>

                                    Page 5
<PAGE>

                    WAYPOINT FINANCIAL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Continued)

                                                     For the Nine Months Ended
                                                            September 30,
                                                         2001         2000
                                                       ---------    ---------
                                                          (In thousands)
                                                            (Unaudited)

Cash flows from financing activities:
   Net (decrease) increase in deposits                 $(182,275)   $ 119,624
   Net increase in other borrowings                      574,440       99,847
   Net increase in escrow                                 (3,635)      29,775
   Dividend reinvestment plan                                 96            -
   Repurchase and retirement of stock                          -        1,216
   Payments to acquire treasury stock                     (2,684)      (1,301)
   Cash dividends                                         (9,946)      (5,359)
   Proceeds from the exercise of stock options             1,738          180
                                                       ---------    ---------
   Net cash provided by financing activities             377,734      243,982
                                                       ---------    ---------

   Net decrease in cash and cash equivalents             (21,565)     (41,156)

Cash and cash equivalents at beginning of period          99,837      110,939


                                                       ---------    ---------
Cash and cash equivalents at end of period             $  78,272    $  69,783
                                                       =========    =========




Supplemental Disclosures:

Cash paid during the year for:
    Interest on deposits, advances and other           $ 168,356    $ 151,330
      borrowings (includes interest credited
      to deposit accounts)
    Income taxes                                           7,354        8,477


Non-cash investing activities:
      Transfers from loans to foreclosed real estate       1,135        2,628
      Exchange of loans for mortgage-backed securities         -       84,168


See accompanying notes to consolidated financial statements.

                                    Page 6
<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. ("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
Services, Inc., Owen Insurance Inc., Advanced Real Estate Associates, 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 three month period ended September 30,
2001 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2001 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 55 through 89 of the 2000 Annual Report on Form 10-K.

(2)  Recently Issued Accounting Guidance
     -----------------------------------

Waypoint Financial adopted Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities," and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133," on January 1, 2001. SFAS
No. 133 requires the transition adjustment, net of the tax effect, resulting
from adopting these Statements to be reported in net income or other
comprehensive income, as appropriate, as the cumulative effect of a change in
accounting principle.

Waypoint Financial does not engage in foreign business operations and,
accordingly, has no derivative instruments associated with such operations.
Waypoint Financial also was not a party at transition to any derivative
contracts that meet the definition of a fair value hedging instrument. Waypoint
Financial did not record any net-of-tax transition adjustments in accumulated
other comprehensive income as a result of recognizing derivatives that are
designated as cash flow hedging instruments at fair value due to the
immateriality of related amounts.

The Company, upon adoption of SFAS 133, also reclassified $22.7 million of
held-to-maturity securities as "available-for-sale" so that those securities
would be eligible as hedged items in future hedge transactions. Under the
provisions of SFAS No. 133, such a reclassification does not call into question
the Company's intent to hold current or future debt securities to their
maturity.

Accounting for Derivative Instruments and Hedging Activities

Waypoint Financial recognizes all derivatives on the balance sheet at fair
value. On the date the derivative instrument is entered into, the company
generally designates the derivative as either (1) a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment ("fair value
hedge") or (2) a hedge of a forecasted transaction or of the variability of cash
flows to be received or paid related to a recognized asset or liability ("cash
flow hedge"). Changes in the fair value of a derivative that is designated as,
and meets all the required criteria for, a fair value hedge, along with the gain
or loss on the hedged asset or liability that is attributable to the hedged
risk, are recorded in current period earnings. Changes in the fair value of a
derivative that is designated as, and meets all the required criteria for, a
cash flow hedge are recorded in accumulated other comprehensive income and
reclassified into earnings as the underlying hedged item affects earnings.

                                     Page 7
<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)


The portion of the change in fair value of a derivative associated with hedge
ineffectiveness or the component of a derivative instrument excluded from the
assessment of hedge effectiveness is recorded currently in earnings. Also,
changes in the entire fair value of a derivative that is not designated as a
hedge are recorded immediately in earnings. The company formally documents all
relationships between hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various hedge
transactions. This process includes relating all derivatives that are designated
as fair value or cash flow hedges to specific assets and liabilities on the
balance sheet or to specific firm commitments or forecasted transactions.

Waypoint Financial periodically purchases financial instruments that contain
"embedded" derivative features. Management believes, based on the company's
assessment, the economic characteristics of the embedded derivative are clearly
and closely related to the economic characteristics of the remaining component
of the financial instrument (the "host contract"). Accordingly, no embedded
derivatives were separated from the host contract and carried at fair value in
the financial statements and are available to be designated in a hedging
transaction.

Waypoint Financial also formally assesses, both at the inception of the hedge
and on an ongoing basis, whether each derivative is highly effective in
offsetting changes in fair values or cash flows of the hedged item. If it is
determined that a derivative is not highly effective as a hedge or if a
derivative ceases to be a highly effective hedge, the company will discontinue
hedge accounting prospectively.

There was no material hedge ineffectiveness related to cash flow and fair value
hedges during the period to be recognized in earnings. There was no gain or loss
reclassified from accumulated other comprehensive income into earnings during
the nine month period ended September 30, 2001, as a result of the
discontinuance of a cash flow hedge due to the probability of the original
forecasted transaction not occurring.

Accounting for Business Combinations, Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001. SFAS No. 142
changes the accounting for goodwill from an amortization method to assessing
impairment on a fair-value-based test only approach annually. Waypoint Financial
will cease the amortization of goodwill that was recorded in past business
combinations on January 1, 2002, as required by SFAS No. 142. The Company is
assessing goodwill for potential impairment and has not yet determined whether
or the extent to which it will affect the financial statements.

Accounting for the Impairment or Disposal of Long-Lived Assets

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." It supersedes
SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." It is effective January 1, 2002 and
establishes criteria beyond that previously specified in Statement 121 to
determine when a long-lived asset is held for sale. Waypoint Financial has not
yet determined whether or the extent to which it will affect the financial
statements.

(3)  Completion of Stock Conversion, Stock Offering, and Acquisition by Merger
     -------------------------------------------------------------------------

On October 17, 2000, Harris Financial, MHC, the parent mutual holding company
for Harris Financial, Inc. completed a mutual-to-stock conversion. As a result
of this conversion, Harris Financial, MHC ceased to exist and Waypoint Financial
became the successor to Harris Financial, Inc. Also on October 17, 2000,
Waypoint Financial completed a stock offering and an acquisition by merger of
York Financial Corp., the parent holding company of York Federal Savings and
Loan Association. As a result of the conversion, offering, and merger
transactions, Waypoint Financial survives as a federally chartered unitary
savings and loan holding company regulated by the Office of Thrift Supervision
("OTS"). Waypoint Bank survives as a federally chartered savings bank and is
also regulated by the OTS.

The merger of Waypoint Financial and York Financial has been accounted for under
the pooling-of-interests method of accounting and, accordingly, Waypoint
Financial's historical consolidated financial statements have been restated to
include the accounts and results of York Financial. The results of operations
previously reported by the separate entities and the combined amounts presented
in the accompanying consolidated financial statements are presented below:

                                    Page 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)
<TABLE>
<CAPTION>
                                            For the Three             For the Nine
                                             Months Ended             Months Ended
                                          September 30, 2000       September 30, 2000
                                         ---------------------    ----------------------
<S>                                                     <C>                      <C>
Net interest income before provision
 for loan losses
   Harris Financial                                    $15,103                   $46,909
   York Financial                                        9,563                    27,874
                                         ---------------------    ----------------------
      Combined                                         $24,666                   $74,783
                                         =====================    ======================

Net income
   Harris Financial                                    $ 4,985                   $13,644
   York Financial                                        2,029                     6,696
                                         ---------------------    ----------------------
      Combined                                         $ 7,014                   $20,340
                                         =====================    ======================
</TABLE>

During 2000, Waypoint Financial recorded certain liabilities associated with
merger-related costs as follows:

<TABLE>
<CAPTION>

                                                                       Reductions during the
                                                  Balance as of          nine months ended         Balance as of
                                                December 31, 2000       September 30, 2001     September 30, 2001
                                              ----------------------- ---------------------- ---------------------
<S>                                           <C>                     <C>                    <C>
Compensation and benefit plans                              $  3,321                 $ 1,257            $ 2,064
System conversion and account integration                        135                     135                  -
                                              ----------------------- ---------------------- ---------------------
   Total accrued merger costs                               $  3,456                 $ 1,392            $ 2,064
                                              ======================= ====================== =====================
</TABLE>

Waypoint Financial expects to settle through payment substantially all remaining
accrued merger costs by December 31, 2002.

(4)  Earnings Per Share
     ------------------

The following table shows the allocation of earnings per share to basic earnings
per share and diluted earnings per share.

<TABLE>
<CAPTION>

                                                                                               Per Share
                                                                   Income          Shares        Amount
                                                              ----------------------------------------------
<S>                                                           <C>                   <C>            <C>
For the three months ended September 30, 2001
   Basic earnings per share:
   Income available to common shareholders                          $   10,503      37,555,818     $   0.28
   Dilutive effect of management and director stock options                            402,925
                                                              ----------------------------------------------
   Diluted earnings per share:
   Income available to common shareholders
      plus assumed conversions                                      $   10,503      37,958,743     $   0.28
                                                              ==============================================

For the three months ended September 30, 2000
   Basic earnings per share:
   Income available to common shareholders                          $    7,014      37,859,000     $   0.19
   Dilutive effect of management and director stock options                            338,000
                                                              ----------------------------------------------
   Diluted earnings per share:
   Income available to common shareholders
      plus assumed conversions                                      $    7,014      38,197,000     $   0.19
                                                              ==============================================
</TABLE>

                                    Page 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)

<TABLE>
<CAPTION>

                                                                                                Per Share
                                                                   Income          Shares        Amount
                                                              ----------------------------------------------
<S>                                                                 <C>             <C>            <C>
For the nine months ended September 30, 2001
   Basic earnings per share:
   Income available to common shareholders                          $   29,039      37,455,196     $   0.78
   Dilutive effect of management and director stock options                            360,240
                                                              ----------------------------------------------
   Diluted earnings per share:
   Income available to common shareholders
      Plus assumed conversions                                      $   29,039      37,815,436     $   0.77
                                                              ==============================================

For the nine months ended September 30, 2000
   Basic earnings per share:
   Income available to common shareholders                          $   20,340      38,283,602     $   0.54
   Dilutive effect of management and director stock options                           343,983
                                                              ----------------------------------------------
   Diluted earnings per share:
   Income available to common shareholders
      Plus assumed conversions                                      $   20,340      38,627,585     $   0.54
                                                              ==============================================

</TABLE>

                                    Page 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)

(5)  Marketable Securities
     ---------------------
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value for held-to-maturity and available-for-sale securities by
major security type were as follows:

<TABLE>
<CAPTION>


                                                                 As of September 30, 2001
                                              ---------------------------------------------------------------
                                                                  Gross          Gross
                                                               Unrealized     Unrealized
                                               Amortized         Holding        Holding            Fair
                                                  Cost            Gains         Losses            Value
                                             ----------------------------------------------------------------
<S>                                             <C>               <C>         <C>                <C>
    Available for sale:
      U.S. Government and agencies              $   508,891       $  9,106    $   (1,240)        $   516,757
      Corporate bonds                                82,032             53        (5,951)             76,134
      Municipal securities                           74,932          2,701          (261)             77,373
      FHLB stock                                     85,385              -              -             85,385
      Equity securities                             115,786          4,892          (197)            120,480
      Mortgage-backed securities:
        Agency PC's & CMO's                         832,317          3,122        (3,474)            831,965
        Private issue CMO's                         630,001         10,254        (1,053)            639,201
                                             ---------------   ------------   ------------    ---------------
          Total mortgage-backed securities        1,462,317         13,376        (4,527)          1,471,166
                                             ---------------   ------------   ------------    ---------------
          Total securities available for
          sale                                  $ 2,329,342       $ 30,128    $  (12,176)        $ 2,347,294
                                             ===============   ============   ============    ===============


                                                                 As of December 31, 2000
                                             ----------------------------------------------------------------

    Held to Maturity:
      U.S. Government and agencies              $     3,500       $     13    $         -        $     3,513
      Corporate bonds                                19,054              -          (990)             18,064
      GNMA Mortgage-backed securities                   155              8              -                163
                                             ---------------   ------------   ------------    ---------------
          Total securities held to maturity     $    22,709       $     21    $     (990)        $    21,740
                                             ===============   ============   ============    ===============
    Available for sale:
      U.S. Government and agencies              $   491,998       $    506    $  (10,074)        $   482,430
      Corporate bonds                                63,609              -        (4,952)             58,657
      Municipal securities                           69,119          2,622          (280)             71,461
      FHLB stock                                     76,540              -              -             76,540
      Equity securities                              74,351          4,871        (1,047)             78,175
      Mortgage-backed securities:
        Agency PC's & CMO's                         475,735            685       (12,272)            464,148
        Private issue CMO's                         629,795          1,450        (7,784)            623,461
                                             ---------------   ------------   ------------    ---------------
          Total mortgage-backed securities        1,105,530          2,135       (20,056)          1,087,609
                                             ---------------   ------------   ------------    ---------------
          Total securities available for
          sale                                   $ 1,881,147       $ 10,134    $  (36,409)        $ 1,854,872
                                             ===============   ============   ============    ===============
</TABLE>

                                    Page 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)

(6)  Loans Receivable, Net
     ---------------------

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

                                                                September 30,          December 31,
                                                                     2001                  2000
                                                               -----------------     -----------------
<S>                                                                  <C>                   <C>
     Residential mortgage loans (principally conventional):
        Secured by 1-4 family residences                           $  1,139,049          $  1,272,672
        Construction (net of undistributed
           portion of $39,423, and $67,073)                              43,535                90,712
                                                               -----------------     -----------------
                                                                      1,182,584              1,363,384
     Less:
        Unearned discount                                                   171                   210
        Net deferred loan origination fees                                3,659                 4,491
                                                               -----------------     -----------------
              Total residential mortgage loans                        1,178,754             1,358,683
                                                               -----------------     -----------------
     Commercial loans:
       Commercial                                                       720,537               642,802
     Less: Net deferred loan origination
       fees                                                               1,002                   923
                                                               -----------------     -----------------
              Total commercial loans                                    719,535               641,879
                                                               -----------------     -----------------
     Consumer and other loans:
        Indirect manufactured housing                                    97,443                90,226
        Indirect home improvement                                        26,934                25,753
        Direct lines of credit                                          103,230                97,475
        Direct installment                                              247,719               239,005
        Indirect automobile                                             121,231               117,377
        Other                                                            23,152                21,742
                                                               -----------------     -----------------
                                                                        619,709               591,578
     Plus:
        Net deferred loan origination fees                              (2,128)               (1,503)
        Dealer reserve                                                   24,840                23,476
                                                               -----------------     -----------------
           Total consumer and other loans                               642,421               613,551
                                                               -----------------     -----------------
     Less: Allowance for loan losses
                                                                         22,882                22,586
                                                               -----------------     -----------------
     Loans receivable, net                                         $  2,517,828          $  2,591,527
                                                               =================     =================
</TABLE>
Loans having a carrying value of $1,412,464,000 were pledged as collateral for
FHLB advances at September 30, 2001.


                                    Page 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)


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. Waypoint Financial
also occasionally sells loans from its portfolio in the ordinary course of
business.

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans totaled $674,557,000 at September 30, 2001 and $741,740,000 at
December 31, 2000. Investor custodial balances maintained in connection with the
foregoing mortgage servicing rights totaled $7,540,000 at September 30, 2001 and
$10,536,000 at December 31, 2000.

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 nine month
period ended September 30, 2001. During the nine month period ended September
30, 2000, Waypoint Financial sold mortgage servicing rights with a carrying
value of $6.2 million on loans serviced for investors totaling $589.9 million.
As a result of the sale of the mortgage servicing rights and the settlement of
related investor custodial accounts, Waypoint recognized other noninterest
income of $.1 million.

Waypoint Financial sold mortgage loans totaling $178,173,000 and $90,442,000
during the nine month periods ended September 30, 2001 and September 30, 2000,
respectively. Waypoint Financial did not exchange loans for mortgage-backed
securities during the nine months ended September 30, 2001, as compared to
$84,168,000 of loan exchanges recorded during the nine months ended September
30, 2000.

(7)  Other Assets
     ------------

Bank-owned life insurance assets represent the largest component of other
assets. These investments totaled $82,175,000 and $20,681,000 as of September
30, 2001 and December 31, 2000. The increase of $61,494,000 during the nine
months ended September 30, 2001 resulted primarily from an additional investment
of $60,000,000 made during the quarter ended September 30, 2001.

All of Waypoint Financial's bank-owned life insurance assets have been
established to fund employee and director benefit plan liabilities. Waypoint
Financial records increases in the cash value of the underlying insurance
contracts as increases in other assets and the associated revenue as other
income. The cash value of underlying insurance contracts increased $1,494,000
during the nine months ended September 30, 2001.

(8)  Other Borrowings
     ----------------

The following table presents the composition of Waypoint Financial's other
borrowings as of the dates indicated.

                                               September 30,       December 31,
                                                    2001               2000
                                            -----------------  -----------------
FHLB Advances                                      $1,701,826         $1,434,806
Repurchase Agreements                                 497,896            189,853

 ESOP & Other                                              47                670
                                                   ----------         ----------
  Total Other borrowings                           $2,199,769         $1,625,329
                                                   ==========         ==========

                                    Page 13
<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
2000 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. Financial Review

Waypoint Financial's assets consist primarily of 100% of the outstanding shares
of Waypoint Bank and various financial services subsidiaries. Waypoint Bank is
primarily engaged in the business of attracting deposits and investing these
deposits into loans secured by residential and commercial real property,
commercial business loans, consumer loans, and investment securities. Waypoint
Financial conducts its business through fifty-eight offices, including fifty
offices located in the five county south-central region of Pennsylvania that
includes Dauphin, York, Cumberland, Lancaster and Lebanon Counties, and eight
offices in Maryland. In addition, Waypoint Financial maintains five loan
production offices, a mortgage lending office, a business banking office, a
commissioned mortgage origination staff, and, to a lesser extent, a
correspondent mortgage origination network. Waypoint Financial's wholly-owned
insurance agency Owen Insurance Inc. operates its main office in York,
Pennsylvania and a second office in Camp Hill, Pennsylvania.

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 rate shocks adjusting rates in
+/- 100 basis point (bp) increments (ramped over the next 12 months) resulting
in projected changes to net interest income over the next 12 months and
projected net portfolio value ratios as indicated in the following table.
Following is an analysis of hypothetical changes in interest rates as of the
dates indicated:

<TABLE>
<CAPTION>

                                        As of September 30, 2001        As of December 31, 2000
                                   --------------------------------------------------------------
                                          Percent change in                Percent change in
                                   --------------------------------------------------------------
     Change in Interest                  Net              Net            Net             Net
          rates                       interest         portfolio       interest       portfolio
      (In basis points)               Income (1)        ratio (2)     Income (1)      Ratio (2)
---------------------------        ---------------  ---------------------------------------------
<S>                                    <C>              <C>               <C>             <C>
            +300                         3.98%           5.74%           (3.30)%         4.09%
            +200                         3.99            6.78             0.59           6.44
            +100                         3.87            7.56             0.29           7.83
              0                             -            7.90                -           8.66
            (100)                       (1.57)           7.32             0.84           9.01
            (200)                       (3.28)           6.41            (2.03)          8.42
</TABLE>

                                    Page 14
<PAGE>

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

         (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. At September 30, 2001 and December 31, 2000, both net interest income
variability and net portfolio ratio results were well within limits established
by the Board of Directors. Also, as of these dates, the net portfolio ratio fell
within the "minimal risk" category established under OTS guidelines for interest
rate risk measurement. Assumptions and estimates used in simulation analysis are
inherently subjective and, as a consequence, results will neither precisely
estimate net interest income or net portfolio value nor precisely measure the
impact of higher or lower interest rates on net interest income or net portfolio
value ratio. The results of these simulations are reported to Waypoint
Financial's Board of Directors on a monthly basis.

Waypoint Financial also uses certain derivative financial instruments from time
to time to manage interest rate risk associated with certain financial assets
and liabilities that Waypoint Financial places in its portfolios in the ordinary
course of business. A detailed discussion of Waypoint Financial's derivative
financial instruments is contained in the Notes to Consolidated Financial
Statements.

IV. Liquidity

Deposits represent Waypoint Financial's primary source of funds. During the nine
months ended September 30, 2001, Waypoint Financial's deposits decreased $182.3
million. The deposit reduction resulted primarily from the implementation of
more conservative pricing practices on time and savings deposits. At September
30, 2001, Waypoint Financial also had brokered deposits of $101.7 million
outstanding at an average interest rate of 3.89% as compared to $127.9 million
outstanding at December 31, 2000 at an average interest rate of 6.73%. Waypoint
Financial 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. To supplement deposit-gathering efforts, Waypoint Financial borrows
from the FHLB of Pittsburgh. At September 30, 2001, Waypoint Financial had
$1.703 billion in FHLB loans outstanding at a weighted average interest rate of
4.91%, an increase of $268 million from $1.435 billion at a weighted-average
interest rate of 6.24% on December 31, 2000. A substantial portion of this
increase in FHLB borrowings was used to invest in additional marketable
securities and to supplement deposits. Waypoint Financial was required to
purchase additional FHLB stock totaling $5.5 million due to increased FHLB loans
outstanding during the nine months ended September 30, 2001. For additional
details of FHLB loans and other borrowings, see the Notes to Consolidated
Financial Statements.

Proceeds from loan and securities sales represent a substantial source of funds
to Waypoint Financial. These sources amounted to $581.5 million and $268.2
million during the nine month periods ended September 30, 2001 and 2000,
respectively.

Generally, Waypoint Financial's principal use of funds is to originate mortgage
and other loans. In addition, during the nine months ended September 30, 2001,
Waypoint Financial utilized leverage strategies to deploy available capital.
These strategies resulted in expansion of the investment portfolio through the
purchase of available for sale securities as well as an increase in loan
balances. The carrying value of securities available for sale increased $492.4
million to $2.347 billion in at September 30, 2001 from $1.855 billion at
December 31, 2000.

Loan demand resulted in total originations of $582.9 million in the nine months
ended September 30, 2001. A relatively low-rate interest rate environment
enabled Waypoint Financial to increase its sales of residential mortgage

                                    Page 15
<PAGE>

loans. During the period, the loan portfolio decreased by $73.7 million to
$2.518 billion at September 30, 2001 from $2.591 million at December 31, 2000.

Waypoint Bank is required by the OTS regulations to maintain sufficient
liquidity to ensure its safe and sound operation. This requirement, which varies
from time to time depending on economic conditions and deposit flows, is based
upon a percentage of deposits and short-term borrowings. Waypoint Bank had
sufficient liquidity during the nine month periods ended September 30, 2001 and
September 30, 2000.

The sources of liquidity previously discussed are deemed by management to be
sufficient to fund outstanding loan commitments and meet other obligations.
Waypoint Financial had outstanding loan commitments totaling $441.1 million.

V. Capital Resources

Stockholders' equity at September 30, 2001, totaled $491.0 million compared to
$445.6 million at December 31, 2000, an increase of $45.4 million. Stockholders'
equity was increased by net income of $29.0 million, by the market valuation of
available for sale securities, net of tax effect, of $27.1 million, and by
increases from stock option exercises and other sources totaling $1.8 million.
Offsetting these increases were cash dividends of $9.9 million and treasury
stock purchases totaling $2.7 million.

Under OTS regulations a savings association must satisfy three minimum capital
requirements: core capital, tangible capital and risk-based capital. Savings
associations must meet all of the standards in order to comply with the capital
requirements. At September 30, 2001, and December 31, 2000, Waypoint Bank met
all three minimum capital requirements.

Risk-based Capital Ratios and Leverage Ratios

<TABLE>
<CAPTION>


         WAYPOINT BANK                                           Minimum Requirement for        Minimum Requirement to be
                                          Actual                     Capital Adequacy               "Well Capitalized"
                               ------------------------------ ------------------------------- -------------------------------
    As of September 30, 2001       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)        $435,452          15.0%        $232,319            8.0%        $290,399           10.0%
  Tier 1 Capital
    (to Risk Weighted Assets)         410,425          14.2%         116,160            4.0%         174,239            6.0%
  Tier 1 Capital
    (to Avg. Assets)                  410,425           8.0%         200,067            4.0%         250,084            5.0%

    As of December 31, 2000
    -----------------------
  Total Capital
     (to Risk Weighted Assets)       $407,016          13.9%        $233,551            8.0%        $291,939           10.0%
  Tier 1 Capital
    (to Risk Weighted Assets)         382,599          13.1%         116,776            4.0%         175,163            6.0%
  Tier 1 Capital
    (to Avg. Assets)                  382,599           7.9%         193,393            4.0%         241,741            5.0%
</TABLE>



X. Results of Operations

Comparison for the Three Month Periods Ended September 30, 2001 and
September 30, 2000

Net Income
Net income for the three months ended September 30, 2001 was $10,503,000, which
represented an increase of $3,489,000 or 49.7% from $7,014,000 reported for the
three months ended September 30, 2000. The increase in net income included an
increase of $3,902,000 in net interest income after provision for loan losses,
an increase of $424,000

                                    Page 16
<PAGE>

in noninterest income, and a decrease of $1,084,000 in noninterest expense,
which were offset by an increase of $1,921,000 in income tax expense. 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 after provision for loan losses totaled $27,361,000 for the three months
ended September 30, 2001, which represents an increase of $3,902,000 or 16.6%
from $23,459,000 for the three months ended September 30, 2000. The paragraphs
below present an analysis of the components of net interest income on a
tax-equivalent basis.

Table 1a 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 periods ended September 30, 2001 and September 30, 2000.
Table 2 presents a rate-volume analysis of changes in net interest income, on a
tax-equivalent basis for the three month periods ended September 30, 2001 and
September 30, 2000.

To understand asset and liability trends that have impacted Waypoint Financial's
average balances, rates, and net interest margin, please refer to the Financial
Condition section, which appears later in this report. Loan trends are presented
under the heading "Loans Receivable, Net" and deposit trends are presented under
the heading "Deposits". Also, investment and borrowing trends are included in
the Financial Condition section respectively under the headings of "Marketable
Securities" and "Other Borrowings".

                                    Page 17
<PAGE>

TABLE 1a - Average Balance Sheets - Three Month Periods

<TABLE>
<CAPTION>

                                                                           For the three months ended,
                                                     ------------------------------------------------------------------------
                                                          September 30, 2001                  September 30, 2000
                                           Rate      ------------------------------------------------------------------------
                                           As of                                 Average                              Average
                                         September        Average     (1) (2)     Yield/     Average      (1) (2)      Yield/
                                         30, 2001       Balance      Interest     Cost       Balance     Interest       Cost
                                        ------------ ------------------------------------------------------------------------
                                                                      (All dollar amounts are in thousands)
<S>                                            <C>       <C>           <C>          <C>     <C>           <C>          <C>
Assets:
Interest-earning assets:
  Loans                                        7.44%     $2,570,317    $ 48,967     7.62%   $ 2,619,165   $ 52,799      8.06%
  Marketable securities - taxable              5.48       2,207,784      30,681      5.56     1,667,053     29,848      7.16
  Marketable securities - taxfree              8.32          74,928       1,558      8.32        63,451      1,389      8.76
  Other interest-earning assets                3.45          33,658         321      3.81        29,480        400      5.43
                                        -------------------------------------------------------------------------------------
Total interest-earning assets                  6.56       4,886,687      81,528      6.67     4,379,149     84,436      7.71
                                        ------------                ----------------------              ---------------------
Noninterest-earning assets                                  210,857                             150,769
                                                     ---------------                      --------------
Total Assets                                             $5,097,544                         $ 4,529,918
                                                     ===============                      ==============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
  Savings deposits                             1.75       $ 216,498       1,013      1.87    $  245,364      1,572      2.56
  Time deposits                                5.35       1,403,521      19,261      5.49     1,668,306     24,741      5.93
  NOW and money market accounts                2.12         855,012       5,070      2.37       741,069      7,038      3.80
  Escrow                                        .46           4,921           6      0.49        10,134          7      0.28
  Borrowed funds                               4.75       2,096,890      26,446      5.04     1,555,976     25,768      6.62
                                        -------------------------------------------------------------------------------------
Total interest-bearing liabilities             4.30       4,576,842      51,796      4.53     4,220,849     59,126      5.60
                                        ------------                ----------------------              ---------------------
Noninterest-bearing liabilities                              42,112                              18,577
                                                     ---------------                      --------------
Total liabilities                                         4,618,954                           4,239,426
Stockholders' equity                                        478,590                             290,492
                                                     ---------------                      --------------
Total liabilities and
  stockholders' equity                                  $ 5,097,544                         $ 4,529,918
                                                     ===============                      ==============

Net interest income -  tax-equivalent                                    29,732                              25,310
                                                                    ------------                        -----------
Interest rate spread (3)                       2.26%                                2.14%                               2.11%
                                        ============                            ==========                         ==========
Net interest-earning assets                              $  309,845                          $  158,300
                                                     ===============                      ==============
Net interest margin (4)                                                             2.43%                               2.31%
                                                                                ==========                         ==========
Ratio of interest-earning assets
  to interest-bearing liabilities                              1.07 X                              1.04 X
                                                     ===============                      ==============

Adjustment to reconcile tax-equivalent
net interest income to reported net
interest income                                                           (772)                              (644)
                                                                    ------------                        -----------

Reported net interest income                                           $ 28,960                           $ 24,666
                                                                    ============                        ===========
</TABLE>


(1)  Includes net expense recognized on deferred loan fees and costs of $175,000
     for the three months ended September 30, 2001, and $185,000 for the three
     months ended September 30, 2000.
(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.

                                    Page 18
<PAGE>

TABLE 1b - Average Balance Sheets - Year-to-date Periods

<TABLE>
<CAPTION>


                                                                          For the nine months ended,
                                                 -----------------------------------------------------------------------------
                                                          September 30, 2001                     September 30, 2000
                                                 -----------------------------------------------------------------------------
                                                                              Average                                Average
                                                    Average       (1) (2)     Yield/      Average        (1) (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                                             $2,618,116      $151,314      7.71%    $2,535,854      $148,391      7.80%
  Marketable securities - taxable                    2,092,413        94,696      6.03      1,639,824        87,579      7.12
  Marketable securities - taxfree                       73,200         4,620      8.42         61,597         4,092      8.86
  Other interest-earning assets                         43,557         1,532      4.69         31,323           924      3.93
                                                 -----------------------------------------------------------------------------
Total interest-earning assets                        4,827,286       252,162      6.96      4,268,598       240,986      7.53
                                                               ------------------------               ------------------------
Noninterest-earning assets                             178,164                                149,695
                                                 --------------                        ---------------
Total Assets                                        $5,005,450                             $4,418,293
                                                 ==============                        ===============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
  Savings deposits                                  $  217,050         3,709      2.28     $  241,468         4,863      2.69
  Time deposits                                      1,468,621        62,894      5.71      1,615,406        68,965      5.69
  NOW and money market accounts                        835,808        18,845      3.01        738,913        19,225      3.47
  Escrow                                                 6,716            24      0.48          9,571            35      0.49
  Borrowed funds                                     1,968,628        79,975      5.42      1,518,274        71,250      6.26
                                                 -----------------------------------------------------------------------------
Total interest-bearing liabilities                   4,496,823       165,447      4.91      4,123,632       164,338      5.31
                                                               ------------------------               ------------------------
Noninterest-bearing liabilities                         46,016                                 20,092
                                                 --------------                        ---------------
Total liabilities                                    4,542,839                              4,143,724
Stockholders' equity                                   462,611                                274,569
                                                 --------------                        ---------------
Total liabilities and
  stockholders' equity                              $5,005,450                             $4,418,293
                                                 ==============                        ===============

Net interest income -  tax-equivalent                                 86,715                                 76,648
                                                               --------------                         --------------
Interest rate spread (3)                                                          2.05%                                  2.22%
                                                                             ==========                             ==========
Net interest-earning assets                         $  330,463                             $  144,966
                                                 ==============                        ===============
Net interest margin (4)                                                           2.40%                                  2.39%
                                                                             ==========                             ==========
Ratio of interest-earning assets
  to interest-bearing liabilities                         1.07 X                                 1.04 X
                                                 ==============                        ===============

Adjustment to reconcile tax-equivalent net
  interest income to reported net interest
  income                                                              (2,274)                                (1,865)
                                                               --------------                         --------------

Reported net interest income                                        $ 84,441                               $ 74,783
                                                               ==============                         ==============
</TABLE>


(1)  Includes (expense) income recognized on deferred loan fees and costs of
     $(839,000) for the nine months ended September 30, 2001, and $46,000 for
     the nine months ended September 30, 2000.
(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.

                                    Page 19
<PAGE>

Table 2 Rate/Volume Analysis of Changes in Net Interest Income (All dollar
amounts presented in table are in 000's)
<TABLE>
<CAPTION>

                                                    Three Months Ended                       Nine Months Ended
                                                    September 30, 2001                      September 30, 2001
                                                       Compared to                              Compared to
                                                    Three Months Ended                       Nine Months Ended
                                                    September 30, 2000                      September 30, 2000
                                          ---------------------------------------  --------------------------------------
                                                   Increase (Decrease)                      Increase (Decrease)
                                          ---------------------------------------  --------------------------------------

                                             Volume         Rate         Net          Volume        Rate         Net
                                          ---------------------------------------  --------------------------------------
                                                                  (Dollar amounts in thousands)
Interest-earning assets:
<S>                                           <C>          <C>         <C>             <C>         <C>           <C>
  Loans, net                                   $   (976)    $ (2,856)   $  (3,832)      $  4,682    $ (1,759)     $ 2,923
  Marketable securities - taxable                 8,390       (7,557)         833         21,823     (14,706)       7,117
  Marketable securities - taxfree                   242          (72)         170            740        (212)         528
  Other interest-earning assets                      51         (130)         (79)           407         201          608
                                          ---------------------------------------  --------------------------------------
  Total interest-earning assets                   7,707      (10,615)      (2,908)        27,652     (16,476)      11,176
                                          ---------------------------------------  --------------------------------------

Interest-bearing liabilities:
  Savings deposits                                 (170)         (389)       (559)          (460)       (694)      (1,154)
  Time deposits                                  (3,734)       (1,746)     (5,480)        (6,311)        240       (6,071)
  NOW and money market deposits                     966        (2,934)     (1,968)         2,346      (2,726)        (380)
  Escrow                                             (5)            4          (1)           (10)         (1)         (11)
  Borrowed funds                                  7,690        (7,012)        678         19,179     (10,454)       8,725
                                          ---------------------------------------  --------------------------------------
  Total interest-bearing liabilities              4,747       (12,077)     (7,330)        14,744     (13,635)       1,109
                                          ---------------------------------------  --------------------------------------
Net change in interest income                  $  2,960      $  1,462    $  4,422       $ 12,908    $ (2,841)    $ 10,067
                                          =======================================  ======================================
</TABLE>

For information on qualitative and quantitative disclosures regarding market
risk, refer to Management's Discussion and Analysis included in the 2000 Annual
Report on Form 10-K.

Provision for Loan Losses
Waypoint Financial recognized provision for loan losses totaling $1,599,000 for
the three months ended September 30, 2001, which represents an increase of
$392,000 or 32.5%, from the $1,207,000 provision recorded for the three months
ended September 30, 2000. The provision for loan losses increased in accordance
with the results of Waypoint Financial's ongoing analysis of the loan portfolio.
During the three months ended September 30, 2001, loan charge-offs decreased
substantially in the commercial loan portfolio as compared to the first six
months of 2001. Waypoint Financial continues to closely monitor its asset
quality and believes its allowance for loan losses is adequate as of September
30, 2001. Waypoint Financial's provision, allowance for loan losses and
non-performing assets are presented in further detail in the Asset Quality
section of this report.

                                    Page 20
<PAGE>

Noninterest Income
Table 3 presents noninterest income for the three month and nine month periods
ended September 30, 2001 and 2000.

Table 3  Changes in Noninterest Income
<TABLE>
<CAPTION>

                                                                      Three months ended September 30
                                                           ------------------------------------------------------
                                                              2001          2000         Change           %
                                                           ------------  ------------  ------------  ------------
                                                                       (dollar amounts in thousands)
<S>                                                            <C>           <C>           <C>             <C>
     Service charges on deposits                               $ 1,489       $ 1,499       $  (10)         (0.7)
     Other service charges, commissions, fees                    3,073         1,977         1,096          55.4
     Loan servicing, net                                         (144)           292         (436)       (149.3)
     Gain on sale of securities                                    334         1,343       (1,009)        (75.1)
     Gain on sale of loans                                       1,201           365           836         229.0
     Other                                                       1,642         1,695          (53)         (3.1)
                                                           ------------  ------------  ------------  ------------
     Total                                                     $ 7,595       $ 7,171        $  424           5.9
                                                           ============  ============  ============  ============

                                                                      Nine months ended September 30
                                                           ------------------------------------------------------
                                                              2001          2000         Change           %
                                                           ------------  ------------  ------------  ------------
                                                                       (dollar amounts in thousands)
     Service charges on deposits                               $ 4,766       $ 4,901      $  (135)         (2.8)
     Other service charges, commissions, fees                    7,899         5,037         2,862          56.8
     Loan servicing, net                                           155         1,041         (886)        (85.1)
     Gain on sale of securities                                  2,213         2,623         (410)        (15.6)
     Gain on sale of loans                                       2,924           130         2,794       2,149.2
     Other                                                       3,225         2,861           364          12.7
                                                           ------------  ------------  ------------  ------------
     Total                                                     $21,182       $16,593       $ 4,589          27.7
                                                           ============  ============  ============  ============
</TABLE>

As noted in Table 3, total noninterest income increased $424,000 or 5.9% to
$7,595,000 for the three months ended September 30, 2001 versus the comparable
prior period. The increase came primarily from other service charges,
commissions, and fees which were up $1,096,000 or 55.4% and include ATM fees and
fees from commercial services, brokerage, insurance, trust, asset management,
and advisory services. Fees were up $659,000 from the sale of insurance products
through Owen Insurance Inc., Waypoint Financial's insurance agency subsidiary
acquired in November 2000. Fees from brokerage activities were also up $406,000,
with most of this increase generated by branch sales of annuity products. This
trend reflected Waypoint Financial's disciplined pricing of deposit products in
the current low rate environment, with customers opting to purchase uninsured
products to achieve their income goals. Gains on the sale of loans also were up
$836,000 to $1,201,000 from $365,000 during the comparable prior period. During
the three months ended September 30, 2001, Waypoint Financial was able to sell
loans at favorable prices due to an advantageous mortgage interest rate
environment. During the comparable prior period, rising interest rates limited
gains. Offsetting these increases were decreases of $436,000 in net loan
servicing income and $1,009,000 in gains on sales of securities. Net loan
servicing income was down from the comparable prior period primarily due to
increased prepayment speeds during the three months ended September 30, 2001,
which reduced gross servicing revenue and increased servicing amortization
expense and negative valuation adjustments. Other income decreased slightly to
$1,642,000 during the quarter ended September 30, 2001. This total included an
increase of $826,000 in income from bank-owned life insurance and a $479,000
gain due to a change in benefit plan liabilities. The comparable prior quarter
included an insurance recovery of $1,860,000 related to fraud losses from the
1996 acquisition of First Harrisburg Bancorp and increased losses of $575,000 on
joint venture investments.

                                    Page 21
<PAGE>

Noninterest Expense
Noninterest expense for the three months ended September 30, 2001 and 2000 is
presented in the Table 4.

Table 4  Changes in Noninterest Expense
<TABLE>
<CAPTION>

                                                                      Three months ended September 30
                                                           ------------------------------------------------------
                                                              2001          2000         Change           %
                                                           ------------  ------------  ------------  ------------
                                                                       (dollar amounts in thousands)
<S>                                                            <C>           <C>            <C>              <C>
     Salaries and benefits                                     $ 9,846       $ 9,808        $   38           0.4
     Equipment expense                                           1,793         2,107          (314)        (14.9)
     Occupancy expense                                           1,627         2,133          (506)        (23.7)
     Advertising and public relations                              579           875          (296)        (33.8)
     FDIC insurance                                                121           134           (13)         (9.7)
     (Income) expense from real estate operations                  (69)          144          (213)       (147.9)
     Amortization of intangibles                                   751           720            31           4.3
     Consulting and other fees                                     717         1,024          (307)        (30.0)
     Supplies, telephone and postage                             1,261         1,194            67           5.6
     Other                                                       2,523         2,094           429          20.5
                                                           ------------  ------------  ------------  ------------
     Total                                                     $19,149       $20,233     $  (1,084)         (5.4)
                                                           ============  ============  ============  ============

                                                                      Nine months ended September 30
                                                           ------------------------------------------------------
                                                              2001          2000         Change           %
                                                           ------------  ------------  ------------  ------------
                                                                       (dollar amounts in thousands)
     Salaries and benefits                                     $29,292       $29,644      $   (352)         (1.2)
     Equipment expense                                           5,333         5,071           262           5.2
     Occupancy expense                                           4,931         6,275        (1,344)        (21.4)
     Advertising and public relations                            1,923         2,769          (846)        (30.6)
     FDIC insurance                                                379           391           (12)         (3.1)
     (Income) expense from real estate operations                 (490)          759        (1,249)       (164.6)
     Amortization of intangibles                                 2,255         2,160            95           4.4
     Consulting and other fees                                   2,221         2,725          (504)        (18.5)
     Supplies, telephone and postage                             4,307         3,720           587          15.8
     Other                                                       7,503         6,894           609           8.8
                                                           ------------  ------------  ------------  ------------
     Total                                                     $57,654       $60,408      $ (2,754)         (4.6)
                                                           ============  ============  ============  ============
</TABLE>

Total noninterest expense decreased $1,084,000 or 5.4% to $19,149,000 for the
three months ended September 30, 2001 from $20,233,000 for the three months
ended September 30, 2000. The decreases in noninterest expense from equipment
and occupancy expense, advertising and public relations expense, and consulting
and other fees are primarily attributable to efficiencies gained from the merger
of Waypoint Financial and York Financial on October 17, 2000. Within salaries
and benefits expense, cost savings from staffing reductions were offset by
increased sales incentives to branch and mortgage lending personnel, which were
up $492,000, salaries and benefits increases due to the acquisition of Owen
Insurance totaling $267,000, and increases for merit and promotional raises
totaling approximately $400,000. Other expense increased $429,000, which
included primarily higher mortgage banking costs due to volume and various other
increased operational costs. OTS fees also increased $128,000 to $194,000 for
the current quarter.

Provision for Income Taxes
Income tax expense totaled $5,304,000 for the three months ended September 30,
2001, which resulted in an effective tax rate of 33.6% on income before taxes of
$15,807,000. During the three months ended September 30, 2000, Waypoint
Financial recorded $3,383,000 of income tax expense, which resulted in an
effective tax rate of 32.5% on income before taxes of $10,397,000. The effective
tax rate is less than the statutory rates due to Waypoint Financial's investment
in tax exempt sources of income. The increase in the effective tax rate in the
three month period ended September 30, 2001 relative to the comparable prior
period resulted from the increase in income before taxes being comprised of
predominantly taxable revenue sources.

                                    Page 22
<PAGE>

Comparison for the Nine Month Periods Ended September 30, 2001 and September 30,
2000

Net Income
Net income for the nine months ended September 30, 2001 was $29,039,000, which
represented an increase of $8,699,000 or 42.8% from $20,340,000 reported for the
nine months ended September 30, 2000. The increase in net income included an
increase of $7,744,000 in net interest income after provision for loan losses,
an increase of $4,589,000 in noninterest income, and a decrease of $2,754,000 in
noninterest expense, which were offset by an increase of $6,388,000 in income
tax expense. The following paragraphs include a discussion of the components of
net income.

Net Interest Income
Net interest income after provision for loan losses totaled $79,144,000 for the
nine months ended September 30, 2001, which represents an increase of $7,744,000
or 10.8% from $71,400,000 for the nine months ended September 30, 2000.
Provision expense for loan losses increased $1,914,000 or 56.6% to $5,297,000
for the nine months ended September 30, 2001 from $3,383,000 for the comparable
prior period. Table 1b 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 nine month periods ended September 30, 2001 and
September 30, 2000. Table 2 presents a rate-volume analysis of changes in net
interest income, on a tax-equivalent basis for the nine month periods ended
September 30, 2001 and September 30, 2000.

Provision for Loan Losses
Waypoint Financial recognized provision for loan losses totaling $5,297,000 for
the nine months ended September 30, 2001, which represents an increase of
$1,914,000 or 56.6%, from the $3,383,000 provision recorded for the nine months
ended September 30, 2000. Waypoint Financial's provision expense and allowance
for loan losses are discussed in further detail in the Asset Quality section of
this report.

Noninterest Income
As noted in Table 3, total noninterest income increased $4,589,000 or 27.7% to
$21,182,000 for the nine months ended September 30, 2001 compared to the
comparable prior period. A substantial portion of the increase came in other
service charges, commissions, and fees which were up $2,862,000 or 56.8% and
include ATM fees and fees from commercial services, brokerage, insurance, trust,
asset management, and advisory services. Fees were up $1,593,000 from the sale
of insurance products through Owen Insurance Inc., Waypoint Financial's
insurance agency subsidiary acquired in November 2000. Fees from brokerage
activities were also up $595,000 and commercial banking fees increased $271,000.
The remaining increase of $403,000 in other service charges, commissions, and
fees resulted primarily from retail banking activities. Gains on the sale of
loans also were up $2,794,000 to $2,924,000 from $130,000 during the comparable
prior period. During the nine months ended September 30, 2001, Waypoint
Financial was able to sell loans at favorable prices due to an advantageous
mortgage interest rate environment. During the comparable prior period, rising
interest rates limited gains and Waypoint Financial sold certain loans at a loss
to improve the Company's interest rate risk profile. Offsetting these increases
were decreases in net loan servicing income and a slight decrease in service
charges on deposits. Net loan servicing income was down $886,000 or 85.1% from
the comparable prior period primarily due to increased prepayment speeds during
the nine months ended September 30, 2001, which reduced gross servicing revenue
and increased servicing amortization expense and negative valuation adjustments.
Service charges on deposits were down $135,000 or 2.8% due primarily to a
reduction in charges for insufficient funds. This trend resulted primarily from
procedural changes in Waypoint Financial's checking account administration,
which has also resulted in reduced overdraft losses in noninterest expense.
Gains of sales of securities were also down $410,000 to $2,213,000 for the nine
months ended September 30, 2001. Other income also increased by $364,000 or
12.7% to $3,225,000. Other income during the current period included an increase
of $965,000 in income from bank-owned life insurance. Other income during the
comparable prior period included a recovery of $1,860,000 related to fraud
losses from the 1996 acquisition of First Harrisburg Bancorp.

Noninterest Expense
Total noninterest expense decreased $2,754,000 or 4.6% to $57,654,000 for the
nine months ended September 30, 2001 from $60,408,000 for the nine months ended
September 30, 2000. The net decrease in noninterest expense, as noted in Table
4, is attributable to decreases in salaries and benefits expense, occupancy
expense, advertising and public relations expense, expense from real estate
operations, and consulting and other fees. These decreases are

                                    Page 23
<PAGE>

primarily attributable to efficiencies gained from the merger of Waypoint
Financial and York Financial on October 17, 2000. Salaries and benefits expense
decreased $352,000 as cost savings from staffing reductions were partially
offset by increased sales incentives to branch and mortgage lending personnel,
which were up $1,271,000, salaries and benefits increases due to the acquisition
of Owen Insurance totaling $871,000, and increases for merit and promotional
raises totaling approximately $900,000. Expense from real estate operations was
reduced primarily by net gains on the sale of foreclosed residential real estate
during the nine months ended September 30, 2001. During the nine months ended
September 30, 2000, sales of foreclosed residential real estate had resulted in
net losses. Offsetting these decreases were increases in equipment expense,
supplies, telephone, and postage expense, and other expense. The increase in
equipment expense primarily reflects Waypoint Financial's conversion of 100% of
its core banking and platform computer systems to in-house operations, thereby
increasing equipment and depreciation expense. Supplies, telephone, and postage
expense increased primarily due to increased mailings to customers associated
with new product introductions, replacement costs for new customer and
administrative forms rolled out in 2001, and increased telephone equipment and
lines to improve customer service and access. Other expense also increased
$609,000 and included a $329,000 increase in OTS fees to $544,000, as well as
other operational expense increases including mortgage banking expenses.

Provision for Income Taxes
Income tax expense totaled $13,633,000 for the nine months ended September 30,
2001, which resulted in an effective tax rate of 31.9% on income before taxes of
$42,672,000. During the nine months ended September 30, 2000, Waypoint Financial
recorded $7,245,000 of income tax expense, which resulted in an effective tax
rate of 26.3% on income before taxes of $27,585,000. The effective tax rate is
less than the statutory rates due to Waypoint Financial's investment in tax
exempt sources of income. The increase in the effective tax rate in the nine
month period ended September 30, 2001 relative to the comparable prior period
resulted from the increase in income before taxes being comprised of
predominantly taxable revenue sources.

XI. Financial Condition

Marketable Securities
Marketable securities, excluding the Federal Home Loan Bank cash account,
totaled $2.347 billion at September 30, 2001 and $1.877 billion at December 31,
2000, which represents an increase of $469.7 million, or 25.0%. The increase
resulted primarily from leveraging strategies used to enhance earnings, whereby
Waypoint Financial deploys the proceeds of wholesale borrowings to invest in
marketable securities at a positive interest spread. Leveraging activities are
conducted in accordance with Waypoint Financial's risk management policies and
allow Waypoint Financial to deploy excess capital not otherwise required to
support lending or other financial services activities. Note (5) of the Notes to
Consolidated Financial Statements presents the composition of the marketable
securities portfolio as of September 30, 2001 and December 31, 2000.

Loan receivable, net
During the nine months ended September 30, 2001, Waypoint Financial recorded a
net decrease of $73.7 million or 2.8% to $2.518 billion at September 30, 2001
from $2.592 billion at December 31, 2000. This decrease in total loans included
the effects of strong commercial and consumer loan growth, which were offset by
a decrease in mortgage loans held in portfolio. Commercial loans grew $77.7
million or 12.1% to $720.5 million at September 30, 2001 from $642.8 million at
December 31, 2000. This trend reflects a number of factors in Waypoint
Financial's market, including a continued stable commercial lending environment
during the period and Waypoint Financial's success at drawing in new business
from competitors that are experiencing disruptive effects from recent business
combinations. Consumer loans grew $28.1 million or 4.8% to $619.7 million at
September 30, 2001 from $591.6 million at December 31, 2000. This growth
reflects continued stable demand for consumer loans in Waypoint Financial's
market, which was offset by the effects of consumer loans paid off through
mortgage loan refinancing activity. During the nine months ended September 30,
2001, market interest rates for mortgage loans remained at historically low
levels, which created opportunities for consumer loan borrowers with substantial
home equity to refinance their consumer debt through mortgage funding.
Offsetting the growth in commercial and consumer loans was a decrease in
residential mortgage loans, which decreased $181.1 million or 13.3% to $1.183
billion at September 30, 2001 from $1.363 billion at December 31, 2000. This
decrease in mortgage loans resulted from the favorable low-rate selling
environment and from Waypoint Financial's strategic decision to originate
substantially fewer mortgage loans for portfolio. Waypoint Financial's loan
growth trends during the nine months ended September 30, 2001 were consistent
with a long-term strategy of converting a thrift-

                                    Page 24
<PAGE>

oriented institution to a diversified financial services company.

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. At September 30, 2001, Waypoint Financial had loan
commitments and unadvanced loans and lines of credit totaling $441.1 million,
including $39.4 million in residential mortgage lending commitments, $265.9
million in commercial lending commitments, and $135.8 million in consumer and
other lending commitments.

Loan Fees. In addition to interest earned on loans, Waypoint Financial receives
income from fees derived from loan originations, loan modifications, late
payments and for miscellaneous services related to its loans. Income from these
activities varies from period to period depending upon the volume and type of
loans made and competitive conditions.

Waypoint Financial charges loan origination fees which are calculated as a
percentage of the amount borrowed. As required by applicable accounting
principles, loan origination fees, discount points and certain loan origination
costs are deferred and recognized over the contractual remaining lives of the
related loans on a level yield basis. At September 30, 2001, Waypoint Financial
had $6.8 million of net deferred loan fees. Waypoint Financial amortized $.8
million of expense from net deferred loan fees and costs during the nine months
ended September 30, 2001.

Loan Quality. Due to strong underwriting standards and credit and collections
management as well as a historically strong economy in its market area, Waypoint
Financial's experience in credit losses have historically been favorable
relative to banking industry averages. 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
                                                          September 30, 2001          December 31, 2000
                                                         -------------------------------------------------
                                                                      (Amounts in thousands)


<S>                                                               <C>                       <C>
Non-accrual residential mortgage loans                            $      1,377              $         540
Non-accrual commercial loans                                             6,252                      4,552
Non-accrual consumer and other loans                                       790                        604
                                                         ----------------------     ----------------------
     Total non-accrual loans
                                                                         8,419                      5,696
Loans 90 days or more delinquent and still accruing                     15,053                     17,481
                                                         ----------------------     ----------------------
     Total non-performing loans                                         23,472                     23,177
     Total foreclosed other assets                                         484                        861
     Total foreclosed real estate                                        1,381                      3,086
                                                         ----------------------     ----------------------
     Total non-performing assets                                  $     25,337              $      27,124
                                                         ======================     ======================

     Total non-performing loans to total loans                            0.92%                      0.89%
                                                         ======================      =====================
     Allowance for loan losses to non-performing loans                   97.49%                     97.45%
                                                         ======================      =====================
     Total non-performing assets to total assets                          0.49%                      0.57%
                                                         ======================      =====================

</TABLE>

                                    Page 25
<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>


                                                        As of or for the       As of or for the          As of or for the
                                                       nine months ended       nine months ended        twelve months ended
             Allowance for Loan Losses                 September 30, 2001     September 30, 2000         December 31, 2000
------------------------------------------------------------------------------------------------------------------------------
                                                                              (Amounts in thousands)

<S>                                                          <C>                     <C>                      <C>         <C>
Balance at beginning of period                               $      22,586           $      23,127            $        23,127
Pooling adjustment to conform accounting periods                         -                     (74)                       234
Provision for loan losses                                            5,297                   3,383                      5,070
Provision component related to
   unfunded commitments                                                  -                     308                          -
Charge-offs:
   Residential mortgage loans                                         (475)                   (958)                    (1,168)
   Commercial loans                                                 (2,176)                   (374)                    (2,482)
   Consumer and other loans                                         (3,373)                 (1,875)                    (2,962)
                                                      ---------------------  ----------------------   ------------------------
      Total charge-offs                                             (6,024)                 (3,207)                    (6,612)
                                                      ---------------------  ----------------------   ------------------------
Recoveries:
   Residential mortgage loans                                           20                     155                        161
   Commercial loans                                                    252                      12                         24
   Consumer and other loans                                            751                     403                        582
                                                      ---------------------  ----------------------   ------------------------
      Total recoveries                                               1,023                     570                        767
                                                      ---------------------  ----------------------   ------------------------
            Net charge-offs                                         (5,001)                 (2,637)                    (5,845)
                                                      ---------------------  ----------------------   ------------------------
Balance at the end of period                                 $      22,882           $      24,107            $        22,586
                                                      =====================  ======================   ========================
Net charge-offs to average loans outstanding                          0.19%                   0.10%                      0.22%
                                                      =====================  ======================   ========================
</TABLE>


Allocation of the Allowance for Loan Losses. The following table sets for the
composition of the allowance for loan losses as of the dates indicated:
<TABLE>
<CAPTION>

                                               As of September 30, 2001                As of December 31, 2000
                                        --------------------------------------------------------------------------
                                                              (Dollar amounts in thousands)
                                                                % of Total                          % of Total
                                              Amount             Reserves            Amount          Reserves
                                        -------------------    --------------     --------------  ----------------
<S>                                                <C>                <C>               <C>                 <C>
Commercial loans                                   $14,364            62.78%            $14,625             64.75%
Residential mortgage loans                           2,020             8.83               2,165              9.59
Consumer and other loans                             4,953            21.64               4,178             18.50
General                                              1,545             6.75               1,618              7.16
                                        -------------------    --------------     --------------  ----------------
     Total                                         $22,882           100.00%            $22,586            100.00%
                                        ===================    ==============     ==============  ================
</TABLE>


Bank-Owned Life Insurance
During the quarter ended September 30, 2001, Waypoint Financial invested $60.0
million in bank-owned life insurance. Waypoint Financial funded this investment
with proceeds from the sale of marketable securities and mortgage loans.
Waypoint Financial's bank-owned life insurance assets totaled $82.2 million at
September 30, 2001 and $20.7 million at December 31, 2000.

                                    Page 26
<PAGE>

Deposits
During the nine months ended September 30, 2001, Waypoint Financial recorded a
net decrease in total deposits of $182.3 million or 6.9% to $2.443 billion at
September 30, 2001 from $2.626 billion at December 31, 2000. This decrease in
total deposits primarily reflects a decrease of $249.6 million in time deposits
to $1.385 billion at September 30, 2001 from $1.634 billion at December 31,
2000. This decrease in time deposits resulted primarily from Waypoint
Financial's implementation during the period of more disciplined pricing
policies for time deposits and decreased usage of brokered time deposits, which
are consistent with Waypoint Financial's reduced emphasis on traditional thrift
activities. Offsetting the decrease in time deposits were increases in Waypoint
Financial's core deposits. Core deposits increased $67.4 million or 6.4% to
$1.059 billion at September 30, 2001 from $991.5 million at December 31, 2000.
Waypoint Financial's increased emphasis on core deposit raising is consistent
with its strategy of converting to a diversified financial services company.


Other Borrowings
Note (8) of the Notes to Consolidated Financial Statements presents the
composition of borrowings as of September 30, 2001 and December 31, 2000.
Waypoint Financial's borrowed funds increased $574.4 million or 35.3% to $2.200
billion at September 30, 2001 from $1.625 billion at December 31, 2000. This
increase in borrowings resulted primarily from Waypoint Financial's investment
leverage activities during the nine months ended September 30, 2001, which are
described under "Marketable Securities" earlier in this report. Waypoint
Financial had available FHLB lines of credit totaling $987.2 million as of
September 30, 2001 versus $633.2 million as of December 31, 2000.

                                    Page 27
<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. On October 26, 2001, Waypoint Financial
                  Corp. filed a preliminary proxy statement regarding a special
                  meeting of the stockholders of Waypoint Financial Corp. to be
                  held December 14, 2001. The business to be conducted at the
                  special meeting includes the approval of the Waypoint
                  Financial Corp. Key Employee/Outside Director Recognition and
                  Retention Plan and the Waypoint Financial Corp. 2001 Stock
                  Option Plan.

          Item 6. Exhibits and Reports on Form 8-K. None.

                                    Page 28
<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/ Charles C. Pearson, Jr.
                           ---------------------------
                            Charles C. Pearson, Jr.,
                             Chairman, President and
                             Chief Executive Officer


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


Dated:  November 13, 2001

                                    Page 29