##### Table of Contents





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 March 31, 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 May 11, 2010: 2,061,245 shares Common Stock, $.01 par value.









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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

INDEX



|         |  |                                                                                                                                          |  |     
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I.  |  | Financial Information                                                                                                                    |  | Page
|         |  |                                                                                                                                         
|Item 1.  |  | Financial Statements                                                                                                                     |  |     
|         |  |                                                                                                                                         
|         |  | Consolidated Balance Sheet as of March 31, 2010 and June 30, 2009 (Unaudited)                                                            |  | 3   
|         |  | Consolidated Statement of Income for the Three and Nine Months Ended March 31, 2010 and 2009 (Unaudited)                                 |  | 4   
|         |  | Consolidated Statement of Changes in Stockholders Equity for the Nine Months Ended March 31, 2010 (Unaudited)                           |  | 5   
|         |  | Consolidated Statement of Cash Flows for the Nine Months Ended March 31, 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 and Nine
Months Ended March 31, 2010 |  | 27  
|         |  |                                                                                                                                         
|Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                               |  | 35  
|         |  |                                                                                                                                         
|Item 4.  |  | Controls and Procedures                                                                                                                  |  | 42  
|         |  |                                                                                                                                         
|Item 4T. |  | Controls and Procedures                                                                                                                  |  | 42  
|         |  |                                                                                                                                         
|PART II. |  | Other Information                                                                                                                        |  | Page
|         |  |                                                                                                                                         
|Item 1.  |  | Legal Proceedings                                                                                                                        |  | 43  
|         |  |                                                                                                                                         
|Item 1A. |  | Risk Factors                                                                                                                             |  | 43  
|         |  |                                                                                                                                         
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                              |  | 43  
|         |  |                                                                                                                                         
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                          |  | 44  
|         |  |                                                                                                                                         
|Item 4.  |  | (Removed and Reserved)                                                                                                                   |  | 44  
|         |  |                                                                                                                                         
|Item 5.  |  | Other Information                                                                                                                        |  | 44  
|         |  |                                                                                                                                         
|Item 6.  |  | Exhibits                                                                                                                                 |  | 44  
|         |  |                                                                                                                                         
|         |  | Signatures                                                                                                                               |  | 45  



2



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WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

(In thousands)



|                                                                                               |  |                |         |   |               |   |         |  
|---------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ------------- | - | ------- | -
|                                                                                               |  | March 31, 2010 |         |   | June 30, 2009 |  
|Assets                                                                                         |  |                |         |   |               |   |         |  
|Cash and due from banks                                                                        |  | $              | 395     |   |               | $ | 522     |  
|Interest-earning demand deposits                                                               |  |                | 12,570  |   |               |   | 21,306  |  
|                                                                                               |  |                |         |   |               |   |         |  
|Total cash and cash equivalents                                                                |  |                | 12,965  |   |               |   | 21,828  |  
|Certificates of deposit                                                                        |  |                | 9,302   |   |               |   | 24,719  |  
|Trading assets                                                                                 |  |                |        |   |               |   |        |  
|Investment securities available-for-sale (amortized cost of $0 and $500)                       |  |                |        |   |               |   | 493     |  
|Investment securities held-to-maturity (market value of $144,372 and $124,366)                 |  |                | 140,515 |   |               |   | 123,128 |  
|Mortgage-backed securities available-for-sale (amortized cost of $2,030 and $2,062)            |  |                | 2,193   |   |               |   | 2,075   |  
|Mortgage-backed securities held-to-maturity (market value of $131,988 and $166,695)            |  |                | 137,101 |   |               |   | 174,129 |  
|Net loans receivable (allowance for loan losses of $646 and $662)                              |  |                | 58,817  |   |               |   | 58,148  |  
|Accrued interest receivable                                                                    |  |                | 2,107   |   |               |   | 2,347   |  
|Federal Home Loan Bank stock, at cost                                                          |  |                | 10,875  |   |               |   | 10,875  |  
|Premises and equipment                                                                         |  |                | 696     |   |               |   | 692     |  
|Other assets                                                                                   |  |                | 2,617   |   |               |   | 1,000   |  
|                                                                                               |  |                |         |   |               |   |         |  
|TOTAL ASSETS                                                                                   |  | $              | 377,188 |   |               | $ | 419,434 |  
|                                                                                               |  |                |         |   |               |   |         |  
|                                                                                               |  |               
|Liabilities and Stockholders Equity                                                           |  |                |         |   |               |   |         |  
|Liabilities:                                                                                   |  |                |         |   |               |   |         |  
|Savings Deposits:                                                                              |  |                |         |   |               |   |         |  
|Non-interest-bearing accounts                                                                  |  | $              | 13,282  |   |               | $ | 13,095  |  
|NOW accounts                                                                                   |  |                | 18,385  |   |               |   | 17,743  |  
|Savings accounts                                                                               |  |                | 34,656  |   |               |   | 32,686  |  
|Money market accounts                                                                          |  |                | 23,729  |   |               |   | 24,485  |  
|Certificates of deposit                                                                        |  |                | 59,842  |   |               |   | 57,465  |  
|Advance payments by borrowers for taxes and insurance                                          |  |                | 607     |   |               |   | 841     |  
|                                                                                               |  |                |         |   |               |   |         |  
|Total savings deposits                                                                         |  |                | 150,501 |   |               |   | 146,315 |  
|Federal Home Loan Bank advances: long-term                                                     |  |                | 130,079 |   |               |   | 130,079 |  
|Federal Home Loan Bank advances: short-term                                                    |  |                | 10,000  |   |               |   |        |  
|Federal Reserve Bank short-term borrowings                                                     |  |                | 54,900  |   |               |   | 108,800 |  
|Other short-term borrowings                                                                    |  |                |        |   |               |   |        |  
|Accrued interest payable                                                                       |  |                | 949     |   |               |   | 1,151   |  
|Other liabilities                                                                              |  |                | 1,645   |   |               |   | 1,966   |  
|                                                                                               |  |                |         |   |               |   |         |  
|TOTAL LIABILITIES                                                                              |  |                | 348,074 |   |               |   | 388,311 |  
|                                                                                               |  |                |         |   |               |   |         |  
|                                                                                               |  |               
|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; 3,805,636 and 3,805,636 shares issued |  |                | 38      |   |               |   | 38      |  
|Additional paid-in capital                                                                     |  |                | 21,409  |   |               |   | 21,392  |  
|Treasury stock: 1,744,391 and 1,735,551 shares at cost, respectively                           |  |                | (26,655 | ) |               |   | (26,531 | )
|Retained earnings, substantially restricted                                                    |  |                | 35,606  |   |               |   | 36,220  |  
|Accumulated other comprehensive (loss) income                                                  |  |                | (1,284  | ) |               |   | 4       |  
|                                                                                               |  |                |         |   |               |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                     |  |                | 29,114  |   |               |   | 31,123  |  
|                                                                                               |  |                |         |   |               |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                     |  | $              | 377,188 |   |               | $ | 419,434 |  
|                                                                                               |  |                |         |   |               |   |         |  

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 EndedMarch 31, |           | Nine Months EndedMarch 31,
|                                                                              |  | 2010                        |           |                            | 2009 |   | 2010      |  |   | 2009     
|INTEREST AND DIVIDEND INCOME:                                                 |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Loans                                                                         |  | $                           | 969       |                            |      | $ | 989       |  | $ | 2,996     |   |  | $ | 3,026    
|Investment securities                                                         |  |                             | 1,436     |                            |      |   | 1,676     |  |   | 4,260     |   |  |   | 5,165    
|Mortgage-backed securities                                                    |  |                             | 507       |                            |      |   | 1,018     |  |   | 1,618     |   |  |   | 4,997    
|Certificates of deposit                                                       |  |                             | 52        |                            |      |   | 261       |  |   | 364       |   |  |   | 499      
|Interest-earning demand deposits                                              |  |                             | 1         |                            |      |   |          |  |   | 3         |   |  |   | 1        
|Federal Home Loan Bank stock                                                  |  |                             |          |                            |      |   |          |  |   |          |   |  |   | 137      
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Total interest and dividend income                                            |  |                             | 2,965     |                            |      |   | 3,944     |  |   | 9,241     |   |  |   | 13,825   
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|INTEREST EXPENSE:                                                             |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Deposits                                                                      |  |                             | 260       |                            |      |   | 458       |  |   | 952       |   |  |   | 1,757    
|Federal Home Loan Bank advances                                               |  |                             | 1,761     |                            |      |   | 1,815     |  |   | 5,353     |   |  |   | 5,754    
|Federal Reserve Bank short-term borrowings                                    |  |                             | 51        |                            |      |   | 82        |  |   | 136       |   |  |   | 232      
|Other short-term borrowings                                                   |  |                             | 2         |                            |      |   | 12        |  |   | 6         |   |  |   | 311      
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Total interest expense                                                        |  |                             | 2,074     |                            |      |   | 2,367     |  |   | 6,447     |   |  |   | 8,054    
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|NET INTEREST INCOME                                                           |  |                             | 891       |                            |      |   | 1,577     |  |   | 2,794     |   |  |   | 5,771    
|PROVISION (RECOVERY) FOR LOAN LOSSES                                          |  |                             | (4        | )                          |      |   | 14        |  |   | (10       | ) |  |   | 35       
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR LOAN LOSSES                |  |                             | 895       |                            |      |   | 1,563     |  |   | 2,804     |   |  |   | 5,736    
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|NON-INTEREST INCOME:                                                          |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Service charges on deposits                                                   |  |                             | 63        |                            |      |   | 70        |  |   | 209       |   |  |   | 243      
|Gains on trading assets                                                       |  |                             | 9         |                            |      |   |          |  |   | 10        |   |  |   |         
|Investment securities gains                                                   |  |                             |          |                            |      |   |          |  |   | 1         |   |  |   |         
|Other than temporary impairment losses                                        |  |                             | (2,202    | )                          |      |   |          |  |   | (2,202    | ) |  |   |         
|Portion of loss recognized in other comprehensive income (OCI) (before taxes) |  |                             | 2,107     |                            |      |   |          |  |   | 2,107     |   |  |   |         
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Net impairment loss recognized in earnings                                    |  |                             | (95       | )                          |      |   |          |  |   | (95       | ) |  |   |         
|Other                                                                         |  |                             | 62        |                            |      |   | 71        |  |   | 200       |   |  |   | 221      
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Total non-interest income                                                     |  |                             | 39        |                            |      |   | 141       |  |   | 325       |   |  |   | 464      
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|NON-INTEREST EXPENSE:                                                         |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Salaries and employee benefits                                                |  |                             | 492       |                            |      |   | 496       |  |   | 1,466     |   |  |   | 1,564    
|Occupancy and equipment                                                       |  |                             | 88        |                            |      |   | 88        |  |   | 241       |   |  |   | 252      
|Data processing                                                               |  |                             | 61        |                            |      |   | 62        |  |   | 181       |   |  |   | 187      
|Correspondent bank service charges                                            |  |                             | 22        |                            |      |   | 27        |  |   | 68        |   |  |   | 73       
|Deposit insurance premium                                                     |  |                             | 82        |                            |      |   | 6         |  |   | 234       |   |  |   | 19       
|Other                                                                         |  |                             | 135       |                            |      |   | 153       |  |   | 525       |   |  |   | 670      
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Total non-interest expense                                                    |  |                             | 880       |                            |      |   | 832       |  |   | 2,715     |   |  |   | 2,765    
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|INCOME BEFORE INCOME TAXES (BENEFIT)                                          |  |                             | 54        |                            |      |   | 872       |  |   | 414       |   |  |   | 3,435    
|INCOME TAXES (BENEFIT)                                                        |  |                             | (20       | )                          |      |   | 290       |  |   | 36        |   |  |   | 1,084    
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|NET INCOME                                                                    |  | $                           | 74        |                            |      | $ | 582       |  | $ | 378       |   |  | $ | 2,351    
|                                                                              |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|                                                                              |  |                             |           |                           
|EARNINGS PER SHARE:                                                           |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Basic                                                                         |  | $                           | 0.04      |                            |      | $ | 0.28      |  | $ | 0.18      |   |  | $ | 1.09     
|Diluted                                                                       |  | $                           | 0.04      |                            |      | $ | 0.28      |  | $ | 0.18      |   |  | $ | 1.09     
|                                                                              |  |                             |           |                           
|AVERAGE SHARES OUTSTANDING:                                                   |  |                             |           |                            |      |   |           |  |   |           |   |  |   |          
|Basic                                                                         |  |                             | 2,065,027 |                            |      |   | 2,106,399 |  |   | 2,068,036 |   |  |   | 2,152,819
|Diluted                                                                       |  |                             | 2,065,027 |                            |      |   | 2,106,399 |  |   | 2,068,036 |   |  |   | 2,152,825

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, 2009                                                                          |  | $           | 38 |                          | $ | 21,392        |  | $ | (26,531                                 | ) |  | $                                          | 36,220 |   |       | $ | 4      |   |  | $ | 31,123 |  
|                                                                                                  |  |             |    |                          |   |              
|Comprehensive loss:                                                                               |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|                                                                                                  |  |             |    |                          |   |              
|Net Income                                                                                        |  |             |    |                          |   |               |  |   |                                         |   |  |                                            | 378    |   |       |   |        |   |  |   | 378    |  
|Other comprehensive income:                                                                       |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|Non-credit unrealized holding losses on securities with OTTI, net of income tax effect of ($ 716) |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   | (1,391 | ) |  |   | (1,391 | )
|Change in unrealized holding losses on securities, net of income tax effect of $ 53               |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   | 103    |   |  |   | 103    |  
|                                                                                                  |  |             |    |                          |   |              
|Comprehensive loss                                                                                |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   | (910   | )
|                                                                                                  |  |             |    |                          |   |              
|Purchase of 8,840 shares of treasury stock                                                        |  |             |    |                          |   |               |  |   | (124                                    | ) |  |                                            |        |   |       |   |        |   |  |   | (124   | )
|                                                                                                  |  |             |    |                          |   |              
|Expense of stock options awarded                                                                  |  |             |    |                          |   | 17            |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   | 17     |  
|                                                                                                  |  |             |    |                          |   |              
|Cash dividends declared ($0.48 per share)                                                         |  |             |    |                          |   |               |  |   |                                         |   |  |                                            | (992   | ) |       |   |        |   |  |   | (992   | )
|                                                                                                  |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  
|                                                                                                  |  |             |    |                          |   |              
|Balance at March 31, 2010                                                                         |  | $           | 38 |                          | $ | 21,409        |  | $ | (26,655                                 | ) |  | $                                          | 35,606 |   |       | $ | (1,284 | ) |  | $ | 29,114 |  
|                                                                                                  |  |             |    |                          |   |               |  |   |                                         |   |  |                                            |        |   |       |   |        |   |  |   |        |  

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)



|                                                                              |  |                            |         |   |      |   |          |  
|----------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | -------- | -
|                                                                              |  | Nine Months EndedMarch 31, |        
|                                                                              |  | 2010                       |         |   | 2009 |  
|OPERATING ACTIVITIES                                                          |  |                            |         |   |      |   |          |  
|                                                                              |  |                           
|Net income                                                                    |  | $                          | 378     |   |      | $ | 2,351    |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                            |         |   |      |   |          |  
|(Recovery) provision for loan losses                                          |  |                            | (10     | ) |      |   | 35       |  
|Net impairment loss recognized in earnings                                    |  |                            | 95      |   |      |   |         |  
|Depreciation                                                                  |  |                            | 76      |   |      |   | 78       |  
|Investment securities gains                                                   |  |                            | (1      | ) |      |   |         |  
|Amortization of discounts, premiums and deferred loan fees                    |  |                            | 1,099   |   |      |   | (337     | )
|Accretion of discounts  commercial paper                                     |  |                            |        |   |      |   | (353     | )
|Trading gains                                                                 |  |                            | (10     | ) |      |   |         |  
|Purchase of trading securities                                                |  |                            | (1,954  | ) |      |   |         |  
|Proceeds from sale of trading securities                                      |  |                            | 1,964   |   |      |   |         |  
|(Increase) decrease in accrued and deferred taxes                             |  |                            | (673    | ) |      |   | 433      |  
|Decrease (increase) in accrued interest receivable                            |  |                            | 240     |   |      |   | (447     | )
|Decrease in accrued interest payable                                          |  |                            | (202    | ) |      |   | (358     | )
|Increase (decrease) in deferred director compensation payable                 |  |                            | 9       |   |      |   | (798     | )
|Increase in prepaid federal deposit insurance                                 |  |                            | (958    | ) |      |   |         |  
|Other, net                                                                    |  |                            | 633     |   |      |   | (61      | )
|                                                                              |  |                            |         |   |      |   |          |  
|Net cash provided by operating activities                                     |  |                            | 686     |   |      |   | 543      |  
|                                                                              |  |                            |         |   |      |   |          |  
|                                                                              |  |                           
|INVESTING ACTIVITIES                                                          |  |                            |         |   |      |   |          |  
|                                                                              |  |                           
|Available-for-sale:                                                           |  |                            |         |   |      |   |          |  
|Proceeds from repayments of investments and mortgage-backed securities        |  |                            | 31      |   |      |   | 7,531    |  
|Proceeds from sales of investments                                            |  |                            | 501     |   |      |   |         |  
|Held-to-maturity:                                                             |  |                            |         |   |      |   |          |  
|Purchases of investment securities                                            |  |                            | (75,393 | ) |      |   | (173,270 | )
|Purchases of mortgage-backed securities                                       |  |                            | (15,451 | ) |      |   |         |  
|Proceeds from repayments of investments                                       |  |                            | 56,941  |   |      |   | 155,665  |  
|Proceeds from repayments of mortgage-backed securities                        |  |                            | 50,321  |   |      |   | 14,457   |  
|Purchases of certificates of deposit                                          |  |                            | (9,755  | ) |      |   | (27,111  | )
|Maturities/redemptions of certificates of deposit                             |  |                            | 25,159  |   |      |   | 8,948    |  
|Increase in net loans receivable                                              |  |                            | (725    | ) |      |   | (2,534   | )
|Purchase of Federal Home Loan Bank stock                                      |  |                            |        |   |      |   | (13,242  | )
|Redemption of Federal Home Loan Bank stock                                    |  |                            |        |   |      |   | 9,298    |  
|Acquisition of premises and equipment                                         |  |                            | (80     | ) |      |   | (28      | )
|                                                                              |  |                            |         |   |      |   |          |  
|Net cash provided by (used for) investing activities                          |  |                            | 31,549  |   |      |   | (20,286  | )
|                                                                              |  |                            |         |   |      |   |          |  



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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In thousands)



|                                                                      |  |                            |         |   |      |   |         |  
|--------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                      |  | Nine Months EndedMarch 31, |        
|                                                                      |  | 2010                       |         |   | 2009 |  
|FINANCING ACTIVITIES                                                  |  |                            |         |   |      |   |         |  
|                                                                      |  |                           
|Net increase in transaction and savings accounts                      |  |                            | 1,775   |   |      |   | 2,121   |  
|Net increase (decrease) in certificates of deposit                    |  |                            | 2,377   |   |      |   | (5,453  | )
|Proceeds from Federal Home Loan Bank long-term advances               |  |                            |        |   |      |   |        |  
|Repayments of Federal Home Loan Bank long-term advances               |  |                            |        |   |      |   | (5,500  | )
|Net increase in FHLB short-term advances                              |  |                            | 10,000  |   |      |   |        |  
|Net (decrease) increase in Federal Reserve Bank short-term borrowings |  |                            | (53,900 | ) |      |   | 47,100  |  
|Net decrease in other short-term borrowings                           |  |                            |        |   |      |   | (15,100 | )
|Net decrease in advance payments by borrowers for taxes and insurance |  |                            | (234    | ) |      |   | (239    | )
|Cash dividends paid                                                   |  |                            | (992    | ) |      |   | (1,037  | )
|Funds used for purchase of treasury stock                             |  |                            | (124    | ) |      |   | (2,378  | )
|                                                                      |  |                            |         |   |      |   |         |  
|Net cash (used for) provided by financing activities                  |  |                            | (41,098 | ) |      |   | 19,514  |  
|                                                                      |  |                            |         |   |      |   |         |  
|                                                                      |  |                           
|Decrease in cash and cash equivalents                                 |  |                            | (8,863  | ) |      |   | (229    | )
|                                                                      |  |                           
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                  |  |                            | 21,828  |   |      |   | 1,826   |  
|                                                                      |  |                            |         |   |      |   |         |  
|                                                                      |  |                           
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                        |  | $                          | 12,965  |   |      | $ | 1,597   |  
|                                                                      |  |                            |         |   |      |   |         |  
|                                                                      |  |                           
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                     |  |                            |         |   |      |   |         |  
|                                                                      |  |                           
|Cash paid during the period for:                                      |  |                            |         |   |      |   |         |  
|Interest on deposits, escrows and borrowings                          |  | $                          | 6,649   |   |      | $ | 8,412   |  
|Income taxes                                                          |  | $                          | 38      |   |      | $ | 631     |  
|                                                                      |  |                           
|Non-cash items:                                                       |  |                            |         |   |      |   |         |  
|Due to Federal Reserve Bank                                           |  | $                          | 557     |   |      | $ | 1,093   |  
|Educational Improvement Tax Credit                                    |  | $                          | 32      |   |      | $ | 135     |  

See accompanying notes
to unaudited consolidated financial statements.



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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 and nine months ended March 31, 2010, are not necessarily
indicative of the results which may be expected for the entire fiscal year.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2009-01, Topic 105  Generally Accepted Accounting Principles  FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.The Codification is the single
source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification does not change current GAAP, but is intended to simplify user access to all authoritative GAAP by providing all the authoritative
literature related to a particular topic in one place. Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative GAAP for SEC registrants. The adoption of this standard did not have a material
impact on the Companys results of operations or financial position.

In September 2006, the FASB issued an
accounting standard related to fair value measurements, which was effective for the Company on July 1, 2008. This standard defined fair value, established a framework for measuring fair value, and expanded disclosure requirements about
fair value measurements. On July 1, 2008 the Company adopted this accounting standard related to fair value measurements for the Companys financial assets and financial liabilities. The Company deferred adoption of this
accounting standard related to fair value measurements for the Companys nonfinancial assets and nonfinancial liabilities, except for those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until
July 1, 2009. The adoption of this accounting standard related to fair value measurements for the Companys nonfinancial assets and nonfinancial liabilities had no impact on retained earnings and is not expected to have a material
impact on the Companys statements of income and condition. This accounting standard was subsequently codified into ASC Topic 820, Fair Value Measurements and Disclosures.

In December 2007, the FASB issued an accounting standard related to noncontrolling interests in consolidated financial statements,
which is effective for fiscal years beginning on or after December 15, 2008. This standard establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Among
other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated
income statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. This accounting standard was subsequently codified into ASC 810-10, Consolidation. The adoption of this standard
did not have a material effect on the Companys financial statements.



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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In June 2008, the FASB issued accounting guidance related to determining whether
instruments granted in share-based payment transactions are participating securities, which is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. This guidance
clarified that instruments granted in share-based payment transactions can be participating securities prior to the requisite service having been rendered. A basic principle of this guidance is that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of EPS pursuant to the two-class method. All prior-period EPS data presented (including
interim financial statements, summaries of earnings, and selected financial data) are required to be adjusted retrospectively to conform with this guidance. This accounting guidance was subsequently codified into ASC Topic 260, Earnings Per
Share. The adoption of this new guidance did not have a material impact on the Companys results of operations or financial position.

In April 2009, the FASB issued new guidance impacting ASC Topic 820, Fair Value Measurements and Disclosures. This ASC provides
additional guidance in determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in
determining fair values when markets have become inactive. The adoption of this new guidance did not have a material effect on the Companys results of operations or financial position.

In April 2009, the FASB issued new guidance impacting ASC 825-10-50, Financial Instruments, which relates to fair value
disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. This guidance amended existing GAAP to require disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial statements. This guidance is effective for interim and annual periods ending after June 15, 2009. The adoption of this new guidance did not have a material impact on the
Companys financial position or results of operations.

In April 2009, the FASB issued new guidance impacting ASC 320-10,
Investments  Debt and Equity Securities, which provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. This guidance is effective for interim and
annual periods ending after June 15, 2009. The adoption of this new guidance did not have a material impact on the Companys financial position or results of operations.

In June 2009, the FASB issued an accounting standard related to the accounting for transfers of financial assets, which is effective
for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. This standard enhances reporting about transfers of financial assets, including securitizations, and where companies have continuing exposure to
the risks related to transferred financial assets. This standard eliminates the concept of a qualifying special-purpose entity and changes the requirements for derecognizing financial assets. This standard also requires additional
disclosures about all continuing involvements with transferred financial assets including information about gains and losses resulting from transfers during the period. This accounting standard was subsequently codified into ASC Topic 860,
Transfers and Servicing. The adoption of this standard is not expected to have a material effect on the Companys results of operations or financial position.

In August 2009, the FASB issued ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)  Measuring Liabilities
at Fair Value. This ASU provides amendments for fair value measurements of liabilities. It provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more techniques. ASU 2009-05 also clarifies that when estimating a fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other
inputs relating to the existence of a restriction that prevents the transfer of the liability. ASU 2009-05 is effective for the first reporting period (including interim periods) beginning after issuance or fourth quarter 2009. The
adoption of this new guidance did not have a material impact on the Companys financial position or results of operations.



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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In September 2006, the FASB issued an accounting standard related to fair value
measurements, which was effective for the Company on July 1, 2009. This standard defined fair value, established a framework for measuring fair value, and expanded disclosure requirements about fair value measurements. On July 1,
2009, the provisions of this accounting standard became effective for the Companys financial assets and financial liabilities and on January 1, 2009 for nonfinancial assets and nonfinancial liabilities. This accounting standard was
subsequently codified into ASC Topic 820, Fair Value Measurements and Disclosures. See Notes 9 and 10 for the necessary disclosures.

On April 1, 2009, the FASB issued new authoritative accounting guidance under ASC Topic 805, Business Combinations,
which became effective for periods beginning after December 15, 2008. ASC Topic 805 applies to all transactions and other events in which one entity obtains control over one or more other businesses. ASC Topic 805 requires an
acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and
measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost-allocation process required under previous
accounting guidance whereby the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. ASC Topic 805 requires acquirers to expense acquisition-related costs as
incurred rather than allocating such costs to the assets acquired and liabilities assumed, as was previously the case under prior accounting guidance. Assets acquired and liabilities assumed in a business combination that arise from contingencies
are to be recognized at fair value if fair value can be reasonably estimated. If fair value of such an asset or liability cannot be reasonably estimated, the asset or liability would generally be recognized in accordance with ASC Topic 450,
Contingencies. Under ASC Topic 805, the requirements of ASC Topic 420, Exit or Disposal Cost Obligations, would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies
are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting and, instead, that contingency would be subject to the probable and
estimable recognition criteria of ASC Topic 450, Contingencies. The adoption of this new guidance did not have a material impact on the Companys financial position or results of operations.

In June 2009, the FASB issued new authoritative accounting guidance under ASC Topic 810, Consolidation, which amends
prior guidance to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an
entity is based on, among other things, an entitys purpose and design and a companys ability to direct the activities of the entity that most significantly impact the entitys economic performance. The new authoritative accounting
guidance requires additional disclosures about the reporting entitys involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entitys financial
statements. The new authoritative accounting guidance under ASC Topic 810 will be effective January 1, 2010 and is not expected to have a significant impact on the Companys financial statements.

On December 30, 2008, the FASB issued new authoritative accounting guidance under ASC Topic 715, Compensation 
Retirement Benefits, which provides guidance related to an employers disclosures about plan assets of defined benefit pension or other post-retirement benefit plans. Under ASC Topic 715, disclosures should provide users of financial
statements with an understanding of how investment allocation decisions are made, the factors that are pertinent to an understanding of investment policies and strategies, the major categories of plan assets, the inputs and valuation techniques used
to measure the fair value of plan assets, the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period and significant concentrations of risk within plan assets. This guidance is effective
fiscal year ending after December 15, 2009. The new authoritative accounting guidance under ASC Topic 715 became effective for the Companys financial statements for the year-ended June 30, 2010. The adoption of this new guidance
is not expected to have a material impact on the Companys financial statements.



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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In December 2009, the FASB issued ASU 2009-16, Accounting for Transfer of
Financial Assets. ASU 2009-16 provides guidance to improve the relevance, representational faithfulness, and comparability of the information that an entity provides in its financial statements about a transfer of financial assets; the effects
of a transfer on its financial position, financial performance, and cash flows; and a transferors continuing involvement, if any, in transferred financial assets. ASU 2009-16 is effective for annual periods beginning after November 15,
2009 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 December 2009, the FASB issued ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest
Entities. The objective of ASU 2009-17 is to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. ASU 2009-17 is effective for
annual periods beginning after November 15, 2009 and for interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Companys financial position.

In September 2009, the FASB issued new guidance impacting Topic 820. This creates a practical expedient to measure the fair value of an
alternative investment that does not have a readily determinable fair value. This guidance also requires certain additional disclosures. This guidance is effective for interim and annual periods ending after December 15, 2009. The Company has
presented the necessary disclosures in the Note 8 herein.

In October 2009, the FASB issued ASU 2009-15, Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. ASU 2009-15 amends Subtopic 470-20 to expand accounting and reporting guidance for own-share lending arrangements issued in contemplation of
convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The adoption of
this guidance is not expected to have a significant impact on the Companys financial statements.

In January 2010, the
FASB issued ASU 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash  a consensus of the FASB Emerging Issues Task Force. ASU 2010-01 clarifies that the stock portion of a
distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in
EPS prospectively and is not a stock dividend. ASU 2010-01 is effective for interim and annual periods ending on or after December 15, 2009 and should be applied on a retrospective basis. The adoption of this guidance did not have a material
impact on the Companys financial position or results of operation.

In January 2010, the FASB issued ASU 2010-02,
Consolidation (Topic 810): Accounting and reporting for Decreases in Ownership of a Subsidiary  a Scope Clarification. ASU 2010-02 amends Subtopic 810-10 to address implementation issues related to changes in ownership provisions
including clarifying the scope of the decrease in ownership and additional disclosures. ASU 2010-02 is effective beginning in the period that an entity adopts Statement 160. If an entity has previously adopted Statement 160, ASU 2010-02 is effective
beginning in the first interim or annual reporting period ending on or after December 15, 2009 and should be applied retrospectively to the first period Statement 160 was adopted. The adoption of this guidance did not have a material impact on
the Companys financial position or results of operation.

In January 2010, the FASB issued ASU 2010-04, Accounting for
Various Topics  Technical Corrections to SEC Paragraphs. ASU 2010-04 makes technical corrections to existing SEC guidance including the following topics: accounting for subsequent investments, termination of an interest rate swap, issuance
of financial statements - subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holding gains and losses, and



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



selections of discount rate used for measuring defined benefit obligation. ASU 2010-04 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the
Companys financial position or results of operation.

In January 2010, the FASB issued ASU 2010-05, Compensation
 Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. ASU 2010-05 updates existing guidance to address the SEC staffs views on overcoming the presumption that for certain shareholders
escrowed share arrangements represent compensation. ASU 2010-05 is effective January 15, 2010. The adoption of this guidance did not have a material impact on the Companys financial position or results of operation.

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 February 2010, the FASB issued ASU 2010-08, Technical Corrections to Various Topics. ASU 2010-08
clarifies guidance on embedded derivatives and hedging. ASU 2010-08 is effective for interim and annual periods beginning after December 15, 2009. The adoption of this guidance did not have a material impact on the Companys financial
position or results of operation.

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 2010-13, Compensation  Stock Compensation (Topic 718): Effect of Denominating the Exercise
Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based
payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after
December 15, 2010 and is not expected to have a significant impact on the Companys financial statements.



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##### Table of Contents

WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 EndedMarch 31, |   |  | Nine Months EndedMarch 31, |  
|                                                                                                         |  | 2010                        |   |  | 2009                       |   |  | 2010       |   |  | 2009       |  
|Weighted average common shares outstanding                                                               |  | 3,805,636                   |   |  | 3,805,636                  |   |  | 3,805,636  |   |  | 3,805,636  |  
|                                                                                                         |  |                             |   | 
|Average treasury stock shares                                                                            |  | (1,740,609                  | ) |  | (1,699,237                 | ) |  | (1,737,600 | ) |  | (1,652,817 | )
|                                                                                                         |  |                             |   |  |                            |   |  |            |   |  |            |  
|Weighted average common shares and common stock equivalents used to calculate basic earnings per share   |  | 2,065,027                   |   |  | 2,106,399                  |   |  | 2,068,036  |   |  | 2,152,819  |  
|                                                                                                         |  |                             |   | 
|Additional common stock equivalents (stock options) used to calculate diluted earnings per share         |  |                            |   |  |                           |   |  |           |   |  | 6          |  
|                                                                                                         |  |                             |   |  |                            |   |  |            |   |  |            |  
|                                                                                                         |  |                             |   | 
|Weighted average common shares and common stock equivalents used to calculate diluted earnings per share |  | 2,065,027                   |   |  | 2,106,399                  |   |  | 2,068,036  |   |  | 2,152,825  |  
|                                                                                                         |  |                             |   |  |                            |   |  |            |   |  |            |  

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 March 31,
2010, there were 125,127 options outstanding with an average exercise price of $16.20 which were anti-dilutive for the three and nine month periods. At March 31, 2009 there were 115,127 options outstanding with an average exercise price of
$16.20 which were anti-dilutive for the three month period. At March 31, 2009, there were 608 options outstanding with an average exercise price of $15.77 which were included in the computation of diluted earnings per share for the nine month
period and 114,519 options outstanding with an average exercise price of $16.20 which were anti-dilutive for the nine 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 nine month periods ended March 31, 2010 and 2009, the Company recorded $17 thousand and $8 thousand, respectively, in
compensation expense related to our share-based compensation awards. As of March 31, 2010, there was approximately $78 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 five 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.



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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) |  | 3.75  |  | to |  | 4.00  

The
Company had 98,535 non-vested stock options outstanding at March 31, 2010, and 114,519 unvested stock options outstanding at March 31, 2009. During the nine months ended March 31, 2010 and 2009, the Company issued 0 and 114,519
options, respectively. The weighted-average fair value of each stock option granted in the nine months ended March 31, 2009 was $0.86.

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 EndedMarch 31, |        |   | Nine Months EndedMarch 31, |  
|                                                                        |  | 2010                        |        |   | 2009                       |   |        | 2010 |  |   | 2009 |  
|                                                                        |  | (Dollars in Thousands)      |       
|                                                                        |  |                             |        |   |                            |   |        |     
|Net income                                                              |  |                             |        |   |                            | $ | 74     |      |  |   |      |   |  | $ | 582 |   |  |   |        |   |  | $ | 378    |   |  |   |     |   |  | $ | 2,351 |  
|Other comprehensive loss:                                               |  |                             |        |   |                            |   |        |      |  |   |      |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |     |   |  |   |       |  
|Unrealized gains (losses) on available for sale securities without OTTI |  | $                           | 167    |   |                            |   |        |      |  | $ | (15  | ) |  |   |     |   |  | $ | 157    |   |  |   |        |   |  | $ | (67 | ) |  |   |       |  
|Unrealized losses on securities with OTTI  Held to maturity            |  |                             | (2,202 | ) |                            |   |        |      |  |   |     |   |  |   |     |   |  |   | (2,202 | ) |  |   |        |   |  |   |    |   |  |   |       |  
|Less: Reclassification adjustment for loss included in net income       |  |                             | (95    | ) |                            |   |        |      |  |   |     |   |  |   |     |   |  |   | (94    | ) |  |   |        |   |  |   |    |   |  |   |       |  
|                                                                        |  |                             |        |   |                            |   |        |      |  |   |      |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |     |   |  |   |       |  
|Other comprehensive loss before tax                                     |  |                             |        |   |                            |   | (1,940 | )    |  |   |      |   |  |   | (15 | ) |  |   |        |   |  |   | (1,951 | ) |  |   |     |   |  |   | (67   | )
|Income tax benefit related to other comprehensive loss                  |  |                             |        |   |                            |   | (660   | )    |  |   |      |   |  |   | (5  | ) |  |   |        |   |  |   | (663   | ) |  |   |     |   |  |   | (23   | )
|                                                                        |  |                             |        |   |                            |   |        |      |  |   |      |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |     |   |  |   |       |  
|Other comprehensive loss net of tax                                     |  |                             |        |   |                            |   | (1,280 | )    |  |   |      |   |  |   | (10 | ) |  |   |        |   |  |   | (1,288 | ) |  |   |     |   |  |   | (44   | )
|                                                                        |  |                             |        |   |                            |   |        |      |  |   |      |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |     |   |  |   |       |  
|Comprehensive (loss) income                                             |  |                             |        |   |                            | $ | (1,206 | )    |  |   |      |   |  | $ | 572 |   |  |   |        |   |  | $ | (910   | ) |  |   |     |   |  | $ | 2,307 |  
|                                                                        |  |                             |        |   |                            |   |        |      |  |   |      |   |  |   |     |   |  |   |        |   |  |   |        |   |  |   |     |   |  |   |       |  



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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)
|March 31, 2010                                   |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|HELD TO MATURITY                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|U.S. government agency securities                |  | $                      | 35,663  |                      | $ | 342                   |  | $ | (29       | ) |  | $ | 35,976 
|Corporate debt securities                        |  |                        | 89,150  |                      |   | 2,884                 |  |   | (3        | ) |  |   | 92,031 
|Foreign debt securities(1)                       |  |                        | 9,761   |                      |   | 417                   |  |   |          |   |  |   | 10,178 
|Obligations of states and political subdivisions |  |                        | 5,941   |                      |   | 246                   |  |   |          |   |  |   | 6,187  
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                 |  |                        |         |                     
|Total                                            |  | $                      | 140,515 |                      | $ | 3,889                 |  | $ | (32       | ) |  | $ | 144,372
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        



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



|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|------------------------------------------------ |  | ---------------------- | ------- | -------------------- | - | --------------------- |  | - | --------- | - |  | - | -------
|                                                 |  | AmortizedCost          |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|                                                 |  | (Dollars in Thousands)
|                                                 |  |                        |         |                     
|June 30, 2009                                    |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|AVAILABLE FOR SALE                               |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|Equity securities                                |  | $                      | 500     |                      | $ |                      |  | $ | (7        | ) |  | $ | 493    
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                 |  |                        |         |                     
|Total                                            |  | $                      | 500     |                      | $ |                      |  | $ | (7        | ) |  | $ | 493    
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                 |  |                        |         |                     
|HELD TO MATURITY                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|U.S. government agency securities                |  | $                      | 32,937  |                      | $ | 387                   |  | $ | (74       | ) |  | $ | 33,250 
|Corporate debt securities                        |  |                        | 74,065  |                      |   | 783                   |  |   | (193      | ) |  |   | 74,655 
|Foreign debt securities(1)                       |  |                        | 8,168   |                      |   | 36                    |  |   | (29       | ) |  |   | 8,175  
|Obligations of states and political subdivisions |  |                        | 7,958   |                      |   | 328                   |  |   |          |   |  |   | 8,286  
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                 |  |                        |         |                     
|Total                                            |  | $                      | 123,128 |                      | $ | 1,534                 |  | $ | (296      | ) |  | $ | 124,366
|                                                 |  |                        |         |                      |   |                       |  |   |           |   |  |   |        



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

During the nine months ended
March 31, 2010, and March 31, 2009, realized investment securities gains totaled $1 thousand and $0, respectively. Proceeds from sales of investments for the months ended March 31, 2010 and March 31, 2009, were $501 thousand and
$0, respectively.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The amortized cost and fair values of debt securities at March 31, 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   |  | $                      | 43,089 |                                | $ | 53,348                         |  | $                  | 10,615 |       | $ | 33,463 |  | $ | 140,515
|Fair value       |  |                        | 43,497 |                                |   | 55,816                         |  |                    | 11,098 |       |   | 33,961 |  |   | 144,372

Investment
securities with amortized costs of $84,879 and $118,593 and fair values of $84,981 and $119,817 at March 31, 2010 and June 30, 2009, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes as
required by law.

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 the Federal Home Loan Mortgage Corporation (FHLMC), the 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 March 31, 2010, the Companys Agency CMOs totaled $90.2 million as compared to $117.1 million at June 30, 2009.
The Companys private-label CMOs totaled $46.9 million at March 31, 2010 as compared to $57.0 million at June 30, 2009. The $37.0 million decrease in the CMO segment of our MBS portfolio was primarily due to repayments on our
Agency CMOs totaling $42.4 million which were partially offset by purchases of Agency CMOs, which totaled $15.4 million, $7.9 million in repayments on our private-label CMOs, and a $2.1 million carrying value adjustment on one
private label CMO with other-than-temporary impairment. During the nine months ended March 31, 2010, the Company received principal payments totaling $7.9 million on its private-label CMOs. At March 31, 2010, approximately $137.1
million or 98.5% (book value) of the Companys MBS portfolio, including CMOs were comprised of adjustable or floating rate investments, as compared to $174.1 million or 98.8% at June 30, 2009. 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.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table sets forth information with respect to the Companys
private-label CMO portfolio as of March 31, 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.



|          |  |                      |  |                           |  |                          |  |     |  |   |        |  |   |       
|--------- |  | -------------------- |  | ------------------------- |  | ------------------------ |  | --- |  | - | ------ |  | - | ------
|Cusip #   |  | Security Description |  | At March 31, 2010        
|          |  | Rating               |  | Book Value(in 
thousands) |  | Fair
Value(in thousands)
|          |  | S&P                  |  | Moodys                   |  | Fitch                    |  |    
|05949AN63 |  | BOAMS 2005-1 1A7     |  | N/A                       |  | A2                       |  | AAA |  | $ | 2,804  |  | $ | 2,511 
|36242DE25 |  | GSR 2005-3F 1A11     |  | N/A                       |  | A1                       |  | AA  |  |   | 3,250  |  |   | 3,054 
|05949A2H2 |  | BOAMS 2005-3 1A6     |  | N/A                       |  | Baa1                     |  | AA  |  |   | 930    |  |   | 869   
|05949A2H2 |  | BOAMS 2005-3 1A6     |  | N/A                       |  | Baa1                     |  | AA  |  |   | 1,185  |  |   | 1,108 
|225458JZ2 |  | CSFB 05-3 3A4        |  | AAA-                      |  | N/A                      |  | AAA |  |   | 6,781  |  |   | 6,631 
|225458KE7 |  | CSFB 2005-3 3A9      |  | AAA-                      |  | N/A                      |  | AAA |  |   | 431    |  |   | 420   
|225458KE7 |  | CSFB 2005-3 3A9      |  | AAA-                      |  | N/A                      |  | AAA |  |   | 1,302  |  |   | 1,269 
|12669G3A7 |  | CWHL 2005 16 A8      |  | NR                        |  | Ba2                      |  | A   |  |   | 1,264  |  |   | 1,057 
|12669G3A7 |  | CWHL 2005 16 A8      |  | NR                        |  | Ba2                      |  | A   |  |   | 2,299  |  |   | 1,922 
|12669G3A7 |  | CWHL 2005 16 A8      |  | NR                        |  | Ba2                      |  | A   |  |   | 3,148  |  |   | 2,632 
|12669G3A7 |  | CWHL 2005 16 A8      |  | NR                        |  | Ba2                      |  | A   |  |   | 3,448  |  |   | 2,883 
|126694CP1 |  | CWHL SER 21 A11      |  | N/A                       |  | Baa3                     |  | B   |  |   | 5,341  |  |   | 5,341 
|126694KF4 |  | CWHL SER 24 A15      |  | B-                        |  | N/A                      |  | B   |  |   | 2,060  |  |   | 1,619 
|126694KF4 |  | CWHL SER 24 A15      |  | B-                        |  | N/A                      |  | B   |  |   | 4,118  |  |   | 3,237 
|16162WLW7 |  | CHASE SER S2 A10     |  | N/A                       |  | Baa1                     |  | BBB |  |   | 3,012  |  |   | 2,629 
|16162WLW7 |  | CHASE SER S2 A10     |  | N/A                       |  | Baa1                     |  | BBB |  |   | 4,217  |  |   | 3,681 
|126694MP0 |  | CWHL SER 26 1A5      |  | CCC                       |  | N/A                      |  | B   |  |   | 1,330  |  |   | 1,010 
|          |  |                      |  |                           |  |                          |  |     |  |   |        |  |   |       
|          |  |                      |  |                           |  |                          |  |     |  | $ | 46,920 |  | $ | 41,873
|          |  |                      |  |                           |  |                          |  |     |  |   |        |  |   |       

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 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. We believe that the private-label CMO portfolio had one Other Than Temporary Impairment at March 31, 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)
|March 31, 2010                                        |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|AVAILABLE FOR SALE                                    |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Government National Mortgage Association certificates |  | $                      | 2,030   |                      | $ | 163                   |  | $ |          |   |  | $ | 2,193  
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Total                                                 |  | $                      | 2,030   |                      | $ | 163                   |  | $ |          |   |  | $ | 2,193  
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|HELD TO MATURITY                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Collateralized mortgage obligations:                  |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|Agency                                                |  | $                      | 90,181  |                      | $ | 249                   |  | $ | (315      | ) |  | $ | 90,115 
|Other                                                 |  |                        | 46,920  |                      |   |                      |  |   | (5,047    | ) |  |   | 41,873 
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Total                                                 |  | $                      | 137,101 |                      | $ | 249                   |  | $ | (5,362    | ) |  | $ | 131,988
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|----------------------------------------------------- |  | ---------------------- | ------- | -------------------- | - | --------------------- |  | - | --------- | - |  | - | -------
|                                                      |  | AmortizedCost          |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | FairValue
|                                                      |  | (Dollars in Thousands)
|June 30, 2009                                         |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|AVAILABLE FOR SALE                                    |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Government National Mortgage Association certificates |  | $                      | 2,062   |                      | $ | 13                    |  | $ |          |   |  | $ | 2,075  
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Total                                                 |  | $                      | 2,062   |                      | $ | 13                    |  | $ |          |   |  | $ | 2,075  
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|HELD TO MATURITY                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Collateralized mortgage obligations:                  |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|Agency                                                |  | $                      | 117,133 |                      | $ | 72                    |  | $ | (1,298    | ) |  | $ | 115,907
|Other                                                 |  |                        | 56,996  |                      |   |                      |  |   | (6,208    | ) |  |   | 50,788 
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        
|                                                      |  |                        |         |                     
|Total                                                 |  | $                      | 174,129 |                      | $ | 72                    |  | $ | (7,506    | ) |  | $ | 166,695
|                                                      |  |                        |         |                      |   |                       |  |   |           |   |  |   |        

The amortized cost and fair value of mortgage-backed
securities at March 31, 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     |  | $                      |  |                                | $ |                               |  | $                  |  |       | $ | 2,030   |  | $ | 2,030  
|Fair value         |  |                        |  |                                |   |                               |  |                    |  |       |   | 2,193   |  |   | 2,193  
|                   |  |                        |   |                                |  
|HELD TO MATURITY   |  |                        |   |                                |   |                                |  |                    |   |       |   |         |  |   |        
|Amortized cost     |  | $                      |  |                                | $ |                               |  | $                  |  |       | $ | 137,101 |  | $ | 137,101
|Fair value         |  |                        |  |                                |   |                               |  |                    |  |       |   | 131,988 |  |   | 131,988

At March 31,
2010 and June 30, 2009, mortgage-backed securities with an amortized cost of $99.1 million and $132.8 million and fair values of $97.2 million and $130.3 million, were pledged to secure borrowings with the Federal Home Loan Bank.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 March 31, 2010 and June 30, 2009.



|                                     |  |                         |        |                       |                          |      |           |       |                       |        |  |           |        |                       |  |   |         |  |   |        |  
|------------------------------------ |  | ----------------------- | ------ | --------------------- | ------------------------ | ---- | --------- | ----- | --------------------- | ------ |  | --------- | ------ | --------------------- |  | - | ------- |  | - | ------ | -
|                                     |  | March 31, 2010          |       
|                                     |  | Less Than Twelve Months |        |                       | Twelve Months or Greater |      |           | Total |                      
|                                     |  | FairValue               |        | GrossUnrealizedLosses |                          |      | FairValue |       | GrossUnrealizedLosses |        |  | FairValue |        | GrossUnrealizedLosses | 
|                                     |  | (Dollars in Thousands)  |       
|                                     |  |                         |        |                       |                          |     
|U.S. government agencies securities  |  | $                       | 5,368  |                       | $                        | (15  | )         |       | $                     | 2,436  |  | $         | (14    | )                     |  | $ | 7,804   |  | $ | (29    | )
|Corporate debt securities            |  |                         | 1,869  |                       |                          | (3   | )         |       |                       |       |  |           |       |                       |  |   | 1,869   |  |   | (3     | )
|Collateralized mortgage obligations: |  |                         |        |                       |                          |      |           |       |                       |        |  |           |        |                       |  |   |         |  |   |        |  
|Agency                               |  |                         | 13,107 |                       |                          | (93  | )         |       |                       | 47,025 |  |           | (222   | )                     |  |   | 60,042  |  |   | (315   | )
|Other                                |  |                         |       |                       |                          |     |           |       |                       | 36,562 |  |           | (5,047 | )                     |  |   | 36,562  |  |   | (5,047 | )
|                                     |  |                         |        |                       |                          |      |           |       |                       |        |  |           |        |                       |  |   |         |  |   |        |  
|                                     |  |                         |        |                       |                          |     
|Total                                |  | $                       | 14,976 |                       | $                        | (111 | )         |       | $                     | 86,023 |  | $         | (5,283 | )                     |  | $ | 106,277 |  | $ | (5,394 | )
|                                     |  |                         |        |                       |                          |      |           |       |                       |        |  |           |        |                       |  |   |         |  |   |        |  



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



|                                     |  |                         |        |                       |                          |      |           |       |                       |         |  |           |        |                       |  |   |         |  |   |        |  
|------------------------------------ |  | ----------------------- | ------ | --------------------- | ------------------------ | ---- | --------- | ----- | --------------------- | ------- |  | --------- | ------ | --------------------- |  | - | ------- |  | - | ------ | -
|                                     |  | June 30, 2009           |       
|                                     |  | Less Than Twelve Months |        |                       | Twelve Months or Greater |      |           | Total |                      
|                                     |  | FairValue               |        | GrossUnrealizedLosses |                          |      | FairValue |       | GrossUnrealizedLosses |         |  | FairValue |        | GrossUnrealizedLosses | 
|                                     |  | (Dollars in Thousands)  |       
|                                     |  |                         |        |                       |                          |     
|U.S. government agencies securities  |  | $                       | 2,447  |                       | $                        | (74  | )         |       | $                     |        |  | $         |       |                       |  | $ | 2,447   |  | $ | (74    | )
|Corporate debt securities            |  |                         | 20,893 |                       |                          | (193 | )         |       |                       |        |  |           |       |                       |  |   | 20,893  |  |   | (193   | )
|Foreign debt securities(1)           |  |                         | 1,977  |                       |                          | (29  | )         |       |                       |        |  |           |       |                       |  |   | 1,977   |  |   | (29    | )
|Equity securities                    |  |                         |       |                       |                          |     |           |       |                       | 493     |  |           | (7     | )                     |  |   | 493     |  |   | (7     | )
|Collateralized mortgage obligations: |  |                         |        |                       |                          |      |           |       |                       |         |  |           |        |                       |  |   |         |  |   |        |  
|Agency                               |  |                         | 40,693 |                       |                          | (490 | )         |       |                       | 66,078  |  |           | (808   | )                     |  |   | 106,771 |  |   | (1,298 | )
|Other                                |  |                         |       |                       |                          |     |           |       |                       | 50,788  |  |           | (6,208 | )                     |  |   | 50,788  |  |   | (6,208 | )
|                                     |  |                         |        |                       |                          |      |           |       |                       |         |  |           |        |                       |  |   |         |  |   |        |  
|                                     |  |                         |        |                       |                          |     
|Total                                |  | $                       | 66,010 |                       | $                        | (786 | )         |       | $                     | 117,359 |  | $         | (7,023 | )                     |  | $ | 183,369 |  | $ | (7,809 | )
|                                     |  |                         |        |                       |                          |      |           |       |                       |         |  |           |        |                       |  |   |         |  |   |        |  



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

In accordance with GAAP,
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.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 we sell, intend to sell or believe that we will be required to sell previously
credit-impaired mortgage-backed securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we 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 and nine month periods ended March 31, 2010:



|                                                                                   |  |                                   |    |                                  |   |   
|---------------------------------------------------------------------------------- |  | --------------------------------- | -- | -------------------------------- | - | --
|                                                                                   |  | Three Months EndedMarch 
31, 2010 |    | Nine Months EndedMarch 
31, 2010
|                                                                                   |  | (In thousands)                   
|                                                                                   |  |                                  
|Beginning balance                                                                  |  | $                                 |   |                                  | $ |  
|Initial credit impairment                                                          |  |                                   | 95 |                                  |   | 95
|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                                                                     |  | $                                 | 95 |                                  | $ | 95
|                                                                                   |  |                                   |    |                                  |   |   



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A summary of investment gains and losses recognized in income during the three and nine
month periods ended March 31, 2010 are as follows:



|                                    |  |                                   |     |   |                                  |   |     |  
|----------------------------------- |  | --------------------------------- | --- | - | -------------------------------- | - | --- | -
|                                    |  | Three Months EndedMarch 
31, 2010 |     |   | Nine Months EndedMarch 
31, 2010 |  
|                                    |  | (In thousands)                    |    
|                                    |  |                                  
|Available for sale securities       |  |                                   |     |   |                                  |   |     |  
|Realized gains                      |  | $                                 |    |   |                                  | $ | 1   |  
|Realized losses                     |  |                                   |    |   |                                  |   |    |  
|Other than temporary impairment     |  |                                   |    |   |                                  |   |    |  
|                                    |  |                                   |     |   |                                  |   |     |  
|Total available-for-sale securities |  | $                                 |    |   |                                  | $ | 1   |  
|                                    |  |                                   |     |   |                                  |   |     |  
|                                    |  |                                  
|                                    |  | Three Months EndedMarch 
31, 2010 |     |   | Nine Months EndedMarch 
31, 2010 |  
|                                    |  | (In thousands)                    |    
|Held-to maturity securities         |  |                                   |     |   |                                  |   |     |  
|Realized gains                      |  | $                                 |    |   |                                  | $ |    |  
|Realized losses                     |  |                                   |    |   |                                  |   |    |  
|Other than temporary impairment     |  |                                   | (95 | ) |                                  |   | (95 | )
|                                    |  |                                   |     |   |                                  |   |     |  
|Total held-to-maturity securities   |  | $                                 | (95 | ) |                                  | $ | (95 | )
|                                    |  |                                   |     |   |                                  |   |     |  

During the quarter ended March 31, 2010 the Company had an other-than-temporary impairment on one of
its private-label CMOs. With respect to this impairment, we recorded a $95 thousand credit impairment charge and a $1.391 million non-credit unrealized holding loss (net of income tax effect of $716 thousand) 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 our 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 March 31, 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



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



considered other-than-temporary and the magnitude of the credit loss. Management believes that one private-label CMO in the portfolio had an Other Than Temporary Impairment at March 31,
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 do we believe that we 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 recognized in accumulated other
comprehensive loss for debt securities classified as held-to-maturity is accreted over the remaining life of the debt security (in a pro rata manner based on the amount of actual cash flows received as a percentage of total estimated cash flows) as
an increase in the carrying value of the security until the security is sold, the security matures, or there is an additional OTTI that is recognized in earnings. 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 our 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 46 positions that are
impaired at March 31, 2010, including 17 positions in private-label collateralized mortgage obligations. Based on its analysis, management has concluded that one private-label CMO is 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. During the quarter ended March 31,
2010 the Company had an other-than-temporary impairment on one of its private-label CMOs. With respect to this impairment, we recorded a $95 thousand credit impairment charge and a $1.391 million non-credit unrealized holding loss (net of income tax
effect of $716 thousand) to accumulated other Comprehensive Income. However, that decline is considered temporary, since the Company does not intend to sell these securities nor is it more likely than not the Company would be required to sell the
security before its anticipated recovery.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



9. FAIR VALUE MEASUREMENTS

GAAP, among other things, requires enhanced disclosures about assets and liabilities carried at fair value. Disclosures follow a
hierarchal framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value. The three broad levels are as follows:



|           |  |                                                                                                                                                                                                                                                                                                                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 March 31, 2010, and
June 30, 2009, 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.



|                                               |  |                        |     |          |   |           |  |       |       |  |   |      
|---------------------------------------------- |  | ---------------------- | --- | -------- | - | --------- |  | ----- | ----- |  | - | -----
|                                               |  | March 31, 2010        
|                                               |  | Level I                |     | Level II |   | Level III |  | Total
|                                               |  | (Dollars in Thousands)
|Assets Measured on a Recurring Basis:          |  |                        |     |          |   |           |  |       |       |  |   |      
|Mortgage-backed securities available for sale: |  |                        |     |          |   |           |  |       |       |  |   |      
|GNMA certificates                              |  | $                      |    |          | $ | 2,193     |  | $     |      |  | $ | 2,193
|Mortgage-backed securities held to maturity:   |  |                        |     |          |   |           |  |       |       |  |   |      
|Collateralized mortgage obligations - other    |  |                        |    |          |   |          |  |       | 5,341 |  |   | 5,341
|                                               |  |                        |     |          |   |           |  |       |       |  |   |      
|                                               |  |                        |     |         
|Total                                          |  | $                      |    |          | $ | 2,193     |  | $     | 5,341 |  | $ | 7,534
|                                               |  |                        |     |          |   |           |  |       |       |  |   |      
|                                               | 
|                                               |  | June 30, 2009         
|                                               |  | Level I                |     | Level II |   | Level III |  | Total
|                                               |  | (Dollars in Thousands)
|Assets Measured on a Recurring Basis:          |  |                        |     |          |   |           |  |       |       |  |   |      
|Investment securities available for sale:      |  |                        |     |          |   |           |  |       |       |  |   |      
|Equity securities                              |  | $                      | 493 |          | $ |          |  | $     |      |  | $ | 493  
|Mortgage-backed securities available for sale: |  |                        |     |          |   |           |  |       |       |  |   |      
|GNMA certificates                              |  |                        |    |          |   | 2,075     |  |       |      |  |   | 2,075
|                                               |  |                        |     |          |   |           |  |       |       |  |   |      
|                                               |  |                        |     |         
|Total                                          |  | $                      | 493 |          | $ | 2,075     |  | $     |      |  | $ | 2,568
|                                               |  |                        |     |          |   |           |  |       |       |  |   |      

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



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 nine
month period ended March 31, 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.

Fair value measurements using significant unobservable inputs (Level III)



|                                                   |  |                                                                        |        |  
|-------------------------------------------------- |  | ---------------------------------------------------------------------- | ------ | -
|                                                   |  | Private-labelMortgage-backed 
securitiesHeld-to-maturityMarch 31, 2010 |       
|Beginning balance  July 1, 2009                   |  | $                                                                      |       |  
|Total net realized/unrealized losses               |  |                                                                        |        |  
|Included in earnings                               |  |                                                                        |        |  
|Net realized losses on securities held-to-maturity |  |                                                                        | (95    | )
|Included in other comprehensive income             |  |                                                                        | (2,107 | )
|Transfers into Level III                           |  |                                                                        | 7,543  |  
|                                                   |  |                                                                        |        |  
|Ending balance  March 31, 2010                    |  | $                                                                      | 5,341  |  
|                                                   |  |                                                                        |        |  

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values are as follows:



|                                                     |  |                        |               |               |   |                |  |           |          |  |   |         
|---------------------------------------------------- |  | ---------------------- | ------------- | ------------- | - | -------------- |  | --------- | -------- |  | - | --------
|                                                     |  | March 31, 2010         |               | June 30, 2009
|                                                     |  | CarryingAmount         |               | FairValue     |   | CarryingAmount |  | FairValue
|                                                     |  | (Dollars in Thousands)
|FINANCIAL ASSETS                                     |  |                        |               |               |   |                |  |           |          |  |   |         
|Cash and cash equivalents                            |  | $                      | 12,965        |               | $ | 12,965         |  | $         | 21,828   |  | $ | 21,828  
|Certificates of deposit                              |  |                        | 9,302         |               |   | 9,302          |  |           | 24,719   |  |   | 24,719  
|Investment securities                                |  |                        | 140,515       |               |   | 144,372        |  |           | 123,621  |  |   | 124,859 
|Mortgage-backed securities                           |  |                        | 139,294       |               |   | 134,181        |  |           | 176,204  |  |   | 168,770 
|Net loans receivable                                 |  |                        | 58,817        |               |   | 61,716         |  |           | 58,148   |  |   | 61,292  
|Accrued interest receivable                          |  |                        | 2,107         |               |   | 2,107          |  |           | 2,347    |  |   | 2,347   
|FHLB stock                                           |  |                        | 10,875        |               |   | 10,875         |  |           | 10,875   |  |   | 10,875  
|                                                     |  |                        |               |              
|FINANCIAL LIABILITIES                                |  |                        |               |               |   |                |  |           |          |  |   |         
|Deposits                                             |  | $                      | 150,501       |               | $ | 150,630        |  | $         | 146,315  |  | $ | 146,711 
|FHLB advances  long term
FHLB advances  short term |  |                        | 130,07910,000 |               |   | 137,57810,000  |  |           | 130,079 |  |   | 136,915
|Federal Reserve Bank short-term borrowings           |  |                        | 54,900        |               |   | 54,900         |  |           | 108,800  |  |   | 108,800 
|Accrued interest payable                             |  |                        | 949           |               |   | 949            |  |           | 1,151    |  |   | 1,151   

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.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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.

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. 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.



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WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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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##### Table of Contents

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

MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 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 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, 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 March 31, 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 $377.2 million at March 31, 2010, as compared to $419.4 million at June 30, 2009. The $42.2
million or 10.1% decrease in total assets was primarily comprised of a $37.0 million or 21.3% decrease in mortgage-backed securities (MBS)  held to maturity, a $15.4 million or 62.4% decrease in FDIC insured certificates of deposit, an $8.9
million or 40.6% decrease in cash and cash equivalents, and a $493 thousand or 100.0% decrease in investment securities  available for sale, which were partially offset by a $17.4 million or 14.1% increase in investment securities
held-to-maturity, a $1.6 million or 161.7% increase in deferred taxes and other assets, and a $669 thousand or 1.2% increase in net loans receivables. The decrease in mortgage-backed securities  held to maturity was due to paydowns on the
Companys mortgage-backed securities portfolio, which were partially offset by the purchase of $15.4 million of floating rate U.S. Government agency Collateralized Mortgage Obligations (CMOs). During the quarter ended March 31, 2010,
overall replacement yields on floating rate MBS continued to improve. As a result, the Company chose to reinvest a portion of its cash flows into purchases of U.S. Government agency floating-rate MBSs. The decrease in FDIC insured certificates of
deposit was primarily due to $25.2 million in redemptions of bank certificates of deposit which were partially offset by $9.8 million of purchases of bank certificates of deposit. The Company chose to reduce its overall investment in certificates of
deposits due to a narrowing of spreads when compared to other investment sectors. The decrease in investment securities available for sale was the result of the sale of an investment with an amortized cost of $500 thousand, during the nine months
ended March 31, 2010. The increase in investment securities held to maturity was primarily due to purchases of $33.7 million of fixed rate investment grade corporate bonds, $30.6 million of U.S. Government agency step-up bonds, $4.7 million of
floating rate investment grade foreign bonds, $2.0 million of fixed to floating rate U.S. Government agency bonds, $1.0 million of short-term taxable municipal bonds, $1.0 million of floating rate investment grade corporate bonds, $900 thousand of
tax-free municipal bonds, $760 thousand of callable fixed rate U.S. Government agency bonds and $418 thousand of floating rate investment grade foreign bonds, which were partially offset by $30.8 million of issuer redemptions prior to maturity (i.e.
calls) of U.S. Government agency bonds, $18.1 million of maturities and calls of investment



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grade corporate bonds, $3.4 million of maturities of investment grade foreign bonds, $4.0 million of maturities of tax-free municipal bonds and $406 thousand of repayments on investment grade
corporate utility first mortgage bonds . See Asset and Liability Management.

The Companys total liabilities
decreased $40.2 million or 10.4% to $348.1 million as of March 31, 2010 from $388.3 million as of June 30, 2009. The $40.2 million decrease in total liabilities was primarily comprised of a $53.9 million or 49.5% decrease in short-term
Federal Reserve Bank borrowings, a $321 thousand decrease in other liabilities, and a $202 thousand decrease in accrued interest payable, which were partially offset by a $10.0 million increase in FHLB short-term advances and a $4.2 million increase
in total savings deposits. The decrease in FRB short-term borrowings was funded primarily by a planned reduction of cash equivalents and investment cash flows received during the nine months ended March 31, 2010. The increase in short-term FHLB
advances was primarily attributable to more attractive borrowing rates with the Federal Home Loan Bank of Pittsburgh. Certificates of deposit increased $2.4 million, savings accounts increased $2.0 million and demand deposits increased $829
thousand, while money market accounts decreased $756 thousand and advance payments by borrowers for taxes and insurance decreased $234 thousand. The increase in certificates of deposits is a result of certificates of deposit for a local government
and school districts issued during the quarter. The increase in demand deposits and savings accounts may reflect a shift in consumer preference to more liquid savings options. Management believes that the changes in 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 $2.0 million or 6.5% to $29.1 million as of March 31, 2010, from approximately $31.1 million as of June 30, 2009. Accumulated other comprehensive income decreased $1.3 million primarily due to one
private-label CMO determined to have an other-than-temporary impairment of $2.1 million, while capital expenditures for cash dividends and treasury stock purchases totaled $992 thousand and $124 thousand, respectively, which were partially offset by
net income of $378 thousand for the nine months ended March 31, 2010.

RESULTS OF OPERATIONS

General. WVS reported net income of $74 thousand or $0.04 earnings per share (basic and diluted) and $378 thousand or $0.18
earnings per share (basic and diluted) for the three and nine months ended March 31, 2010, respectively. Net income decreased by $508 thousand or 87.3% and earnings per share (basic and diluted) decreased $0.24 or 85.7% for the three months
ended March 31, 2010, when compared for the same period in 2009. The decrease in net income was primarily attributable to a $686 thousand decrease in net interest income, a $102 thousand decrease in non-interest income, and a $48 thousand
increase in non-interest expense, which were partially offset by a $310 thousand decrease in income tax expense, and a $18 thousand decrease in provisions for loan losses. For the nine months ended March 31, 2010, net income decreased $2.0
million or 83.9% and earnings per share (basic and diluted) decreased $0.91 or 83.5% when compared to the same period in 2009. The decrease in net income was primarily attributable to a $3.0 million decrease in net interest income and a $139
thousand decrease in non-interest income, which were partially offset by a $1.0 million decrease in income tax expense, a $50 thousand decrease in non-interest expense and a $45 thousand decrease in provision for loan losses.

Net Interest Income. The Companys net interest income decreased by $686 thousand or 43.5% for the three months ended
March 31, 2010, when compared to the same period in 2009. For the three months ended March 31, 2010, approximately $524 thousand of the decrease in net interest income can be attributed to the impact of declining market interest rates on
the Companys financial assets and liabilities, and $162 thousand of the decrease in net interest income is attributable to lower overall balances in the Companys financial assets and liabilities when compared to the same period in 2009.
For the nine months ended March 31, 2010, approximately $2.5 million of the decrease in net interest income was primarily attributed to the impact of declining market interest rates on the Companys financial assets and liabilities and
$458 thousand of the decrease in net interest income is attributable to lower overall balances in the Companys financial assets and liabilities when compared to the same period in 2009.



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During the nine months ended March 31, 2010, the Federal Open Market Committee (FOMC)
maintained its targeted federal funds range at 0.00% to 0.25% which was established in December 2008. See also Asset and Liability Management.

Interest Income. Interest on mortgage-backed securities decreased $511 thousand or 50.2% and $3.4 million or 67.6% for the three
and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31, 2010 was primarily attributable to a 61 basis point decrease in the weighted average yield
earned on U.S. Government agency floating rate mortgage-backed securities, a $51.8 million decrease in the average balance of U.S. Government agency mortgage-backed securities outstanding, a 46 basis point decrease in the weighted average yield
earned on private label mortgage-backed securities and a $8.9 million decrease in the average balance of private label mortgage-backed securities outstanding for the three months ended March 31, 2010, when compared to the same period in 2009.
The decrease for the nine months ended March 31, 2010, was primarily attributable to a 181 basis point decrease in the weighted average yield earned on U.S. Government agency mortgage-backed securities, a $50.0 million decrease in the average
balance of U.S. Government agency mortgage-backed securities outstanding, a 159 basis point decrease in the weighted average yield earned on private label mortgage-backed securities and a $6.2 million decrease in the average balance of private label
mortgage-backed securities outstanding for the nine months ended March 31, 2010, when compared to the same period in 2009. The decrease in the weighted average yield earned on mortgage-backed securities was consistent with lower short-term
market interest rates for the three and nine months ended March 31, 2010, when compared to the same periods in 2009. The decrease in the average balances of mortgage-backed securities during the three and nine months ended March 31, 2010
was primarily attributable to principal paydowns of mortgage-backed securities during the period. Due to modestly improving overall replacement yields in the floating rate MBS market, during the quarter ending March 31, 2010, the Company chose
to reinvest a portion of its cash flows into purchases of U.S. Government floating-rate MBS.

Interest on investment
securities decreased by $240 thousand or 14.3% and $905 thousand or 17.5% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31, 2010
was primarily attributable to $733 thousand decrease in interest income on callable U.S. Government agency bonds and a $118 thousand decrease in accretion of discount on short-term investment grade commercial paper, which was partially offset by a
$615 thousand increase in interest income on corporate bonds. The decrease for the nine months ended March 31, 2010 was primarily attributable to a $2.7 million decrease in interest income callable on U.S. Government agency bonds and a $356
thousand decrease in accretion income on short-term investment grade commercial paper, which were offset by a $2.2 million increase in interest income on investment grade corporate bonds. During the quarter ending March 31, 2010, the Company
chose to begin reinvesting in U.S. Government agency callable bonds primarily those with step-up and fixed-floating structure. This strategy allowed us to earn additional interest income while managing our overall interest rate risk position.

Interest on FDIC insured bank certificates of deposit decreased $209 thousand or 80.1% and decreased $135 thousand or 27.1%
for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31, 2010 was primarily attributable to a $19.7 million decrease in the average
portfolio balance of certificates of deposit and a 148 basis point decrease in the weighted average yield earned when compared to the same period in 2009. The decrease for the nine months ended March 31, 2010, was primarily attributable to a 63
basis point decrease in the weighted average yield earned and a $1.9 million decrease in the average portfolio balance of certificates of deposit 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 range in maturity terms from five to twenty-four 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.

Dividends on FHLB stock decreased $137 thousand or 100.0% for the nine months ended March 31, 2010, when compared to the same period
in 2009. The decrease for the nine months ended March 31, 2010 was attributable to the Federal Home Loan Bank of Pittsburghs suspension of dividends on its common



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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 on net loans receivable decreased
$20 thousand or 2.0% and $30 thousand or 1.0% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31, 2010 was primarily attributable to
a decrease of 27 basis points in the weighted average yield earned on net loans receivable for the three months ended March 31, 2010, when compared to the same period in 2009, which was partially offset by a $1.2 million increase in the average
balance of net loans receivable outstanding, when compared to the same period in 2009. The decrease for the nine months ended March 31, 2010 was primarily attributable to a 15 basis point decrease in the weighted average yield earned on net
loans receivable for the nine months ended March 31, 2010, when compared to the same period in 2009, which was partially offset by a $701 thousand increase in the average balance of net loans receivable outstanding when compared to the same
period in 2009. The increase in the average loan balance outstanding for the three and nine months ended March 31, 2010 was attributable in part to increased levels of new loan originations among residential construction and commercial real
estate loan products. The Company has limited its portfolio origination of longer-term fixed rate loans 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 Expense.Interest
expense on deposits and escrows decreased $198 thousand or 43.2% and $805 thousand or 45.8% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease in interest expense on
deposits for the three months ended March 31, 2010 was primarily attributable to an 88 basis point decrease in the weighted average rate paid on time deposits, a 43 basis point decrease in the weighted average rate paid on money market
accounts, a $5.1 million decrease in the average balance of time deposits, and a 27 basis point decrease in the weighted average yield paid on savings accounts when compared to the same period in 2009. The decrease for the nine months ended
March 31, 2010, was primarily attributable to a 109 basis point decrease in the weighted average rate paid on time deposits, a 81 basis point decrease in the weighted average rate paid on money market accounts, a $5.9 million decrease in the
average balance of time deposits, and a 30 basis point decrease in the weighted average yield paid on savings accounts, when compared to the same period in 2009. The decrease in average yields of time deposits, money markets and savings accounts
reflects lower market rates for the three and nine months ended March 31, 2010 while the change in average balances for time deposits may be in response to increased liquidity preferences by depositors in response to unsettled financial
markets.

Interest paid on FHLB advances decreased $54 thousand or 3.0% and $401 thousand or 7.0% for the three and
nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31, 2010 was primarily attributable to a $4.7 million decrease in the average balance of FHLB
long-term advances, when compared to the same period in 2009. The decrease for the nine months ended March 31, 2010, was primarily attributable to a $5.2 million decrease in the average balance of FHLB long-term advances, a $22.0 million
decrease in the average balance of FHLB short-term advances and a 86 basis point decrease in the weighted average rate paid on FHLB short-term advances when compared to the same period in 2009. The decreases in the average balances of FHLB long-term
borrowings was due to the maturity of FHLB long-term borrowings. The decreases in the average balances of FHLB short-term advances was primarily attributable to more favorable short-term borrowing rates offered by the Federal Reserve Bank. The
decrease in rates paid on FHLB short-term advances reflects lower short-term market interest rates.

Interest paid on FRB
short-term borrowings decreased $31 thousand or 37.8% and $96 thousand or 41.4% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31,
2010 was attributable to a $51.9 million decrease in the average balances of FRB short-term borrowings, which was partially offset by a 2 basis point increase in the weighted average rate paid on FRB short-term borrowings. The decrease for the nine
months ended March 31, 2010 was primarily attributable to a 24 basis point decrease in the weighted average rate paid on FRB short-term borrowings which was partially offset by a $7.3 million increase in the average



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balances of FRB short-term borrowings. The decrease in rates paid reflect lower short-term market interest rates, while the increase in average balances of FRB short-term borrowings is
attributable to more favorable short-term borrowing rates offered by the Federal Reserve Bank.

Interest paid on other
short-term borrowings decreased $10 thousand or 83.3% and $305 thousand or 98.1% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for the three months ended March 31,
2010 was primarily attributable to a $7.4 million decrease in average balances of other short-term borrowings and an 18 point decrease in rates paid on other short-term borrowings during the period. The decrease for the nine months ended
March 31, 2010 was primarily attributable to a $20.5 million decrease in the average balance of other short-term borrowings and a 147 basis point decrease in the weighted average rate paid on other short-term borrowings during the period. The
decrease in rates paid reflect lower short-term market interest rates while the decrease in average balances of other short-term borrowings is attributable to more favorable short-term borrowing rates offered by the Federal Reserve Bank (FRB).

Provision (Recovery) for Loan Losses. A provision (recovery) for loan losses is charged (credited) 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.

The Company recorded a recovery for loan losses of $4 thousand and $10 thousand for the three and nine months ended March 31, 2010,
respectively, compared to a provision for loan losses of $14 thousand and $35 thousand for the same periods in 2009. At March 31, 2010, the Companys total allowance for loan losses amounted to $646 thousand or 1.1% of the Companys
total loan portfolio, as compared to $662 thousand or 1.1% at June 30, 2009.

Non-Interest Income. Non-interest
income decreased by $102 thousand or 72.3% and $139 thousand or 30.0% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The decrease for both periods was primarily attributable to a $95
thousand other-than temporary impairment loss on one private-label CMO, and decreases in service fee income on deposit accounts and ATM fee income. See also Note 8  Notes to Unaudited Consolidated Financial Statements.

Non-Interest Expense. Non-interest expense increased $48 thousand or 5.8% and decreased $50 thousand or 1.8% for the three and
nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The increase for the three months ended March 31, 2010 was principally attributable to a $76 thousand increase in Federal Deposit Insurance expense,
which was partially offset by an $18 thousand decrease in ATM network expenses, a $5 thousand decrease in correspondent bank service charges and a $4 thousand decrease in employee related expenses when compared to the same period in 2009. The
decrease for the nine months ended March 31, 2010 was primarily attributable to $109 thousand decrease in charitable contributions eligible for PA tax credits, a $98 thousand decrease in employee related expenses, a $43 thousand decrease in ATM
network expenses, and an $11 thousand decrease in occupancy and equipment expenses, which were partially offset by a $215 thousand increase in Federal Deposit Insurance expense.

Income Tax Expense.Income tax expense decreased $310 thousand or 106.9% and $1.0 million or 96.7% for the three and nine months
ended March 31, 2010, when compared to the same periods in 2009. The decrease for the three and nine months ended March 31, 2010 was primarily due to lower levels of taxable income when compared to the same periods in 2009.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $686 thousand during the nine months ended March 31, 2010. Net cash used for
operating activities was primarily comprised of Company net income of $378 thousand and a $240 thousand decrease in accrued interest receivable.



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Funds provided by investing activities totaled $31.5 million during the nine months ended
March 31, 2010. Primary sources of funds during the nine months ended March 31, 2010, included maturities, sales and repayments of investment securities, mortgage-backed securities and certificates of deposit totaling $57.4 million, $50.4
million and $25.2 million, respectively, which were partially offset by purchases of investments, mortgage-backed securities and certificates of deposit totaling $75.4 million, $15.5 million and $9.8 million, respectively, a $725 thousand increase
in net loans receivable and an $80 thousand increase for acquisitions of equipment.

Funds used for financing activities
totaled $41.1 million for the nine months ended March 31, 2010. The primary uses included a $53.9 million decrease in short-term FRB borrowings, $992 thousand in cash dividends paid on the Companys common stock, and $124 thousand in
treasury stock purchases, which were partially offset by a $10.0 million increase in FHLB short-term advances and a $3.9 million increase in total deposits. The decrease in FRB short-term borrowings reflects paydowns on the borrowings through
investment and financing and a planned reduction of cash equivalent balances. The increase in FHLB short-term advances is a result of more favorable short-term borrowing rates offered by the FHLB. The $3.9 million increase in total deposits
consisted of a $2.4 million increase in time deposits, a $2.0 million increase in passbook accounts, and a $829 thousand increase in demand deposits, which were partially offset by a $756 thousand decrease in money market accounts, and a $234
thousand decrease in mortgage escrow accounts. The increase in time deposits is primarily attributable to certificates opened by local government units and school districts. The changes in passbook savings, may reflect lower market rates on
certificates and a shift in consumer preferences to more liquid savings options. The decreases in 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. At
March 31, 2010, total approved loan commitments outstanding amounted to approximately $1.1 million. At the same date, commitments under unused lines of credit amounted to $5.0 million and the unadvanced portion of construction loans
approximated $8.9 million. Certificates of deposit scheduled to mature in one year or less at March 31, 2010 totaled $47.9 million. Management believes that a significant portion of maturing deposits will remain with the Company.

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 FRB and other borrowings, to provide the cash utilized in investing activities. Management believes that the Company currently has adequate liquidity available to respond to liquidity demands.

On April 27, 2010, the Companys Board of Directors declared a cash dividend of $0.16 per share payable May 20, 2010, to
shareholders of record at the close of business on May 10, 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.

As of March 31, 2010, WVS Financial Corp. exceeded all regulatory capital requirements and maintained Tier I and total risk-based
capital equal to $30.4 million or 13.8% and $31.1 million or 14.2%, respectively, of total risk-weighted assets, and Tier I leverage capital of $30.4 million or 7.91% 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



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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 March 31, 2010 totaled approximately $1.6
million or 0.4% of total assets as compared to $953 thousand or 0.2% of total assets at June 30, 2009. Nonperforming assets at March 31, 2010 consisted of: six single-family real estate loans totaling $1.3 million, and two home equity
lines of credit totaling $359 thousand. These loans are in various stages of collection activity.

The $669 thousand increase
in nonperforming assets during the nine months ended March 31, 2010 was attributable to the classification to non-performing of: three single family real estate loans totaling $859 thousand, and two home equity lines of credit totaling $359
thousand, which were partially offset by the reclassification of; one multi-family real estate loan totaling $465 thousand, one single family real estate loan totaling $55 thousand and one home equity loan totaling $21 thousand, (all of which paid
current in the period) to performing, the charge-off of one commercial loan totaling $6 thousand, and paydowns on non-performing loans of $1 thousand.

At June 30, 2009, the Company had one previously restructured commercial real estate loan to a retirement village located in the
North Hills totaling $972 thousand. At June 30, 2009, the loan was reclassified as performing, and was paid off in full in July 2009.

At June 30, 2009, the Company had one previously restructured loan secured by undeveloped land totaling $304 thousand and one
previously restructured unsecured loan totaling $5 thousand to two borrowers. During the fourth quarter of fiscal 2004, the Bankruptcy Court approved a secured claim totaling $440 thousand and an unsecured claim totaling $76 thousand be paid in
accordance with a Bankruptcy Plan of Reorganization. All Court ordered plan payments have been received in a timely manner. In accordance with generally accepted accounting principles, the Company had recorded interest payments received on a cost
recovery basis until June 30, 2006 and then began recording interest income. During the quarter ended December 31, 2009, the secured claim approved by the Bankruptcy Court was refinanced by the Savings Bank at prevailing market rates and
terms, and during the quarter ended March 31, 2010, the unsecured claim approved by the Bankruptcy Court was paid off in full.

During the nine months ended March 31, 2010, approximately $58 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 nine months ended March 31, 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.

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
March 31, 2010, intermediate and long-term market interest rates traded in a narrow band. Reinvestment yields on floating rate mortgage-backed securities were somewhat higher. Both the Treasury and MBS markets were impacted by historically high
purchases by the Federal Reserve and to economic problems in the Euro zone  most notably within Greece. In response to these market conditions, the Company reduced its overall borrowed funds position and began to purchase U.S. Government
agency callable step-up bonds and U.S. Government agency floating rate CMOs. We also reduced our corporate sector allocation as bonds matured due to declining yield spreads. This tactic also allowed us to increase our risk-based capital
ratios.



35



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##### Table of Contents

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. 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 Yield
Curve
|                   |  |                       |  |                    
|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            

These changes in
intermediate and long-term market interest rates, the changing slope of the Treasury yield curve, and low to moderate 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 nine months ended March 31, 2010, totaled $14.6 million, $57.4 million and $50.4 million, respectively. Due to stagnant
global interest rates and Treasury yields we reduced 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 invest in callable U.S. Government agency bonds, investment grade corporate obligations and floating rate U.S. Government agency CMOs. The Company reinvested back into callable U.S.
Government agency bonds with step-up and fixed to floating coupons and maturities generally within ten years. 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, continued 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 likely will continue to be weak throughout calendar year 2010. The Company will continue to selectively offer commercial real estate, land acquisition and development, and shorter-term residential construction loans, to partially
increase interest income while limiting interest rate risk. The Company continues to offer higher yielding home equity and small business loans to existing customers and seasoned prospective customers.

The Company selectively purchased callable U.S. Government agency bonds with step-up and fixed to floating coupons to earn a favorable
financing spread and to provide higher levels of liquidity due to turmoil in the current interest rate environment. To a lesser extent, the Company discontinued purchasing FDIC insured bank certificates of deposit and corporate bonds due to lower
market yields. Each of the aforementioned strategies also helped to better match the interest-rate and liquidity risks associated with the Savings Banks customers liquidity preference for shorter term money market and time deposit
products.



36



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##### Table of Contents

During the nine months ended March 31, 2010, principal investment purchases were
comprised of: fixed-rate investment grade corporate bonds  $33.7 million with a weighted average yield of 2.57%; U.S. Government agency step-up bonds with an initial lock-out period of 6 months  $31.0 million with a weighted average
yield to call of approximately 3.21%; FDIC bank insured certificates of deposit  $9.7 million with a weighted average yield of 1.90%; U.S. Government agency floating rate CMOs  $15.4 million with an original average rate of 1.53%;
floating rate investment grade foreign bonds  $4.7 million with a weighted average yield of 2.19%; floating rate U.S. Government agency bonds with an initial lock-out period of 3 months  $2.0 million with a weighted average yield to call
of 2.65%; short-term taxable municipal obligations  $1.0 million with a weighted average yield of 1.22%; floating rate investment grade corporate bonds  $954 thousand with a weighted average yield of 2.61%; callable fixed rate U.S.
Government agency bonds with initial lock out periods of 7  8 months  $760 thousand with a weighted average yield to call of 2.90%; and fixed rate investment grade foreign bonds  $418 thousand with a weighted average yield of 2.38%
and fixed-rate tax-free municipal bonds  $900 thousand with taxable equivalent yield to maturity of 2.21%. Major investment proceeds received during nine months ended March 31, 2010 were: callable U.S. Government agency bonds  $30.8
million with a weighted average yield of approximately 4.06%; investment grade corporate bonds  $18.1 million with a weighted average yield of approximately 3.78%; tax-free municipal bonds  $4.0 million with a weighted average taxable
equivalent yield of approximately 5.89%; investment grade foreign bonds  $3.4 million with a weighted average yield of approximately 3.34%; investment grade corporate utility first mortgage bonds  $406 thousand with a weighted average
yield of 5.84%. The Company also had $25.2 million in FDIC insured bank certificates of deposit redeemed with a weighted average yield of approximately 3.38%.

As of March 31, 2010, the implementation of these asset and liability management initiatives resulted in the following:



| | 1) | $137.1 million or 49.0% of the Companys investment portfolio was comprised of floating rate mortgage-backed securities (including collateralized mortgage
obligations  CMO) that reprice on a monthly basis;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | $94.0 million or 33.6% of the Companys investment portfolio consisted of investment grade fixed rate corporate bonds with maturities as follows: 1  6 months
 $1.3 million; 6  12 months  $35.8 million; 1  3 years  $32.5 million; 3  5 years  $18.7 million; and over 5 years  $5.6 million.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | $28.0 million or 10.0% of the Companys investment portfolio was comprised of callable U.S. Government agency step-up bonds which are callable within 3  6
months;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) | $7.3 million or 2.6% of the Companys investment portfolio was comprised of fixed-rate callable U.S. Government Agency bonds which are callable as follows: 3
months or less  $2.6 million; 3  6 months  $2.0 million; and 1  2 years  $2.7 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.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5) | $9.3 million or 2.5% of the Companys total assets consisted of FDIC insured bank certificates of deposit with remaining maturities ranging from 1 to 21 months;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6) | $4.9 million or 1.8% of the Companys investment portfolio consisted of investment grade floating rate corporate bonds which reprice quarterly and will mature
within 3 to 22 months;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7) | An aggregate of $31.4 million or 53.4% 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  $85.5 million or 43.8%; 3  6 months  $25.0 million or
12.8%; 6  12 months  $45.0 million or 23.1%; 1  3 years  $22.0 million or 11.3%; 3  5 years  $5.0 million or 2.6%; and over 5 years  $12.5 million or 6.4%.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.



37



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##### Table of Contents

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.



|                                                                     |  |                        |         |   |          |   |         |      |  |   |         |  
|-------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------- | - | ------- | ---- |  | - | ------- | -
|                                                                     |  | March 31,              |         |   | June 30, |  
|                                                                     |  | 2010                   |         |   | 2009     |   |         | 2008 | 
|                                                                     |  | (Dollars in Thousands) |        
|Interest-earning assets maturing or repricing within one year        |  | $                      | 280,445 |   |          | $ | 326,316 |      |  | $ | 377,916 |  
|Interest-bearing liabilities maturing or repricing within one year   |  |                        | 256,003 |   |          |   | 228,295 |      |  |   | 207,133 |  
|                                                                     |  |                        |         |   |          |   |         |      |  |   |         |  
|                                                                     |  |                        |        
|Interest sensitivity gap                                             |  | $                      | 24,442  |   |          | $ | 98,021  |      |  | $ | 170,783 |  
|                                                                     |  |                        |         |   |          |   |         |      |  |   |         |  
|Interest sensitivity gap as a percentage of total assets             |  |                        | 6.48    | % |          |   | 23.37   | %    |  |   | 40.36   | %
|Ratio of assets to liabilities maturing or repricing within one year |  |                        | 109.55  | % |          |   | 142.94  | %    |  |   | 182.45  | %

During the nine months
ended March 31, 2010, the Company managed its one year interest sensitivity gap by: (1) reducing a significant portion of its short-term borrowings; (2) adjusting its investment portfolio to include investment grade fixed and floating
rate corporate bonds; (3) investing in callable U.S. Government agency fixed to floating rate and step-up bonds; (4) investing in shorter-term FDIC insured bank certificates of deposit; (5) emphasizing loans with shorter-terms or
repricing frequencies, and (6) limiting the portfolio origination of long-term fixed rate mortgages.



38



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##### Table of Contents

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 March 31, 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) |  | $                      | 59,606 |   |         | $ | 16,390 |          |  | $ | (7,361   | ) |  | $        | (9,122 | ) |          | $ | (111   | )         |  | $ | 20,951 |   |  | $ | 28,685 |  
|% of Total Assets     |  |                        | 15.8   | % |         |   | 4.3    | %        |  |   | -2.0     | % |  |          | -2.4   | % |          |   | 0.0    | %         |  |   | 5.6    | % |  |   | 7.6    | %
|Base Case Up 100 bp   |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 61,907 |   |         | $ | 23,898 |          |  | $ | 20,398   |   |  | $        | 21,604 |   |          | $ | 30,812 |           |  | $ | 38,012 |   |  | $ | 28,685 |  
|% of Total Assets     |  |                        | 16.4   | % |         |   | 6.3    | %        |  |   | 5.4      | % |  |          | 5.7    | % |          |   | 8.2    | %         |  |   | 10.1   | % |  |   | 7.6    | %
|Base Case No Change   |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 63,806 |   |         | $ | 26,722 |          |  | $ | 24,442   |   |  | $        | 25,815 |   |          | $ | 35,449 |           |  | $ | 42,669 |   |  | $ | 28,685 |  
|% of Total Assets     |  |                        | 16.9   | % |         |   | 7.1    | %        |  |   | 6.5      | % |  |          | 6.8    | % |          |   | 9.4    | %         |  |   | 11.3   | % |  |   | 7.6    | %
|Base Case Down 100 bp |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 64,917 |   |         | $ | 25,539 |          |  | $ | 22,275   |   |  | $        | 26,695 |   |          | $ | 36,425 |           |  | $ | 41,663 |   |  | $ | 28,685 |  
|% of Total Assets     |  |                        | 17.2   | % |         |   | 6.8    | %        |  |   | 5.9      | % |  |          | 7.1    | % |          |   | 9.7    | %         |  |   | 11.0   | % |  |   | 7.6    | %
|Base Case Down 200 bp |  |                        |        |   |         |   |        |          |  |   |          |   |  |          |        |   |          |   |        |           |  |   |        |   |  |   |        |  
|Cummulative Gap ($s) |  | $                      | 75,090 |   |         | $ | 43,858 |          |  | $ | 24,868   |   |  | $        | 27,386 |   |          | $ | 42,018 |           |  | $ | 46,904 |   |  | $ | 28,685 |  
|% of Total Assets     |  |                        | 19.9   | % |         |   | 11.6   | %        |  |   | 6.6      | % |  |          | 7.3    | % |          |   | 11.1   | %         |  |   | 12.4   | % |  |   | 7.6    | %

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.



39



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##### Table of Contents

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 March 31, 2010. This analysis was done assuming that the interest-earning
assets will average approximately $370 million and $371 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 March 31, 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 |  
|                                      |  | March 31, 2011                                               |   |  | March 31, 2010 |  
|Estimated impact on:                  |  | -200                                                         |   |  | -100           |   |  | 0     |   |  | +100  |   |  | +200  |   |  | -200 |        |   | -100 |   |        | 0 |  |   | +100   |   |  | +200 |       
|Change in net interest income         |  | -24.1                                                        | % |  | -13.6          | % |  |      |   |  | 4.9   | % |  | 19.4  | % |  |      | -17.2  | % |      |   | -6.4   | % |  |   |       |   |  |      | 9.1    | % |  |   | 30.9   | %
|Return on average equity              |  | 9.06                                                         | % |  | 11.09          | % |  | 13.69 | % |  | 14.52 | % |  | 16.80 | % |  |      | 3.73   | % |      |   | 5.14   | % |  |   | 5.97   | % |  |      | 7.14   | % |  |   | 9.86   | %
|Return on average assets              |  | 0.71                                                         | % |  | 0.88           | % |  | 1.12  | % |  | 1.21  | % |  | 1.35  | % |  |      | 0.29   | % |      |   | 0.39   | % |  |   | 0.46   | % |  |      | 0.56   | % |  |   | 0.75   | %
|Market value of equity (in thousands) |  |                                                              |   |  |                |   |  |       |   |  |       |   |  |       |   |  | $    | 26,304 |   |      | $ | 24,857 |   |  | $ | 24,931 |   |  | $    | 23,682 |   |  | $ | 21,025 |  

The Companys
nine months earnings were adversely impacted by low market interest rates. This period of low interest rates is expected to continue throughout most of calendar year 2010. During the first nine months of fiscal 2010, we better positioned our balance
sheet and franchise by reducing overall leverage, avoiding low yielding assets, selectively pursuing seasoned new construction builders and increasing our Tier l leverage ratio to 7.91%.

Looking ahead, we believe that our net interest income should significantly improve over time. Our legacy long-term FHLB advances, taken
out a number of years ago when interest rates were higher, will begin to mature as shown below.



|              |  |            |        |                    |      
|------------- |  | ---------- | ------ | ------------------ | -----
|Quarter Ended |  | Amount/$MM |        | Weighted Avg. Rate
|6/30/10       |  | $          | 20.579 |                    | 5.86%
|9/30/10       |  | $          | 25.000 |                    | 5.77%
|12/31/10      |  | $          | 35.000 |                    | 5.44%
|3/31/11       |  | $          | 10.000 |                    | 4.99%
|6/30/11       |  | $          | 17.000 |                    | 5.28%

In addition, our
substantial floating rate mortgage-backed securities portfolio should perform well when interest rates begin to rise.



40



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##### Table of Contents

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 March 31, 2010.

Anticipated Transactions



|                                                    |  |                       |        |  
|--------------------------------------------------- |  | --------------------- | ------ | -
|                                                    |  | (Dollars inThousands) |       
|Undisbursed construction and land development loans |  |                       |        |  
|Fixed rate                                          |  | $                     | 4,039  |  
|                                                    |  |                       | 6.73   | %
|                                                    | 
|Adjustable rate                                     |  | $                     | 4,816  |  
|                                                    |  |                       | 4.58   | %
|                                                    | 
|Undisbursed lines of credit                         |  |                       |        |  
|Adjustable rate                                     |  | $                     | 4,983  |  
|                                                    |  |                       | 3.64   | %
|                                                    | 
|Loan origination commitments                        |  |                       |        |  
|Fixed rate                                          |  | $                     | 335    |  
|                                                    |  |                       | 6.67   | %
|                                                    | 
|Adjustable rate                                     |  | $                     | 720    |  
|                                                    |  |                       | 6.77   | %
|                                                    | 
|Letters of credit                                   |  |                       |        |  
|Adjustable rate                                     |  | $                     | 430    |  
|                                                    |  |                       | 4.25   | %
|                                                    |  |                       |        |  
|                                                    | 
|                                                    |  | $                     | 15,659 |  
|                                                    |  |                       |        |  



41



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##### Table of Contents

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 March 31,
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 twelve 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
|------- | -----------------------

Not applicable.



|ITEM 4T. | 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 March 31, 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 March 31, 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 March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42



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##### Table of Contents

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.

There have been no material developments with
respect to this litigation during the quarter ended March 31, 2010.

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, 2009.



|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
March 31, 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
|01/01/10  01/31/10 |  | 0                             |  | $                               |      |                                                                                | 0     |                                                                                | 49,480
|02/01/10  02/28/10 |  | 0                             |  | $                               |      |                                                                                | 0     |                                                                                | 49,480
|03/01/10  03/31/10 |  | 4,420                         |  | $                               | 13.86 |                                                                                | 4,420 |                                                                                | 45,060
|Total               |  | 4,420                         |  | $                               | 13.86 |                                                                                | 4,420 |                                                                                | 45,060



|(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 45,060 shares remaining to be repurchased at March 31, 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.
|             |  |  | 
|May 14, 2010 |  |  |  | BY:                 |  | /S/    DAVID J.
BURSIC                                                                                
|Date         |  |  |  |                     |  | David J. Bursic
President and Chief Executive Officer
(Principal Executive Officer)                   
|             |  |  | 
|May 14, 2010 |  |  |  | BY:                 |  | /S/    KEITH A.
SIMPSON                                                                               
|Date         |  |  |  |                     |  | Keith A. Simpson
Vice-President, Treasurer and Chief Accounting Officer
(Principal Accounting Officer)



45