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 December 31, 1997

                                       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                (I.R.S. Employer
      incorporation or organization)               Identification Number)

           9001 Perry Highway
       Pittsburgh, Pennsylvania                          15237
       ------------------------                       ---------- 
         (Address of principal                        (Zip Code)
          executive offices)

                                 (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 [ ]

         Shares  outstanding  as of February 6, 1998 : 1,808,050  shares  Common
Stock, $.01 par value.
<PAGE>

                       WVS FINANCIAL CORP. AND SUBSIDIARY

                                      INDEX



PART I.                    Financial Information                                

Item 1.                    Financial Statements

                           Consolidated Statements of Financial
                           Condition as of December 31, 1997
                           and June 30, 1997 (Unaudited)                        

                           Consolidated Statements of Income
                           for the Three and Six Months Ended
                           December 31, 1997 and 1996 (Unaudited)               

                           Consolidated Statements of Cash Flows
                           for the Six Months Ended December 31,
                           1997 and 1996 (Unaudited)                            

                           Consolidated Statements of Changes in
                           Stockholders' Equity for the Six Months
                           Ended December 31, 1997 (Unaudited)                  

                           Notes to Unaudited Consolidated
                           Financial Statements                                 

Item 2.                    Management's Discussion and Analysis of
                           Financial Condition and Results of
                           Operations for the Three and Six Months
                           Ended December 31, 1997                              

Item 3.                    Quantitative and Qualitative Disclosures
                           about Market Risk                                    

PART II.                   Other Information                                    

Item 1.                    Legal Proceedings                                    
Item 2.                    Changes in Securities                                
Item 3.                    Defaults upon Senior Securities                      
Item 4.                    Submission of Matters to a Vote of
                           Security Holders                                     
Item 5.                    Other Information                                    
Item 6.                    Exhibits and Reports on Form 8-K                     
Signatures                                                                      

<PAGE>
<TABLE>
<CAPTION>
                                        WVS FINANCIAL CORP. AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                    (UNAUDITED)
                                                  (in thousands)

                                                              December 31,     June 30,
                                                                  1997          1997
                                                              ---------      ---------
          Assets
<S>                                                           <C>            <C>
Cash and due from banks .................................     $     625      $     667
Interest-earning demand deposits ........................           908          1,904
Investment securities available-for-sale
   (amortized cost of $10,360 and $3,689) ...............        10,434          3,553
Investment securities held-to-maturity
   (market value of $75,444 and $83,889) ................        75,021         83,995
Mortgage-backed securities available-for-sale
   (amortized cost of $16,585 and $18,417) ..............        16,726         18,280
Mortgage-backed securities held-to-maturity
   (market value of $19,273 and $19,381) ................        18,819         19,210
Federal Home Loan Bank stock, at cost ...................         3,872          3,927
Net loans receivable ....................................       161,002        158,134
Accrued interest receivable .............................         2,449          2,809
Real estate owned .......................................          --             --
Premises and equipment ..................................         1,237          1,298
Deferred taxes and other assets .........................           929            916
                                                              ---------      ---------
          TOTAL ASSETS ..................................     $ 292,022      $ 294,693
                                                              =========      =========

          Liabilities and Stockholders' Equity
Liabilities:
Savings Deposits:
   Non-interest-bearing accounts ........................     $   7,859      $   7,283
   NOW accounts .........................................        15,400         15,177
   Savings accounts .....................................        36,751         36,591
   Money market accounts ................................        11,642         12,103
   Certificates of deposit ..............................        95,479         99,725
                                                              ---------      ---------
   Total savings deposits ...............................       167,131        170,879
Federal Home Loan Bank advances .........................        77,432         77,857
Other borrowings ........................................         7,171          6,784
Advance payments by borrowers for taxes and insurance ...         2,234          3,531
Accrued interest payable ................................         1,924          1,768
Other liabilities .......................................         5,002            985
                                                              ---------      ---------
   TOTAL LIABILITIES ....................................       260,894        261,804
                                                              ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                        WVS FINANCIAL CORP. AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                    (UNAUDITED)
                                                  (in thousands)

                                                              December 31,     June 30,
                                                                  1997          1997
                                                              ---------      ---------          
<S>                                                           <C>            <C>

Stockholders' equity:
Preferred stock:
   5,000,000 shares, no par value per share, authorized;             
   none outstanding......................................            --             --
Common stock:
   10,000,000 shares, $.01 par value per share,
   authorized;  1,753,280 and 1,747,280 shares issued and
   outstanding ..........................................            18             17
Additional paid-in capital ..............................        17,672         17,236
Retained earnings, substantially restricted .............        14,152         16,900
Unallocated shares - Recognition and Retention Plans ....          (483)          (631)
Unallocated shares - Employee Stock Ownership Plan ......          (373)          (453)
                                                              ---------      ---------
                                                                 30,986         33,069
Unrealized gain (loss) on available-for-sale securities .           142           (180)
                                                              ---------      ---------
   TOTAL STOCKHOLDERS' EQUITY ...........................        31,128         32,889
                                                              ---------      ---------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....     $ 292,022      $ 294,693
                                                              =========      =========

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

<PAGE>
<TABLE>
<CAPTION>
                                       WVS FINANCIAL CORP. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF INCOME
                                                  (UNAUDITED)
                                                 (in thousands)

                                                       Three Months Ended                Six Months Ended
                                                           December 31,                      December 31,
                                                     1997             1996            1997             1996
                                                 -----------      -----------     -----------      -----------
<S>                                              <C>              <C>             <C>              <C> 
INTEREST AND DIVIDEND INCOME:

     Loans .................................     $     3,300      $     3,080     $     6,565      $     6,163
     Investment securities .................           1,482            1,464           3,050            2,674
     Mortgage-backed securities ............             623              679           1,265            1,390
     Interest-earning deposits with
        other institutions .................              21               26              35              54 
     Federal Home Loan Bank stock ..........              58               49             119               82
                                                 -----------      -----------     -----------      -----------
          Total interest and dividend income           5,484            5,298          11,034           10,363
                                                 -----------      -----------     -----------      -----------

INTEREST EXPENSE:

     Deposits ..............................           1,751            1,767           3,535            3,539
     Borrowings ............................           1,179            1,006           2,357            1,753
     Advance payments by borrowers for
        taxes and insurance.................               9                7              16               16
                                                 -----------      -----------     -----------      -----------               
          Total interest expense ...........           2,939            2,780           5,908            5,308
                                                 -----------      -----------     -----------      -----------

NET INTEREST INCOME ........................           2,545            2,518           5,126            5,055
PROVISION FOR LOAN LOSSES ..................            (120)              30            (120)              60
                                                 -----------      -----------     -----------      -----------
NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES.........................           2,665            2,488           5,246            4,995
                                                 -----------      -----------     -----------      -----------
                                                      
NON-INTEREST INCOME:
     Service charges on deposits ...........              58               56             110              103
     Investment securities gains ...........              --               --              --               26
     Other .................................              48               41              86               77
                                                 -----------      -----------     -----------      -----------
          Total non-interest income ........             106               97             196              206
                                                 -----------      -----------     -----------      -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       WVS FINANCIAL CORP. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF INCOME
                                                  (UNAUDITED)
                                                 (in thousands)

                                                       Three Months Ended                Six Months Ended
                                                           December 31,                      December 31,
                                                     1997             1996            1997             1996
                                                 -----------      -----------     -----------      -----------
<S>                                              <C>              <C>             <C>              <C> 
NON-INTEREST EXPENSE:
     Salaries and employee benefits ........             913              694           1,670            1,330
     Occupancy and equipment ...............             104              109             207              208
     Deposit insurance premium .............              28             --                55            1,239
     Data processing .......................              42               43              84               85
     Correspondent bank service charges ....              29               30              60               58
     Other .................................             200              203             366              361
                                                 -----------      -----------     -----------      -----------
          Total non-interest expense .......           1,316            1,079           2,442            3,281
                                                 -----------      -----------     -----------      -----------


INCOME BEFORE INCOME TAXES .................           1,455            1,506           3,000            1,920
INCOME TAXES ...............................             459              594           1,069              758
                                                 -----------      -----------     -----------      -----------

NET INCOME .................................     $       996      $       912     $     1,931      $     1,162
                                                 ===========      ===========     ===========      ===========

EARNINGS PER SHARE:
     Basic .................................     $      0.58      $      0.54     $      1.13      $      0.69
     Diluted ...............................     $      0.56      $      0.52     $      1.09      $      0.67



AVERAGE SHARES OUTSTANDING:
     Basic .................................       1,709,170        1,681,304       1,706,495        1,680,229
     Diluted ...............................       1,773,620        1,742,072       1,769,678        1,738,823

</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                               WVS FINANCIAL CORP. AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)
                                         (in thousands)

                                                                            Six Months Ended 
                                                                               December  31,
                                                                        ----------------------
                                                                            1997          1996
                                                                         -------       -------
OPERATING ACTIVITIES
<S>                                                                     <C>           <C>
Net income ........................................................     $  1,931      $  1,162
Adjustments to reconcile net income to cash provided by operating
activities:  
   Provision for loan losses ......................................         (120)           60
   Gain on sale of Real Estate Owned ..............................         --              (8)
   Gain on sale of investments and mortgage-backed securities .....         --             (26)
   Depreciation and amortization, net .............................           67            70
   Amortization of discounts, premiums and deferred loan fees .....          (29)           38
   Amortization of ESOP, RRP and deferred and unearned compensation          429           190
   Decrease (increase) in accrued interest receivable .............          360          (201)
   Increase in accrued interest payable ...........................          154           279
   Decrease (increase) in accrued and deferred taxes ..............         (119)           43
   Other, net .....................................................          290          (175)
                                                                         -------       -------
      Net cash provided by operating activities ...................        2,963         1,432
                                                                         -------       -------

INVESTING ACTIVITIES
Available-for-sale:
   Purchases of investments and mortgage-backed securities ........      (11,680)         (839)
   Proceeds from repayments of investments and mortgage-backed
   securities .....................................................        4,707           921
   Proceeds from sale of investments and mortgage-backed securities        2,192         1,665
Held-to-maturity:
   Purchases of investments and mortgage-backed securities ........      (47,620)      (44,513)
   Proceeds from repayments of investments and mortgage-backed
   securities .....................................................       57,052        30,981
Net Increase in loans receivable ..................................       (2,842)       (1,366)
Sale of real estate owned .........................................         --              72
Decrease (increase) in FHLB stock .................................           55        (1,268)
Purchases of premises and equipment ...............................           (7)          (45)
                                                                         -------       -------
      Net cash provided by (used for) investing activities ........        1,857       (14,392)
                                                                         -------       -------

</TABLE>
<PAGE>
<TABLE>
<CAPTION>




                               WVS FINANCIAL CORP. AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)
                                         (in thousands)

                                                                               Six Months Ended
                                                                                December 31,
                                                                          ----------------------
                                                                             1997           1996
                                                                          --------      --------
<S>                                                                       <C>           <C>
FINANCING ACTIVITIES
Net increase (decrease) in transaction and passbook accounts.........          499        (1,320)
Net decrease in certificates of deposit .............................       (4,246)       (1,515)
Net (decrease) increase in FHLB borrowings ..........................         (425)       24,857
Net increase (decrease) in other borrowings .........................          388        (5,416)
Net decrease in advance payments by borrowers for taxes and insurance       (1,297)       (1,547)
Net proceeds from issuance of common stock ..........................           63             2
Cash dividends paid .................................................         (839)         (488)
                                                                          --------      --------
      Net cash (used for) provided by financing activities ..........       (5,857)       14,573
                                                                          --------      --------

      (Decrease) increase in cash and cash equivalents ..............       (1,037)        1,613
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD ................        2,570         2,727
                                                                          --------      --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD ......................     $  1,533      $  4,340
                                                                          ========      ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash paid during the period for:
      Interest on deposits, escrows and borrowings ..................     $  5,752      $  5,029
      Income taxes ..................................................        1,181           889
   Noncash item:
      Foreclosed mortgage loans transferred to real estate owned ....         --              64
      Dividends declared, not yet paid (net of reimbursement
        for unallocated ESOP shares) ................................        3,775          --



</TABLE>


                  See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>
<CAPTION>
                                              WVS FINANCIAL CORP. AND SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                          (UNAUDITED)
                                                        (in thousands)

                                                                                           
                                                                                             Net
                                                                                          Unrealized      Retained
                                               Additional    Unallocated    Unallocated      Gain        Earnings-
                                   Common      Paid-in      Shares Held    Shares Held   (Loss) on    Substantially
                                   Stock       Capital         by ESOP        by RRP     Securities    Restricted       Total
                                 --------      --------      --------      --------      --------       --------     --------

<S>                              <C>           <C>           <C>           <C>           <C>            <C>          <C>
Balance at June 30, 1997 ...     $     17      $ 17,236      $   (453)     $   (631)     $   (180)      $ 16,900     $ 32,889

Release of earned Employee
Stock Ownership Plan (ESOP)
shares .....................                        201            80                                                     281

Accrued compensation expense
for Recognition and
Retention Plans (RRP) ......                                                    148                                       148

Tax benefit from stock
grants issued under RRP ....                        173                                                                   173

Exercise of Stock Options ..            1            62                                                                    63

Change in unrealized loss,
net of income taxes of $166                                                                   322                         322

Cash dividends declared
($2.70 per share) ..........                                                                              (4,679)      (4,679)

Net income .................                                                                               1,931        1,931
                                 --------      --------      --------      --------      --------       --------     --------
Balance at December 31, 1997     $     18      $ 17,672      $   (373)     $   (483)     $    142       $ 14,152     $ 31,128
                                 ========      ========      ========      ========      ========       ========     ========


</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
                       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  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 and six months ended December 31, 1997 are not
         necessarily  indicative  of the results  which may be expected  for the
         entire fiscal year.

2.       EARNINGS PER SHARE

         In February  1997,  the  Financial  Accounting  Standards  Board (FASB)
         issued  Statement of Financial  Accounting  Standards No. 128 "Earnings
         Per Share".  Statement No. 128 replaced the previously reported primary
         and fully  diluted  earnings per share with basic and diluted  earnings
         per share.  Unlike primary earnings per share, basic earnings per share
         excludes any dilutive  effects of options,  warrants,  and  convertible
         securities.  Diluted  earnings  per share  differs  from fully  diluted
         earnings per share in that average period market prices are utilized in
         calculating weighted average common stock equivalents instead of period
         ending market prices.

         All  earnings  per  share  amounts  have  been  presented,   and  where
         necessary, restated to conform to the Statement No. 128 requirements.

3.       LITIGATION

         On March 27, 1995,  the United  States  District  Court for the Western
         District of  Pennsylvania  entered an Opinion and Orders  dismissing in
         its entirety a lawsuit  brought by Plaintiff  William S. Karn, who is a
         depositor of the Savings Bank and a shareholder  of the Company,  which
         alleged,  among other things,  antitrust and securities laws violations
         in connection  with the Savings Bank's mutual - to - stock  conversion.
         The court also  dismissed  this same  Plaintiff's  federal  claims in a
         second and  substantially  similar lawsuit while remanding to the Court
         of Common Pleas of Allegheny  County any  cognizable  state law claims.
         This Plaintiff has filed Motion to Amend Judgment with the Court on the
         Opinion and Orders and a  Memorandum  Response in  Opposition  has been
         filed. On August 28, 1995, the Court denied the  Plaintiff's  motion to
         Amend Judgment.

         The Company is involved with various other 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.
<PAGE>

4.       RECENT ACCOUNTING PRONOUNCEMENTS

         In July 1997 the Financial  Accounting Standards Board issued Statement
         of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive
         Income".  Statement  No. 130 is effective  for fiscal  years  beginning
         after  December 15, 1997.  This  statement  establishes  standards  for
         reporting and presentation of  comprehensive  income and its components
         (revenues, expenses, gains and losses) in a full set of general purpose
         financial  statements.  It requires  that all items are  required to be
         recognized  under  accounting  standards as components of comprehensive
         income be reported in a financial  statement that is presented with the
         same  prominence  as other  financial  statements.  Statement  No.  130
         requires  that  companies  (i)  classify  items of other  comprehensive
         income by their  nature in a financial  statement  and (ii) display the
         accumulated  balance  of other  comprehensive  income  separately  from
         retained earnings and additional  paid-in capital in the equity section
         of the statement of financial condition.  Reclassification of financial
         statements for earlier periods provided for  comprehensive  purposes is
         required.
<PAGE>
                       WVS FINANCIAL CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1997


         When used in this Form 10-Q,  or, in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive officer,  the words or phrases "will likely
result",  "are expected to",  "will  continue",  "is  anticipated",  "estimate",
"project"  or similar  expressions  are  intended to  identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  Such  statements  are  subject  to  certain  risks  and  uncertainties
including changes in economic  conditions in the Company's market area,  changes
in policies by regulatory  agencies,  fluctuations in interest rates, demand for
loans in the  Company's  market area and  competition  that could  cause  actual
results  to differ  materially  from  historical  earnings  and those  presently
anticipated  or projected.  The Company  wishes to caution  readers not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date made.  The Company  wishes to advise  readers  that the factors  listed
above  could  affect the  Company's  financial  performance  and could cause the
Company's  actual  results  for  future  periods to differ  materially  from any
opinions or statements  expressed  with respect to future periods in any current
statements.

         The  Company  does  not  undertake,   and  specifically  disclaims  any
obligation, to publicly release the result of any revisions which may be made to
forward-looking  statements to reflect events or circumstances after the date of
statements or to reflect the occurrence of anticipated or unanticipated events.


GENERAL

         WVS Financial  Corp.  ("WVS" or the  "Company")  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,  SAIF-insured stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  Originally  organized under  Pennsylvania  law in 1908 as West View
Building Loan  Association,  West View changed its name to West View Savings and
Loan   Association   in  1954.  In  June  1992,   West  View  converted  from  a
Pennsylvania-chartered    mutual    savings   and   loan    association   to   a
Pennsylvania-chartered  mutual  savings bank.  The Savings Bank converted to the
stock form of ownership in November 1993.  The Savings Bank had no  subsidiaries
at December 31, 1997.

         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 consists 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.
<PAGE>
         The  Company's   strategy   focuses  on  traditional   thrift  lending,
maintaining asset quality and increasing core earnings.



FINANCIAL CONDITION


         The Company's  assets  totaled  $292.0  million at December 31, 1997 as
compared to $294.7 million at June 30, 1997. The $2.7 million or 0.9% decline in
total  assets was  primarily  comprised  of a $4.1  million or 3.2%  decrease in
investment  and  mortgage-backed  securities,  including  Federal Home Loan Bank
("FHLB") stock, which was partially offset by a $2.9 million or 1.8% increase in
net loans receivable. The Company's total liabilities decreased $900 thousand or
3.4% to $260.9  million as of December  31, 1997 from $261.8  million as of June
30,  1997.  The $900  thousand  decrease  in  total  liabilities  was  primarily
comprised  of a $3.8  million or 2.2%  decrease in deposits  and a $1.3  million
decrease in advance  payments by  borrowers  for taxes and  insurance  which was
partially  offset by a $4.0  million  increase  in other  liabilities.  The $4.0
million  increase in other  liabilities  was  primarily  attributable  to a $3.8
million  increase in dividends  payable on the  Company's  common  stock.  Total
stockholders'  equity  decreased  $1.8  million  or 5.5% to $31.1  million as of
December 31, 1997 from $32.9 million as of June 30, 1997,  primarily due to $1.9
million of Company net income for the six months ended December 31, 1997,  which
was offset by $4.6 million in cash  dividends  declared on the Company's  common
stock.

          ASSET AND  LIABILITY  MANAGEMENT.  The  Company  continued  a strategy
designed to reduce the interest rate  sensitivity of its financial assets to its
financial  liabilities.  The primary  elements  of this  strategy  include:  (i)
expanding  the  Company's  investment  growth  program in order to  enhance  net
interest  income;  (ii)  maintaining  the Company's  level of short-term  liquid
investments by funding loan  commitments and purchasing  longer-term  investment
securities;  (iii) emphasizing the retention of lower-cost  savings accounts and
other core deposits; (iv) pricing the Company's certificates of deposit and loan
products  nearer to the market  average  rate as  opposed to the upper  range of
market offered rates.

          The Company has continued its investment  growth  program,  originally
initiated in the third  quarter of fiscal 1994,  in order to realize  additional
net interest income.  Under this strategy, a longer-term callable or noncallable
investment  security,  or  mortgage-backed  security,  is  purchased  and funded
through the use of short-term non-deposit liabilities, such as FHLB advances and
short-term  borrowings.  With  this  strategy,  the  Company  increases  its net
interest  income,  but also  faces the risk,  during  periods  of rising  market
interest  rates,  that it may experience a decline in net interest income if the
rate  paid  on its  various  borrowings  rises  above  the  rate  earned  on the
investment security purchased. In order to mitigate this exposure, the Board has
placed certain restrictions on the investment growth program, including: (i) the
average outstanding daily balance of total borrowings,  computed quarterly,  may
not exceed  approximately  $85.0  million;  (ii) suitable  investments  shall be
confined to those meeting the credit quality criteria  outlined in the Company's
investment  policy;  and (iii) each security  purchased  shall initially yield a
minimum  of  seventy-five  basis  points  above  the  incremental  rate  paid on
short-term borrowings, at the time of purchase. In most cases, the initial yield
spread  earned on  investment  security  purchases  exceeded  approximately  two
hundred basis points.
<PAGE>
         The Company has  continued to purchase  bonds with  optional  principal
redemption  features  ("callable  bonds")  in order to  capture  additional  net
interest income. Callable bonds generally provide investors with higher rates of
return than  noncallable  bonds  because the issuer has the option to redeem the
bonds before maturity.  While this strategy affords WVS the current  opportunity
to improve its net interest income, during a period of declining interest rates,
such as was experienced  during the quarter ended December 31, 1997, the Company
would be exposed to the risk that the  investment  will be redeemed prior to its
final stated maturity.  In order to mitigate this risk, the Company has funded a
significant   portion  of  its  purchases  of  callable  bonds  with  short-term
borrowings.  Approximately  $19.3  million  of  callable  agency  bonds  with an
estimated  weighted  average rate of 7.7% were called  during the quarter  ended
December  31, 1997.  During the quarter  ended  December  31, 1997,  the Company
purchased  approximately  $18.5  million of callable  bonds with an  approximate
weighted average yield to call and maturity of 7.5% and 7.4%, respectively.  The
callable  agency bond  purchases,  totaling  $18.5  million,  are  summarized by
initial term to call as follows:  $6.5 million within three months, $4.0 million
with  greater  than three  months and within six months,  and $8.0  million with
greater than six months and within twelve months.

         During the quarter ended December 31, 1997,  the Company  increased its
commercial  paper  holdings by $15.0  million.  At December 31, 1997 the Company
held $15.0 million of commercial  paper with an  approximate  yield of 7.2%. The
commercial  paper  purchases were made in order to capitalize on seasonally high
calendar year end commercial paper rates and for liquidity management.

         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.
The  Company  will  continue  to offer  land  acquisition  and  development  and
shorter-term   construction  loans,  primarily  on  residential  properties,  to
partially increase its loan asset sensitivity.

         During the six months ended  December 31,  1997,  the Company  borrowed
approximately  $23.1  million  from  the FHLB in the way of  various  short-term
borrowings  with a  weighted  average  rate of 5.71% and $28.6  million in other
borrowings  with a weighted  average rate of 5.62%.  During the six months ended
December 31, 1997,  the Company  repaid $23.5 million of FHLB advances and $27.2
million of other  borrowings.  Due to a decline in market  interest rates during
the six months  ended  December  31, 1997,  the Company  shortened  the maturity
structure  of its  incremental  borrowings  to  reduce  its cost of funds and to
better match the maturities of its borrowings  with the possible early repayment
of a portion of its investment portfolio.

         As of  December  31,  1997,  the  implementation  of  these  asset  and
liability management initiatives resulted in the following:  (i) an aggregate of
$51.6  million  or 32.0% of the  Company's  net loan  portfolio  had  adjustable
interest rates or maturities of less than 12 months; (ii) $18.4 million or 51.8%
of the Company's portfolio of mortgage-backed  securities  (including CMOs) were
secured  by  floating  rate  securities;  (iii)  $15.5  million  or 18.1% of the
Company's  investment  securities portfolio had scheduled maturities of one year
or less; and (iv) $68.4 million or 80.0% of the Company's investment  securities
portfolio was comprised of callable bonds.
<PAGE>
         The effect of interest rate changes on a financial institution's assets
and liabilities may be analyzed by examining the extent to which such assets and
liabilities  are "interest rate  sensitive"  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  when the  amount of rate
sensitive  assets  exceeds the amount of rate  sensitive  liabilities.  A gap is
considered  negative when the amount of interest sensitive  liabilities  exceeds
the amount of interest  sensitive  assets.  During a period of falling  interest
rates, a positive gap would tend to adversely affect net interest income,  while
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, while a negative gap would tend to adversely
affect net interest income.

         The  Company's  one  year  cumulative  interest  rate  sensitivity  gap
amounted to a negative 22.4% of total assets at December 31, 1997 as compared to
a  negative  13.3%  at  June  30,  1997,  in each  instance,  based  on  certain
assumptions  by management  with respect to the repricing of certain  assets and
liabilities.  At  December  31,  1997,  the  Company's  interest-earning  assets
maturing or repricing within one year totaled $100.7 million while the Company's
interest-bearing  liabilities  maturing  or  repricing  within one year  totaled
$166.2  million,   providing  a  deficiency  of  interest-earning   assets  over
interest-bearing  liabilities  of $65.5  million.  At  December  31,  1997,  the
percentage of the Company's  assets to liabilities  maturing or repricing within
one year was 60.6%.

RESULTS OF OPERATIONS


           General.  WVS reported  net income of $996  thousand and $1.9 million
for the three and six months ended  December 31, 1997.  Net income  increased by
$84 thousand or 9.2% for the three months ended  December 31, 1997 when compared
to the same period in 1996.  The  increase  was  primarily  the result of a $150
thousand  decrease in the provision for loan losses, a $135 thousand decrease in
income tax expense,  a $27 thousand  increase in net interest  income,  and a $9
thousand increase in non-interest  income,  which was partially offset by a $219
thousand  increase  in  employee  salaries  and  benefits  expense.  Net  income
increased by $769  thousand or 66.2% for the six months ended  December 31, 1997
when compared to the same period in 1996. The $769 thousand or 66.2% increase in
net  income  was  principally  the  result  of  a  $839  thousand   decrease  in
non-interest  expense, a $180 thousand decrease in the provision for loan losses
and a $71 thousand  increase in net interest income,  which was partially offset
by a $311 thousand increase in income tax expense.  The decrease in non-interest
expense for the six months ended December 31, 1997 was primarily attributable to
one-time  items,  including  a $1.2  million  net  decrease  in federal  deposit
premiums to recapitalize the Savings Association Insurance Fund ("SAIF"),  which
was  partially  offset by a $340  thousand  increase  in  employee  compensation
expense.  The $71 thousand  increase in net  interest  income for the six months
ended December 31, 1997 was chiefly attributable to increases in interest earned
on investment and  mortgage-backed  securities and net loans  receivable of $269
thousand and $402 thousand,  respectively,  which was partially offset by a $604
thousand  increase in interest  expense on Federal  Home Loan Bank  Advances and
other borrowings.
<PAGE>
           Net Interest  Income.  The Company's net interest income increased by
$27 thousand or 1.1% for the three months ended  December 31, 1997 when compared
to the same period in 1996.  The increase  resulted from a $186 thousand or 3.5%
increase in interest  income which was  partially  offset by a $159  thousand or
5.7% increase in interest  expense.  For the six months ended December 31, 1997,
net interest income increased by $71 thousand or 1.4%, when compared to the same
period in 1996.  The increase  resulted  from a $671 million or 6.5% increase in
interest income which was partially  offset by a $600 thousand or 11.3% increase
in interest expense.

           Interest Income.  Interest on net loans receivable  increased by $220
thousand or 7.1% for the three months ended  December 31, 1997 when  compared to
the same period in 1996. The increase was  attributable  to an increase of $11.0
million in the average balance of net loans  receivable  outstanding,  which was
partially offset by a decrease in the weighted average yield earned on net loans
receivable  of 1 basis point for the three months  ended  December 31, 1997 when
compared to the same period in 1996. Interest on net loans receivable  increased
by $402  thousand  or 6.5% for the six  months  ended  December  31,  1997  when
compared to the same period in 1996.  The increase was  attributable  to a $10.8
million increase in the average balance of outstanding loans which was partially
offset by a 5 basis  point  decrease in the  weighted  average  yield  earned on
outstanding  loans for the six months ended  December 31, 1997. The increases in
the average loan balance outstanding for the three and six months ended December
31,  1997 were  primarily  attributable  to higher  levels  of real  estate  and
consumer loan originations.

           Interest on mortgage-backed  securities  decreased by $56 thousand or
8.2% for the three  months  ended  December  31, 1997 when  compared to the same
period in 1996. The decrease was  attributable to a $3.5 million decrease in the
average balance of mortgage-backed securities outstanding, partially offset by a
4 basis point increase in the weighted  average yield earned on  mortgage-backed
securities  for the three  months ended  December 31, 1997 when  compared to the
same  period in 1996.  Interest on  mortgage-backed  securities  decreased  $125
thousand or 8.9% for the six months ended  December  31, 1997.  The decrease was
primarily  attributable  to a $3.9  million  decrease in the average  balance of
mortgage-backed  securities  outstanding  partially  offset  by a 5 basis  point
increase in the weighted average yield earned on mortgage-backed  securities for
the six months ended December 31, 1997 when compared to the same period in 1996.
The decrease in the average balance of  mortgage-backed  securities  outstanding
was due to principal  repayment during the period.  The increase in the weighted
average yield earned, during both periods, was principally attributable to lower
levels of premium amortization due to slower rates of principal repayment,  when
compared to the same period in 1996.

           Interest and dividend income on interest-bearing  deposits with other
institutions,   investment   securities   and  FHLB  Stock  ("other   investment
securities")  increased  by $2.2  thousand  or 1.4% for the three  months  ended
December  31, 1997 when  compared to the same period in 1996.  The  increase was
attributable  to a $515  thousand  increase  in the  average  balance  of  other
investment  securities  outstanding and a 6 basis point increase in the weighted
average yield earned on other  investment  securities for the three months ended
December  31, 1997 when  compared to the same period in 1996.  Interest on other
investment  securities  increased  $394 thousand or 14% for the six months ended
December  31, 1997 when  compared to the same  period in 1996.  The  increase in
interest  income on other  investment  securities  was  attributable  to an $8.2
million  increase  in  the  average  balance  of  other  investment   securities
<PAGE>
outstanding  and a 23 basis point increase in the weighted  average yield earned
on other  investment  securities for the six months ended December 31, 1997 when
compared to the same period in 1996.  The  increases  in the average  balance of
other  investment  securities  during  both  three and six month  periods  ended
December 31, 1997 was principally attributable to purchases of commercial paper,
which were made in order to  capitalize  on  seasonally  high  calendar year end
commercial paper rates and for liquidity management.

           Interest Expense.  Interest expense on deposits and escrows decreased
by $14 thousand or 0.8% and  decreased by $4 thousand or 0.1% for  the three and
six months  ended  December 31, 1997,  respectively,  when  compared to the same
periods in 1996.  The  decrease in interest  expense on deposits and escrows was
principally  attributable  to a $2.6 million  decrease in the average balance of
interest-bearing  deposits and escrows for the three  months ended  December 31,
1997 when compared to the same period in 1996. For the six months ended December
31, 1997, the decrease in interest expense on deposits and escrows was primarily
attributable  to a 12 basis point decrease in the average yield paid on deposits
and escrows due to lower market interest rates, when compared to the same period
in 1996.

           Interest expense on other  borrowings  increased by $173 thousand and
increased by $604 thousand for the three and six months ended December 31, 1997,
respectively, when compared to the same periods in 1996. The increase associated
with both periods is primarily  attributable to funding the Company's investment
growth program.

           Provision for Loan Losses.  A provision for loan losses is charged to
earnings  to  bring  the  total  allowance  to 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,  past loan loss  experience,  current  economic  conditions,  volume,
growth and composition of the loan portfolio, and other relevant factors.

           The Company's  provision  for loan losses  decreased by $150 thousand
and $180  thousand  for the  three  and six  months  ended  December  31,  1997,
respectively,  when  compared  to the same  periods  in 1996.  The  decrease  in
provision  for  loan  losses  was  primarily  due to a  recovery  of  previously
established  loan loss reserves  attributable to the payoff of a commercial loan
participation.  At December 31, 1997,  the  Company's  total  allowance for loan
losses amounted to $1.9 million or 1.1% of the Company's total loan portfolio as
compared to $2.0 million, or 1.3% at June 30, 1997.

           Non-Interest  Income.  Total  non-interest  income  increased  by  $9
thousand  and  decreased  by $10  thousand  for the three and six  months  ended
December 31, 1997, respectively,  when compared to the same periods in 1996. The
increase in non-interest income for the three months ended December 31, 1997 was
primarily  attributable  to increased  automated  teller machine ("ATM") service
charges.  The decrease in non-interest  income for the six months ended December
31, 1997 was principally attributable to the absence of a $26 thousand gain from
the sale of securities in 1996, partially offset by increased service charges on
ATMs and transaction account service charges.

           Non-Interest  Expense.  Total  non-interest  expense  increased  $237
thousand  or 22% and  decreased  $839  thousand  or 25.6%  for the three and six
months ended December 31, 1997, respectively,  when compared to the same periods
in 1996.
<PAGE>
           Federal  deposit  insurance   premiums  increased  $28  thousand  and
decreased  $1.2 million or 95.6% for the three and six months ended December 31,
1997, respectively,  when compared to the same periods in 1996. The increase for
the quarter  ended  December 31, 1997 was primarily  attributable  to normal and
recurring  levels of SAIF premiums based upon deposit size. The decrease for the
six months ended December 31, 1997 was  principally  attributable to the absence
of a $1.1  million  one-time  charge to  recapitalize  the SAIF as  required  by
federal law.

           Compensation and employee benefits expense increased $219 thousand or
31.6% and  increased  $340  thousand or 25.6% for the three and six months ended
December 31, 1997, respectively, when compared to the same periods in 1996.

         Income Tax Expense.  Income tax expense  decreased by $135  thousand or
22.7% and increased by $311 thousand or 41.0% for the three and six months ended
December 31, 1997, respectively,  when compared to the same periods in 1996. The
change in income tax expense,  for both  periods,  was  attributable  to varying
levels of taxable  income  during the three and six months  ended  December  31,
1997.

LIQUIDITY AND CAPITAL RESOURCES


         Net cash provided by operating  activities  totaled $3.0 million during
the six  months  ended  December  31,  1997.  Net  cash  provided  by  operating
activities  was  primarily  comprised  of $1.9  million of net income and a $360
thousand decrease in accrued interest receivable.

         Funds provided by investing  activities totaled $2.4 million during the
six months  ended  December 31,  1997.  Primary  sources of funds during the six
months ended December 31, 1997 include $64.0 million of proceeds from repayments
of investment and mortgage-backed securities which was partially offset by $58.7
million used for purchases of investment  securities and a $2.8 million increase
in net loans receivable.

         Funds used by  financing  activities  totaled  $5.9 million for the six
months ended December 31, 1997.  Primary  financial uses include a $425 thousand
decrease  in  Federal  Home Loan  Bank  advances,  a $3.7  million  decrease  in
deposits, a $1.3 million decrease in advance payments by borrowers for taxes and
insurance,  and $839 thousand of cash dividends  disbursed,  which was partially
offset by a $388 thousand increase in other borrowings.  Financial  institutions
generally, including the Company, have experienced a certain degree of depositor
disintermediation to other investment alternatives. Management believes that the
degree of  disintermediation  experienced  by the Company has not had a material
impact on overall liquidity.  As of December 31, 1997, $71.7 million or 42.9% of
the  Company's  total  deposits  consisted  of  core  deposits.  Management  has
determined that it currently is maintaining adequate liquidity and is seeking to
better match funding sources with lending and investment opportunities.

         The  Company's  primary  sources of funds are  deposits,  amortization,
prepayments  and maturities of existing  loans,  mortgage-backed  securities and
investment  securities,  funds  from  operations,  and  funds  obtained  through
short-term borrowings. At December 31, 1997, the total approved loan commitments
outstanding  amounted to $3.3 million. At the same date commitments under unused
lines  of  credit  amounted  to $6.2  million  and  the  unadvanced  portion  of
construction loans approximated $12.5 million. Certificates of deposit scheduled
to  mature in one year or less at  December  31,  1997  totaled  $58.2  million.
Management  believes that a significant portion of maturing deposits will remain
with the Company.
<PAGE>
         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.  The Company has been able to generate  sufficient  cash
through the retail deposit market,  its traditional  funding source, and through
FHLB  advances and other  borrowings,  to provide the cash utilized in investing
activities.  The Company has established a $15.0 million line of credit with the
FHLB,  which is  scheduled to mature on March 25, 1998 and is subject to various
conditions,  including the pledging and delivery of acceptable  collateral.  The
primary  purpose  of the  line of  credit  is to serve  as a  back-up  liquidity
facility for the Company, however, the Company may from time to time utilize the
line of credit to purchase investment securities and fund other commitments.  In
addition,  the Company has access to the Federal  Reserve Bank discount  window.
Management  believes that the Company currently has adequate liquidity available
to respond to liquidity demands.

         On December 30, 1997 the Company's  Board of Directors  declared a cash
dividend  of $0.30 per share,  and a special  cash  dividend of $1.90 per share,
both  payable  February  19,  1998 to  shareholders  of  record  at the close of
business on February 9, 1998.  Dividends  will be 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 or that, if paid,  such  dividends  will not be
reduced or eliminated in future periods.

         As of December 31, 1997,  WVS Financial  Corp.  exceeded all regulatory
capital requirements and maintained Tier I and total risk-based capital equal to
$31.0  million  or 20.8% and $32.8  million  or  22.0%,  respectively,  of total
risk-weighted  assets,  and Tier I leverage capital of $31.0 million or 10.8% of
average quarterly assets.

         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  December  31,  1997  totaled
approximately $598 thousand or 0.2% of total assets as compared to $274 thousand
or 0.1% of total  assets as of June 30, 1997.  Nonperforming  assets at December
31, 1997  consisted  of $480  thousand in  commercial  real  estate  loans,  $52
thousand  in   single-family   loans,   and  $66  thousand  in  consumer  loans.
Approximately $1 thousand of additional interest income would have been recorded
during the six months ended  December 31, 1997, if the Company's  nonaccrual and
restructured loans had been current in accordance with their original loan terms
and outstanding throughout the quarter year ended December 31, 1997.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         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 U.S.  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.
<PAGE>
         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.

         The Federal Reserve Board,  together with the Office of the Comptroller
of the Currency and the Federal Deposit Insurance  Corporation,  adopted a Joint
Agency Policy  Statement on  Interest-Rate  Risk,  effective  June 26, 1996. The
policy statement  provides  guidance to examiners and bankers on sound practices
for  managing  interest  rate  risk,  which  will  form the  basis  for  ongoing
evaluation  of the  adequacy of  interest-rate  risk  management  at  supervised
institutions.  The policy statement also outlines  fundamental elements of sound
management  that have been  identified  in prior  Federal  Reserve  guidance and
discusses  the   importance  of  these  elements  in  the  context  of  managing
interest-rate  risk.  Specifically,  the guidance emphasizes the need for active
board  of  director  and  senior   management   oversight  and  a  comprehensive
risk-management  process that  effectively  identifies,  measures,  and controls
interest-rate  risk.  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 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.

         Several  techniques  might  be  used  by  an  institution  to  minimize
interest-rate risk. One approach used by the Company is to periodically  analyze
its assets and  liabilities and make future  financing and investment  decisions
based on payment streams, interest rates, contractual maturities,  and estimated
sensitivity  to actual or  potential  changes  in market  interest  rates.  Such
activities fall under the broad definition of  asset/liability  management.  The
Company's primary asset/liability management technique is the measurement of the
Company's  asset/liability  gap-that  is, the  difference  between the cash flow
amounts of interest-sensitive assets and liabilities that will be refinanced (or
repriced) during a given period. For example, if the asset amount to be repriced
exceeds the  corresponding  liability amount for a certain day, month,  year, or
<PAGE>
longer period,  the institution is in an asset-sensitive  gap position.  In this
situation,  net interest  income would increase if market interest rates rose or
decrease if market interest rates fell. If, alternatively, more liabilities than
assets will  reprice,  the  institution  is in a  liability-sensitive  position.
Accordingly, net interest income would decline when rates rose and increase when
rates fell.  Also, these examples assume that  interest-rate  changes for assets
and liabilities are of the same magnitude,  whereas actual interest-rate changes
generally differ in magnitude for assets and liabilities.

         An  institution  could  also  manage  interest-rate  risk  by:  selling
existing assets or repaying certain liabilities;  matching repricing periods for
new assets and  liabilities  for example,  by  shortening  terms of new loans or
investments;  hedging existing assets, liabilities, or anticipated transactions.
An institution might also invest in more complex financial  instruments intended
to hedge or otherwise change  interest-rate risk.  Interest-rate  swaps, futures
contracts,  options on futures, and other such derivative financial  instruments
often are used for this  purpose.  Because  these  instruments  are sensitive to
interest-rate  changes,  they  require  management  expertise  to be  effective.
Financial  institutions  are also  subject to  prepayment  risk in falling  rate
environments.  For example,  mortgage  loans and other  financial  assets may be
prepaid by a debtor so that the debtor may refund its  obligations at new, lower
rates.  The Company has not purchased  derivative  financial  instruments in the
past and does not  presently  intend to purchase  such  instruments  in the near
future.  Prepayments  of assets  carrying  higher  rates  reduce  the  Company's
interest  income and overall asset yields.  A large portion of an  institution's
liabilities may be short term or due on demand,  while most of its assets may be
invested in long-term  loans or investments.  Accordingly,  the Company seeks to
have in place  sources of cash to meet  short-term  demands.  These funds can be
obtained by  increasing  deposits,  borrowing,  or selling  assets.  Also,  FHLB
advances and wholesale borrowings have become increasingly  important sources of
liquidity for the Company.

         The following table provides  information about the Company's financial
instruments  that are sensitive to changes in interest  rates as of December 31,
1997  based on the  information  and  assumptions  set forth in the  notes.  The
Company believes that the assumptions  utilized,  which are based on statistical
data provided by a federal  regulatory  agency in the Company's market area, are
reasonable.  The Company had no  derivative  financial  instruments,  or trading
portfolio,  as of December 31, 1997. The expected maturity date values for loans
receivable,   mortgage-backed   securities,   and  investment   securities  were
calculated  by  adjusting  the  instrument's   contractual   maturity  date  for
expectations  of  prepayments,  as set forth in the notes.  Similarly,  expected
maturity date values for  interest-bearing  core deposits were calculated  based
upon estimates of the period over which the deposits would be outstanding as set
forth in the notes.  With respect to the Company's  adjustable rate instruments,
expected  maturity  date values  were  measured by  adjusting  the  instrument's
contractual  maturity date for expectations of prepayments,  as set forth in the
notes. From a risk management  perspective,  however,  the Company believes that
repricing  dates, as opposed to expected  maturity dates, may be a more relevant
metric in analyzing the value of such instruments.  Similarly, substantially all
of the  Company's  investment  securities  portfolio  is  comprised  of callable
government agency  securities.  Company borrowings were tabulated by contractual
maturity dates and without regard to any conversion or repricing dates.
<PAGE>
<TABLE>
<CAPTION>
                                           EXPECTED MATURITY DATE-QUARTER ENDED DECEMBER 31,
                                       --------------------------------------------------------------------
                                                                                                     There-                  Fair
                                         1998        1999        2000        2001        2002         after      Total       Value
                                       -------     -------     -------     -------     -------     --------     --------    --------
<S>                                    <C>         <C>         <C>         <C>         <C>         <C>          <C>         <C> 
ON-BALANCE SHEET FINANCIAL INSTRUMENTS 
Interest-earning assets:
  Loans receivable (1)(2)(3)(4)
  Fixed rate                           $25,795     $16,345     $12,534     $10,799     $ 8,208     $ 44,466     $118,147    $121,631
    Average interest rate                 8.36%       8.05%       7.94%       7.89%       7.79%        7.52%

  Adjustable rate                        8,764       7,423       6,276       5,295       4,456       12,725       44,939      46,852
    Average interest rate(5)              8.06%       8.07%       8.08%       8.09%       8.10%        7.80%
  Mortgage-backed securities
  Fixed rate                               ---       1,745         359       1,623         223       13,091       17,041      17,199
    Average interest rate                 0.00%       6.45%       6.36%       7.65%       7.40%        7.03%

  Adjustable rate                          ---         ---         ---         ---         ---       18,365       18,365      18,800
    Average interest rate(6)              0.00%       0.00%        0.00       0.00%       0.00%        7.16%

  Investments(7)                        14,983         500         ---         ---         ---       73,770       89,253      89,750
    Average interest rate                 7.19%       6.40%       0.00%       0.00%       0.00%        7.58%

  Interest-bearing deposits                908         ---         ---         ---         ---          ---          908         908
    Average interest rate                 5.77%       0.00%       0.00%       0.00%       0.00%        0.00%
                                       -------     -------     -------     -------     -------     --------     --------    --------
        Total                          $50,450     $26,013     $19,169     $17,717     $12,887     $162,417     $288,653    $295,140
                                    

Interest-bearing liabilities:
  Interest-bearing deposits
   and escrows(8)(9)(10)               $86,629     $23,050     $23,050      $7,425      $7,425      $21,786     $169,365    $169,587
    Average interest rate                 4.48%       4.41%       4.41%       3.57%       3.57%    
    2.30%

  Borrowings                            25,103       8,000         ---      30,000      21,500          ---       84,603      84,327
    Average interest rate                 5.84%       5.89%       0.00%       5.72%       5.80%        0.00%
                                       -------     -------     -------     -------     -------     --------     --------    --------
        Total                         $111,732     $31,050     $23,050     $37,425     $28,925      $21,786     $253,968    $253,914
                                        
</TABLE>
(1)  Net of  undisbursed  loan  proceeds and does not include net deferred  loan
     fees or the allowance for loan losses.
(2)  For  single-family  residential  loans,  assumes  annual  amortization  and
     prepayment rate at 15% for adjustable  rate loans,  and 9% to 37% for fixed
     rate loans. For  multi-family  residential  loans and other loans,  assumes
     amortization and prepayment rate of 12%.
(3)  For second mortgage loans,  assumes annual amortization and prepayment rate
     of 18%.
(4)  Consumer loans assumes amortization and prepayment rate of 13%.
(5)  Substantially  all of the  Company's  adjustable  rate loans  reprice on an
     annual basis based upon changes in the one-year  constant maturity treasury
     index with various market based annual and lifetime  interest rate caps and
     floors.
(6)  Substantially  all  of  the  Company's   adjustable  rate   mortgage-backed
     securities  reprice on a monthly  basis based upon changes in the one month
     LIBOR index with various lifetime caps and floors.
<PAGE>
(7)  Totals include the Company's investment in Federal Home Loan Bank stock.
(8)  For regular savings accounts, assumes an annual decay rate of 17% for three
     years or less,  16% for more than three through five years and 14% for more
     than five years.
(9)  For NOW accounts, assumes an annual decay rate of 37% for one year or less,
     32% for more than one  through  three  years  and 17% for more  than  three
     years.
(10) For money market deposit accounts,  assumes an annual decay rate of 79% for
     one year or less and 31% for more than one year.


         The Company's  loans  receivable  increased from $160.7 million at June
30, 1997 to $163.1 million at December 31, 1997.  The $2.4 million  increase was
primarily  funded  through a reduction  of the  Company's  investment  portfolio
during the quarter ended December 31, 1997. The Savings Bank's  interest-bearing
deposits and escrows  decreased  from $174.4  million at June 30, 1997 to $169.4
million at December 31, 1997.  The $5.0 million or 2.9%  decrease was  primarily
attributable  to a $4.2  million  decrease in time  deposits  and a $1.3 million
decrease in escrows  which was partially  offset by a $576 thousand  increase in
non-interest bearing deposit accounts.

         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 December 31,
1997.
<TABLE>
<CAPTION>
                            Anticipated Transactions
                            ------------------------
<S>                                                   <C>
                  Undisbursed construction and
                      land development loans
                        Fixed rate ...........        $ 5,130
                                                         8.79%
                        Adjustable rate ......          7,324
                                                         9.43%
                  Undisbursed lines of credit
                        Adjustable rate ......          6,172
                                                         8.56%
                  Loan origination commitments
                        Fixed rate ...........          1,895
                                                         9.13%
                        Adjustable rate ......          1,433
                                                         7.92%
                  Letters of credit
                        Adjustable rate ......             82
                                                        11.50%
                                                      -------
                                                      $22,036

</TABLE>


         The  Company  believes  that  there  were no  material  changes  to the
Company's anticipated transactions during the quarter ended December 31, 1997.
<PAGE>



PART II - OTHER INFORMATION



ITEM 1.           Legal Proceedings

                See  discussion  contained  in  Note  3 of  Notes  to  Unaudited
Consolidated Financial Statements.

ITEM 2.           Changes in Securities

                  Not applicable.

ITEM 3.           Defaults Upon Senior Securities

                  Not applicable.

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

                  Not applicable.

ITEM 5.           Other Information

                  Not applicable.

ITEM 6.           Exhibits and Reports on Form 8-K

                  (a)      The  following  exhibit is filed as part of this form
                           10-Q, and this list includes the Exhibit Index.

                  Number                   Description                          
                  ------                   -----------                          
                    11              Statement re computation of per      
                                    share earnings
 

 
                    27              Financial data schedule              

                  (b)      Not applicable.

<PAGE>





                                   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.



February 6, 1998                            BY: /s/Robert C. Sinewe
                                                -------------------
Date                                            Robert C. Sinewe
                                                President and Chief Executive
                                                Officer



February 6, 1998                            BY: /s/David J. Bursic
                                                ------------------
Date                                            David J. Bursic
                                                Senior Vice President, Treasurer
                                                and Chief Financial Officer