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

                                    FORM 10-Q

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934

         For the quarterly period ended December 31, 1998

                                       or

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ______ to ______

                         Commission File Number: 0-22444

                               WVS Financial Corp.
             ------------------------------------------------------ 
             (Exact name of registrant as specified in its charter)

                 Pennsylvania                             25-1710500
        -------------------------------              ----------------------
        (State or other jurisdiction of                (I.R.S. Employer
        incorporation or organization)               Identification Number)

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

                                 (412) 364-1911
                         -------------------------------
                         (Registrant's telephone number,
                              including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirement for the past 90 days.    YES [ X ]    NO    [   ]

         Shares  outstanding  as of February 9, 1999 : 3,365,648  shares  Common
Stock, $.01 par value.
<PAGE>
                       WVS FINANCIAL CORP. AND SUBSIDIARY

                                      INDEX

PART I.                    Financial Information                                
-------                    ---------------------                                

Item 1.                    Financial Statements

                           Consolidated Statements of Financial
                           Condition as of December 31, 1998
                           and June 30, 1998 (Unaudited)                        

                           Consolidated Statements of Income
                           for the Three and Six Months Ended
                           December 31, 1998 and 1997 (Unaudited)               

                           Consolidated Statements of Cash Flows
                           for the Six Months Ended December 31,
                           1998 and 1997 (Unaudited)                            

                           Consolidated Statements of Changes in
                           Stockholders' Equity for the Six Months
                           Ended December 31, 1998 (Unaudited)                  

                           Notes to Unaudited Consolidated
                           Financial Statements                                 

Item 2.                    Management's Discussion and Analysis of
                           Financial Condition and Results of
                           Operations for the Three and Six Months
                           Ended December 31, 1998                              

Item 3.                    Quantitative and Qualitative Disclosures
                           about Market Risk                                    

PART II.                   Other Information                                    
--------                   -----------------                                    

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

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

                                                                 December 31, 1998          June 30, 1998
                                                                 -----------------          ------------- 
<S>                                                                  <C>                      <C>        
          Assets
Cash and due from banks                                              $     843                $     699  
Interest-earning demand deposits                                         4,075                    1,807  
Investment securities available-for-sale (amortized cost of                                              
   $14,212 and $17,481)                                                 14,268                   17,519  
Investment securities held-to-maturity (market value of                                                  
   $56,889 and $63,996)                                                 56,927                   63,749  
Mortgage-backed securities available-for-sale (amortized cost of                                         
   $12,842 and $18,842)                                                 13,023                   19,041  
Mortgage-backed securities held-to-maturity (market value of                                             
   $68,061 and $27,777)                                                 67,586                   27,273  
Federal Home Loan Bank stock, at cost                                    6,195                    4,675  
Net loans receivable                                                   152,537                  157,737  
Accrued interest receivable                                              2,527                    2,414  
Real estate owned                                                           --                       --    
Premises and equipment                                                   1,165                    1,179  
Deferred taxes and other assets                                          1,238                      961  
                                                                     ---------                ---------  
          TOTAL ASSETS                                               $ 320,384                $ 297,054  
                                                                     =========                =========  
                                                                                                         
          Liabilities and Stockholders' Equity                                                           
Liabilities:                                                                                             
Savings Deposits:                                                                                        
   Non-interest-bearing accounts                                     $   8,654                $   7,528  
   NOW accounts                                                         16,930                   15,347  
   Savings accounts                                                     36,245                   37,966  
   Money market accounts                                                11,871                   13,259  
   Certificates of deposit                                              95,088                   93,570  
                                                                     ---------                ---------  
    Total savings deposits                                             168,788                  167,670  
Federal Home Loan Bank advances                                        101,500                   88,857  
Other borrowings                                                        12,150                      889  
Advance payments by borrowers for taxes and insurance                    2,060                    3,312  
Accrued interest payable                                                 1,845                    1,874  
Other liabilities                                                        1,450                    1,474  
                                                                     ---------                ---------  
     TOTAL LIABILITIES                                                 287,793                  264,076  
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                    WVS FINANCIAL CORP. AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                (UNAUDITED)
                                              (in thousands)
                                                (continued)

                                                                 December 31, 1998          June 30, 1998
                                                                 -----------------          ------------- 
<S>                                                                  <C>                      <C> 
Stockholders' equity:                                                                                    
Preferred stock:                                                                                         
   5,000,000 shares, no par value per share, authorized; none                                            
   outstanding                                                              --                       --    
Common stock:                                                                                            
   10,000,000 shares, $.01 par value per share, authorized;                                              
   3,663,600 and 3,617,120 shares issued, respectively, and        
   3,539,746 and 3,617,120 outstanding, respectively                        37                       36      
Additional paid-in capital                                              18,958                   18,386  
Treasury stock: 123,854 shares at cost                                  (1,893)                      --    
Retained earnings, substantially restricted                             15,985                   15,143  
Unallocated shares - Recognition and Retention Plans                      (380)                    (432) 
Unallocated shares - Employee Stock Ownership Plan                        (272)                    (312) 
                                                                     ---------                ---------  
                                                                        32,435                   32,821  
Unrealized gain (loss) on available-for-sale securities                    156                      157  
                                                                     ---------                ---------  
     TOTAL STOCKHOLDERS' EQUITY                                         32,591                   32,978  
                                                                     ---------                ---------  
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 320,384                $ 297,054  
                                                                     =========                ========= 
</TABLE>
           See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                          WVS FINANCIAL CORP. AND SUBSIDIARY
                                          CONSOLIDATED STATEMENTS OF INCOME
                                                     (UNAUDITED)
                                        (in thousands, except per share data)


                                                             Three Months Ended               Six Months Ended
                                                                December 31,                     December 31,
                                                       ----------------------------      ---------------------------
                                                            1998            1997             1998            1997
                                                       ------------     -----------      -----------     -----------
<S>                                                     <C>             <C>              <C>             <C>        
INTEREST AND DIVIDEND INCOME:
     Loans                                              $     3,189     $     3,300      $     6,378     $     6,565
     Investment securities                                    1,339           1,482            2,820           3,050
     Mortgage-backed securities                               1,069             623            1,857           1,265
     Interest-earning deposits with other
         institutions                                            16              21               32              35
     Federal Home Loan Bank stock                                97              58              178             119
                                                       ------------     -----------      -----------     -----------
          Total interest and dividend income                  5,710           5,484           11,265          11,034
                                                       ------------     -----------      -----------     -----------

INTEREST EXPENSE:
     Deposits                                                 1,662           1,751            3,351           3,535
     Borrowings                                               1,544           1,179            2,886           2,357
     Advance payments by borrowers for
         taxes and insurance                                      7               9               15              16
                                                       ------------     -----------      -----------     -----------
           Total interest expense                             3,213           2,939            6,252           5,908
                                                       ------------     -----------      -----------     -----------

NET INTEREST INCOME                                           2,497           2,545            5,013           5,126
PROVISION FOR LOAN LOSSES                                        --            (120)              --            (120)
                                                       ------------     -----------      -----------     -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES           2,497           2,665            5,013           5,246
                                                       ------------     -----------      -----------     -----------

NON-INTEREST INCOME:
     Service charges on deposits                                 75              58              137             110
     Investment securities gains, net                            36              --               36              --
     Other                                                       51              48               91              86
                                                       ------------     -----------      -----------     -----------
          Total non-interest income                             162             106              264             196
                                                       ------------     -----------      -----------     -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                         WVS FINANCIAL CORP. AND SUBSIDIARY
                                          CONSOLIDATED STATEMENTS OF INCOME
                                                     (UNAUDITED)
                                        (in thousands, except per share data)
                                                     (continued)


                                                            Three Months Ended                Six Months Ended
                                                                December 31,                     December 31,
                                                       ----------------------------      ---------------------------
                                                            1998            1997             1998            1997
                                                       ------------     -----------      -----------     -----------
<S>                                                     <C>             <C>              <C>             <C>        
NON-INTEREST EXPENSE:
     Salaries and employee benefits                             717             913            1,408           1,670
     Occupancy and equipment                                     90             104              184             207
     Deposit insurance premium                                   25              28               51              55
     Data processing                                             42              42               88              84
     Correspondent bank service charges                          32              29               61              60
     Other                                                      207             200              382             366
                                                       ------------     -----------      -----------     -----------
          Total non-interest expense                          1,113           1,316            2,174           2,442
                                                       ------------     -----------      -----------     -----------
INCOME BEFORE INCOME TAXES                                    1,546           1,455            3,103           3,000
INCOME TAXES                                                    563             459            1,170           1,069
                                                       ------------     -----------      -----------     -----------

NET INCOME                                              $       983     $       996      $     1,933     $     1,931
                                                        ===========     ===========      ===========     ===========
EARNINGS PER SHARE:
     Basic                                              $      0.28     $      0.29      $      0.54     $      0.57
     Diluted                                            $      0.28     $      0.28      $      0.54     $      0.55
AVERAGE SHARES OUTSTANDING:
     Basic                                                3,514,727       3,419,243        3,548,647       3,413,442
     Diluted                                              3,545,577       3,548,146        3,579,898       3,539,809
</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                WVS FINANCIAL CORP. AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED)
                                          (in thousands)

                                                                            Six Months Ended 
                                                                               December 31,
                                                                        ------------------------
                                                                           1998           1997
                                                                        ---------      ---------
<S>                                                                     <C>            <C>      
OPERATING ACTIVITIES

Net income                                                              $   1,933      $   1,931
Adjustments to reconcile net income to cash provided by operating
 activities:
   Provision for loan and real estate owned losses                             --           (120)
   Gain on sale of investments and mortgage-backed securities                 (36)            --
   Depreciation and amortization, net                                          59             67
   Amortization of discounts, premiums and deferred loan fees                  (6)           (29)
   Amortization of ESOP, RRP and deferred and unearned
      compensation                                                            175            429
   (Increase) decrease in accrued interest receivable                        (113)           360
   (Decrease) increase in accrued interest payable                            (28)           154
   Increase in accrued and deferred taxes                                    (141)          (119)
   Other, net                                                                 110            290
                                                                        ---------      ---------
         Net cash provided by operating activities                          1,953          2,963
                                                                        ---------      ---------

INVESTING ACTIVITIES

Available-for-sale:
   Purchases of investments and mortgage-backed securities                (26,908)       (11,680)
   Proceeds from repayments of investments and mortgage-backed
      securities                                                           35,235          4,707
   Proceeds from sale of investments and mortgage-backed securities           905          2,192
Held-to-maturity:
   Purchases of investments and mortgage-backed securities               (116,596)       (47,620)
   Proceeds from repayments of investments and mortgage-backed
   securities                                                              83,317         57,052
Decrease (increase) in net loans receivable                                 5,066         (2,842)
Sale of Real Estate Owned                                                      --             --
(Increase) decrease in FHLB stock                                          (1,520)            55
Purchases of premises and equipment                                           (45)            (7)
                                                                        ---------      ---------
         Net cash (used for) provided by investing activities             (20,546)         1,857
                                                                        ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                WVS FINANCIAL CORP. AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED)
                                          (in thousands)

                                                                            Six Months Ended 
                                                                               December 31,
                                                                         -----------------------
                                                                           1998           1997
                                                                         --------       --------
<S>                                                                      <C>            <C>     
FINANCING ACTIVITIES

Net (decrease) increase in transaction and passbook accounts                 (400)           499
Net increase (decrease) in certificates of deposit                          1,518         (4,246)
Net increase (decrease) in FHLB borrowings                                 12,643           (425)
Net increase in other borrowings                                           11,260            388
Net decrease in advance payments by borrowers for taxes and
   insurance                                                               (1,251)        (1,297)
Net proceeds from issuance of common stock                                    232             63
Funds used for purchase of treasury stock                                  (1,893)            --
Cash dividends paid                                                        (1,104)          (839)
                                                                         --------       --------
         Net cash provided by (used for) financing activities              21,005         (5,857)
                                                                         --------       --------

         Increase (decrease) in cash and cash equivalents                   2,412         (1,037)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                        2,506          2,570
                                                                         --------       --------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                           $  4,918       $  1,533
                                                                         ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash paid during the period for:
      Interest on deposits, escrows and borrowings                       $  6,281       $  5,752
      Income taxes                                                       $  1,368       $  1,181

</TABLE>


          See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                 WVS FINANCIAL CORP. AND SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                             (UNAUDITED)
                                                           (in thousands)
                                                                                                   Accum.
                                                                                    Unallocated    Other        Retained
                                          Additional                 Unallocated       Shares     Compre-       Earnings-
                                Common     Paid-In      Treasury      Shares Held     Held by     hensive    Substantially
                                 Stock     Capital        Stock         by ESOP         RRP        Income      Restricted     Total 
                                 -----     -------        -----         -------         ---        ------      ----------     ----- 
<S>                            <C>        <C>       <C>            <C>            <C>            <C>            <C>         <C>    
Balance at June 30, 1998       $   36     $18,386   $       ---    $      (312)   $     (432)    $    157       $15,143     $32,978

Comprehensive income:

   Net Income                                                                                                     1,933       1,933
   Other comprehensive
     income:
      Change in unrealized
          holding gains on
          securities                                                                                   (1)                       (1)
                                                                                                                            ------- 
Comprehensive income                                                                                                          1,932

Purchase of shares for
   treasury stock                                        (1,893)                                                             (1,893)

Release of earned
   Employee Stock
   Ownership Plan (ESOP)
   shares                                      84                           40                                                  124

Accrued compensation
   expense for Recognition
   And Retention Plans
   (RRP)                                                                                  52                                     52

Exercise of stock options           1         231                                                                               232

Tax benefit from exercise
   of stock options                           257                                                                               257

Cash dividends declared
   ($0.32 per share)                                                                                             (1,091)     (1,091)
                               ------     -------   --------       -----------    ----------     --------       -------     -------
Balance at December 31,   
   1998                        $   37     $18,958   $ (1,893)      $      (272)   $     (380)    $    156       $15,985     $32,591
                               ======     =======   ========       ===========    ==========     ========       =======     =======
Components of
comprehensive income:
  Change in net unrealized         
   gain on investment
   securities held for sale                                                                           (13)
  Realized losses included                                                                                 
   in net income, net of tax                                                                           12
                                                                                                 --------
Total                                                                                                  (1)
                                                                                                 ========
</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
                       WVS FINANCIAL CORP. AND SUBSIDIARY
                       ----------------------------------

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION
         ---------------------

         The accompanying  unaudited consolidated financial statements have been
         prepared  in  accordance  with  the  instructions  for  Form  10-Q  and
         therefore  do not include  information  or  footnotes  necessary  for a
         complete  presentation of financial  condition,  results of operations,
         and  cash  flows  in  conformity  with  generally  accepted  accounting
         principles.   However,  all  adjustments  (consisting  only  of  normal
         recurring  adjustments)  which,  in  the  opinion  of  management,  are
         necessary for a fair  presentation  have been included.  The results of
         operations  for the three and six months ended  December 31, 1998,  are
         not necessarily indicative of the results which may be expected for the
         entire fiscal year.


<PAGE>
2.       EARNINGS PER SHARE
         ------------------

         The  following  table sets forth the  computation  of basic and diluted
         earnings per share.
<TABLE>
<CAPTION>
                                        Three Months Ended                 Six Months Ended
                                            December 31,                      December 31,
                                   ----------------------------      ---------------------------- 
                                       1998             1997             1998             1997
                                   -----------      -----------      -----------      -----------
<S>                                <C>              <C>              <C>              <C>      
Weighted average common
 shares outstanding                  3,663,204        3,496,574        3,660,162        3,496,013

Average treasury stock
 shares                                (91,465)            --            (52,482)            --

Average unearned ESOP
 shares                                (57,012)         (77,331)         (59,033)         (82,571)
                                   -----------      -----------      -----------      -----------

Weighted average common
 shares and common stock
 equivalents used to
 calculate basic earnings per
 share                               3,514,727        3,419,243        3,548,647        3,413,442

Additional common stock
 equivalents (stock options)
 used to calculate
 diluted earnings per share             30,850          128,903           31,251          126,367
                                   -----------      -----------      -----------      -----------
Weighted average common
 shares and common stock
 equivalents used to calculate
 diluted earnings per share          3,545,577        3,548,146        3,579,898        3,539,809
                                   ===========      ===========      ===========      ===========

Net income                         $   983,321      $   996,073      $ 1,933,443      $ 1,930,764
                                   ===========      ===========      ===========      ===========

Earnings per share:
     Basic                         $      0.28      $      0.29      $      0.54      $      0.57
     Diluted                       $      0.28      $      0.28      $      0.54      $      0.55
                                   ===========      ===========      ===========      ===========

</TABLE>
<PAGE>
3.       RECENT ACCOUNTING PRONOUNCEMENTS
         --------------------------------

         In July 1997, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive
         Income".  Statement  No. 130 is effective  for fiscal  years  beginning
         after  December 15, 1997.  This  statement  establishes  standards  for
         reporting and presentation of  comprehensive  income and its components
         (revenues, expenses, gains and losses) in a full set of general purpose
         financial  statements.  It requires  that all items are  required to be
         recognized  under  accounting  standards as components of comprehensive
         income to be reported in a financial  statement  that is presented with
         the same  prominence as other financial  statements.  Statement No. 130
         requires  that  companies  (1)  classify  items of other  comprehensive
         income by their  nature in a  financial  statement  and (2) display the
         accumulated  balance  of other  comprehensive  income  separately  from
         retained earnings and additional  paid-in capital in the equity section
         of the statement of financial condition.  Reclassification of financial
         statements for earlier periods provided for  comprehensive  purposes is
         required.

         In June 1998, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards No. 133, "Accounting for Derivative
         Instruments and Hedging Activities".  The statement provides accounting
         and reporting standards for derivative  instruments,  including certain
         derivative  instruments  embedded in other contracts,  by requiring the
         recognition of those items as assets or liabilities in the statement of
         financial position, recorded at fair value. Statement No. 133 precludes
         a  held-to-maturity  security  from being  designated as a hedged item,
         however,  at the date of  initial  application  of this  statement,  an
         entity is permitted to transfer any held-to-maturity  security into the
         available-for-sale  or trading categories.  The unrealized holding gain
         or loss on such  transferred  securities  shall be reported  consistent
         with the  requirements  of Statement No. 115,  "Accounting  for Certain
         Investments in Debt and Equity Securities". Such transfers do not raise
         an issue  regarding an entity's intent to hold other debt securities to
         maturity in the future.  This statement  applies  prospectively for all
         fiscal  quarters of all years  beginning  after June 15, 1999.  Earlier
         adoption is  permitted  for any fiscal  quarter  that begins  after the
         issue date of this statement.
<PAGE>
ITEM 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1998



GENERAL

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

         West View Savings Bank is a Pennsylvania-chartered,  SAIF-insured stock
savings bank conducting  business from six offices in the North Hills suburbs of
Pittsburgh.  Originally  organized under  Pennsylvania  law in 1908 as West View
Building Loan  Association,  West View changed its name to West View Savings and
Loan   Association   in  1954.  In  June  1992,   West  View  converted  from  a
Pennsylvania-chartered    mutual    savings   and   loan    association   to   a
Pennsylvania-chartered  mutual  savings bank.  The Savings Bank converted to the
stock form of ownership in November 1993.  The Savings Bank had no  subsidiaries
at December 31, 1998.

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

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



FINANCIAL CONDITION


         The Company's  assets  totaled  $320.4 million at December 31, 1998, as
compared to $297.1  million at June 30, 1998. The $23.3 million or 7.9% increase
in total assets was primarily  comprised of a $24.2 million or 19.0% increase in
investment  and  mortgage-backed  securities,  including  Federal Home Loan Bank
("FHLB") stock and a $2.3 million increase in interest-earning  demand deposits,
which were  partially  offset by a $5.2  million or 3.3%  decrease  in net loans
receivable.  The Company's investment securities decreased from $85.9 million to
$77.4 million while  mortgage-backed  securities increased from $46.3 million to
$80.6 million from June 30 to December 31, 1998.  These  changes were  primarily
attributable to higher interest yields on mortgage-backed  securities over other
investment  securities.  The Company's  loans  receivable  decreased from $157.7
million at June 30,  1998,  to $152.5  million at December  31,  1998.  The $5.2
million  decrease was  primarily  due to lower levels of loan  originations  and
increased  volumes of refinancings as a result of lower market interest rates on
loans.
<PAGE>
         The  Company's  total  liabilities  increased  $23.7 million or 8.9% to
$287.8 million as of December 31, 1998, from $264.1 million as of June 30, 1998.
The $23.7 million  increase in total  liabilities  was primarily  comprised of a
$23.9 million  increase in Federal Home Loan Bank advances and other  borrowings
and a $1.1 million or 0.7% increase in deposits which were partially offset by a
$1.3 million  decrease in advance payments by borrowers for taxes and insurance.
The Savings Bank's  interest-bearing  deposits  increased from $167.7 million at
June 30, 1998, to $168.8  million at December 31, 1998.  FHLB advances and other
borrowings  increased  from $89.7 million at June 30, 1998, to $113.6 million at
December 31,  1998,  primarily as a result of the  Company's  investment  growth
program.

         Total  stockholders'  equity  decreased  $387 thousand or 1.2% to $32.6
million  as of  December  31,  1998,  from $33.0  million  as of June 30,  1998,
primarily due to $1.1 million in cash dividends declared on the Company's common
stock which was  partially  offset by proceeds  from stock option  exercises and
ESOP plan share  releases.  Company net income of $1.9  million was used to fund
common stock repurchases of approximately $1.9 million.



          ASSET AND  LIABILITY  MANAGEMENT.  The  Company  continued  a strategy
designed to better match the interest rate  sensitivity of its financial  assets
to its financial liabilities. The primary elements of this strategy include: (1)
expanding  the  Company's  investment  growth  program in order to  enhance  net
interest  income;  (2)  maintaining  the Company's  level of  short-term  liquid
investments by funding loan  commitments and purchasing  longer-term  investment
securities;  (3)  emphasizing the retention of lower-cost  savings  accounts and
other core deposits;  and (4) pricing the Company's  certificates of deposit and
loan products nearer to the market average rate as opposed to the upper range of
market offered rates.

          The Company has continued its investment  growth  program,  originally
initiated in the third  quarter of fiscal 1994,  in order to realize  additional
net interest income.  Under this strategy, a longer-term callable or noncallable
investment  security,  or  mortgage-backed  security,  is  purchased  and funded
through the use of short-term non-deposit liabilities, such as FHLB advances and
short-term  borrowings.  With  this  strategy,  the  Company  increases  its net
interest  income,  but also  faces the risk,  during  periods  of rising  market
interest  rates,  that it may experience a decline in net interest income if the
rate  paid  on its  various  borrowings  rises  above  the  rate  earned  on the
investment security purchased. In order to mitigate this exposure, the Board has
placed certain restrictions on the investment growth program, including: (1) the
average outstanding daily balance of total borrowings,  computed quarterly,  may
not exceed  approximately  $125.0  million;  (2) suitable  investments  shall be
restricted  to  those  meeting  the  credit  quality  criteria  outlined  in the
Company's investment policy; (3) each security purchased shall initially yield a
minimum  of  seventy-five  basis  points  above  the  incremental  rate  paid on
short-term  borrowings,  at the time of  purchase  and (4) the  Company's  total
borrowed  funds  position  may not exceed  $150.0  million.  In most cases,  the
initial  yield  spread  earned  on  investment   security   purchases   exceeded
approximately one hundred and thirty basis points.

          During the six months ended December 31, 1998,  the Company  increased
its mortgage-backed  securities holdings by $34.3 million. At December 31, 1998,
the Company held $80.1 million of mortgage-backed securities with an approximate
yield of 6.71%. The mortgage-backed  securities  purchases were made in order to
mitigate the principal calls on the Company's callable bond portfolio and earn a
higher yield with an expected  average life profile  comparable  to  longer-term
callable agency bonds.
<PAGE>
         During the three months ended December 31, 1998, the Company  increased
its fixed-rate  mortgage-backed securities portfolio by $32.7 million or 107.6%.
Mortgage-backed securities purchases during the quarter ended December 31, 1998,
totaled  approximately $40.6 million with an estimated weighted average purchase
yield of 6.48% and an  estimated  weighted  average  life of  approximately  3.5
years. The Company believes that the mortgage-backed  securities sector provided
the best relative value, as compared to other  investment  alternatives,  due to
the high degree of interest rate  volatility  during the quarter.  Yields on the
Company's  mortgage-backed  security  purchases  generally  exceeded  yields  on
comparable  mortgage  products in the local market area with  shorter  projected
average lives and durations.

         During the six months ended  December 31, 1998,  the Company  increased
its  commercial  paper  holdings by $10.4  million.  At December 31,  1998,  the
Company held $12.8  million of  commercial  paper with an  approximate  yield of
6.2%.  The  commercial  paper  purchases  were  made in order to  capitalize  on
seasonally  high  calendar  year end  commercial  paper rates and for  liquidity
management.

         During the six months ended  December 31,  1998,  the Company  borrowed
approximately $62.4 million in various short-term  borrowings from the FHLB with
a weighted  average rate of 5.14% and incurred $49.1 million in other borrowings
with a weighted average rate of 5.22%.  During the six months ended December 31,
1998,  the Company  repaid $49.8  million of FHLB  advances and $37.9 million of
other  borrowings.  Due to a decline  in market  interest  rates  during the six
months ended December 31, 1998, the Company shortened the maturity  structure of
its  incremental  borrowings to reduce its cost of funds and to better match the
maturities of its borrowings  with the possible early  repayment of a portion of
its investment portfolio.

         The Company also makes available for origination  residential  mortgage
loans with interest rates which adjust pursuant to a designated index,  although
customer acceptance has been somewhat limited in the Savings Bank's market area.
The Company will continue to  selectively  offer  commercial  real estate,  land
acquisition and development and shorter-term  construction  loans,  primarily on
residential properties, to partially increase its loan asset sensitivity. Due to
relatively low fifteen and thirty year mortgage loan yields, the Company intends
to emphasize  higher  yielding home equity and small  business loans to existing
customers and seasoned prospective customers.

         As of  December  31,  1998,  the  implementation  of  these  asset  and
liability management initiatives resulted in the following:  (1) an aggregate of
$50.8  million  or 33.3% of the  Company's  net loan  portfolio  had  adjustable
interest rates or maturities of less than 12 months;  (2) $17.3 million or 21.4%
of  the   Company's   portfolio   of   mortgage-backed   securities   (including
collateralized  mortgage  obligations  - "CMOs") were  secured by floating  rate
securities;  (3) $13.1 million or 18.4% of the Company's  investment  securities
portfolio had scheduled maturities of one year or less; and (4) $58.0 million or
81.9% of the Company's investment securities portfolio was comprised of callable
bonds.

         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 interest rate  sensitive  within a
specific time period if it will mature or reprice within a given time period.  A
gap is considered  positive when the amount of rate sensitive assets exceeds the
<PAGE>
amount of rate  sensitive  liabilities.  A gap is  considered  negative when the
amount  of  interest  sensitive  liabilities  exceeds  the  amount  of  interest
sensitive  assets.  During a period of falling  interest  rates,  a positive gap
would tend to adversely affect net interest  income,  while a negative gap would
tend to result in an increase in net interest income.  During a period of rising
interest  rates,  a  positive  gap would  tend to result in an  increase  in net
interest  income,  while a  negative  gap would  tend to  adversely  affect  net
interest income.

         The Company's one year  cumulative  interest  rate  sensitivity  gap is
estimated at a positive  0.7% of total assets at December 31, 1998,  as compared
to a  negative  13.3% at June  30,  1998,  in each  instance,  based on  certain
assumptions  by management  with respect to the repricing of certain  assets and
liabilities.  At  December  31,  1998,  the  Company's  interest-earning  assets
maturing or repricing within one year totaled $127.1 million while the Company's
interest-bearing  liabilities  maturing  or  repricing  within one year  totaled
$124.7   million,   providing   an  excess  of   interest-earning   assets  over
interest-bearing  liabilities  of  $2.4  million.  At  December  31,  1998,  the
percentage of the Company's  assets to liabilities  maturing or repricing within
one year was 1.02%.


RESULTS OF OPERATIONS


          General. WVS reported net income of $983 thousand and $1.9 million for
the three and six months ended  December 31, 1998.  Net income  decreased by $13
thousand or 1.3% for the three months ended December 31, 1998,  when compared to
the same period in 1997. The decrease was primarily  attributable to the absence
of a $120  thousand  recovery in the provision for loan losses due to the payoff
of a commercial  loan  participation  in the quarter ended  December 31, 1997, a
$104 thousand  increase in income tax expense and a $48 thousand decrease in net
interest  income,  which was  partially  offset by a $203  thousand  decrease in
non-interest  expense and a $56 thousand  increase in non-interest  income.  Net
income  increased by $2 thousand or 0.1% for the six months  ended  December 31,
1998, when compared to the same period in 1997. The $2 thousand or 0.1% increase
in net  income was  principally  the  result of the  absence of a $120  thousand
recovery in the provision for loan losses due to the payoff of a commercial loan
participation in December 1997, a $113 thousand decrease in net interest income,
and a $101 thousand increase in income tax expense which partially offset a $264
thousand  decrease  in  non-interest  expense  and a $72  thousand  increase  in
non-interest  income.  The decrease in  non-interest  expense for the six months
ended December 31, 1998,  was primarily  attributable  to reduced  discretionary
Employee Stock Ownership Plan ("ESOP")  contributions  and lower Recognition and
Retention  Plan  ("RRP")  expenses.  The $72 thousand  increase in  non-interest
income for the six months ended December 31, 1998, was  principally due to a $27
thousand  increase in service charges on deposits and a $36 thousand net gain on
the sale of investment  securities.  The $113 thousand  decrease in net interest
income was primarily attributable to lower yields on interest-earning assets due
to sharply reduced  long-term market interest rates and a less than proportional
reduction in short-term rates paid on borrowings.
<PAGE>
           Net Interest  Income.  The Company's net interest income decreased by
$48 thousand or 1.9% for the three months ended December 31, 1998, when compared
to the same period in 1997.  The decrease  resulted from a $226 thousand or 4.1%
increase in interest income which was offset by a $274 thousand or 9.3% increase
in interest  expense.  For the six months ended  December 31, 1998, net interest
income  decreased by $113 thousand or 2.2%,  when compared to the same period in
1997.  The decrease  resulted  from a $231 thousand or 2.1% increase in interest
income which was offset by a $344 thousand or 5.8% increase in interest expense.

           Interest Income. Interest on mortgage-backed  securities increased by
$446  thousand or 71.6% for the three  months  ended  December  31,  1998,  when
compared to the same period in 1997.  The increase was  attributable  to a $31.2
million   increase  in  the  average  balance  of   mortgage-backed   securities
outstanding,  partially  offset by a 53 basis  point  decrease  in the  weighted
average yield earned on  mortgage-backed  securities  for the three months ended
December  31,  1998,  when  compared  to the same  period in 1997.  Interest  on
mortgage-backed  securities  increased $592 thousand or 46.8% for the six months
ended  December 31, 1998.  The increase was  primarily  attributable  to a $20.8
million   increase  in  the  average  balance  of   mortgage-backed   securities
outstanding  partially  offset  by a 45 basis  point  decrease  in the  weighted
average  yield  earned on  mortgage-backed  securities  for the six months ended
December 31, 1998, when compared to the same period in 1997.  During the quarter
ended December 31, 1998, the Company  increased its  mortgage-backed  securities
portfolio to capitalize on attractive sector yield levels in comparison to other
investment securities.

          Interest and dividend income on  interest-bearing  deposits with other
institutions,   investment   securities   and  FHLB  stock  ("other   investment
securities")  decreased  by $109  thousand  or 7.0% for the three  months  ended
December 31, 1998,  when  compared to the same period in 1997.  The decrease was
primarily  attributable  to a $5.1  million  increase in the average  balance of
investment securities  outstanding which was offset by a 92 basis point decrease
in the weighted  average  yield earned on  investment  securities  for the three
months  ended  December  31,  1998,  when  compared  to the same period in 1997.
Interest on other investment  securities decreased $174 thousand or 5.4% for the
six months ended  December 31, 1998,  when  compared to the same period in 1997.
The decrease in interest income on investment  securities was  attributable to a
$6.2  million   increase  in  the  average  balance  of  investment   securities
outstanding  which  was  offset by a 90 basis  point  decrease  in the  weighted
average yield earned on investment  securities for the six months ended December
31, 1998, when compared to the same period in 1997. The increases in the average
balance of  investment  securities  during both the three and six month  periods
ended  December  31,  1998,  were  principally   attributable  to  purchases  of
investment  securities  under  the  Company's  investment  growth  program,  and
purchases  of  commercial  paper  which  were  made in  order to  capitalize  on
seasonally  high  calendar  year  end  commercial   paper  rates  and  liquidity
management.  The decrease in the  weighted  average  yield earned on  investment
securities was a result of the reduced long-term market interest rates.

           Interest on net loans  receivable  decreased by $111 thousand or 3.4%
for the three months ended  December 31, 1998,  when compared to the same period
in 1997.  The  decrease  was  attributable  to a decrease of $8.0 million in the
average balance of net loans receivable outstanding,  which was partially offset
by an increase of 13 basis  points in the weighted  average  yield earned on net
loans  receivable for the three months ended December 31, 1998, when compared to
the same period in 1997.  Interest  on net loans  receivable  decreased  by $187
<PAGE>
thousand or 2.9% for the six months ended  December 31, 1998,  when  compared to
the same  period  in 1997.  The  decrease  was  attributable  to a $5.9  million
decrease in the average balance of outstanding  loans which was partially offset
by a 7 basis point increase in the weighted  average yield earned on outstanding
loans for the six months ended  December 31, 1998.  The decreases in the average
loan balance  outstanding  for the three and six months ended December 31, 1998,
were primarily  attributable to lower levels of mortgage loan  originations  and
higher levels of loan prepayments due to a marked decline in long-term  interest
rates.

           Interest Expense.  Interest expense on deposits and escrows decreased
by $91 thousand or 5.2% and decreased by $185 thousand or 5.2% for the three and
six months  ended  December 31, 1998,  respectively,  when  compared to the same
periods in 1997.  The  decrease in interest  expense on deposits and escrows was
principally  attributable  to a $1.6  million and $1.7  million  decrease in the
average balance of  interest-bearing  deposits and escrows and a 30 and 32 basis
point  decrease in the average  yield paid on deposits and escrows for the three
and six months ended December 31, 1998, respectively,  when compared to the same
period in 1997.  The decrease in the average  yield paid on deposits and escrows
was due to lower  market  interest  rates,  when  compared to the same period in
1997.

           Interest expense on FHLB advances and other  borrowings  increased by
$365 thousand and $529 thousand for the three and six months ended  December 31,
1998,  respectively,  when  compared to the same  periods in 1997.  The increase
associated with both periods is primarily  attributable to funding the Company's
investment growth program.

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

           The Company did not record a provision  for possible  losses on loans
for the three and six months ended December 31, 1998, respectively.  At December
31 and June 30, 1998, the Company's  total allowance for loan losses amounted to
$1.9 million or 1.2% of the Company's total loan portfolio.

           Non-Interest  Income.  Total  non-interest  income  increased  by $56
thousand and $68 thousand for the three and six months ended  December 31, 1998,
respectively,  when  compared  to the same  periods  in 1997.  The  increase  in
non-interest  income for the three months ended December 31, 1998, was primarily
attributable  to $36 thousand in net gains on the sale of investment  securities
and a $17  thousand  increase in service  charges on  deposits.  The increase in
non-interest  income for the six months ended December 31, 1998, was principally
attributable  to $36 thousand of net gains on the sale of investment  securities
and a $27 thousand increase in service charges on deposits.

           Non-Interest  Expense.  Total  non-interest  expense  decreased  $203
thousand  or 15.4% and  decreased  $268  thousand or 11.0% for the three and six
months ended December 31, 1998, respectively,  when compared to the same periods
in 1997.
<PAGE>
           Compensation and employee benefits expense decreased $196 thousand or
21.5% and $262 thousand or 15.7% for the three and six months ended December 31,
1998, respectively,  when compared to the same periods in 1997. The decrease was
primarily attributable to reduced discretionary ESOP contributions and lower RRP
expenses in 1998.

         Income Tax Expense.  Income tax expense  increased by $104  thousand or
22.7% and $101 thousand or 9.5% for the three and six months ended  December 31,
1998,  respectively,  when  compared to the same periods in 1997.  The change in
income tax expense,  for both periods,  was  attributable  to increased  taxable
income during the three and six months ended December 31, 1998.



LIQUIDITY AND CAPITAL RESOURCES


         Net cash provided by operating  activities  totaled $2.0 million during
the six  months  ended  December  31,  1998.  Net  cash  provided  by  operating
activities was primarily comprised of $1.9 million of net income.

         Funds used by investing activities totaled $20.5 million during the six
months  ended  December  31,  1998.  Primary uses of funds during the six months
ended December 31, 1998, included $143.5 million for purchases of investment and
mortgage-backed  securities  which was  partially  offset by $118.6  million  of
proceeds from repayments of investment and mortgage-backed securities and a $5.1
million decrease in net loans receivable.

         Funds  provided by financing  activities  totaled $21.0 million for the
six months ended December 31, 1998.  Primary  financial sources included a $23.9
million  increase  in FHLB  advances  and other  borrowings  and a $1.1  million
increase in deposits which were partially offset by $1.9 million in purchases of
treasury  stock,  a $1.3 million  decrease in advance  payments by borrowers for
taxes and  insurance  and $1.1 million of cash  dividends  paid on the Company's
common stock.  Financial  institutions  generally,  including the Company,  have
experienced a certain degree of depositor  disintermediation to other investment
alternatives.   Management   believes  that  the  degree  of   disintermediation
experienced by the Company has not had a material  impact on overall  liquidity.
As of December 31, 1998,  $73.7 million or 43.7% of the Company's total deposits
consisted  of core  deposits.  Management  has  determined  that it currently is
maintaining  adequate  liquidity and is seeking to better match funding  sources
with lending and investment opportunities.

         The  Company's  primary  sources of funds are  deposits,  amortization,
prepayments  and maturities of existing  loans,  mortgage-backed  securities and
investment  securities,  funds  from  operations,  and  funds  obtained  through
short-term borrowings. At December 31, 1998, the total approved loan commitments
outstanding amounted to $3.5 million. At the same date, commitments under unused
lines  of  credit  amounted  to $8.0  million  and  the  unadvanced  portion  of
construction loans approximated $12.2 million. Certificates of deposit scheduled
to mature in one year or less at  December  31,  1998,  totaled  $65.6  million.
Management  believes that a significant portion of maturing deposits will remain
with the Company.
<PAGE>
         Historically,  the Company used its sources of funds  primarily to meet
its  ongoing  commitments  to pay  maturing  savings  certificates  and  savings
withdrawals,  fund loan  commitments  and  maintain a  substantial  portfolio of
investment  securities.  The Company has been able to generate  sufficient  cash
through the retail deposit market,  its traditional  funding source, and through
FHLB  advances and other  borrowings,  to provide the cash utilized in investing
activities.  The Company has established a $25.0 million line of credit with the
FHLB,  which is  scheduled  to mature on  February  9,  2000,  and is subject to
various   conditions,   including   the  pledging  and  delivery  of  acceptable
collateral.  The primary  purpose of the line of credit is to serve as a back-up
liquidity facility for the Company,  however,  the Company may from time to time
utilize  the line of credit to  purchase  investment  securities  and fund other
commitments.  In  addition,  the Company has access to the Federal  Reserve Bank
discount  window.  Management  believes that the Company  currently has adequate
liquidity available to respond to liquidity demands.

         On July 28, 1998,  the Board of Directors  authorized the repurchase of
up  to  183,156  shares,  or  approximately  five  percent,   of  the  Company's
outstanding  common stock during the next twelve  months.  During the six months
ended  December 31, 1998,  123,854 shares of common stock were  repurchased  for
approximately  $1.9  million.  The  repurchased  shares will be held in treasury
stock and may be reserved for issuance  pursuant to the Company's  stock benefit
plans.

         On December 23,  1998,  the Company  entered  into an agreement  with a
shareholder  to repurchase  197,478  shares of the Company's  common stock.  The
Company  anticipates  purchasing  147,078  shares by the quarter ended March 31,
1999, and the remaining  50,400 shares no later than the quarter ended September
30, 1999. Aggregate  consideration to be paid totals approximately $3.1 million.
These shares are in addition to the stock buyback referenced above.

         On January 26, 1999, the Company's  Board of Directors  declared a cash
dividend of $0.16 per share payable February 18, 1999, to shareholders of record
at the close of  business  on  February  8, 1999.  Dividends  will be subject to
determination and declaration by the Board of Directors, which take into account
the  Company's  financial  condition,  statutory  and  regulatory  restrictions,
general  economic  conditions and other factors.  There can be no assurance that
dividends  will in fact be paid on the  common  stock  or that,  if  paid,  such
dividends will not be reduced or eliminated in future periods.

         As of December 31, 1998,  WVS Financial  Corp.  exceeded all regulatory
capital requirements and maintained Tier I and total risk-based capital equal to
$32.4  million  or 19.3% and $34.3  million  or  20.4%,  respectively,  of total
risk-weighted  assets,  and Tier I leverage capital of $32.4 million or 10.3% of
average quarterly assets.

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

         The  Company's  nonperforming  assets at  December  31,  1998,  totaled
approximately $685 thousand or 0.2% of total assets as compared to $603 thousand
or 0.2% of total  assets as of June 30, 1998.  Nonperforming  assets at December
31, 1998,  consisted  of $480  thousand in  commercial  real estate  loans,  $92
<PAGE>
thousand in single-family loans, $74 thousand in consumer loans, $23 thousand in
land loans and $15  thousand in lines of credit.  Approximately  $13 thousand of
additional  interest income would have been recorded during the six months ended
December 31, 1998, if the Company's  nonaccrual and restructured  loans had been
current in accordance with their original loan terms and outstanding  throughout
the six months ended December 31, 1998.



YEAR 2000 COMPLIANCE


         The  Company  outsources  substantially  all  of  its  data  processing
requirements and it is to a large extent  dependent upon vendor  cooperation for
systems used in its day-to-day  business.  The Company,  in conjunction with its
vendors, is testing its computer systems and requiring  representations from its
vendors  that the  products  provided  are or will be year 2000  compliant.  The
Company has developed a plan of action to help ensure that its  operational  and
financial systems will not be adversely affected by year 2000  software/hardware
failures due to processing errors arising from calculations  using the year 2000
date.  Substantially  all  hardware  and  software  products  were  compliant at
December 31,  1998.  In the  unlikely  event that the systems  tested do not, in
fact,  operate properly when the year 2000 does arrive,  all customer  accounts,
deposits and loans, as well as accounting  systems,  will be maintained manually
to ensure business  continuation while systems are being corrected.  The Company
has not and does not expect to incur material  expenditures  to address the year
2000 issue. Based upon current  estimates,  the Company does not expect to incur
more than $75 thousand  (pre-tax) in year 2000  remediation  expenses.  Any year
2000  compliance  failures,   which  are  currently  unknown,  could  result  in
additional expenses or business disruption to the Company.


FORWARD LOOKING STATEMENTS


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

         The  Company  does  not  undertake,   and  specifically  disclaims  any
obligation, to publicly release the result of any revisions which may be made to
forward-looking  statements to reflect events or circumstances after the date of
statements or to reflect the occurrence of anticipated or unanticipated events.
<PAGE>
ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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

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

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

         The Federal Reserve Board,  together with the Office of the Comptroller
of the Currency and the Federal Deposit Insurance  Corporation,  adopted a Joint
Agency Policy  Statement on Interest  Rate Risk,  effective  June 26, 1996.  The
policy statement  provides  guidance to examiners and bankers on sound practices
for  managing  interest  rate  risk,  which  will  form the  basis  for  ongoing
evaluation  of the  adequacy  of interest  rate risk  management  at  supervised
institutions.  The policy statement also outlines  fundamental elements of sound
management  that have been  identified  in prior  Federal  Reserve  guidance and
discusses the importance of these  elements in the context of managing  interest
rate risk.  Specifically,  the guidance  emphasizes the need for active board of
director and senior  management  oversight and a  comprehensive  risk-management
process that effectively identifies,  measures, and controls interest rate risk.
Financial institutions derive their income primarily from the excess of interest
collected over interest paid. The rates of interest an institution  earns on its
assets and owes on its liabilities generally are established contractually for a
period of time.  Since market interest rates change over time, an institution is
exposed to lower profit  margins (or losses) if it cannot adapt to interest rate
changes. For example, assume that an institution's assets carry intermediate- or
long-term  fixed  rates  and that  those  assets  were  funded  with  short-term
liabilities.   If  market  interest  rates  rise  by  the  time  the  short-term
<PAGE>
liabilities  must be  refinanced,  the  increase in the  institution's  interest
expense on its liabilities may not be sufficiently  offset if assets continue to
earn at the long-term fixed rates.  Accordingly,  an institution's profits could
decrease on existing assets because the  institution  will either have lower net
interest income or,  possibly,  net interest  expense.  Similar risks exist when
assets are subject to  contractual  interest rate  ceilings,  or rate  sensitive
assets are funded by longer-term,  fixed-rate  liabilities in a  decreasing-rate
environment.

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

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

         The following table provides  information about the Company's financial
instruments  that are sensitive to changes in interest  rates as of December 31,
1998,  based on the  information  and  assumptions  in the notes.  The Company's
assumptions  are based on  statistical  data  provided  by a federal  regulatory
agency in the  Company's  market area,  and are believed to be  reasonable.  The
<PAGE>
Company had no  derivative  financial  instruments  or trading  portfolio  as of
December  31,  1998.  The expected  maturity  date values for loans  receivable,
mortgage-backed   securities,  and  investment  securities  were  calculated  by
adjusting  the  instrument's  contractual  maturity  date  for  expectations  of
prepayments.  Similarly, expected maturity date values for interest-bearing core
deposits  were  calculated  based upon  estimates  of the period  over which the
deposits would be  outstanding.  With respect to the Company's  adjustable  rate
instruments,  expected  maturity  date values were  measured  by  adjusting  the
instrument's   contractual   maturity  date  for  expectations  of  prepayments.
Substantially all of the Company's investment  securities portfolio is comprised
of callable  government agency securities.  From a risk management  perspective,
the Company  believes  that  repricing  dates,  as opposed to expected  maturity
dates, may be a more relevant metric in analyzing the value of such instruments.
Company  borrowings  were  tabulated by  contractual  maturity dates and without
regard to any conversion or repricing dates.
<PAGE>
<TABLE>
<CAPTION>
                                                       EXPECTED MATURITY DATE-QUARTER ENDED DECEMBER 31,
                                          --------------------------------------------------------------------
                                                                                                        There-               Fair
                                            1999        2000        2001        2002         2003       after     Total      Value
                                          -------     -------     -------     -------      ------      -------   --------   --------
<S>                                       <C>         <C>         <C>         <C>          <C>         <C>       <C>        <C>     
 
ON-BALANCE SHEET FINANCIAL INSTRUMENTS
Interest-earning assets:
  Loans receivable (1)(2)(3)(4)
  Fixed rate                              $28,815     $18,097     $12,957     $10,602      $7,738      $31,833   $110,042   $120,533
    Average interest rate                   8.14%       7.89%       7.79%       7.74%       7.64%        7.45%

  Adjustable rate                          14,126       9,565       6,717       4,893       3,687        5,437     44,425     47,723
    Average interest rate(5)                7.94%       8.02%       8.12%       8.21%       8.29%        8.33%
  Mortgage-backed securities
  Fixed rate                                  159         ---         ---         153       1,868       60,988     63,168     63,510
    Average interest rate                   6.41%       0.00%       0.00%       7.22%       6.02%        6.75%

  Adjustable rate                             ---         ---         ---         ---         ---       17,259     17,259     17,574
    Average interest rate(6)                0.00%       0.00%       0.00%       0.00%       0.00%        6.65%

  Investments(7)                           37,758         ---         ---         ---         ---       39,577     77,335     77,352
    Average interest rate                   6.31%       0.00%       0.00%       0.00%       0.00%        6.58%

  Interest-bearing deposits                 4,075         ---         ---         ---         ---          ---      4,075      4,075
    Average interest rate                   4.74%       0.00%       0.00%       0.00%       0.00%        0.00%
                                          -------     -------     -------     -------      ------      -------   --------   --------
        Total                            $84,933     $27,662     $19,674     $15,648     $13,293     $155,094    $316,304   $330,767
                                          

Interest-bearing liabilities:
  Interest-bearing deposits
   and escrows(8)(9)(10)                  $94,588     $19,695     $19,695      $7,486      $7,486      $21,898   $170,848   $171,380
    Average interest rate                   4.36%       3.67%       3.67%       3.34%       3.34%        2.13%

  Borrowings                               30,150         ---      30,000      21,500         ---       32,000    113,650    115,085
    Average interest rate                   5.43%       0.00%       5.75%       5.80%       0.00%        5.06%
                                          -------     -------     -------     -------      ------      -------   --------   --------
        Total                           $124,738     $19,695     $49,695     $28,986     $ 7,486      $53,898    $284,498   $286,465
                                       
</TABLE>

(1) Net of undisbursed loan proceeds and does not include net deferred loan fees
or the allowance for loan losses.
(2)  For  single-family  residential  loans,  assumes  annual  amortization  and
prepayment rate at 15% for adjustable rate loans,  and 14% to 39% for fixed rate
loans. For multi-family  residential loans and other loans, assumes amortization
and prepayment rate of 12%.
(3) For second mortgage loans,  assumes annual  amortization and prepayment rate
of 18%.
(4) Consumer loans assumes amortization and prepayment rate of 13%.
(5)  Substantially  all of the  Company's  adjustable  rate loans  reprice on an
annual basis based upon changes in the one-year constant maturity treasury index
with various market based annual and lifetime interest rate caps and floors.
<PAGE>
(6)  Substantially  all  of  the  Company's   adjustable  rate   mortgage-backed
securities  reprice on a monthly basis based upon changes in the one month LIBOR
index with various lifetime caps and floors.
(7) Totals  include the  Company's  investment  in Federal Home Loan Bank stock.
Amounts adjusted to reflect  investment  securities  called through December 31,
1998,  totaling  approximately  $2.4  million and $22.6  million  expected to be
called by December 31, 1999.
(8) For regular savings accounts,  assumes an annual decay rate of 17% for three
years or less,  16% for more than three through five years and 14% for more than
five years.
(9) For NOW accounts,  assumes an annual decay rate of 37% for one year or less,
32% for more than one through three years and 17% for more than three years.
(10) For money market deposit accounts,  assumes an annual decay rate of 79% for
one year or less and 31% for more than one year.
<PAGE>
         The table below provides  information  about the Company's  anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed  letters  and  lines  of  credit.  The  Company  used no  derivative
financial instruments to hedge such anticipated  transactions as of December 31,
1998.

<TABLE>
<CAPTION>
                              Anticipated Transactions
                   -----------------------------------------
<S>                                                  <C>    
                   Undisbursed construction and
                       land development loans
                         Fixed rate                  $ 4,027
                                                        8.87%

                         Adjustable rate             $ 8,166
                                                        8.76%
                   Undisbursed lines of credit

                         Adjustable rate             $ 8,002
                                                        8.43%
                   Loan origination commitments
                         Fixed rate                  $ 1,743
                                                        7.43%

                         Adjustable rate             $ 1,718
                                                        8.25%
                   Unfunded security commitments
                         Fixed rate                  $ 3,000
                                                        6.75%
                   Letters of credit
                         Adjustable rate             $    45
                                                       11.50%
                                                     -------
                                                     $26,701
</TABLE>

         The  Company  believes  that  there  were no  material  changes  to the
Company's  anticipated  transactions  during the six months  ended  December 31,
1998.
<PAGE>
PART II - OTHER INFORMATION
---------------------------


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

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

ITEM 2.    Changes in Securities
           ---------------------

           Not applicable.

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

           Not applicable.

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

           The information required by this item is incorporated by reference to
           the Company's SEC Form 10-Q for the quarterly  period ended September
           30, 1998.

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

           Not applicable.

ITEM 6.    Exhibits and Reports on Form 8-K
           --------------------------------

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

                           Number            Description                    Page
                           ------            -----------                    ----
                             27        Financial Data Schedule               E-1
 

                 (b)       Not applicable.


<PAGE>


                                   SIGNATURES


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



                                WVS FINANCIAL CORP.



February 9, 1999                BY:  /s/David J. Bursic
----------------                     ------------------
Date                                 David J. Bursic
                                     President and Chief Executive Officer
                                     (Principal Executive and Financial Officer)