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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2010

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: 0-22444





WVS Financial Corp.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Pennsylvania                                                   |  | 25-1710500                             
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|9001 Perry Highway Pittsburgh, Pennsylvania                    |  | 15237                                  
|(Address of principal executive offices)                       |  | (Zip Code)                             

(412)
364-1911

(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 requirement for the past 90
days.    YES  x    NO   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    YES   ̈    NO   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange
Act).    YES   ̈    NO  x

Shares outstanding as of November 3, 2010: 2,057,930 shares Common Stock, $.01 par value.









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WVS FINANCIAL CORP. AND SUBSIDIARY

INDEX



|         |  |                                                                                                                                     |  |      |      | 
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|         |  |                                                                                                                                     |  | Page |     
|         |  |                                                                                                                                    
|PART I.  |  | Financial Information                                                                                                               |  |      |      | 
|         |  |                                                                                                                                    
|Item 1.  |  | Financial Statements                                                                                                                |  |      |      | 
|         |  |                                                                                                                                    
|         |  | Consolidated Balance Sheet as of September 30, 2010 and June 30, 2010 (Unaudited)                                                   |  |      | 3    | 
|         |  |                                                                                                                                    
|         |  | Consolidated Statement of Income for the Three Months Ended September 30, 2010 and 2009
(Unaudited)                                 |  |      | 4    | 
|         |  |                                                                                                                                    
|         |  | Consolidated Statement of Changes in Stockholders Equity for the Three Months Ended September 30, 2010
 (Unaudited)                |  |      | 5    | 
|         |  |                                                                                                                                    
|         |  | Consolidated Statement of Cash Flows for the Three Months Ended September 30, 2010 and 2009
(Unaudited)                             |  |      | 6    | 
|         |  |                                                                                                                                    
|         |  | Notes to Unaudited Consolidated Financial Statements                                                                                |  |      | 8    | 
|         |  |                                                                                                                                    
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations for the Three Months
Ended September 30, 2010 |  |      | 22   | 
|         |  |                                                                                                                                    
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                          |  |      | 29   | 
|         |  |                                                                                                                                    
|Item 4.  |  | Controls and Procedures                                                                                                             |  |      | 37   | 
|         |  |                                                                                                                                    
|         |  |                                                                                                                                     |  |      | Page | 
|         |  |                                                                                                                                    
|PART II. |  | Other Information                                                                                                                   |  |      |      | 
|         |  |                                                                                                                                    
|Item 1.  |  | Legal Proceedings                                                                                                                   |  |      | 38   | 
|         |  |                                                                                                                                    
|Item 1A. |  | Risk Factors                                                                                                                        |  |      | 38   | 
|         |  |                                                                                                                                    
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                         |  |      | 38   | 
|         |  |                                                                                                                                    
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                     |  |      | 39   | 
|         |  |                                                                                                                                    
|Item 4.  |  | (Removed and Reserved)                                                                                                              |  |      | 39   | 
|         |  |                                                                                                                                    
|Item 5.  |  | Other Information                                                                                                                   |  |      | 39   | 
|         |  |                                                                                                                                    
|Item 6.  |  | Exhibits                                                                                                                            |  |      | 39   | 
|         |  |                                                                                                                                    
|         |  | Signatures                                                                                                                          |  |      | 40   | 



2



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WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

(In thousands)



|                                                                                               |  |                    |         |   |               |   |         |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                                               |  | September 30, 2010 |         |   | June 30, 2010 |  
|Assets                                                                                         |  |                    |         |   |               |   |         |  
|Cash and due from banks                                                                        |  | $                  | 667     |   |               | $ | 438     |  
|Interest-earning demand deposits                                                               |  |                    | 1,047   |   |               |   | 1,760   |  
|                                                                                               |  |                    |         |   |               |   |         |  
|Total cash and cash equivalents                                                                |  |                    | 1,714   |   |               |   | 2,198   |  
|Certificates of deposit                                                                        |  |                    | 7,357   |   |               |   | 8,605   |  
|Trading assets                                                                                 |  |                    |        |   |               |   |        |  
|Investment securities held-to-maturity (fair value of $138,802 and $157,379)                   |  |                    | 134,465 |   |               |   | 153,193 |  
|Mortgage-backed securities available-for-sale (amortized cost of $2,008 and $2,019)            |  |                    | 2,141   |   |               |   | 2,146   |  
|Mortgage-backed securities held-to-maturity (fair value of $98,055 and $110,443)               |  |                    | 98,973  |   |               |   | 114,986 |  
|Net loans receivable (allowance for loan losses of $654 and $645)                              |  |                    | 56,707  |   |               |   | 56,315  |  
|Accrued interest receivable                                                                    |  |                    | 2,076   |   |               |   | 2,430   |  
|Federal Home Loan Bank stock, at cost                                                          |  |                    | 10,875  |   |               |   | 10,875  |  
|Premises and equipment                                                                         |  |                    | 652     |   |               |   | 679     |  
|Prepaid FDIC insurance premium                                                                 |  |                    | 769     |   |               |   | 855     |  
|Deferred tax assets (net)                                                                      |  |                    | 1,546   |   |               |   | 1,533   |  
|Other assets                                                                                   |  |                    | 669     |   |               |   | 853     |  
|                                                                                               |  |                    |         |   |               |   |         |  
|TOTAL ASSETS                                                                                   |  | $                  | 317,944 |   |               | $ | 354,668 |  
|                                                                                               |  |                    |         |   |               |   |         |  
|                                                                                               |  |                   
|Liabilities and Stockholders Equity                                                           |  |                    |         |   |               |   |         |  
|Liabilities:                                                                                   |  |                    |         |   |               |   |         |  
|Savings Deposits:                                                                              |  |                    |         |   |               |   |         |  
|Non-interest-bearing accounts                                                                  |  | $                  | 12,983  |   |               | $ | 14,828  |  
|NOW accounts                                                                                   |  |                    | 18,225  |   |               |   | 18,792  |  
|Savings accounts                                                                               |  |                    | 34,535  |   |               |   | 35,137  |  
|Money market accounts                                                                          |  |                    | 22,753  |   |               |   | 22,797  |  
|Certificates of deposit                                                                        |  |                    | 103,728 |   |               |   | 109,624 |  
|Advance payments by borrowers for taxes and insurance                                          |  |                    | 253     |   |               |   | 744     |  
|                                                                                               |  |                    |         |   |               |   |         |  
|Total savings deposits                                                                         |  |                    | 192,477 |   |               |   | 201,922 |  
|Federal Home Loan Bank advances: long-term                                                     |  |                    | 84,500  |   |               |   | 109,500 |  
|Other short-term borrowings                                                                    |  |                    | 10,000  |   |               |   | 12,510  |  
|Accrued interest payable                                                                       |  |                    | 724     |   |               |   | 837     |  
|Other liabilities                                                                              |  |                    | 2,709   |   |               |   | 2,104   |  
|                                                                                               |  |                    |         |   |               |   |         |  
|TOTAL LIABILITIES                                                                              |  |                    | 290,410 |   |               |   | 326,873 |  
|                                                                                               |  |                    |         |   |               |   |         |  
|                                                                                               |  |                   
|Stockholders equity:                                                                          |  |                    |         |   |               |   |         |  
|Preferred stock:                                                                               |  |                    |         |   |               |   |         |  
|5,000,000 shares, no par value per share, authorized; none
Issued                              |  |                    |        |   |               |   |        |  
|Common stock:                                                                                  |  |                    |         |   |               |   |         |  
|10,000,000 shares, $.01 par value per share, authorized;
3,805,636 and 3,805,636 shares issued |  |                    | 38      |   |               |   | 38      |  
|Additional paid-in capital                                                                     |  |                    | 21,420  |   |               |   | 21,415  |  
|Treasury stock: 1,744,391 and 1,747,706 shares at cost, respectively                           |  |                    | (26,690 | ) |               |   | (26,690 | )
|Retained earnings, substantially restricted                                                    |  |                    | 35,000  |   |               |   | 35,270  |  
|Accumulated other comprehensive loss                                                           |  |                    | (2,234  | ) |               |   | (2,238  | )
|                                                                                               |  |                    |         |   |               |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                     |  |                    | 27,534  |   |               |   | 27,795  |  
|                                                                                               |  |                    |         |   |               |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                     |  | $                  | 317,944 |   |               | $ | 354,668 |  
|                                                                                               |  |                    |         |   |               |   |         |  

See accompanying notes to unaudited consolidated financial statements.



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WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

(In thousands, except per share data)



|                                                    |  |                    |           |  |      |   |           | 
|--------------------------------------------------- |  | ------------------ | --------- |  | ---- | - | --------- | 
|                                                    |  | Three Months Ended |          
|                                                    |  | September 30,      |          
|                                                    |  | 2010               |           |  | 2009 |  
|INTEREST AND DIVIDEND INCOME:                       |  |                    |           |  |      |   |           | 
|Loans                                               |  | $                  | 882       |  |      | $ | 1,102     | 
|Investment securities                               |  |                    | 1,275     |  |      |   | 1,328     | 
|Mortgage-backed securities                          |  |                    | 425       |  |      |   | 583       | 
|Certificates of deposit                             |  |                    | 38        |  |      |   | 185       | 
|Interest-earning demand deposits                    |  |                    | 1         |  |      |   | 1         | 
|                                                    |  |                    |           |  |      |   |           | 
|Total interest and dividend income                  |  |                    | 2,621     |  |      |   | 3,199     | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|INTEREST EXPENSE:                                   |  |                    |           |  |      |   |           | 
|Deposits                                            |  |                    | 286       |  |      |   | 376       | 
|Federal Home Loan Bank advances                     |  |                    | 1,451     |  |      |   | 1,795     | 
|Federal Reserve Bank short-term borrowings          |  |                    |          |  |      |   | 40        | 
|Other short-term borrowings                         |  |                    | 6         |  |      |   | 2         | 
|                                                    |  |                    |           |  |      |   |           | 
|Total interest expense                              |  |                    | 1,743     |  |      |   | 2,213     | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|NET INTEREST INCOME                                 |  |                    | 878       |  |      |   | 986       | 
|PROVISION FOR LOAN LOSSES                           |  |                    | 9         |  |      |   | 3         | 
|                                                    |  |                    |           |  |      |   |           | 
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                    | 869       |  |      |   | 983       | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|NON-INTEREST INCOME:                                |  |                    |           |  |      |   |           | 
|Service charges on deposits                         |  |                    | 58        |  |      |   | 77        | 
|Gains on trading assets                             |  |                    |          |  |      |   | 1         | 
|Other                                               |  |                    | 67        |  |      |   | 75        | 
|                                                    |  |                    |           |  |      |   |           | 
|Total non-interest income                           |  |                    | 125       |  |      |   | 153       | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|NON-INTEREST EXPENSE:                               |  |                    |           |  |      |   |           | 
|Salaries and employee benefits                      |  |                    | 470       |  |      |   | 487       | 
|Occupancy and equipment                             |  |                    | 83        |  |      |   | 78        | 
|Data processing                                     |  |                    | 61        |  |      |   | 60        | 
|Correspondent bank service charges                  |  |                    | 21        |  |      |   | 24        | 
|Deposit insurance premium                           |  |                    | 91        |  |      |   | 79        | 
|Other                                               |  |                    | 179       |  |      |   | 182       | 
|                                                    |  |                    |           |  |      |   |           | 
|Total non-interest expense                          |  |                    | 905       |  |      |   | 910       | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|INCOME BEFORE INCOME TAXES                          |  |                    | 89        |  |      |   | 226       | 
|INCOME TAX EXPENSE                                  |  |                    | 30        |  |      |   | 55        | 
|                                                    |  |                    |           |  |      |   |           | 
|NET INCOME                                          |  | $                  | 59        |  |      | $ | 171       | 
|                                                    |  |                    |           |  |      |   |           | 
|                                                    |  |                   
|EARNINGS PER SHARE:                                 |  |                    |           |  |      |   |           | 
|Basic                                               |  | $                  | 0.03      |  |      | $ | 0.08      | 
|Diluted                                             |  | $                  | 0.03      |  |      | $ | 0.08      | 
|                                                    |  |                   
|AVERAGE SHARES OUTSTANDING:                         |  |                    |           |  |      |   |           | 
|Basic                                               |  |                    | 2,057,930 |  |      |   | 2,070,085 | 
|Diluted                                             |  |                    | 2,057,930 |  |      |   | 2,070,085 | 

See accompanying notes
to unaudited consolidated financial statements.



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WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

(UNAUDITED)

(In thousands)



|                                                                        |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|----------------------------------------------------------------------- |  | ----------- | -- |  | ------------------------ | - | ------ | ------------- |  | - | --------------------------------------- | - |  | ------------------------------------------ | ------ | - | ----- | - | ------ | - |  | - | ------ | -
|                                                                        |  | CommonStock |    |  | AdditionalPaid-InCapital |   |        | TreasuryStock |  |   | RetainedEarningsSubstantiallyRestricted |   |  | AccumulatedOtherComprehensiveIncome (loss) |        |   | Total |  
|Balance at June 30, 2010                                                |  | $           | 38 |  |                          | $ | 21,415 |               |  | $ | (26,690                                 | ) |  | $                                          | 35,270 |   |       | $ | (2,238 | ) |  | $ | 27,795 |  
|                                                                        |  |             |    |  |                          |  
|Comprehensive income:                                                   |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|                                                                        |  |             |    |  |                          |  
|Net Income                                                              |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            | 59     |   |       |   |        |   |  |   | 59     |  
|Other comprehensive income:                                             |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|Unrealized holding gains on securities, net of income tax effect of $ 2 |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   | 4      |   |  |   | 4      |  
|                                                                        |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|                                                                        |  |             |    |  |                          |  
|Comprehensive income                                                    |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   | 63     |  
|                                                                        |  |             |    |  |                          |  
|Expense of stock options awarded                                        |  |             |    |  |                          |   | 5      |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   | 5      |  
|                                                                        |  |             |    |  |                          |  
|Cash dividends declared                                                 |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|($0.16 per share)                                                       |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            | (329   | ) |       |   |        |   |  |   | (329   | )
|                                                                        |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|                                                                        |  |             |    |  |                          |  
|Balance at September 30, 2010                                           |  | $           | 38 |  |                          | $ | 21,420 |               |  | $ | (26,690                                 | ) |  | $                                          | 35,000 |   |       | $ | (2,234 | ) |  | $ | 27,534 |  
|                                                                        |  |             |    |  |                          |   |        |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  

See accompanying notes to unaudited consolidated financial statements.



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WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                                       |  |                    |        |   |      |   |         |  
|-------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------- | -
|                                                                                       |  | Three Months Ended |       
|                                                                                       |  | September 30,      |       
|                                                                                       |  | 2010               |        |   | 2009 |  
|OPERATING ACTIVITIES                                                                   |  |                    |        |   |      |   |         |  
|                                                                                       |  |                   
|Net income                                                                             |  | $                  | 59     |   |      | $ | 171     |  
|Adjustments to reconcile net income to cash provided by operating activities:          |  |                    |        |   |      |   |         |  
|Provision for loan losses                                                              |  |                    | 9      |   |      |   | 3       |  
|Depreciation                                                                           |  |                    | 27     |   |      |   | 25      |  
|Accretion of discounts, premiums and deferred loan fees                                |  |                    | 493    |   |      |   | 298     |  
|Trading gains                                                                          |  |                    |       |   |      |   | (1      | )
|Purchase of trading securities                                                         |  |                    |       |   |      |   | (995    | )
|Proceeds from sale of trading securities                                               |  |                    |       |   |      |   | 996     |  
|(Increase) decrease in deferred income taxes                                           |  |                    | (13    | ) |      |   | 20      |  
|Decrease in accrued interest receivable                                                |  |                    | 354    |   |      |   | 349     |  
|Decrease in accrued interest payable                                                   |  |                    | (113   | ) |      |   | (39     | )
|Increase in deferred director compensation payable                                     |  |                    | 2      |   |      |   | 1       |  
|Decrease of prepaid federal deposit insurance premium                                  |  |                    | 86     |   |      |   |        |  
|(Decrease) increase in Transaction Account Clearing Balance payable to Federal Reserve |  |                    | 637    |   |      |   | (147    | )
|Other, net                                                                             |  |                    | 154    |   |      |   | (111    | )
|                                                                                       |  |                    |        |   |      |   |         |  
|Net cash provided by operating activities                                              |  |                    | 1,695  |   |      |   | 570     |  
|                                                                                       |  |                    |        |   |      |   |         |  
|                                                                                       |  |                   
|INVESTING ACTIVITIES                                                                   |  |                    |        |   |      |   |         |  
|                                                                                       |  |                   
|Available-for-sale:                                                                    |  |                    |        |   |      |   |         |  
|Purchase of investment securities                                                      |  |                    | (3,749 | ) |      |   |        |  
|Proceeds from repayments of investments and mortgage-backed securities                 |  |                    | 3,751  |   |      |   | 10      |  
|Held-to-maturity:                                                                      |  |                    |        |   |      |   |         |  
|Purchases of investment securities                                                     |  |                    | (2,970 | ) |      |   | (14,729 | )
|Proceeds from repayments of investments                                                |  |                    | 21,216 |   |      |   | 19,367  |  
|Proceeds from repayments of mortgage-backed securities                                 |  |                    | 16,019 |   |      |   | 21,441  |  
|Purchases of certificates of deposit                                                   |  |                    |       |   |      |   | (100    | )
|Maturities/redemptions of certificates of deposit                                      |  |                    | 1,245  |   |      |   | 6,288   |  
|(Increase) decrease in net loans receivable                                            |  |                    | (407   | ) |      |   | 17      |  
|Acquisition of premises and equipment                                                  |  |                    |       |   |      |   | (27     | )
|                                                                                       |  |                    |        |   |      |   |         |  
|Net cash provided by investing activities                                              |  |                    | 35,105 |   |      |   | 32,267  |  
|                                                                                       |  |                    |        |   |      |   |         |  



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WVS FINANCIAL CORP.
AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                      |  |                    |         |   |      |   |         |  
|--------------------------------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ------- | -
|                                                                      |  | Three Months Ended |        
|                                                                      |  | September 30,      |        
|                                                                      |  | 2010               |         |   | 2009 |  
|FINANCING ACTIVITIES                                                  |  |                    |         |   |      |   |         |  
|                                                                      |  |                   
|Net (decrease) increase in transaction and savings accounts           |  | $                  | (3,058  | ) |      | $ | 4,793   |  
|Net decrease in certificates of deposit                               |  |                    | (5,800  | ) |      |   | (1,747  | )
|Net decrease in advance payments by borrowers for taxes and insurance |  |                    | (491    | ) |      |   | (504    | )
|Net decrease in brokered CDs                                          |  |                    | (2,100  | ) |      |   |        |  
|Net increase in CDARS one-way buy CDs                                 |  |                    | 2,004   |   |      |   |        |  
|Repayments of Federal Home Loan Bank long-term advances               |  |                    | (25,000 | ) |      |   |        |  
|Net decrease in Federal Reserve Bank short-term borrowings            |  |                    |        |   |      |   | (53,500 | )
|Net decrease in other short-term borrowings                           |  |                    | (2,510  | ) |      |   |        |  
|Cash dividends paid                                                   |  |                    | (329    | ) |      |   | (331    | )
|                                                                      |  |                    |         |   |      |   |         |  
|Net cash used for financing activities                                |  |                    | (37,284 | ) |      |   | (51,289 | )
|                                                                      |  |                    |         |   |      |   |         |  
|                                                                      |  |                   
|Decrease in cash and cash equivalents                                 |  |                    | (484    | ) |      |   | (18,452 | )
|                                                                      |  |                   
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                  |  |                    | 2,198   |   |      |   | 21,828  |  
|                                                                      |  |                    |         |   |      |   |         |  
|                                                                      |  |                   
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                        |  | $                  | 1,714   |   |      | $ | 3,376   |  
|                                                                      |  |                    |         |   |      |   |         |  
|                                                                      |  |                   
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                     |  |                    |         |   |      |   |         |  
|                                                                      |  |                   
|Cash paid during the period for:                                      |  |                    |         |   |      |   |         |  
|Interest on deposits, escrows and borrowings                          |  | $                  | 1,856   |   |      | $ | 2,251   |  
|Income taxes                                                          |  |                    |        |   |      |   |        |  
|                                                                      |  |                   
|Non-cash items:                                                       |  |                    |         |   |      |   |         |  
|Due to Federal Reserve Bank                                           |  | $                  | 1,767   |   |      | $ | 677     |  

See accompanying notes
to unaudited consolidated financial statements.



7



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##### Table of Contents



WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial
statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity
with U.S. generally accepted accounting principles. However, all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation have been included. The results of operations
for the three months ended September 30, 2010, are not necessarily indicative of the results which may be expected for the entire fiscal year.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued ASU
No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures, and includes conforming
amendments to guidance on employers disclosures about postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances,
and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this
guidance is not expected to have a significant impact on the Companys financial statements.

In March 2010, the FASB
issued ASU 2010-11, Derivatives and Hedging. ASU 2010-11 provides clarification and related additional examples to improve financial reporting by resolving potential ambiguity about the breadth of the embedded credit derivative scope
exception in ASC 815-15-15-8. ASU 2010-11 is effective at the beginning of the first fiscal quarter beginning after June 15, 2010. The adoption of this guidance is not expected to have a significant impact on the Companys financial
statements.

In April 2010, the FASB issued ASU 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the
Loan is a Part of a Pool That is Accounted for as a Single Asset  a consensus of the FASB Emerging Issues Task Force. ASU 2010-18 clarifies the treatment for a modified loan that was acquired as part of a pool of assets. Refinancing or
restructuring the loan does not make it eligible for removal from the pool, the FASB said. The amendment will be effective for loans that are part of an asset pool and are modified during financial reporting periods that end July 15, 2010 or
later and is not expected to have a significant impact on the Companys financial statements.

In July 2010, the FASB
issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.ASU 2010-20 is intended to provide additional information to assist financial
statement users in assessing an entitys credit risk exposures and evaluating the adequacy of its allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on
or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The amendments in ASU 2010-20 encourage,
but do not require, comparative disclosures for earlier reporting periods that ended before initial adoption. However, an entity should provide comparative disclosures for those reporting periods ending after initial adoption. The Company is
currently evaluating the impact the adoption of this guidance will have on the Companys financial position or results of operations.

In August, 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules. This ASU amends various SEC paragraphs pursuant to the issuance of Release
No. 33-9026: Technical Amendments to Rules, Forms, Schedules, and Codification of Financial Reporting Policies and is not expected to have a significant impact on the Companys financial statements.



8



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





In August, 2010,
the FASB issued ASU 2010-22, Technical Corrections to SEC Paragraphs  An announcement made by the staff of the U.S. Securities and Exchange Commission. This ASU amends various SEC paragraphs based on external comments received and the
issuance of SAB 112, which amends or rescinds portions of certain SAB topics and is not expected to have a significant impact on the Companys financial statements.

3. EARNINGS PER SHARE

The following table sets forth the computation of
the weighted-average common shares used to calculate basic and diluted earnings per share.



|                                                                                                         |  |                                 |            |   |      |  |            |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- |  | ---------- | -
|                                                                                                         |  | Three Months
EndedSeptember 30, |           
|                                                                                                         |  | 2010                            |            |   | 2009 | 
|                                                                                                         |  |                                
|Weighted average common shares issued                                                                    |  |                                 | 3,805,636  |   |      |  | 3,805,636  |  
|Average treasury stock shares                                                                            |  |                                 | (1,747,706 | ) |      |  | (1,735,551 | )
|                                                                                                         |  |                                 |            |   |      |  |            |  
|                                                                                                         |  |                                
|Weighted average common shares and common stock equivalents used to calculate basic earnings per share   |  |                                 | 2,057,930  |   |      |  | 2,070,085  |  
|Additional common stock equivalents (stock options) used to calculate diluted earnings per share         |  |                                 |           |   |      |  |           |  
|                                                                                                         |  |                                 |            |   |      |  |            |  
|                                                                                                         |  |                                
|Weighted average common shares and common stock equivalents used to calculate diluted earnings per share |  |                                 | 2,057,930  |   |      |  | 2,070,085  |  
|                                                                                                         |  |                                 |            |   |      |  |            |  

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

At September 30,
2010, there were 125,127 options outstanding with an average exercise price of $16.20 which were anti-dilutive for the three month period. At September 30, 2009 there were 125,127 options outstanding with an average exercise price of $16.20
which were anti-dilutive for the three month period.

4. STOCK BASED COMPENSATION DISCLOSURE

The Companys 2008 Stock Incentive Plan (the Plan), which was approved by shareholders in October 2008, permits the grant
of stock options or restricted shares to its directors and employees for up to 152,000 shares (up to 38,000 restricted shares may be issued). Option awards are generally granted with an exercise price equal to the market price of the Companys
stock at the date of grant; those option awards generally vest based on five years of continuous service and have ten-year contractual terms.

During the three month periods ended September 30, 2010 and 2009, the Company recorded $6 thousand and $5 thousand, respectively, in compensation expense related to our share-based compensation
awards. As of September 30, 2010, there was approximately $67 thousand of unrecognized compensation cost related to unvested share-based compensation awards granted in fiscal 2009. That cost is expected to be recognized over the next four
years.

In accordance with GAAP, the cash flows from the tax benefits resulting from tax deductions in excess of the
compensation cost recognized for stock-based awards (excess tax benefits) are classified as financing cash flows.



9



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





For purposes of
computing results, the Company estimated the fair values of stock options using the Black-Scholes option-pricing model. The model requires the use of subjective assumptions that can materially affect fair value estimates. The fair value of each
option is amortized into compensation expense on a straight line basis between the grant date for the option and each vesting date. The fair value of each stock option granted was estimated using the following weighted-average assumptions:



|                                 |  |  |      |   |  |    |  |  |       |  
|-------------------------------- |  |  | ---- | - |  | -- |  |  | ----- | -
|Assumptions                      |  |  |      |   |  |    |  |  |       |  
|Volatility                       |  |  | 7.49 | % |  | to |  |  | 11.63 | %
|Interest Rates                   |  |  | 2.59 | % |  | to |  |  | 3.89  | %
|Dividend Yields                  |  |  | 3.94 | % |  | to |  |  | 4.02  | %
|Weighted Average Life (in years) |  |  | 10   |   |  | to |  |  | 10    |  

The Company had
89,035 non-vested stock options outstanding at September 30, 2010, and 122,519 unvested stock options outstanding at September 30, 2009. There were no stock options issued during the three months ended September 30, 2010 and 2009.

5. COMPREHENSIVE INCOME

Other comprehensive income primarily reflects changes in net unrealized gains/losses on available-for-sale securities. Total comprehensive income is summarized as follows (dollars in thousands):



|                                                                                                            |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------- | - |  | ---- | - | -- |  |  | - | -- | - |  | - | --- | -
|                                                                                                            |  | Three Months EndedSeptember 30, |  
|                                                                                                            |  | 2010                            |   |  | 2009 |  
|                                                                                                            |  | (Dollars in Thousands)          |  
|                                                                                                            |  |                                 |   | 
|Net income                                                                                                  |  |                                 |   |  |      | $ | 59 |  |  |   |    |   |  | $ | 171 |  
|other comprehensive income (loss):                                                                          |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  
|Unrealized gains (losses) on available for sale securities without Other Than Temporary Impairment
(OTTI) |  | $                               | 6 |  |      |   |    |  |  | $ | (5 | ) |  |   |     |  
|                                                                                                            |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  
|Other comprehensive (loss) income before tax                                                                |  |                                 | 6 |  |      |   |    |  |  |   | (5 | ) |  |   |     |  
|Income tax (benefit) expense related to other comprehensive (loss) income                                   |  |                                 | 2 |  |      |   |    |  |  |   | (2 | ) |  |   |     |  
|                                                                                                            |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  
|Other comprehensive (loss) income net of tax                                                                |  |                                 |   |  |      |   | 4  |  |  |   |    |   |  |   | (3  | )
|                                                                                                            |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  
|Comprehensive income                                                                                        |  |                                 |   |  |      | $ | 63 |  |  |   |    |   |  | $ | 168 |  
|                                                                                                            |  |                                 |   |  |      |   |    |  |  |   |    |   |  |   |     |  



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





6. INVESTMENT SECURITIES

The amortized cost and fair values of investments are as follows:



|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|------------------------------------------------ |  | ---------------------- | ------- |  | -------------------- | - | ----- | --------------------- |  | - | --------- | - |  | - | ------- | 
|                                                 |  | AmortizedCost          |         |  | GrossUnrealizedGains |   |       | GrossUnrealizedLosses |  |   | FairValue |  
|                                                 |  | (Dollars in Thousands) |        
|September 30, 2010                               |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|HELD TO MATURITY                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|U.S. government agency securities                |  | $                      | 35,015  |  |                      | $ | 243   |                       |  | $ | (3        | ) |  | $ | 35,255  | 
|Corporate debt securities                        |  |                        | 85,507  |  |                      |   | 3,342 |                       |  |   | (2        | ) |  |   | 88,847  | 
|Foreign debt securities(1)                       |  |                        | 9,660   |  |                      |   | 567   |                       |  |   |          |   |  |   | 10,227  | 
|Obligations of states and political subdivisions |  |                        | 4,283   |  |                      |   | 190   |                       |  |   |          |   |  |   | 4,473   | 
|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                 |  |                        |         | 
|Total                                            |  | $                      | 134,465 |  |                      | $ | 4,342 |                       |  | $ | (5        | ) |  | $ | 138,802 | 
|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 



|(1) | U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
|--- | ----------------------------------------------------------------------------------



|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|------------------------------------------------ |  | ---------------------- | ------- |  | -------------------- | - | ----- | --------------------- |  | - | --------- | - |  | - | ------- | 
|                                                 |  | AmortizedCost          |         |  | GrossUnrealizedGains |   |       | GrossUnrealizedLosses |  |   | FairValue |  
|                                                 |  | (Dollars in Thousands) |        
|June 30, 2010                                    |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|HELD TO MATURITY                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|U.S. government agency securities                |  | $                      | 55,002  |  |                      | $ | 403   |                       |  | $ | (5        | ) |  | $ | 55,400  | 
|Corporate debt securities                        |  |                        | 83,710  |  |                      |   | 3,090 |                       |  |   | (6        | ) |  |   | 86,794  | 
|Foreign debt securities(1)                       |  |                        | 9,711   |  |                      |   | 482   |                       |  |   |          |   |  |   | 10,193  | 
|Obligations of states and political subdivisions |  |                        | 4,770   |  |                      |   | 222   |                       |  |   |          |   |  |   | 4,992   | 
|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                 |  |                        |         | 
|Total                                            |  | $                      | 153,193 |  |                      | $ | 4,197 |                       |  | $ | (11       | ) |  | $ | 157,379 | 
|                                                 |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 



|(1) | U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
|--- | ----------------------------------------------------------------------------------

There were no recorded realized investment securities gains during the quarters ended September 30, 2010 and September 30,
2009.

The amortized cost and fair values of debt securities at September 30, 2010, by contractual maturity, are shown
below. Expected maturities may differ from the contractual maturities because issuers may have the right to call securities prior to their final maturities.



|                 |  |                        |        |  |                                |   |        |                                |  |   |                    |  |  |       |        |  |  |   |         | 
|---------------- |  | ---------------------- | ------ |  | ------------------------------ | - | ------ | ------------------------------ |  | - | ------------------ |  |  | ----- | ------ |  |  | - | ------- | 
|                 |  | Due inone yearor less  |        |  | Due afterone throughfive years |   |        | Due afterfive throughten years |  |   | Due afterten years |  |  | Total |       
|                 |  | (Dollars in Thousands) |       
|HELD TO MATURITY |  |                        |        |  |                                |   |        |                                |  |   |                    |  |  |       |        |  |  |   |         | 
|Amortized cost   |  | $                      | 47,539 |  |                                | $ | 43,876 |                                |  | $ | 27,219             |  |  | $     | 15,831 |  |  | $ | 134,465 | 
|Fair value       |  |                        | 47,842 |  |                                |   | 46,773 |                                |  |   | 28,071             |  |  |       | 16,116 |  |  |   | 138,802 | 

Investment securities
with amortized costs of $15.7 million and $28.7 million and fair values of $15.8 million and $29.0 million at September 30, 2010 and June 30, 2010, respectively, were pledged to secure public deposits, repurchase agreements, and for other
purposes as required by law.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





7. MORTGAGE-BACKED SECURITIES

Mortgage-backed securities (MBS) include mortgage pass-through certificates (PCs) and
collateralized mortgage obligations (CMOs). With a pass-through security, investors own an undivided interest in the pool of mortgages that collateralize the PCs. Principal and interest is passed through to the investor as it is
generated by the mortgages underlying the pool. PCs and CMOs may be insured or guaranteed by Freddie Mac (FHLMC), Fannie Mae (FNMA) and the Government National Mortgage Association (GNMA). CMOs may also be
privately issued with varying degrees of credit enhancements. A CMO reallocates mortgage pool cash flow to a series of bonds (called traunches) with varying stated maturities, estimated average lives, coupon rates and prepayment characteristics.

The Companys CMO portfolio is comprised of two segments: CMOs backed by U.S. Government Agencies (Agency
CMOs) and CMOs backed by single-family whole loans not guaranteed by a U.S. Government Agency (Private-Label CMOs).

At September 30, 2010, the Companys Agency CMOs totaled $59.0 million as compared to $70.9 million at June 30, 2010. The Companys private-label CMOs totaled $40.0 million
at September 30, 2010 as compared to $44.1 million at June 30, 2010. The $16.0 million decrease in the CMO segment of our MBS portfolio was primarily due to repayments on our Agency CMOs totaling $11.9 million, and $4.1 million in
repayments on our private-label CMOs. During the three months ended September 30, 2010, the Company received principal payments totaling $4.1 million on its private-label CMOs. At September 30, 2010, approximately $99.0 million
or 97.9% (book value) of the Companys MBS portfolio, including CMOs were comprised of adjustable or floating rate investments, as compared to $115.0 million or 98.2% at June 30, 2010. Substantially all of the Companys floating
rate MBS adjust monthly based upon changes in the one month LIBOR. The Company has no investment in multi-family or commercial real estate based MBS.

Due to prepayments of the underlying loans, and the prepayment characteristics of the CMO traunches, the actual maturities of the Companys MBS are expected to be substantially less than the
scheduled maturities.

The following table sets forth information with respect to the Companys private-label CMO
portfolio as of September 30, 2010. At the time of purchase, all of our private-label CMOs were rated in the highest investment category by at least two ratings agencies.



|          |  |                      |  |                       |     |  |                           |  |      |                          |  |  |     |  |  |   |        |  |  |   |        | 
|--------- |  | -------------------- |  | --------------------- | --- |  | ------------------------- |  | ---- | ------------------------ |  |  | --- |  |  | - | ------ |  |  | - | ------ | 
|          |  |                      |  | At September 30, 2010 |    
|          |  |                      |  | Rating                |     |  | Book Value(in 
thousands) |  |      | Fair
Value(in thousands) | 
|Cusip #   |  | Security Description |  | S&P                   |     |  | Moodys                   |  |      | Fitch                    |  |  |    
|05949AN63 |  | BOAMS 2005-1 1A7     |  |                       | N/A |  |                           |  | Ba1  |                          |  |  | AAA |  |  | $ | 2,488  |  |  | $ | 2,351  | 
|36242DE25 |  | GSR 2005-3F 1A11     |  |                       | N/A |  |                           |  | Baa3 |                          |  |  | AA  |  |  |   | 2,327  |  |  |   | 2,277  | 
|05949A2H2 |  | BOAMS 2005-3 1A6     |  |                       | N/A |  |                           |  | Ba2  |                          |  |  | AA  |  |  |   | 834    |  |  |   | 793    | 
|05949A2H2 |  | BOAMS 2005-3 1A6     |  |                       | N/A |  |                           |  | Ba2  |                          |  |  | AA  |  |  |   | 1,063  |  |  |   | 1,012  | 
|225458JZ2 |  | CSFB 05-3 3A4        |  |                       | AAA |  |                           |  | N/A  |                          |  |  | A   |  |  |   | 5,814  |  |  |   | 5,643  | 
|225458KE7 |  | CSFB 2005-3 3A9      |  |                       | AAA |  |                           |  | N/A  |                          |  |  | A   |  |  |   | 378    |  |  |   | 365    | 
|225458KE7 |  | CSFB 2005-3 3A9      |  |                       | AAA |  |                           |  | N/A  |                          |  |  | A   |  |  |   | 1,143  |  |  |   | 1,103  | 
|12669G3A7 |  | CWHL 2005 16 A8      |  |                       | N/A |  |                           |  | B2   |                          |  |  | B   |  |  |   | 1,123  |  |  |   | 1,011  | 
|12669G3A7 |  | CWHL 2005 16 A8      |  |                       | N/A |  |                           |  | B2   |                          |  |  | B   |  |  |   | 2,043  |  |  |   | 1,839  | 
|12669G3A7 |  | CWHL 2005 16 A8      |  |                       | N/A |  |                           |  | B2   |                          |  |  | B   |  |  |   | 2,797  |  |  |   | 2,518  | 
|12669G3A7 |  | CWHL 2005 16 A8      |  |                       | N/A |  |                           |  | B2   |                          |  |  | B   |  |  |   | 3,064  |  |  |   | 2,758  | 
|126694CP1 |  | CWHL SER 21 A11      |  |                       | N/A |  |                           |  | Caa1 |                          |  |  | CCC |  |  |   | 5,341  |  |  |   | 5,937  | 
|126694KF4 |  | CWHL SER 24 A15      |  |                       | CCC |  |                           |  | N/A  |                          |  |  | CCC |  |  |   | 1,357  |  |  |   | 1,565  | 
|126694KF4 |  | CWHL SER 24 A15      |  |                       | CCC |  |                           |  | N/A  |                          |  |  | CCC |  |  |   | 2,713  |  |  |   | 3,128  | 
|16162WLW7 |  | CHASE SER S2 A10     |  |                       | N/A |  |                           |  | B1   |                          |  |  | BBB |  |  |   | 2,602  |  |  |   | 2,354  | 
|16162WLW7 |  | CHASE SER S2 A10     |  |                       | N/A |  |                           |  | B1   |                          |  |  | BBB |  |  |   | 3,643  |  |  |   | 3,296  | 
|126694MP0 |  | CWHL SER 26 1A5      |  |                       | CCC |  |                           |  | N/A  |                          |  |  | B   |  |  |   | 1,250  |  |  |   | 1,040  | 
|          |  |                      |  |                       |     |  |                           |  |      |                          |  |  |     |  |  |   |        |  |  |   |        | 
|          |  |                      |  |                       |     |  |                           |  |      |                          |  |  |     |  |  |   | 39,980 |  |  |   | 38,990 | 
|          |  |                      |  |                       |     |  |                           |  |      |                          |  |  |     |  |  |   |        |  |  |   |        | 

The Company retained an independent third party to assist it in the determination of a fair value for each
of its private-label CMOs. This valuation is meant to be a Level Three valuation as defined by ASC Topic 820, Fair Value Measurements and Disclosures. The valuation does not represent the actual terms or prices at which



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



any party could purchase the securities. There is currently no active secondary market for private-label CMOs and there can be no assurance that any secondary market for private-label
CMOs will develop. The private-label CMO portfolio had two previously recorded Other Than Temporary Impairments at September 30, 2010. No additional other than temporary impairments were identified during the quarter ended
September 30, 2010.

The Company believes that the data and assumptions used to determine the fair values are reasonable.
The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the private-label CMO segments fair value.

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



|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|----------------------------------------------------- |  | ---------------------- | ------- |  | -------------------- | - | ----- | --------------------- |  | - | --------- | - |  | - | ------- | 
|                                                      |  | AmortizedCost          |         |  | GrossUnrealizedGains |   |       | GrossUnrealizedLosses |  |   | FairValue |  
|                                                      |  | (Dollars in Thousands) |        
|September 30, 2010                                    |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|AVAILABLE FOR SALE                                    |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Government National Mortgage Association certificates |  | $                      | 2,008   |  |                      | $ | 133   |                       |  | $ |          |   |  | $ | 2,141   | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Total                                                 |  | $                      | 2,008   |  |                      | $ | 133   |                       |  | $ |          |   |  | $ | 2,141   | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|HELD TO MATURITY                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Collateralized mortgage obligations:                  |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|Agency                                                |  | $                      | 58,993  |  |                      | $ | 87    |                       |  | $ | (15       | ) |  | $ | 59,065  | 
|Private-label                                         |  |                        | 39,980  |  |                      |   | 1,219 |                       |  |   | (2,209    | ) |  |   | 38,990  | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Total                                                 |  | $                      | 98,973  |  |                      | $ | 1,306 |                       |  | $ | (2,224    | ) |  | $ | 98,055  | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|                                                      |  | AmortizedCost          |         |  | GrossUnrealizedGains |   |       | GrossUnrealizedLosses |  |   | FairValue |  
|                                                      |  | (Dollars in Thousands) |        
|June 30, 2010                                         |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|AVAILABLE FOR SALE                                    |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Government National Mortgage Association certificates |  | $                      | 2,019   |  |                      | $ | 127   |                       |  | $ |          |   |  | $ | 2,146   | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Total                                                 |  | $                      | 2,019   |  |                      | $ | 127   |                       |  | $ |          |   |  | $ | 2,146   | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|HELD TO MATURITY                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Collateralized mortgage obligations:                  |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|Agency                                                |  | $                      | 70,899  |  |                      | $ | 71    |                       |  | $ | (376      | ) |  | $ | 70,594  | 
|Private-label                                         |  |                        | 44,087  |  |                      |   |      |                       |  |   | (4,238    | ) |  |   | 39,849  | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 
|                                                      |  |                        |         | 
|Total                                                 |  | $                      | 114,986 |  |                      | $ | 71    |                       |  | $ | (4,614    | ) |  | $ | 110,443 | 
|                                                      |  |                        |         |  |                      |   |       |                       |  |   |           |   |  |   |         | 



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The amortized cost
and fair value of mortgage-backed securities at September 30, 2010, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with
or without call or prepayment penalties.



|                   |  |                        |   |  |                                |   |   |                                |  |   |                    |  |  |       |        |  |  |   |        | 
|------------------ |  | ---------------------- | - |  | ------------------------------ | - | - | ------------------------------ |  | - | ------------------ |  |  | ----- | ------ |  |  | - | ------ | 
|                   |  | Due inone yearor less  |   |  | Due afterone throughfive years |   |   | Due afterfive throughten years |  |   | Due afterten years |  |  | Total |       
|                   |  | (Dollars in Thousands) |  
|                   |  |                        |   |  |                               
|AVAILABLE FOR SALE |  |                        |   |  |                                |   |   |                                |  |   |                    |  |  |       |        |  |  |   |        | 
|Amortized cost     |  | $                      |  |  |                                | $ |  |                                |  | $ |                   |  |  | $     | 2,008  |  |  | $ | 2,008  | 
|Fair value         |  |                        |  |  |                                |   |  |                                |  |   |                   |  |  |       | 2,141  |  |  |   | 2,141  | 
|                   |  |                        |   |  |                               
|HELD TO MATURITY   |  |                        |   |  |                                |   |   |                                |  |   |                    |  |  |       |        |  |  |   |        | 
|Amortized cost     |  | $                      |  |  |                                | $ |  |                                |  | $ |                   |  |  | $     | 98,973 |  |  | $ | 98,973 | 
|Fair value         |  |                        |  |  |                                |   |  |                                |  |   |                   |  |  |       | 98,055 |  |  |   | 98,055 | 

At September 30,
2010 and June 30, 2010, mortgage-backed securities with an amortized cost of $61.0 million and $81.4 million and fair values of $61.2 million and $80.8 million, were pledged to secure borrowings with the Federal Home Loan Bank.

8. UNREALIZED LOSSES ON SECURITIES

The following table shows the Companys gross unrealized losses and fair value, aggregated by category and length of time that the individual securities have been in a continuous unrealized loss
position, at September 30, 2010 and June 30, 2010.



|                                     |  |                         |       |  |                          |   |    |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|------------------------------------ |  | ----------------------- | ----- |  | ------------------------ | - | -- | --------- |  | - | --------------------- |  |  | --------- | ------ | - | --------------------- | - | ------ |  |  | - | ------ | -
|                                     |  | September 30, 2010      |      
|                                     |  | Less Than Twelve Months |       |  | Twelve Months or Greater |   |    | Total     | 
|                                     |  | FairValue               |       |  | GrossUnrealizedLosses    |   |    | FairValue |  |   | GrossUnrealizedLosses |  |  | FairValue |        |   | GrossUnrealizedLosses |  
|                                     |  | (Dollars in Thousands)  |      
|                                     |  |                         |       |  |                          |  
|U.S. government agencies securities  |  | $                       |      |  |                          | $ |   |           |  | $ | 400                   |  |  | $         | (3     | ) |                       | $ | 400    |  |  | $ | (3     | )
|Corporate debt securities            |  |                         | 691   |  |                          |   | (2 | )         |  |   |                      |  |  |           |       |   |                       |   | 691    |  |  |   | (2     | )
|Collateralized mortgage obligations: |  |                         |       |  |                          |   |    |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|Agency                               |  |                         | 1,433 |  |                          |   | (1 | )         |  |   | 17,837                |  |  |           | (14    | ) |                       |   | 19,270 |  |  |   | (15    | )
|Private-label                        |  |                         |      |  |                          |   |   |           |  |   | 28,360                |  |  |           | (2,209 | ) |                       |   | 28,360 |  |  |   | (2,209 | )
|                                     |  |                         |       |  |                          |   |    |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|                                     |  |                         |       |  |                          |  
|Total                                |  | $                       | 2,124 |  |                          | $ | (3 | )         |  | $ | 46,597                |  |  | $         | (2,226 | ) |                       | $ | 48,721 |  |  | $ | (2,229 | )
|                                     |  |                         |       |  |                          |   |    |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  



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|                                     |  |                         |        |  |                          |   |      |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|------------------------------------ |  | ----------------------- | ------ |  | ------------------------ | - | ---- | --------- |  | - | --------------------- |  |  | --------- | ------ | - | --------------------- | - | ------ |  |  | - | ------ | -
|                                     |  | June 30, 2010           |       
|                                     |  | Less Than Twelve Months |        |  | Twelve Months or Greater |   |      | Total     | 
|                                     |  | FairValue               |        |  | GrossUnrealizedLosses    |   |      | FairValue |  |   | GrossUnrealizedLosses |  |  | FairValue |        |   | GrossUnrealizedLosses |  
|                                     |  | (Dollars in Thousands)  |       
|U.S. government agencies securities  |  | $                       |       |  |                          | $ |     |           |  | $ | 404                   |  |  | $         | (5     | ) |                       | $ | 404    |  |  | $ | (5     | )
|Corporate debt securities            |  |                         | 3,893  |  |                          |   | (6   | )         |  |   |                      |  |  |           |       |   |                       |   | 3,893  |  |  |   | (6     | )
|Collateralized mortgage obligations: |  |                         |        |  |                          |   |      |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|Agency                               |  |                         | 15,607 |  |                          |   | (116 | )         |  |   | 33,065                |  |  |           | (260   | ) |                       |   | 48,672 |  |  |   | (376   | )
|Private-label                        |  |                         |       |  |                          |   |     |           |  |   | 39,849                |  |  |           | (4,238 | ) |                       |   | 39,849 |  |  |   | (4,238 | )
|                                     |  |                         |        |  |                          |   |      |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  
|                                     |  |                         |        |  |                          |  
|Total                                |  | $                       | 19,500 |  |                          | $ | (122 | )         |  | $ | 73,318                |  |  | $         | (4,503 | ) |                       | $ | 92,818 |  |  | $ | (4,625 | )
|                                     |  |                         |        |  |                          |   |      |           |  |   |                       |  |  |           |        |   |                       |   |        |  |  |   |        |  

In accordance with ASC Topic 820, revisions were made to the recognition and reporting requirements for
Other-Than-Temporary-Impairments (OTTI) of debt securities classified as available-for-sale and held-to-maturity.

For debt securities, the ability and intent to hold provision was eliminated, and impairment is now considered to be other
than temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the securitys entire
amortized cost basis (even if the entity does not intend to sell the security). In addition, the probability standard relating to the collectability of cash flows was eliminated, and impairment is now considered to be other than temporary if the
present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security (any such shortfall is referred to as a credit loss).

The Company evaluates outstanding available-for-sale and held-to-maturity securities in an unrealized loss position (i.e., impaired
securities) for OTTI on a quarterly basis. In doing so, the Company considers many factors including, but not limited to: the credit ratings assigned to the securities by the Nationally Recognized Statistical Rating Organizations (NRSROs); other
indicators of the credit quality of the issuer; the strength of the provider of any guarantees; the length of time and extent that fair value has been less than amortized cost; and whether the Company has the intent to sell the security or more
likely than not will be required to sell the security before its anticipated recovery. In the case of its private label residential MBS, the Company also considers prepayment speeds, the historical and projected performance of the underlying loans
and the credit support provided by the subordinate securities. These evaluations are inherently subjective and consider a number of quantitative and qualitative factors.

The following table presents a roll-forward of the credit loss component of the amortized cost of mortgage-backed securities that we have written down for OTTI and the credit component of the loss that is
recognized in earnings. The beginning balance represents the credit loss component for mortgage-backed securities for which OTTI occurred prior to adoption of the guidance of ASC Topic 320-10-69. OTTI recognized in earnings for credit impaired
mortgage-back securities is presented as additions in two components based upon whether the current period is the first time the mortgage-backed security was credit-impaired (initial credit impairment) or is not the first time the mortgage-backed
security was credit impaired (subsequent credit impairments). The credit loss component is reduced if the Company sells, intends to sell or believes that the Company will be required to sell previously credit-impaired mortgage-backed securities.
Additionally, the credit loss component is reduced if the Company receives cash flows



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in excess of what the Company expected to receive over the remaining life of the credit impaired mortgage-backed securities, the security matures or is fully written down. Changes in the credit
loss component of credit impaired mortgage-backed securities were as follows for the three month period ended September 30, 2010:



|                                                                                   |  |                                       |     | 
|---------------------------------------------------------------------------------- |  | ------------------------------------- | --- | 
|                                                                                   |  | Three Months 
EndedSeptember 30, 2010 |    
|                                                                                   |  | (In thousands)                        |    
|                                                                                   | 
|Beginning balance                                                                  |  | $                                     | 194 | 
|Initial credit impairment                                                          |  |                                       |    | 
|Subsequent credit impairment                                                       |  |                                       |    | 
|Reductions for amounts recognized in earnings due to intent or requirement to sell |  |                                       |    | 
|Reductions for securities sold                                                     |  |                                       |    | 
|Reduction for increase in cash flows expected to be collected                      |  |                                       |    | 
|                                                                                   |  |                                       |     | 
|Ending Balance                                                                     |  | $                                     | 194 | 
|                                                                                   |  |                                       |     | 

During the three months ended September 30, 2010, the Company recorded no credit impairment charge and
no non-credit unrealized holding loss to accumulated other comprehensive income.

In the case of its private label residential
MBS that exhibit adverse risk characteristics, the Company employs models to determine the cash flows that it is likely to collect from the securities. These models consider borrower characteristics and the particular attributes of the loans
underlying the securities, in conjunction with assumptions about future changes in home prices and interest rates, to predict the likelihood a loan will default and the impact on default frequency, loss severity and remaining credit enhancement. A
significant input to these models is the forecast of future housing price changes for the relevant states and metropolitan statistical areas, which are based upon an assessment of the various housing markets. In general, since the ultimate receipt
of contractual payments on these securities will depend upon the credit and prepayment performance of the underlying loans and, if needed, the credit enhancements for the senior securities owned by the Company, the Company uses these models to
assess whether the credit enhancement associated with each security is sufficient to protect against likely losses of principal and interest on the underlying mortgage loans. The development of the modeling assumptions requires significant judgment.

In conjunction with the adoption of ASC Topic 820 effective June 30, 2009, the Company retained an independent third
party to assist it with the private label CMO portfolio OTTI assessment. The independent third party utilized certain assumptions for producing the cash flow analyses used in the OTTI assessment. Key assumptions would include interest rates,
expected market participant spreads and discount rates, housing prices, projected future delinquency levels and assumed loss rates on any liquidated collateral.

The Company reviewed the independent third partys assumptions used in the September 30, 2010 OTTI process. Based on the results of this review, the Company deemed the independent third
partys assumptions to be reasonable and adopted them. However, different assumptions could produce materially different results, which could impact the Companys conclusions as to whether an impairment is considered other-than-temporary
and the magnitude of the credit loss. Management believes that two private-label CMOs in the portfolio had an Other Than Temporary Impairment at September 30, 2010.

If the Company intends to sell an impaired debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, the impairment is other-than-temporary
and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost. The Company does not anticipate selling its private-label CMO portfolio, nor does



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Management believe that the Company will be required to sell these securities before recovery of this amortized cost basis.

In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security and it is not
more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and
(2) the amount of the total impairment related to all other factors (i.e., the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors
is recognized in accumulated other comprehensive loss. The total OTTI is presented in the Statement of Income with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive loss. Absent the intent or
requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary.

Regardless of
whether an OTTI is recognized in its entirety in earnings or if the credit portion is recognized in earnings and the noncredit portion is recognized in other comprehensive income (loss), the estimation of fair values has a significant impact on the
amount(s) of any impairment that is recorded.

The noncredit portion of any OTTI losses on securities classified as
available-for-sale is adjusted to fair value with an offsetting adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security. All of the Companys private-label CMOs
were originally, and continue to be classified, as held to maturity.

In periods subsequent to the recognition of an OTTI
loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the previous amortized cost basis less the credit-related OTTI recognized in earnings. For
debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is accreted into interest income over the remaining life of the security in a prospective
manner based on the amount and timing of future estimated cash flows.

The Company has investments in 23 positions that are
impaired at September 30, 2010, including 10 positions in private-label collateralized mortgage obligations. Based on its analysis, management has concluded that two private-label CMOs are other-than-temporarily impaired, while the
remaining securities portfolio has experienced unrealized losses and a decrease in fair value due to interest rate volatility, illiquidity in the marketplace, or credit deterioration in the U.S. mortgage markets.



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9. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the
principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies
into the following three levels:



|           |  |                                                                                                                                                                                                                                                                                                                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level I:   |  | Quoted prices are available in active markets for identical assets or liabilities as of the reported date.                                                                                                                                                                                                                                                                               
|           | 
|Level II:  |  | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and
liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|           | 
|Level III: |  | Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using managements best
estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.                                                                       

The following tables present the assets reported on the consolidated balance sheet at their fair value as of September 30, 2010 and June 30, 2010, by level within the fair value hierarchy. As
required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.



|                                               |  |                    |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|---------------------------------------------- |  | ------------------ | - |  | -------- | - | ----- | --------- |  | - | ----- |  |  | - | ----- | 
|                                               |  | September 30, 2010 |  
|                                               |  | Level I            |   |  | Level II |   |       | Level III |  |   | Total | 
|Assets Measured on a Recurring Basis:          |  |                    |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|Mortgage-backed securities available for sale: |  |                    |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|GNMA certificates                              |  | $                  |  |  |          | $ | 2,141 |           |  | $ |      |  |  | $ | 2,141 | 
|                                               |  |                    |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|                                               |  |                    |   | 
|Total                                          |  | $                  |  |  |          | $ | 2,141 |           |  | $ |      |  |  | $ | 2,141 | 
|                                               |  |                    |   |  |          |   |       |           |  |   |       |  |  |   |       | 



|                                               |  |               |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|---------------------------------------------- |  | ------------- | - |  | -------- | - | ----- | --------- |  | - | ----- |  |  | - | ----- | 
|                                               |  | June 30, 2010 |  
|                                               |  | Level I       |   |  | Level II |   |       | Level III |  |   | Total | 
|Assets Measured on a Recurring Basis:          |  |               |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|Mortgage-backed securities available for sale: |  |               |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|GNMA certificates                              |  | $             |  |  |          | $ | 2,146 |           |  | $ |      |  |  | $ | 2,146 | 
|                                               |  |               |   |  |          |   |       |           |  |   |       |  |  |   |       | 
|                                               |  |               |   | 
|Total                                          |  | $             |  |  |          | $ | 2,146 |           |  | $ |      |  |  | $ | 2,146 | 
|                                               |  |               |   |  |          |   |       |           |  |   |       |  |  |   |       | 



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|                                                    |  |                    |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|--------------------------------------------------- |  | ------------------ | - |  | -------- | - | - | --------- |  | - | ----- |  |  | - | ----- | 
|                                                    |  | September 30, 2010 |  
|                                                    |  | Level I            |   |  | Level II |   |   | Level III |  |   | Total | 
|Assets Measured on a Non-recurring Basis:           |  |                    |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|Mortgage-backed securities held to maturity:        |  |                    |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|Collateralized mortgage obligations  private-label |  | $                  |  |  |          | $ |  |           |  | $ | 9,411 |  |  | $ | 9,411 | 
|                                                    |  |                    |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|                                                    |  |                    |   | 
|Total                                               |  | $                  |  |  |          | $ |  |           |  | $ | 9,411 |  |  | $ | 9,411 | 
|                                                    |  |                    |   |  |          |   |   |           |  |   |       |  |  |   |       | 



|                                                    |  |               |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|--------------------------------------------------- |  | ------------- | - |  | -------- | - | - | --------- |  | - | ----- |  |  | - | ----- | 
|                                                    |  | June 30, 2010 |  
|                                                    |  | Level I       |   |  | Level II |   |   | Level III |  |   | Total | 
|Assets Measured on a Non-recurring Basis:           |  |               |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|Mortgage-backed securities held to maturity:        |  |               |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|Collateralized mortgage obligations  private-label |  | $             |  |  |          | $ |  |           |  | $ | 9,935 |  |  | $ | 9,935 | 
|                                                    |  |               |   |  |          |   |   |           |  |   |       |  |  |   |       | 
|                                                    |  |               |   | 
|Total                                               |  | $             |  |  |          | $ |  |           |  | $ | 9,935 |  |  | $ | 9,935 | 
|                                                    |  |               |   |  |          |   |   |           |  |   |       |  |  |   |       | 

Fair values for securities available for sale are determined by obtaining quoted prices on nationally
recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the
securities relationship to other benchmark quoted securities.

The following table represents the changes in the Level
III fair-value category for the three month period ended September 30, 2010. The Company classifies financial instruments in Level III of the fair-value hierarchy when there is reliance on at least one significant unobservable input to the
valuation model. In addition to these unobservable inputs, the valuation model for Level III financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly.

Changes in fair value measurements using significant unobservable inputs (Level III) during the quarter ended September 30, 2010 are
detailed in the following table.



|                                                   |  |                                                                           |       |  
|-------------------------------------------------- |  | ------------------------------------------------------------------------- | ----- | -
|                                                   |  | Private-labelMortgage-backed securitiesHeld-to-maturitySeptember 30,
2010 |      
|Beginning balance  July 1, 2010                   |  | $                                                                         | 9,935 |  
|Total net realized/unrealized losses               |  |                                                                           |       |  
|Included in earnings                               |  |                                                                           |       |  
|Net realized losses on securities held-to-maturity |  |                                                                           |      |  
|Included in other comprehensive income             |  |                                                                           |      |  
|Transfers into Level III                           |  |                                                                           |      |  
|Other  paydowns received                          |  |                                                                           | (524  | )
|                                                   |  |                                                                           |       |  
|Ending balance  September 30, 2010                |  | $                                                                         | 9,411 |  
|                                                   |  |                                                                           |       |  



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





10. FAIR VALUE OF FINANCIAL
INSTRUMENTS

The carrying amounts and estimated fair values are as follows:



|                            |  |                        |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|--------------------------- |  | ---------------------- | ------- |  | ------------- | - | ------- | -------------- |  | - | --------- |  |  | - | ------- | 
|                            |  | September 30, 2010     |         |  | June 30, 2010 |  
|                            |  | CarryingAmount         |         |  | FairValue     |   |         | CarryingAmount |  |   | FairValue | 
|                            |  | (Dollars in Thousands) |        
|FINANCIAL ASSETS            |  |                        |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|Cash and cash equivalents   |  | $                      | 1,714   |  |               | $ | 1,714   |                |  | $ | 2,198     |  |  | $ | 2,198   | 
|Certificates of deposit     |  |                        | 7,357   |  |               |   | 7,357   |                |  |   | 8,605     |  |  |   | 8,605   | 
|Investment securities       |  |                        | 134,465 |  |               |   | 138,802 |                |  |   | 153,193   |  |  |   | 157,379 | 
|Mortgage-backed securities  |  |                        | 101,114 |  |               |   | 100,196 |                |  |   | 117,132   |  |  |   | 112,589 | 
|Net loans receivable        |  |                        | 56,707  |  |               |   | 61,645  |                |  |   | 56,315    |  |  |   | 60,403  | 
|Accrued interest receivable |  |                        | 2,076   |  |               |   | 2,076   |                |  |   | 2,430     |  |  |   | 2,430   | 
|FHLB stock                  |  |                        | 10,875  |  |               |   | 10,875  |                |  |   | 10,875    |  |  |   | 10,875  | 
|                            |  |                        |         | 
|FINANCIAL LIABILITIES       |  |                        |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|Deposits                    |  | $                      | 192,477 |  |               | $ | 192,920 |                |  | $ | 201,922   |  |  | $ | 202,275 | 
|FHLB advances  long term   |  |                        | 84,500  |  |               |   | 86,970  |                |  |   | 109,500   |  |  |   | 113,721 | 
|Other short-term borrowings |  |                        | 10,000  |  |               |   | 10,000  |                |  |   | 12,510    |  |  |   | 12,510  | 
|Accrued interest payable    |  |                        | 724     |  |               |   | 724     |                |  |   | 837       |  |  |   | 837     | 

Financial instruments
are defined as cash, evidence of an ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from or to a second entity on potentially favorable or unfavorable
terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon
managements judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors, as determined through various option pricing formulas or simulation modeling. As many of these
assumptions result from judgments made by management based upon estimates, which are inherently uncertain, the resulting estimated values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition,
changes in the assumptions on which the estimated values are based may have a significant impact on the resulting estimated values.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of WVS, are not considered financial instruments, but have value, this estimated
fair value of financial instruments would not represent the full market value of WVS.

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

Cash and Cash Equivalents, Certificates of Deposit, Accrued Interest Receivable and
Payable, and Other Short-term Borrowings

The fair value approximates the current book value.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Investment
Securities, Mortgage-Backed Securities, and FHLB Stock

The fair value of investment and mortgage-backed securities is
equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. For discussion of valuation of private-label CMOs, see Note 8 Unrealized Losses
on Securities. Since the FHLB stock is not actively traded on a secondary market and held exclusively by member financial institutions, the estimated fair market value approximates the carrying amount.

Net Loans Receivable and Deposits

Fair value for consumer mortgage loans is estimated using market quotes or discounting contractual cash flows for prepayment estimates. Discount rates were obtained from secondary market sources, adjusted
to reflect differences in servicing, credit, and other characteristics.

The estimated fair values for consumer, fixed-rate
commercial, and multi-family real estate loans are estimated by discounting contractual cash flows for prepayment estimates. Discount rates are based upon rates generally charged for such loans with similar credit characteristics.

The estimated fair value for nonperforming loans is the appraised value of the underlying collateral adjusted for estimated credit risk.

Demand, savings, and money market deposit accounts are reported at book value. The fair value of certificates of deposit is
based upon the discounted value of the contractual cash flows. The discount rate is estimated using average market rates for deposits with similar average terms.

FHLB Advances

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

Commitments to Extend Credit

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



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|ITEM 2. | 
|------- | 

MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010

FORWARD
LOOKING STATEMENTS

In the normal course of business, we, in an effort to help keep our shareholders and the public
informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements, as that term is defined in the U.S. federal securities laws. Generally, these
statements relate to business plans or strategies, projected or anticipated benefits from acquisitions made by or to be made by us, projections involving anticipated revenues, earnings, profitability or other aspects of operating results or other
future developments in our affairs or the industry in which we conduct business. Forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as anticipated,
believe, expect, intend, plan, estimate or similar expressions.

Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on
reasonable assumptions, we can give no assurance that those results or expectations will be attained. Forward-looking statements involve risks, uncertainties and assumptions (some of which are beyond our control), and as a result actual results may
differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the following, as well as those discussed elsewhere herein:



| |  |  | our investments in our businesses and in related technology could require additional incremental spending, and might not produce expected deposit and
loan growth and anticipated contributions to our earnings;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the
allowance for loan losses or a reduced demand for credit or fee-based products and services;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the interest rate environment could reduce net interest income and could increase credit losses;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the conditions of the securities markets could change, which could adversely affect, among other things, the value or credit quality of our assets, the
availability and terms of funding necessary to meet our liquidity needs and our ability to originate loans and leases;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the extensive laws, regulations and policies governing financial holding companies and their subsidiaries could alter our business
environment or affect our operations;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential need to adapt to industry changes in information technology systems, on which we are highly dependent, could present operational issues
or require significant capital spending;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | competitive pressures could intensify and affect our profitability, including as a result of continued industry consolidation, the increased
availability of financial services from non-banks, technological developments such as the internet or bank regulatory reform; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | acts or threats of terrorism and actions taken by the United States or other governments as a result of such acts or threats, including possible
military action, could further adversely affect
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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business and economic conditions in the United States generally and in our principal markets, which could have an adverse effect on our financial performance and that of our borrowers and on the
financial markets and the price of our common stock.

You should not put undue reliance on any forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new or future events except to the extent required by federal securities laws.

GENERAL

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

West View Savings Bank is a Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from six offices in the North
Hills suburbs of Pittsburgh. The Savings Bank converted to the stock form of ownership in November 1993. The Savings Bank had no subsidiaries at September 30, 2010.

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

FINANCIAL CONDITION

The Companys assets totaled $317.9 million at September 30, 2010, as compared to $354.7 million at June 30, 2010. The $36.8 million or 10.4% decrease in total assets was primarily
comprised of a $18.7 million or 12.2% decrease in investment securities  held to maturity, a $16.0 million or 13.9% decrease in mortgage-backed securities (MBS) held to maturity, and a $1.2 million or 14.5% decrease in FDIC insured
certificates of deposit. The decrease in investment securities  held to maturity was primarily due to $20.0 million of issuer redemptions prior to maturity (i.e. calls) of U.S. Government agency bonds, $3.7 million of maturities of investment
grade foreign bonds, $500 thousand of early redemptions of tax-free municipal bonds, $378 thousand of repayments on investment grade corporate utility first mortgage bonds, and $332 thousand of maturities of investment grade corporate bonds, which
were partially offset by purchases of $3.7 million of fixed rate investment grade foreign bonds and $3.0 million of floating rate investment grade corporate bonds. The decrease in mortgage-backed securities  held to maturity was due to
paydowns on the Companys mortgage-backed securities portfolio. The decrease in FDIC insured certificates of deposit was due to $1.2 million in redemptions of bank certificates of deposit. The Company has chosen to reduce its overall investment
portfolio due to a marked decline in market interest rates and a narrowing of investment spreads. See Asset and Liability Management.

The Companys total liabilities decreased $36.5 million or 11.2% to $290.4 million as of September 30, 2010 from $326.9 million as of June 30, 2010. The $36.5 million decrease in total
liabilities was primarily comprised of a $25.0 million or 22.8% decrease in long-term FHLB advances, a $9.5 million or 4.7% decrease in total savings deposits, and a $2.5 million or 20.1% decrease in other short-term borrowings, which were partially
offset by a $605 thousand or 28.8% increase in other liabilities. The decrease in long term FHLB advances was funded primarily by investment cash flows received during the three months ended September 30, 2010. Certificates of deposit
decreased $5.9 million, demand and NOW deposits decreased $2.4 million, savings accounts decreased $602 thousand, advance payments by borrowers for taxes and insurance decreased $491 thousand and money market accounts decreased $44 thousand. The
decrease



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in certificates of deposits is a result of certificates of deposit for a local government unit maturing during the quarter. The decrease in demand and NOW deposits relates to lower overall
transaction account balances. Management believes that the changes in demand deposits, savings accounts and advance payments by borrowers for taxes and insurance were primarily attributable to seasonal payments of local, county and school real
estate taxes.

Total stockholders equity decreased $261 thousand or 0.9% to $27.5 million as of September 30, 2010,
from approximately $27.8 million as of June 30, 2010. Capital expenditures for cash dividends totaled $329 thousand which, was partially offset by net income of $59 thousand for the three months ended September 30, 2010.

RESULTS OF OPERATIONS

General. WVS reported net income of $59 thousand or $0.03 earnings per share (basic and diluted) for the three months ended September 30, 2010. Net income decreased by $112 thousand or 65.5%
and earnings per share (basic and diluted) decreased $0.05 or 62.5% for the three months ended September 30, 2010, when compared for the same period in 2009. The decrease in net income was primarily attributable to a $108 thousand decrease in
net interest income, a $28 thousand decrease in non-interest income, and a $6 thousand increase in provisions for loan losses, which were partially offset by a $25 thousand decrease in income tax expense, and a $5 thousand decrease in non-interest
expenses.

Net Interest Income. The Companys net interest income decreased by $108 thousand or 11.0% for the
three months ended September 30, 2010, when compared to the same period in 2009. The decrease in net interest income is attributable to a $578 thousand decrease in interest income, which was partially offset by a $470 thousand decrease in
interest expense. The decrease in interest income was primarily due to lower rates of interest earned on financial assets during the quarter ended September 30, 2010 when compared to the same period in 2009. The decrease in interest expense was
primarily attributable to the payoff of FHLB long-term borrowings, lower rates and pay downs on short-term borrowings and lower rates paid on deposits during the quarter ended September 30, 2010, when compared to the same period in 2009.

Interest Income. Interest on net loans receivable decreased $220 thousand or 20.0% for the three months ended
September 30, 2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was primarily attributable to a decrease of 141 basis points in the weighted average yield earned on net loans
receivable for the three months ended September 30, 2010, when compared to the same period in 2009, and a $1.0 million decrease in the average balance of net loans receivable outstanding, when compared to the same period in 2009. The decrease
in the average loan balance of net loans receivable outstanding for the three months ended September 30, 2010 was attributable in part to increased levels of loan payoffs on single-family first mortgage and junior lien loan products. The
Company has limited its origination of longer-term fixed rate loans for its portfolio to mitigate its exposure to a rise in market interest rates. The Company will continue to originate longer-term fixed rate loans for sale on a correspondent basis
to increase non-interest income and to contribute to net income.

Interest on mortgage-backed securities decreased $158
thousand or 27.1% for the three months ended September 30, 2010 when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was primarily attributable to a $40.9 million decrease in the average
balance of U.S. Government agency mortgage-backed securities outstanding and a $12.2 million decrease in the average balance of private label mortgage-backed securities outstanding, which were partially offset by a 9 basis point increase in the
weighted average yield earned on U.S. Government agency mortgage-backed securities and a 16 basis point increase in the weighted average yield earned on private label mortgage-backed securities for the three months ended September 30, 2010,
when compared to the same period in 2009. The decrease in the average balances of mortgage-backed securities during the three months ended September 30, 2010 was attributable to principal paydowns of mortgage-backed securities during the
period. The increase in yield is attributable to slightly higher LIBOR interest rates in the quarter ended September 30, 2010 when compared to the same period in 2009.



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Interest on FDIC
insured bank certificates of deposit decreased $147 thousand or 79.5% for the three months ended September 30, 2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was primarily
attributable to a $13.7 million decrease in the average portfolio balance of certificates of deposit and a 151 basis point decrease in the weighted average yield earned when compared to the same period in 2009. The Company began investing in FDIC
insured certificates of deposit during the quarter ended March 31, 2008 due to relatively attractive yields in this investment sector. The certificates have remaining maturities ranging from one to fifteen months. Due to decreases in yields in
this investment sector, the Company has decided to not reinvest in certificates of deposit and let the portfolio decrease through maturities and early issuer redemptions.

Interest on investment securities decreased by $53 thousand or 4.0% for the three months ended September 30, 2010, when compared to the same period in 2009. The decrease for the three months ended
September 30, 2010 was primarily attributable to $50 thousand decrease in interest income on tax-free municipal bonds and a $27 thousand decrease in interest on corporate and foreign bonds, which were partially offset by a $31 thousand increase
in interest income on callable U.S. Government agency bonds.

Dividends on FHLB stock were $0 for the three months ended
September 30, 2010 and September 30, 2009. This was attributable to the Federal Home Loan Bank of Pittsburghs suspension of dividends on its common stock. In December 2008, the FHLB of Pittsburgh announced that it was suspending
payments of dividends and redemptions of excess capital stock from members. The FHLBs stated purpose of these actions is to build retained earnings to ensure adequate regulatory capital.

Interest Expense. Interest paid on FHLB advances decreased $344 thousand or 19.2% for the three months ended September 30,
2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was primarily attributable to a $23.0 million decrease in the average balance of FHLB long-term advances, when compared to the same
period in 2009, and a 10 basis point decrease in the weighted average yield paid on FHLB long-term advances. The decreases in the average balances of FHLB long-term borrowings were due to the maturity of two FHLB long-term borrowings.

Interest expense on deposits and escrows decreased $90 thousand or 23.9% for the three months ended September 30, 2010, when
compared to the same period in 2009. The decrease in interest expense on deposits for the three months ended September 30, 2010 was primarily attributable to an 127 basis point decrease in the weighted average rate paid on time deposits, and a
19 basis point decrease in the weighted average yield paid on savings accounts, which were partially offset by a $49.9 million increase in the average balance of time deposits when compared to the same period in 2009. The decrease in average yields
of time deposits and savings accounts reflects lower market rates for the three months ended September 30, 2010 while the change in average balances for time deposits is a result of the Banks participation in brokered CD programs.

Interest paid on FRB short-term borrowings decreased $40 thousand or 100.0% for the three months ended September 30,
2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was attributable to the payoff of all FRB short-term Term Auction Facility borrowings. The FRB terminated the Term Auction Facility in
April 2010.

Interest paid on other short-term borrowings increased $4 thousand or 200.0% for the three months ended
September 30, 2010, when compared to the same period in 2009. The increase for the three months ended September 30, 2010 was primarily attributable to a $4.6 million increase in average balances of other short-term borrowings during the
period. The increase in average balances of other short-term borrowings is attributable to more favorable short-term borrowing rates offered by the brokers as compared to FHLB short-term borrowings.

Provision for Loan Losses. A provision for loan losses is charged to earnings to maintain the total allowance at a level
considered adequate by management to absorb potential losses in the portfolio. Managements determination of the adequacy of the allowance is based on an evaluation of the portfolio considering past experience, current economic conditions,
volume, growth and composition of the loan portfolio, and other relevant factors.



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Provisions for loan
losses increased $6 thousand or 200.0% for the three months ended September 30, 2010, when compared to the same period in 2009. At September 30, 2010, the Companys total allowance for loan losses amounted to $654 thousand or 1.1% of
the Companys total loan portfolio, as compared to $645 thousand or 1.1% at June 30, 2010.

Non-Interest
Income. Non-interest income decreased by $28 thousand or 18.3% for the three months ended September 30, 2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was primarily
attributable to decreases in service fee income on deposit accounts and ATM fee income.

Non-Interest Expense.
Non-interest expense decreased $5 thousand or 0.5% for the three months ended September 30, 2010, when compared to the same period in 2009. The decrease for the three months ended September 30, 2010 was principally attributable to a $17
thousand decrease in employee related expenses, which was partially offset by a $12 thousand increase in Federal Deposit Insurance expense.

Income Tax Expense.Income tax expense decreased $25 thousand or 45.5% for the three months ended September 30, 2010, when compared to the same period in 2009. The decrease for the
three months ended September 30, 2010 was primarily due to lower levels of taxable income when compared to the same period in 2009.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating
activities totaled $1.7 million during the three months ended September 30, 2010. Net cash provided by operating activities was primarily comprised of a $637 thousand increase in transaction account clearing funds due to the FRB, $493 thousand
in amortizations of premiums and deferred loan fees, a $354 thousand decrease in accrued interest receivable.

Funds provided
by investing activities totaled $35.1 million during the three months ended September 30, 2010. Primary sources of funds during the three months ended September 30, 2010, included maturities and repayments of investment securities,
mortgage-backed securities and certificates of deposit totaling $25.0 million, $16.0 million and $1.2 million, respectively, which were partially offset by purchases of investments totaling $6.7 million and a $407 thousand increase in net loans
receivable.

Funds used for financing activities totaled $37.3 million for the three months ended September 30, 2010. The
primary uses included a $25.0 million decrease in FHLB long-term advances, a $9.4 million decrease in total deposits, a $2.5 million decrease in other short-term borrowings, and $329 thousand in cash dividends paid on the Companys common
stock. The decrease in FHLB long-term advances reflects paydowns on matured high cost FHLB legacy advances. The $9.4 million decrease in total deposits consisted of a $5.9 million decrease in time deposits, a $2.4 million decrease in demand and NOW
deposits, a $602 thousand decrease in passbook accounts, a $491 thousand decrease in mortgage escrow accounts and a $44 thousand decrease in money market accounts. The decrease in time deposits is primarily due to the maturity of certificates of
deposit for a local government unit. The decreases in demand and NOW deposits, passbook accounts and mortgage escrow accounts were due primarily to the payments of local property taxes by and for customers. Management believes that it currently is
maintaining adequate liquidity and continues to match funding sources with lending and investment opportunities.

The
Companys primary sources of funds are deposits, amortization, repayments and maturities of existing loans, mortgage-backed securities and investment securities, funds from operations, and funds obtained through FHLB and FRB advances and other
borrowings. During the quarter ended September 30, 2010, the Savings Bank issued $2.0 million of certificates of deposit through the CDARS One-Way Buy Program, at a fixed rate of interest of 0.27% to mature on December 16, 2010.
Certificates of deposit scheduled to mature in one year or less at September 30, 2010 totaled $91.2 million. At September 30, 2010, the Savings Bank had outstanding $51.5 million of certificates issued through the CDARS One-Way Buy
Program. CDARS CDs totaling $43 million reprice on a monthly basis at LIBOR plus 14 basis points and mature on April 7, 2011. CDARS CDs totaling $6.5 million mature on April 14, 2011 and carry a fixed



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rate of interest at 0.60%, and the remaining $2.0 million of CDARS CDs mature on December 16, 2010 and carry a fixed rate of interest of 0.27%. Management believes that a significant
portion of our local maturing deposits will remain with the Company. Management intends to repay a portion of the maturing wholesale CDs with investment and MBS cash flows during fiscal 2011. The remaining wholesale CDs will either be
rolled over or replaced with borrowings depending upon market conditions.

At September 30, 2010, the Savings Bank also
had $3.7 million of other brokered CDs which carried fixed rates of interest ranging from 0.40% to 0.60% with various maturities through July 19, 2011. During the quarter ended September 30, 2010, approximately $2.3 million of other
brokers CDs matured.

Historically, the Company used its sources of funds primarily to meet its ongoing commitments to
pay maturing savings certificates and savings withdrawals, fund loan commitments and maintain a substantial portfolio of investment securities. At September 30, 2010, total approved loan commitments outstanding amounted to approximately $50
thousand. At the same date, commitments under unused lines of credit amounted to $5.0 million and the unadvanced portion of construction loans approximated $8.7 million. The Company has been able to generate sufficient cash through the retail
deposit market, its traditional funding source, and through FHLB advances, and FRB and other borrowings, to provide the cash utilized in investing activities. During the quarter ended March 31, 2010, the Company began to utilize whole-sale
deposits in order to rebalance its short-term liability structure. The use of whole-sale deposits also allows the Company to match its corporate bond maturities and cash-flows from its private-label CMO securities. Management believes that the
Company currently has adequate liquidity available to respond to liquidity demands.

On October 26, 2010, the
Companys Board of Directors declared a cash dividend of $0.04 per share payable November 24, 2010, to shareholders of record at the close of business on November 15, 2010. Dividends are subject to determination and declaration by the
Board of Directors, which take into account the Companys financial condition, statutory and regulatory restrictions, general economic conditions and other factors. There can be no assurance that dividends will in fact be paid on the Common
Stock in future periods or that, if paid, such dividends will not be reduced or eliminated.

Recently, the Savings Bank
learned the results of a targeted regulatory visitation and review of the Savings Banks asset quality, earnings performance and capital protection. The review was primarily related to the Savings Banks private label mortgage-backed
securities portfolio as a result of the previously reported downgrades of certain PLMBS within the Savings Banks investment portfolio by one or more national rating agencies. In connection with the regulatory review, the Savings Bank agreed to
take certain actions to monitor and improve related asset quality in relation to regulatory capital. These actions include: additional documentation and monitoring procedures relating to its assessment of other than temporary impairment and market
(fair) value estimates, the submission of a capital plan to its regulators, and to seek prior non-objection from its banking regulators for any dividends payable by the Savings Bank to the Company. The Company has made similar commitments to the
Federal Reserve. The Company previously announced and reported a reduction of its quarterly cash dividend from $0.16 to $0.04 per share along with the suspension of common stock repurchases under its stock repurchase program. The Company believes
that these actions demonstrate its commitment to serve as a source of strength to the Savings Bank and are appropriate in light of todays economic environment. The Company believes that its liquidity is strong with liquid assets totaling
approximately $1.4 million. This level of liquidity could support operating expenses and the current dividend for about two and one-half years without any dividend income from the Savings Bank. Dividends are subject to declaration by the Board of
Directors, which take into account the Companys financial condition, earnings, statutory and regulatory restrictions, general economic conditions and other factors. There can be no assurance that dividends will in fact be paid on the common
stock in future periods or that, if paid, such dividends will not be reduced or eliminated.

As of September 30, 2010,
WVS Financial Corp. exceeded all regulatory capital requirements and maintained Tier I and total risk-based capital equal to $29.8 million or 14.2% and $30.5 million or 14.5%, respectively, of total risk-weighted assets, and Tier I leverage capital
of $29.8 million or 8.60% of average quarterly assets.



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Nonperforming assets
consist of nonaccrual loans and real estate owned. A loan is placed on nonaccrual status when, in the judgment of management, the probability of collection of interest is deemed insufficient to warrant further accrual. When a loan is placed on
nonaccrual status, previously accrued but uncollected interest is deducted from interest income. The Company normally does not accrue interest on loans past due 90 days or more, however, interest may be accrued if management believes that it will
collect on the loan.

The Companys nonperforming assets at September 30, 2010 totaled approximately $1.4 million or
0.4% of total assets as compared to $1.7 million or 0.5% of total assets at June 30, 2010. Nonperforming assets at September 30, 2010 consisted of: five single-family real estate loans totaling $1.0 million, two home equity lines of credit
totaling $359 thousand and one fixed rate home equity loan totaling $33 thousand. These loans are in various stages of collection activity.

The $238 thousand decrease in nonperforming assets during the three months ended September 30, 2010 was attributable to the reclassification to performing status of one single family real estate loan
totaling $286 thousand, which was partially offset by the classification non-performing status: one single family real estate loan totaling $15 thousand and one home equity loan totaling $33 thousand.

During the three months ended September 30, 2010, approximately $23 thousand of interest income would have been recorded on loans
accounted for on a non-accrual basis if such loans had been current according to the original loan agreements for the entire period. These amounts were not included in the Companys interest income for the three months ended September 30,
2010. The Company continues to work with the borrowers in an attempt to cure the defaults and is also pursuing various legal avenues in order to collect on these loans.



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|ITEM 3. | 
|------- | 

QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

ASSET AND LIABILITY MANAGEMENT

The Companys primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. All of the Companys
transactions are denominated in US dollars with no specific foreign exchange exposure. The Savings Bank has no agricultural loan assets and therefore would not have a specific exposure to changes in commodity prices. Any impacts that changes in
foreign exchange rates and commodity prices would have on interest rates are assumed to be exogenous and will be analyzed on an ex post basis.

Interest rate risk (IRR) is the exposure of a banking organizations financial condition to adverse movements in interest rates. Accepting this risk can be an important source of
profitability and shareholder value, however, excessive levels of IRR can pose a significant threat to the Companys earnings and capital base. Accordingly, effective risk management that maintains IRR at prudent levels is essential to the
Companys safety and soundness.

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

Since December 2007 and into fiscal 2011, the global economy remained in the worst recession since the end of World War II. Many factors contributed to the recession, including: the failure, or near
failure, of major financial institutions, marked declines in housing sales and prices, significant defaults in mortgage payments (particularly in the subprime sector), disruptions in global financial market liquidity, declining stock markets and
increased volatility in the bond, commodity and equity markets.

As the various markets began to unravel, historical
relationships between bonds, commodities and equities continued to diverge. This divergence created additional market volatility as market participants attempted to rebalance their portfolios. The worlds central banks continued to intervene in
order to stabilize markets, at varying times and with varying degrees of success. The degree of co-ordination and timing between central banks varied due to differing perceptions of the problem and disparate impacts within a particular
countrys economy. For example, the U.S. economy began to recover at a very slow and uneven rate. Domestic unemployment remained high which continued to impact the housing markets. Several governments within the Eurozone have experienced
difficulty in managing their fiscal budgets. During the quarter, many central banks, including the Federal Reserve, have begun a second phase of quantitative losing  the purchase of various government bonds  to lower market interest
rates further and to stimulate aggregate demand.

Throughout the three months ended September 30, 2010, the Company
continued to adjust its asset/liability management tactics in two ways. First, we substantially increased our Tier 1 capital to average assets ratio from 8.21% at June 30, 2010 to 8.60% at September 30, 2010. We accomplished this primarily
by reducing both Company assets and borrowings. With market interest rates at historical lows, we believed that the risks of maintaining a leveraged balance sheet far exceed the additional potential income that could be earned. Second, we reduced
overall borrowings and changed the composition of our wholesale funding sources. We reduced our overall borrowings by $27.5 million. Short-term borrowings were reduced by $2.5 million and legacy FHLB long-term borrowings were reduced by $25.0
million. We also utilized two sources of wholesale funding: the CDARS One-Way Buy Program and the limited use of other deposit brokers. We believe that the CDARS One-Way Buy



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Program made financial sense because it allows us to issue CDs that price monthly using the same LIBOR index used by our floating-rate MBS. The CDARS CDs, along with the other brokered
CDs, also allow us to better match cash flow from our maturing corporate bond investments and monthly principal repayments from the MBS portfolio.

Looking ahead, we continue to believe that our net interest income will improve in fiscal year 2011 primarily through the reduction of interest expense on long-term fixed rate legacy FHLB advances. Our
legacy long-term fixed rate FHLB advances, taken out a number of years ago when interest rates were higher, will mature as shown below.



|              |  |            |      |  |                    |  |      |  
|------------- |  | ---------- | ---- |  | ------------------ |  | ---- | -
|Quarter Ended |  | Amount/$MM |      |  | Weighted Avg. Rate | 
|12/31/10      |  | $          | 35.0 |  |                    |  | 5.44 | %
|03/31/11      |  | $          | 10.0 |  |                    |  | 4.99 | %
|06/30/11      |  | $          | 17.0 |  |                    |  | 5.28 | %

We expect to repay a
substantial portion of these legacy long-term FHLB advances as they mature, and to reprice any amounts not repaid at much lower rates of interest.

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

During the quarter ended September 30, 2010, intermediate and long-term market
interest rates fell considerably. Many central banks, including the Federal Reserve began a second phase of quantitative losing to stimulate aggregate demand, reduce high levels of unemployment and to further lower market interest rates. In response
to these market conditions, the Company reduced the overall level of both assets and liabilities. Asset levels were reduced in light of considerably lower market yields and narrowing credit spreads. Borrowings were reduced by utilizing investment
cash flow and to lower related interest expense. These actions also allowed us to increase our risk-based capital ratios.



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The table below shows
the targeted federal funds rate and the benchmark two and ten year treasury yields at June 30, 2007, September 30, 2007, December 31, 2007, March 31, 2008, June 30, 2008, September 30,
2008, December 31, 2008, March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, and March 31, 2010, June 30, 2010 and September 30, 2010. The difference in yields
on the two year and ten year Treasurys is often used to determine the steepness of the yield curve and to assess the term premium of market interest rates.



|                   |  |                       |  |                     |      |   |                      |  |      |                     |  |                    
|------------------ |  | --------------------- |  | ------------------- | ---- | - | -------------------- |  | ---- | ------------------- |  | -------------------
|                   |  |                       |  | Yield on:           |      |   |                     
|                   |  | TargetedFederal Funds |  | Two (2)YearTreasury |      |   | Ten (10)YearTreasury |  |      | Shape of YieldCurve
|                   |  |                       |  |                    
|June 30, 2007      |  | 5.25%                 |  |                     | 4.87 | % |                      |  | 5.03 | %                   |  | Slightly Positive  
|September 30, 2007 |  | 4.75%                 |  |                     | 3.97 | % |                      |  | 4.59 | %                   |  | Moderately Positive
|December 31, 2007  |  | 4.25%                 |  |                     | 3.05 | % |                      |  | 4.04 | %                   |  | Positive           
|March 31, 2008     |  | 2.25%                 |  |                     | 1.62 | % |                      |  | 3.45 | %                   |  | Positive           
|June 30, 2008      |  | 2.00%                 |  |                     | 2.63 | % |                      |  | 3.99 | %                   |  | Positive           
|September 30, 2008 |  | 2.00%                 |  |                     | 2.00 | % |                      |  | 3.85 | %                   |  | Positive           
|December 31, 2008  |  | 0.00% to 0.25%        |  |                     | 0.76 | % |                      |  | 2.25 | %                   |  | Positive           
|March 31, 2009     |  | 0.00% to 0.25%        |  |                     | 0.81 | % |                      |  | 2.71 | %                   |  | Positive           
|June 30, 2009      |  | 0.00% to 0.25%        |  |                     | 1.11 | % |                      |  | 3.53 | %                   |  | Positive           
|September 30, 2009 |  | 0.00% to 0.25%        |  |                     | 0.95 | % |                      |  | 3.31 | %                   |  | Positive           
|December 31, 2009  |  | 0.00% to 0.25%        |  |                     | 1.14 | % |                      |  | 3.85 | %                   |  | Positive           
|March 31, 2010     |  | 0.00% to 0.25%        |  |                     | 1.02 | % |                      |  | 3.84 | %                   |  | Positive           
|June 30, 2010      |  | 0.00% to 0.25%        |  |                     | 0.61 | % |                      |  | 2.97 | %                   |  | Positive           
|September 30, 2010 |  | 0.00% to 0.25%        |  |                     | 0.42 | % |                      |  | 2.53 | %                   |  | Positive           

These changes in
intermediate and long-term market interest rates, the changing slope of the Treasury yield curve, and higher levels of interest rate volatility have impacted prepayments on the Companys loan, investment and mortgage-backed securities
portfolios. Principal repayments on the Companys loan, investment and mortgage-backed securities portfolios for the three months ended September 30, 2010, totaled $4.3 million, $25.0 million and $16.0 million, respectively. Due to
stagnant global interest rates and Treasury yields we continued to reduce our overall borrowed funds position. The Company continued to rebalance its investment portfolio by using proceeds from calls of U.S. Government agency bonds, repayments on
its mortgage-backed securities and maturities of bank certificates of deposit to paydown borrowings. This strategy has allowed the Company to improve its liquidity posture while managing overall interest rate risk and strengthening our regulatory
capital ratios.

Due to the term structure of market interest rates, historically low long-term mortgage interest rates,
weakness in the economy, an excess supply of existing homes available for sale, and lower levels of housing starts, the Company continued to reduce its portfolio originations of long-term fixed rate mortgages while continuing to offer such loans on
a correspondent basis. The Company also makes available for origination residential mortgage loans with interest rates which adjust pursuant to a designated index, although customer acceptance has been somewhat limited in the Savings Banks
market area. We expect that the housing market will continue to be weak throughout fiscal 2011. The Company will continue to selectively offer commercial real estate, land acquisition and development, and shorter-term construction loans (primarily
on residential properties), and commercial loans on business assets to partially increase interest income while limiting credit and interest rate risk. The Company has also offered higher yielding commercial and small business loans to existing
customers and seasoned prospective customers.

During the three months ended September 30, 2010, principal investment
purchases were comprised of: fixed-rate investment grade foreign bonds - $3.7 million with a weighted average yield of 1.13%; and floating rate investment grade corporate bonds - $3.0 million with a weighted average yield of 1.16%.



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Major investment
proceeds received during the three months ended September 30, 2010 were: callable U.S. Government agency bonds - $20.0 million with a weighted average yield of approximately 2.88%; investment grade foreign bonds - $3.7 million with a weighted
average yield of approximately 1.13%; tax-free municipal bonds - $500 thousand with a weighted average taxable equivalent yield of approximately 2.38%; investment grade corporate utility first mortgage bonds - $378 thousand with a weighted average
yield of approximately 5.83%; and investment grade corporate bonds - $332 thousand with a weighted average yield of 3.72%. The Company also had $1.2 million in FDIC insured bank certificates of deposit redeemed with a weighted average yield of
approximately 1.96%.

As of September 30, 2010, the implementation of these asset and liability management initiatives
resulted in the following:



| | 1) | $99.0 million or 42.0% of the Companys investment portfolio was comprised of floating rate mortgage-backed securities (including collateralized mortgage
obligations  CMOs) that reprice on a monthly basis;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | $81.6 million or 34.6% of the Companys investment portfolio consisted of investment grade fixed-rate corporate bonds with remaining maturities as follows: 3
months or less - $6.4 million or 7.9%; 3  12 months - $36.1 million or 44.2%; 1  2 years - $15.1 million or 18.5%; 2  3 years - $9.3 million or 11.4%; 3  5 years - $9.4 million or 11.5%; and over 5 years - $5.3 million or
6.5%;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | $32.0 million or 13.6% of the Companys investment portfolio was comprised of callable U.S. Government Agency step-up bonds which are callable within 1  8
months. These bonds may or may not actually be redeemed prior to maturity (i.e. called) depending upon the level of market interest rates at their respective call dates;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) | $7.4 million or 2.3% of the Companys total assets consisted of FDIC insured bank certificates of deposit with remaining maturities ranging from one to fifteen
months;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5) | $2.6 million or 1.1% of the Companys investment portfolio was comprised of fixed-rate callable U.S. Government Agency bonds which are callable as follows: one
year or less - $2.6 million. These bonds may or may not actually be redeemed prior to maturity (i.e. called) depending upon the level of market interest rates at their respective call dates;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6) | $3.9 million or 1.7% of the Companys investment portfolio consisted of investment grade floating-rate corporate bonds which will reprice within three months and
will mature within sixteen to twenty eight months;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7) | An aggregate of $31.2 million or 55.1% of the Companys net loan portfolio had adjustable interest rates or maturities of less than 12 months; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | 8) | The maturity distribution of the Companys borrowings is as follows: 3 months or less - $45.0 million or 47.6%; 3  12 months - $32.0 million or 33.9%; 3
 5 years - $5.0 million or 5.3%; and over 5 years - $12.5 million or 13.2%.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

As part of its asset/liability management strategy, the Company maintained an asset
sensitive financial position. An asset sensitive financial position may benefit earnings during a period of rising interest rates and reduce earnings during a period of declining interest rates.

The following table sets forth certain information at the dates indicated relating to the Companys interest-earning assets and
interest-bearing liabilities which are estimated to mature or are scheduled to reprice within one year.



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|                                                                     |  |                        |         |   |          |   |         |   |  |   |         |  
|-------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------- | - | ------- | - |  | - | ------- | -
|                                                                     |  | September 
30,2010     |         |   | June 30, |  
|                                                                     |  | 2010                   |         |   | 2009     |  
|                                                                     |  | (Dollars in Thousands) |        
|Interest-earning assets maturing or repricing within one year        |  | $                      | 248,173 |   |          | $ | 243,519 |   |  | $ | 326,316 |  
|Interest-bearing liabilities maturing or repricing within one year   |  |                        | 219,608 |   |          |   | 248,813 |   |  |   | 228,295 |  
|                                                                     |  |                        |         |   |          |   |         |   |  |   |         |  
|                                                                     |  |                        |        
|Interest sensitivity gap                                             |  | $                      | 28,565  |   |          | $ | (5,294  | ) |  | $ | 98,021  |  
|                                                                     |  |                        |         |   |          |   |         |   |  |   |         |  
|Interest sensitivity gap as a percentage of total assets             |  |                        | 8.98    | % |          |   | -1.49   | % |  |   | 23.37   | %
|Ratio of assets to liabilities maturing or repricing within one year |  |                        | 113.01  | % |          |   | 97.87   | % |  |   | 142.94  | %

During the three months
ended September 30, 2010, the Company managed its one year interest sensitivity gap by: (1) Repaying $25.0 million of maturing legacy FHLB long-term debt; and (2) Issuing $2.0 million of fixed rate CDARS CDs to offset maturities of
other brokered CDs and to align corporate bond maturities and expected MBS cashflows.



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The following table
illustrates the Companys estimated stressed cumulative repricing gap  the difference between the amount of interest-earning assets and interest-bearing liabilities expected to reprice at a given point in time  at September 30,
2010. The table estimates the impact of an upward or downward change in market interest rates of 100 and 200 basis points.

Cumulative Stressed Repricing Gap



|                      |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|--------------------- |  | ---------------------- | ------ | - | ------- | - | ------ | -------- |  | - | -------- | - |  | -------- | ------ | - | -------- | - | ------ | --------- |  | - | ------ | - |  | - | ------ | -
|                      |  | Month 3                |        |   | Month 6 |   |        | Month 12 |  |   | Month 24 |   |  | Month 36 |        |   | Month 60 |   |        | Long Term | 
|                      |  | (Dollars in Thousands) |       
|Base Case Up 200 bp   |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 11,464 |   |         | $ | 9,925  |          |  | $ | 5,444    |   |  | $        | 28,092 |   |          | $ | 37,187 |           |  | $ | 39,242 |   |  | $ | 28,690 |  
|% of Total Assets     |  |                        | 3.6    | % |         |   | 3.1    | %        |  |   | 1.7      | % |  |          | 8.8    | % |          |   | 11.7   | %         |  |   | 12.3   | % |  |   | 9.0    | %
|Base Case Up 100 bp   |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 12,484 |   |         | $ | 11,791 |          |  | $ | 8,592    |   |  | $        | 32,532 |   |          | $ | 41,900 |           |  | $ | 43,745 |   |  | $ | 28,690 |  
|% of Total Assets     |  |                        | 3.9    | % |         |   | 3.7    | %        |  |   | 2.7      | % |  |          | 10.2   | % |          |   | 13.2   | %         |  |   | 13.8   | % |  |   | 9.0    | %
|Base Case No Change   |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 44,049 |   |         | $ | 44,823 |          |  | $ | 28,565   |   |  | $        | 39,828 |   |          | $ | 49,783 |           |  | $ | 49,354 |   |  | $ | 28,690 |  
|% of Total Assets     |  |                        | 13.9   | % |         |   | 14.1   | %        |  |   | 9.0      | % |  |          | 12.5   | % |          |   | 15.7   | %         |  |   | 15.5   | % |  |   | 9.0    | %
|Base Case Down 100 bp |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 44,182 |   |         | $ | 45,074 |          |  | $ | 28,964   |   |  | $        | 40,288 |   |          | $ | 50,146 |           |  | $ | 49,354 |   |  | $ | 28,690 |  
|% of Total Assets     |  |                        | 13.9   | % |         |   | 14.2   | %        |  |   | 9.1      | % |  |          | 12.7   | % |          |   | 15.8   | %         |  |   | 15.5   | % |  |   | 9.0    | %
|Base Case Down 200 bp |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 44,186 |   |         | $ | 45,107 |          |  | $ | 29,085   |   |  | $        | 40,500 |   |          | $ | 50,373 |           |  | $ | 49,518 |   |  | $ | 28,690 |  
|% of Total Assets     |  |                        | 13.9   | % |         |   | 14.2   | %        |  |   | 9.1      | % |  |          | 12.7   | % |          |   | 15.8   | %         |  |   | 15.6   | % |  |   | 9.0    | %

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



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The following table
presents the simulated impact of a 100 and 200 basis point upward or downward (parallel) shift in market interest rates on net interest income, return on average equity, return on average assets and the market value of portfolio equity at
September 30, 2010. This analysis was done assuming that the interest-earning assets will average approximately $241 million and $182 million over a projected twelve and twenty-four month period, respectively, for the estimated impact on change
in net interest income, return on average equity and return on average assets. The estimated changes in market value of equity were calculated using balance sheet levels at September 30, 2010. Actual future results could differ materially from
our estimates primarily due to unknown future interest rate changes and the level of prepayments on our investment and loan portfolios and future FDIC regular and special assessments.

Analysis of Sensitivity to Changes in Market Interest Rates



|                                      |  |                                                              |      |   |                    |  |      |   |  |  |      |   |  |      |      |   |      |  |      |      |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------- |  | ------------------------------------------------------------ | ---- | - | ------------------ |  | ---- | - |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | ---- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                      |  | Twelve Month Forward Modeled Change in Market Interest Rates |     
|                                      |  | September 30, 2011                                           |      |   | September 30, 2010 | 
|Estimated impact on:                  |  | -200                                                         |      |   | -100               |  |      | 0 |  |  | +100 |   |  | +200 |      |   | -200 |  |      | -100 |  |   | 0      |   |  | +100 |        |   | +200 |  
|Change in net interest income         |  |                                                              | -5.6 | % |                    |  | -3.0 | % |  |  | -    |   |  |      | 20.2 | % |      |  | 31.5 | %    |  |   | -2.4   | % |  |      | -1.5   | % |      |   | -      |   |  |   | 14.8   | % |  |   | 20.5   | %
|Return on average equity              |  |                                                              | 2.65 | % |                    |  | 2.98 | % |  |  | 3.36 | % |  |      | 5.77 | % |      |  | 7.07 | %    |  |   | 3.75   | % |  |      | 3.87   | % |      |   | 4.06   | % |  |   | 5.99   | % |  |   | 6.71   | %
|Return on average assets              |  |                                                              | 0.38 | % |                    |  | 0.43 | % |  |  | 0.48 | % |  |      | 0.83 | % |      |  | 1.03 | %    |  |   | 0.43   | % |  |      | 0.44   | % |      |   | 0.47   | % |  |   | 0.64   | % |  |   | 0.71   | %
|Market value of equity (in thousands) |  |                                                              |      |   |                    |  |      |   |  |  |      |   |  |      |      |   |      |  |      |      |  | $ | 26,208 |   |  | $    | 26,002 |   |      | $ | 26,258 |   |  | $ | 26,716 |   |  | $ | 26,572 |  

The Companys
three months earnings were adversely impacted by low market interest rates. This period of low interest rates is expected to continue throughout fiscal 2011. During fiscal 2010 and the first three months of fiscal 2011, we better positioned our
balance sheet and franchise by reducing borrowings, avoiding low yielding assets, and increasing our Tier l leverage ratio to 8.60%.



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The table below
provides information about the Companys anticipated transactions comprised of firm loan commitments and other commitments, including undisbursed letters and lines of credit. The Company used no derivative financial instruments to hedge such
anticipated transactions as of September 30, 2010.



|                                                    |  |                        |        |  
|--------------------------------------------------- |  | ---------------------- | ------ | -
|Anticipated Transactions                            | 
|                                                    |  | (Dollars in Thousands) |       
|Undisbursed construction and land development loans |  |                        |        |  
|Fixed rate                                          |  | $                      | 4,234  |  
|                                                    |  |                        | 6.60   | %
|                                                    | 
|Adjustable rate                                     |  | $                      | 4,503  |  
|                                                    |  |                        | 4.48   | %
|                                                    | 
|Undisbursed lines of credit                         |  |                        |        |  
|Adjustable rate                                     |  | $                      | 4,968  |  
|                                                    |  |                        | 3.71   | %
|                                                    | 
|Loan origination commitments                        |  |                        |        |  
|Fixed rate                                          |  | $                      | 50     |  
|                                                    |  |                        | 5.50   | %
|                                                    | 
|Letters of credit                                   |  |                        |        |  
|Adjustable rate                                     |  | $                      | 430    |  
|                                                    |  |                        | 4.25   | %
|                                                    |  |                        |        |  
|                                                    | 
|                                                    |  | $                      | 14,185 |  
|                                                    |  |                        |        |  



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In the ordinary course
of its construction lending business, the Savings Bank enters into performance standby letters of credit. Typically, the standby letters of credit are issued on behalf of a builder to a third party to ensure the timely completion of a certain aspect
of a construction project or land development. At September 30, 2010, the Savings Bank had one performance standby letter of credit outstanding totaling approximately $142 thousand and two financial letters of credit totaling $288 thousand. All
performance letters of credit are secured by developed property while the financial letters of credit are secured by certificates of deposit. All of the letters of credit will mature within seven months. In the event that the obligor is unable to
perform its obligations as specified in the applicable letter of credit agreement, the Savings Bank would be obligated to disburse funds up to the amount specified in the letter of credit agreement. The Savings Bank maintains adequate collateral
that could be liquidated to fund these contingent obligations.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



| | (a) | Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a  15(f) and
15d  15(f) under the Securities Exchange Act of 1934).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management assessed the effectiveness of the
Companys internal control over financial reporting as of September 30, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control  Integrated Framework.

Based on this assessment, management believes that, as of September 30, 2010, the
Companys internal control over financial reporting was effective.



| | (b) | No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the
three months ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II -
OTHER INFORMATION



|ITEM 1. | Legal Proceedings
|------- | -----------------

The
Company previously reported, under Item 3(a) of its Annual Report on Form 10-K for the fiscal year ended June 30, 2009, a lawsuit filed by Plantiff Matthew Dragotta against West View Savings Bank. On August 24, 2009 U.S. District
Judge, Terrance P. McVerry issued an order granting the Banks motion to Dismiss the lawsuit.

On September 3, 2009
the Plaintiff filed a motion for Reconsideration of Judge McVerrys order granting the Banks motion to Dismiss the lawsuit.

On October 16, 2009 Judge McVerry denied the Plantiffs Motion for Reconsideration.

On November 4, 2009 the Plaintiff provided a Notice of Appeal to the United States Court of Appeals for the Third Circuit appealing Judge McVerrys orders of September 3 and
October 16, 2009.

On September 28, 2010 the United States Court of Appeals for the Third Circuit vacated Judge
McVerrys orders and remanded the case to the U.S. District Court for further proceedings.

The Company is involved with
various legal actions arising in the ordinary course of business. Management believes the outcome of these matters will have no material effect on the consolidated operations or consolidated financial condition of WVS Financial Corp.



|ITEM 1A. | Risk Factors
|-------- | ------------

There are no material changes to the risk factors included in Item 1A of the Companys Annual Report on Form 10-K for the
fiscal year ended June 30, 2010.



|ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



| | (a) | Not applicable.
| | --- | ---------------



| | (b) | Not applicable.
| | --- | ---------------



| | (c) | The following table sets forth information with respect to purchases of common stock of the Company made by or on behalf of the Company during the three months ended
September 30, 2010.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                      |  |                                |   |  |                                 |   |   |                                                                                 |  |  |                                                                                |  |  |  |        | 
|------------------------------------- |  | ------------------------------ | - |  | ------------------------------- | - | - | ------------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------ |  |  |  | ------ | 
|ISSUER PURCHASES OF EQUITY SECURITIES | 
|Period                                |  | TotalNumber 
ofSharesPurchased |   |  | Average PricePaid per Share ($) |   |   | Total Number ofShares Purchasedas Part of PubliclyAnnounced 
Plans orPrograms 1 |  |  | Maximum Number ofShares that May YetBe RepurchasedUnder the Plans orPrograms 2 | 
|07/01/10  07/31/10                   |  |                                | 0 |  |                                 | $ |  |                                                                                 |  |  | 0                                                                              |  |  |  | 41,745 | 
|08/01/10  08/31/10                   |  |                                | 0 |  |                                 | $ |  |                                                                                 |  |  | 0                                                                              |  |  |  | 41,745 | 
|09/01/10  09/30/10                   |  |                                | 0 |  |                                 | $ |  |                                                                                 |  |  | 0                                                                              |  |  |  | 41,745 | 
|Total                                 |  |                                | 0 |  |                                 | $ |  |                                                                                 |  |  | 0                                                                              |  |  |  | 41,745 | 



|(1) | All shares indicated were purchased under the Companys Tenth Stock Repurchase Program.
|--- | ---------------------------------------------------------------------------------------

|(2) | Tenth Stock Repurchase Program
|--- | ------------------------------



| | (a) | Announced January 29, 2009.
| | --- | ---------------------------



| | (b) | 106,000 common shares approved for repurchase.
| | --- | ----------------------------------------------



| | (c) | No fixed date of expiration.
| | --- | ----------------------------



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| | (d) | This program has not expired and has 41,745 shares remaining to be repurchased at September 30, 2010.
| | --- | -----------------------------------------------------------------------------------------------------



| | (e) | Not applicable.
| | --- | ---------------



|ITEM 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



|ITEM 4. | (Removed and Reserved)
|------- | ----------------------



|ITEM 5. | Other Information
|------- | -----------------



| | (a) | Not applicable.
| | --- | ---------------



| | (b) | Not applicable.
| | --- | ---------------



|ITEM 6. | Exhibits
|------- | --------

The
following exhibits are filed as part of this Form 10-Q, and this list includes the Exhibit Index.



|       |  |                                                                          |  |      |     | 
|------ |  | ------------------------------------------------------------------------ |  | ---- | --- | 
|Number |  | Description                                                              |  | Page |    
|       |  |                                                                         
|31.1   |  | Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer  |  |      | E-1 | 
|       |  |                                                                         
|31.2   |  | Rule 13a-14(a) / 15d-14(a) Certification of the Chief Accounting Officer |  |      | E-2 | 
|       |  |                                                                         
|32.1   |  | Section 1350 Certification of the Chief Executive Officer                |  |      | E-3 | 
|       |  |                                                                         
|32.2   |  | Section 1350 Certification of the Chief Accounting Officer               |  |      | E-4 | 
|       |  |                                                                         
|99     |  | Report of Independent Registered Public Accounting Firm                  |  |      | E-5 | 



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SIGNATURES

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



|                 |  |                     |  |                                                                                                       
|---------------- |  | ------------------- |  | ------------------------------------------------------------------------------------------------------
|                 |  | WVS FINANCIAL CORP.
|                 |  |                    
|November 4, 2010 |  | BY:                 |  | /S/    DAVID J.
BURSIC                                                                                
|Date             |  |                     |  | David J. Bursic President and Chief Executive Officer (Principal Executive
Officer)                   
|                 |  |                    
|November 4, 2010 |  | BY:                 |  | /S/    KEITH A.
SIMPSON                                                                               
|Date             |  |                     |  | Keith A. Simpson Vice-President, Treasurer and Chief Accounting Officer (Principal
Accounting Officer)



40