EXHIBIT 13

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                            ADVANCE FINANCIAL BANCORP

Corporate Profile

     Advance  Financial  Bancorp  (the  "Company")  is  a  Delaware  corporation
organized in September 1996 at the direction of Advance  Financial  Savings Bank
(the  "Bank") to acquire  all of the  capital  stock that the Bank issued in its
conversion  from a mutual to a stock form of ownership  (the  "Conversion").  On
December 31, 1996,  the Bank  completed the Conversion and became a wholly owned
subsidiary  of the  Company.  The Company is a unitary  savings and loan holding
company which, under existing laws,  generally is not restricted in the types of
business  activities  in which it may engage  provided  that the Bank  retains a
specified  amount of its  assets in  housing-related  investments.  The  Company
conducts no significant business or operations of its own other than holding all
the outstanding stock of the Bank and investing the Company's portion of the net
proceeds obtained in the Conversion.

The Bank  chartered  in 1935 under the name  Advance  Federal  Savings  and Loan
Association  of West  Virginia,  is a federally  chartered  stock  savings  bank
headquartered  in Wellsburg,  West Virginia.  The Bank is subject to examination
and  comprehensive  regulation  by the  Office  of  Thrift  Supervision  and its
deposits are federally  insured by the Savings  Association  Insurance Fund. The
Bank is a member of and owns stock in the  Federal  Home Loan Bank  ("FHLB")  of
Pittsburgh, which is one of the 12 regional banks in the FHLB System.

     The Bank operates a traditional  savings bank business,  attracting deposit
accounts from the general public and using those  deposits,  together with other
funds,  primarily to originate and invest in loans secured by one to four family
residential real estate,  non-residential real estate and commercial loans. To a
lesser  extent,  the Bank also  originates  multi-family  real estate  loans and
consumer loans.

Stock Market Information

     The Company's  common stock has been traded on the NASDAQ  SmallCap  Market
under the trading  symbol of "AFBC" since it commenced  trading in January 1997.
The following table reflects high and low bid quotations as published by NASDAQ.
The quotations reflect inter-dealer prices,  without retail mark-up,  mark-down,
or commission, and may not represent actual transactions.
                                                               Dividends
         Date                             High ($)   Low ($)   Declared ($)
         ----                             --------   -------   ------------

July 1, 1997 to September 30, 1997          16.75     14.88        .08
October 1, 1997 to December 31, 1997        17.88     16.50        .08
January 1, 1998 to March 31, 1998           20.88     17.38        .08
April 1, 1998 to June 30, 1998              19.50     17.88        .08
July 1, 1998 to September 30, 1998          18.13     13.88        .08
October 1, 1998 to December 31, 1998        14.38     12.63        .08
January 1, 1999 to March 31, 1999           13.50     11.63        .08
April 1, 1999 to June 30, 1999              12.63     10.44        .08

     The number of  stockholders of record of common stock as of the record date
of August 31, 1999, was  approximately  466. This does not reflect the number of
persons or entities who held stock in nominee or "street"  name through  various
brokerage firms. At August 31, 1999, there were 971,285 shares outstanding.  The
Company's  ability  to pay  dividends  to  stockholders  is  dependent  upon the
dividends  it  receives  from the Bank.  The Bank may not  declare or pay a cash
dividend  on any of its stock if the  effect  thereof  would  cause  the  Bank's
regulatory  capital  to be  reduced  below  (1)  the  amount  required  for  the
liquidation  account  established in connection with the conversion,  or (2) the
regulatory capital requirements imposed by the OTS.

Selected Financial Ratios and Other Data
                                                        For the Years Ended
                                                             June 30
                                                        -------------------
                                                         1999 %     1998 %
                                                        -------------------
Return on average assets
     (net income divided by average total assets)            .64       .78
Return on average equity
     (net income divided by average equity)                 5.22      5.34
Average equity to average assets ratio
     (average equity divided by average assets)            12.34     14.61
Equity to assets at period end                             11.54     13.07
Net interest spread                                         3.30      3.30
Dividend payout ratio                                      37.02     37.65
Net yield on average interest-earning assets                3.80      3.98
Non-performing loans to total assets                         .59       .40
Non-performing loans to total loans                          .70       .46
Allowance for loan losses to non-performing assets         70.67     88.29
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                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

     The Private  Securities  Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and expenses,  and general economic  conditions.  Advance Financial Bancorp (the
"Company")  undertakes  no  obligation  to  publicly  release the results of any
revisions  to those  forward-looking  statements  which  may be made to  reflect
events or  circumstances  after the date hereof or to reflect the  occurrence of
unanticipated events.

Overview

     The Company's  results from  operations are primarily  dependent on its net
interest  income,  which is the  difference  between the interest  earned on its
assets,  primarily  loans  and  investments,  and the  interest  expense  on its
liabilities,  primarily  deposits and  borrowings.  Net  interest  income may be
affected  significantly  by general  economic  and  competitive  conditions  and
policies  of  regulatory  agencies,  particularly  those with  respect to market
interest rates. The results of operations are also  significantly  influenced by
the level of noninterest  expenses,  such as compensation and employee benefits,
noninterest income, such as service charges on deposit related services, and the
Company's provision for loan losses.

Asset and Liability Management

     The  Company's  net  interest  income is  sensitive  to changes in interest
rates, as the rates paid on interest-bearing liabilities generally change faster
than the rates  earned on  interest-earning  assets.  As a result,  net interest
income will frequently  decline in periods of rising interest rates and increase
in periods of decreasing interest rates.

     To mitigate the impact of changing  interest rates on net interest  income,
the Company  manages  interest rate  sensitivity  and  asset/liability  products
through an asset/liability management committee (the "Committee"). The Committee
meets as necessary to  determine  the rates of interest for loans and  deposits.
Rates on deposits are primarily  based on the Company's  need for funds and on a
review of rates offered by other financial  institutions in the Company's market
area.  Interest rates on loans are primarily based on the interest rates offered
by other financial  institutions  in the Company's  market area, as well as, the
Company's cost of funds.

     The Committee manages the imbalance between its interest-earning assets and
interest-bearing   liabilities  through  the  determination  and  adjustment  of
asset/liability  composition and pricing strategies. The Committee then monitors
the  impact  of the  interest  rate  risk  and  earnings  consequences  of  such
strategies  for  consistency  with the  Company's  liquidity  needs,  growth and
capital adequacy.  The Committee's  principal strategy is to reduce the interest
rate sensitivity of interest-earning  assets and attempt to match the maturities
of interest-earning assets with interest-bearing liabilities, while allowing for
a mismatch in an attempt to increase net interest income.

     In an effort to reduce  interest  rate  risk and  protect  itself  from the
negative  effects of rapid or prolonged  changes in interest rates,  the Company
has also instituted certain asset and liability management  measures,  including
underwriting  long-term  fixed  rate loans that are  saleable  in the  secondary
market,  offering  longer  term  deposit  products  and  diversifying  the  loan
portfolio into shorter term consumer and commercial business loans. In addition,
the  Company  originates  one year,  three  year and five year  adjustable  rate
mortgage loans.


Net Portfolio Value

     The Company  computes  amounts by which the net present  value of cash flow
assets,  liabilities  and off balance  sheet items  ("NPV")  would change in the
event of a range of assumed changes in market interest rates.  The  computations
estimate the effect on the Company's NPV from  instantaneous and permanent 1% to
3% (100 to 300 basis points) increases or decreases in market interest rates.


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Based upon the Office of Thrift  Supervision  assumptions,  the following  table
presents the Company's NPV at June 30, 1999.


                 Changes in rates     NPV Ratio (1)              Change(2)
                 ----------------     -------------              ---------
                     +300 bp              9.51 %                  (241) bp
                     +200 bp             10.75                    (120) bp
                     +100 bp             11.57                    ( 35) bp
                        0 bp             11.92
                     -100 bp             12.05                      13  bp
                     -200 bp             11.87                    (  5) bp
                     -300 bp             11.86                    (  6) bp

(1) Calculated as the estimated NPV divided by present value of total assets.
(2) Calculated  as the  excess  (deficiency)  of  the  NPV  ratio  assuming  the
    indicated change in interest rates over the estimated NPV ratio assuming  no
    change in interest rates.

       These  calculations  indicate  that the  Company's  NPV could not only be
  adversely  affected by increases in interest rates but also could be adversely
  affected  by a  decrease  in  interest  rates of 200 or 300 basis  points.  In
  addition,  the  Company  may be deemed  to have  more  than a normal  level of
  interest rate risk under applicable regulatory capital requirements.

       Computations of prospective effects of hypothetical interest rate changes
  are  based on  numerous  assumptions,  including  relative  levels  of  market
  interest rates,  prepayments,  and deposit run-offs,  and should not be relied
  upon as indicative of actual  results.  Certain  shortcomings  are inherent in
  such  computations.  Although  certain assets and liabilities may have similar
  maturity  or periods of  repricing  they may react at  different  times and in
  different  degrees to changes in market interest rates.  The interest rates on
  certain types of assets and liabilities may fluctuate in advance of changes in
  market  interest  rates,  while rates on other types of assets and liabilities
  may lag behind  changes in market  interest  rates.  Certain  assets,  such as
  adjustable rate mortgages,  generally have features which restrict  changes in
  interest  rates on a short-term  basis and over the life of the asset.  In the
  event of a change in interest rates,  prepayments and early withdrawal  levels
  could  deviate  significantly  from those assumed in making  calculations  set
  forth above. Additionally,  an increased credit risk may result as the ability
  of many  borrowers  to  service  their  debt may  decrease  in the event of an
  interest rate increase.


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Average Balance Sheet

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods  presented.  Average  balances  are  derived  from  month-end  balances.
Management does not believe that the use of month-end  balances instead of daily
average  balances  has  caused  any  material  differences  in  the  information
presented.

<TABLE>
<CAPTION>
                                                                     Year Ended June 30,                            At June 30,
                                                 ------------------------------------------------------------ ----------------------
                                                              1999                           1998                      1999
                                                 ----------------------------- ------------------------------ ---------------------
                                                   Average             Average  Average               Average               Average
                                                                       Yield                          Yield/                Yield/
                                                   Balance  Interest    Cost    Balance    Interest    Cost      Balance     Cost
                                                 ---------- --------  -------- --------- ----------  -------- -----------  --------
<S>                                              <C>        <C>       <C>     <C>         <C>       <C>      <C>         <C>
Interest-earning assets:
  Loans receivable (1)                            $103,764   $8,517     8.21%   $93,708     $7,737     8.26%    $109,338     8.04%
  Investment securities (2)                          9,696      554     5.71%     9,376        640     6.83%       9,936     5.19%
  Mortgage-backed securities                         2,031      121     5.95%       357         33     9.24%       4,365     6.87%
                                                 ---------- --------  -------- --------- ----------  -------- -----------  --------
     Total interest-earning assets                 115,491    9,192     7.95%   103,441      8,410     8.13%     123,639     7.77%
                                                            --------  --------           ----------  --------              --------
Non-interest-earning assets                          6,286                        5,192                            6,464
                                                 ----------                    ---------                      -----------
     Total assets                                 $121,777                     $108,633                         $130,103
                                                 ==========                    =========                      ===========

Interest-bearing liabilities:
  Interest-bearing demand deposits                 $19,846      650     3.28%   $15,739        559     3.55%     $22,028     3.05%
  Certificates of deposit                           59,066    3,257     5.51%    48,808      2,814     5.77%      63,562     5.15%
  Savings deposits                                  15,103      404     2.67%    14,589        414     2.84%      16,317     2.72%
  Short-term borrowings                              9,042      486     5.37%     9,716        505     5.20%       9,000     5.30%
                                                 ---------- --------  -------- --------- ----------  -------- -----------  --------
     Total interest-bearing liabilities            103,057    4,797     4.65%    88,852      4,292     4.83%     110,907     4.39%
                                                            --------  --------           ----------  --------              --------
Non-interest bearing liabilities                     3,693                        3,907                            4,176
                                                 ----------                    ---------                      -----------
     Total liabilities                             106,750                       92,759                          115,083
Stockholders' equity                                15,027                       15,874                           15,020
                                                 ----------                    ---------                      -----------
     Total liabilities and stockholders'
       equity                                     $121,777                     $108,633                         $130,103
                                                 ==========                    =========                      ===========

Net interest income                                         $ 4,395                        $ 4,118
                                                            ========                     ==========
Interest rate spread (3)                                                3.30%                          3.30%                 3.38%
                                                                      ========                       ========              ========
Net Yield on interest-earning assets (4)                                3.81%                          3.98%                 3.83%
                                                                      ========                       ========              ========
Ratio of average interest-earning assets  to
  average interest-bearing liabilities                                112.07%                        116.42%               111.48%
                                                                      ========                       ========              ========

</TABLE>

----------------------------------------------------------
(1)  Average balances include non-accrual loans.
(2)  Includes interest-bearing deposits in other financial institutions and FHLB
     stock.
(3)  Interest-rate spread represents the difference between the average yield on
     interest   earning   assets  and  the  average  cost  of   interest-bearing
     liabilities
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.


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Rate/Volume Analysis

The table below sets forth  certain  information  regarding  changes in interest
income and interest expense of the Company for the periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information  is  provided  on  changes  attributable  to (i ) changes  in volume
(changes  in average  volume  multiplied  by old rate) and (ii ) changes in rate
(changes in rate  multiplied  by old  average  volume).  Changes,  which are not
solely  attributable to rate or volume,  are allocated to changes in rate due to
rate sensitivity of interest-earning assets and interest-bearing liabilities.

<TABLE>
<CAPTION>
                                                                                Year Ended June 30,
                                                                ----------------------------------------------------
                                                                                   1999 vs 1998
                                                                ----------------------------------------------------
                                                                                Increase (Decrease)
                                                                                      Due to
                                                                ----------------------------------------------------
                                                                     Volume              Rate                Net
                                                                ----------------------------------------------------
                                                                              (Dollars in Thousands)
<S>                                                                  <C>               <C>                 <C>
              Interest Income:
                Loans receivable                                         $830               ($50)               $780
                Investment securities                                      22               (108)                (86)
                Mortgage-backed securities                                155                (67)                 88
                                                                ----------------------------------------------------
                   Total interest-earning assets                       $1,007              ($225)               $782
                                                                ----------------------------------------------------
              Interest Expense:
                Interest-bearing demand
                 deposits                                                $146               ($55)               $91
                Certificates of Deposit                                   592               (149)               443
                Savings Deposits                                           15                (25)               (10)
                Short-term borrowings                                     (35)                16                (19)
                                                                ----------------------------------------------------
                   Total interest-bearing liabilities                     718               (213)               505
                                                                ----------------------------------------------------

              Net change in interest income                              $289               ($12)              $277
                                                                ====================================================
</TABLE>


Comparison of Financial Condition

     The Company's total assets increased approximately $15,742,000,  or 13.79%,
to $129,927,000 at June 30, 1999, from $114,185,000 at June 30, 1998,  primarily
as a result of the  opening in June 1998 of the  Wintersville,  Ohio branch (the
"Wintersville  branch").  The  Wintersville  branch  contributed   approximately
$13,000,000 in loan and deposit growth for the year ended June 30, 1999.

     Total cash and cash  equivalents  decreased by  $4,724,000 to $4,360,000 at
June 30, 1999 from $9,084,000 at June 30, 1998. This decrease was used primarily
to purchase  investment  securities and mortgage-backed  securities.  Management
maintains a level of cash and equivalents,  which is desirable to meeting normal
cash flow  requirements  of its  customers  for the funding of loan requests and
repayment of deposits.

     Investment  securities  increased $3,471,000 to $5,481,000 at June 30, 1999
from  $2,010,000 at June 30, 1998.  This increase is primarily the result of the
purchase of available  for sale agency bonds with call  provisions  ranging from
four months to 18 months and rates  averaging  6.43%.  Management has classified
these investments as available for sale for liquidity  purposes while maximizing
interest   yields  in   excess  of  the   federal   overnight   rates   paid  on
interest-bearing demand deposits.

     Mortgage-backed  securities  increased $3,967,000 to $4,306,000 at June 30,
1999 from $339,000 at June 30, 1998.  This increase is made up of two adjustable
rate mortgage-backed instruments and six fixed rate instruments.  The adjustable
rate  instruments  were  classified  as held to maturity due to their ability to
absorb interest rate  fluctuations.  The fixed rate  instruments  were placed in
available  for  sale  for  liquidity  purposes.  The  purchase  of  these  eight
mortgage-backed securities is a result of management's response to the Company's
declining loan portfolio ratio of one to four family mortgages. The ratio of one
to four family mortgages has declined as a result of the Company's interest rate
management program of selling fixed rate mortgages on the secondary market.


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  Net loans  receivable  increased  $14,310,000 to $109,900,000 at June 30, 1999
from $95,590,000 at June 30, 1998. The net increase is primarily attributable to
increases  in   non-residential   and  multi-family   mortgages  of  $8,538,000,
commercial  loans of  $3,712,000,  consumer  loans of $1,242,000 and one to four
family  mortgages of $1,769,000,  offset by a net decrease in  construction  and
loans in process of $890,000.  Such increases are  attributable  to the economic
health of the Bank's  primary  lending area and the  competitive  pricing of the
Bank's loan products.  The funding for the loan growth was provided primarily by
an increase in deposits.

     Deposits  increased by  $16,787,000 or 18.96% to  $105,339,000  at June 30,
1999 from  $88,552,000 at June 30, 1998. This increase  represents  increases in
certificate  of  deposits  of  $9,616,000,  core  savings  and NOW  deposits  of
$2,427,000, money market demand deposits of $3,169,000,and  non-interest-bearing
demand  deposits of  $1,575,000.  As noted  above,  the increase in deposits was
primarily from the Wintersville branch.

     Stockholders  equity increased $65,000 to $14,993,000 at June 30, 1999 from
$14,928,000 at June 30, 1998.  Through June 30, 1999, the Company  initiated the
payment of dividends of $.32 per share, while maintaining capital ratios well in
excess of regulatory  guidelines.  The Board of Directors will determine  future
dividend  policies in light of earnings and financial  condition of the Company,
including applicable governmental regulations and policies.

Comparison  of the Results of  Operations  for the Years Ended June 30, 1999 and
1998

     Net Income. Net income for the year ended June 30,1999 decreased $64,000 or
7.55% to $784,000  from  $848,000 for the same period  ended June 30, 1998.  The
primary  reason for the decrease in net income was due to the costs  incurred to
operate and facilitate the growth of the Wintersville branch.

     Net Interest Income. The Company's net interest income increased  $276,000,
or 6.70%, to $4,394,000 for the year ended June 30, 1999 from $4,118,000 for the
same period  ended 1998.  The  interest  rate spread  remained at 3.30% for both
periods ended June 30, 1999 and 1998.

     Interest  Income.  Total interest income increased  $782,000,  or 9.30%, to
$9,192,000  for the year ended June 30, 1999 from  $8,410,000 for the comparable
1998 period. The increase in interest income resulted primarily from an increase
in earnings on average loans of $780,000.  Average  principal  balances of loans
increased  $10,056,000  to  $103,764,000  for the year ended June 30,  1999 from
$93,708,000   for  the   comparable   1998   period.   However,   the  yield  on
interest-earning  assets  decreased  18 basis points to 7.95% for the year ended
June 30, 1999 from 8.13% for the comparable 1998 period. Such decrease in yields
for  fiscal  1999  was  primarily  due  to the  origination  of  lower  yielding
investments and mortgage-backed  securities,  which reflect current market rates
of interest.

     Interest Expense.  Total interest expense  increased  $505,000 or 11.79% to
$4,797,000  for the year ended June 30,  1999  compared  to  $4,292,000  for the
comparable 1998 period.  The increase in expense is primarily due to an increase
in the average volume of  interest-bearing  demand deposits of $3,436,000 and an
increase  in the average  volume of  certificates  of  deposits of  $10,258,000.
However,  the average cost on  interest-bearing  liabilities  decreased 18 basis
points to 4.65% for the year ended June 30,  1999 from 4.83% for the  comparable
1998 period. Such decrease reflects an overall decrease in the costs of deposits
which was offset  slightly by the use of more  expensive  Federal Home Loan Bank
advances.

     Provision for Loan Losses.  For the year ended June 30, 1999, the provision
for loan losses was  $150,000 as compared to $254,000  for the  comparable  1998
period. Net charge-offs for the period ended June 30, 1999 were $45,000 compared
to $144,000 for the comparable 1998 period. Management continually evaluates the
adequacy of the allowance for loan losses,  which  encompasses  the overall risk
characteristics of the various portfolio segments,  past experience with losses,
the impact of economic  conditions on  borrowers,  and other  relevant  factors.
While the loan mix has  changed  slightly  over the past two  years,  management
believes that the underlying  collateral supporting such loans provides adequate
coverage.  The Company  maintains a desirable  level in its loan loss provisions
based upon the  Company's  review of the  market,  loan  portfolio,  and overall
assessment  of  the  adequacy  of  the  valuation  allowance.  There  can  be no
assurance,  however,  that additional  provisions will not be required in future
periods.

     Noninterest Income. Noninterest income increased by $191,000, or 34.23%, to
$749,000  for the year ended June 30, 1999  compared  to  $558,000  for the same
period ended 1998. Service charges on deposit accounts increased by $106,000, or
39.41%,  due to the  increase  in volume and number of  deposit  accounts  and a
slight increase in fees. In addition,  there was an increase of $36,000 from the
recognition  of  servicing  rights  on  fixed-rate  mortgage  loans  sold in the
secondary market.


<PAGE>
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     Noninterest Expense.  Noninterest expense increased $674,000, or 22.07%, to
$3,728,000 for the year ended June 30, 1999 from  $3,054,000 for the same period
ended  1998.  Compensation  and  benefits  increased  $368,000,  or 26.72%,  due
primarily to additional  hiring of employees to operate the Wintersville  branch
coupled with an increase of $87,000 associated with the funding of the Company's
Restricted Stock Plan for employees. Occupancy and equipment increased $204,000,
or 53.20%,  due  primarily  to the new  Wintersville  branch that opened in June
1998. Professional fees decreased by $39,000 in fiscal 1999 due to a decrease in
services for compliance with regulatory requirements and employee benefit plans.
Data processing  increased  $45,000,  or 15.17%, due primarily to the additional
transaction  volume that was created by the opening of the Wintersville  branch.
Other operating  expense increased by $96,000 in fiscal 1999 due primarily to an
increase  in  Director's  Restricted  Stock Plan of $47,000  and an  increase of
$42,000 as a result of increased  operational  costs of  additional  transaction
volumes relating to the use of ATMs and credit card programs

     Income Taxes. Income tax expense decreased $39,000 or 7.49% to $482,000 for
the year ended June 30, 1999 compared to $521,000 for the same period ended 1998
due to a 7.54%  decrease in income before  income taxes.  The effective tax rate
for income taxes as of the years ended June 30, 1999 and 1998 was 38%.

     Liquidity and Capital Resources. The Company's primary sources of funds are
deposits,  repayment  of loans and  mortgage-backed  securities,  maturities  of
investments and  interest-bearing  deposits,  funds provided from operations and
advances from the FHLB of Pittsburgh.  While  scheduled  repayments of loans and
mortgage-backed   securities  and   maturities  of  investment   securities  are
predicable  sources of funds,  deposit  flows and loan  prepayments  are greatly
influenced  by the general level of interest  rates,  economic  conditions,  and
competition.  The Company  uses its  resources  primarily  to fund  existing and
future loan  commitments,  maturing  certificates  of deposit and demand deposit
withdraws,   investments  in  other  interest-bearing  assets,   maintenance  of
necessary liquidity, and to meet operating expenses.

     Net cash provided by operating  activities for the year ended June 30, 1999
was $2,821,000 as compared to net cash used by operating  activities of $183,000
for the same  period  ended  1998.  This  increase in cash was the result of net
proceeds  from  the  sale  of  loans  amounting  to  $1,455,000,   amortization,
depreciation and loan loss provision of $573,000 and net income of $784,000.

     Net cash used for  investing  activities  for the year ended June 30,  1999
increased $16,367,000 to $22,420,000 from $6,053,000 for the year ended June 30,
1998.  This increase was primarily  attributable to a $4,756,000 net increase in
loans  funded and a  $13,537,000  increase in the net amount of  investment  and
mortgage-backed  securities purchased coupled with a decrease in the amount used
for the purchase of premises and equipment of $1,888,000.

     Net cash provided by financing  activities for the year ended June 30, 1999
increased  $6,348,000 to $14,875,000  from  $8,527,000 for the same period ended
1998.  The  increase  was  primarily a result of an increase in net  deposits of
$8,305,000  and a  reduction  in the amount of  company  stock  repurchased  for
treasury and benefit plans of $1,267,000 coupled with a decrease in net advances
from the FHLB of $3,253,000.

     Liquidity  may  be  adversely  affected  by  unexpected  deposit  outflows,
excessive interest rates paid by competitors,  adverse publicity relating to the
savings and loan industry and similar  matters.  Management  monitors  projected
liquidity  needs  and  determines  the  level  desirable  based  in  part on the
Company's  commitments to make loans and  management's  assessment of the Bank's
ability to generate funds.


YEAR 2000 EVALUATION

     Rapid  and  accurate   data   processing  is  essential  to  the  Company's
operations.  Many computer programs can only distinguish the final two digits of
the year entered (a common programming practice in prior years) and are expected
to read  entries for the year 2000 as the year 1900 or as zero and an  incorrect
attempt to compute  payment,  interest,  delinquency and other data. The Company
has  been  evaluating  both  information   technology   (computer  systems)  and
non-information  technology systems (e.g. vault timers, electronic door lock and
elevator controls). Based upon such evaluations;  management has determined that
the Company has year 2000 risk in three areas: (1) Company's own computers,  (2)
Computers of others used by the Company's borrowers, and (3) Computers of others
who provide the Company with data processing.

     Company's Own Computers.  As of June 30, 1999, the Company has upgraded its
computer  system to comply with the year 2000 risk. Such costs expended were not
material to the  financial  statements  of the  Company.  The  Company  does not
anticipate any additional costs throughout the remainder of calendar 1999.


<PAGE>
--------------------------------------------------------------------------------

     Borrowers.  The Company has evaluated most of their  borrowers and does not
believe the year 2000  problem  should,  on an  aggregate  basis,  impact  their
ability to make payments to the Company. The Company believes that most of their
residential  borrowers are not dependent on their home  computers for income and
that none of their commercial  borrowers are so large that the year 2000 problem
would  render them unable to collect  revenue or rent and, in turn,  continue to
make loan  payments to the  Company.  The Company  does not expect any  material
costs to address  this risk area and  believes  they are year 2000  compliant in
this risk area.

     Data Processing.  This risk is primarily focused on one third party service
bureau that provides  virtually all of the Company's data processing.  Effective
November of 1998,  this service bureau has advised the Company that they are now
year 2000 compliant.

     Contingency  Plan.  The Company is continuing to monitor any changes to the
service  bureau and any effects  that it might have on their status as year 2000
compliant.  If the service  bureau fails,  the Company will attempt to locate an
alternative  service  bureau  that is year 2000  compliant.  If the  Company  is
unsuccessful, it will use its existing computer system to enter deposit balances
and interest on these accounts.  If this labor-intensive  approach is necessary,
management and employees will become much less efficient.  However,  the Company
believes that they would be able to operate in this manner  indefinitely,  until
their existing service bureau,  or their  replacement,  is able to again provide
data  processing  services.  If very  few  institutional  service  bureaus  were
operating  in the year 2000,  the  Company's  replacement  costs,  assuming  the
Company could negotiate an agreement, could be material. The written contingency
and business  resumption plan has been completed,  validated and tested. In July
of 1999,  the Board of Directors of the Company  approved such plan. The plan is
updated for any changes in the Company's  mission  critical  applications.  Plan
updates and  changes  through the  remainder  of 1999 are subject to  additional
validation, testing, and approval upon implementation.

     While the Company's  year 2000 plan was designed to  significantly  address
the year 2000 problems,  the occurrence of the following could negatively impact
the Company:

(a)  utility service companies may be unable to provide the necessary service to
     implement  the  Company's  data  systems  or  provide  sufficient  sanitary
     conditions for its offices; or
(b)  the Company's  service bureau  provider  could have a major  malfunction in
     their  system or their  service  could be  disrupted  due to their  utility
     providers, or some combination of the two; or
(c) the Company may have to transact its business manually.

     Successful  and timely  completion  of the year 2000 plan is based upon the
Company's best estimates derived from various assumptions of future events which
are  inherently  uncertain,  including  the progress and results of its external
service  bureau,  testing  plans,  and  all  vendors,   suppliers  and  customer
readiness.

     Despite the Company's best efforts to address the year 2000  problems,  the
vast  number  of  external  entities  that have  direct  and  indirect  business
relationships  with the Company,  such as,  customers,  vendors,  payment system
providers and other financial institutions,  make it impossible to assure that a
failure to achieve  compliance by one or more of these entities would not have a
material adverse impact on the Company's business or its consolidated  financial
statements.


 <PAGE>
SNODGRASS
Certified Public Accountants and Consultants





[LOGO]




                         Report of Independent Auditors



Board of Directors and Stockholders
Advance Financial Bancorp


We have audited the accompanying consolidated balance sheet of Advance Financial
Bancorp  and  subsidiary  as  of  June  30,  1999  and  1998,  and  the  related
consolidated  statements of income,  changes in stockholders'  equity,  and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management, as well as, evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Advance Financial
Bancorp and  subsidiary  as of June 30, 1999 and 1998,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.


/s/S.R. Snodgrass, A.C.

Steubenville, Ohio
July 30, 1999

















<PAGE>
                            ADVANCE FINANCIAL BANCORP
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                                       June 30,
                                                                                          ------------------------------------
                                                                                               1999                  1998
                                                                                          --------------        --------------
<S>                                                                                      <C>                   <C>
ASSETS Cash and cash equivalents:
     Cash and amounts due from banks                                                        $  1,395,704          $  1,334,831
     Interest-bearing deposits with other institutions                                         2,964,166             7,749,362
                                                                                             -----------           -----------
              Total cash and cash equivalents                                                  4,359,870             9,084,193
                                                                                             -----------           -----------

Investment securities:
     Securities held to maturity (fair value of $970,914
      and $1,753,325)                                                                            999,896             1,745,667
     Securities available for sale                                                             4,481,475               264,020
                                                                                             -----------           -----------
              Total investment securities                                                      5,481,371             2,009,687
                                                                                             -----------           -----------

Mortgage-backed securities:
     Securities held to maturity (fair value of $2,456,645
      and $364,031)                                                                            2,472,681               339,362
     Securities available for sale                                                             1,832,845                     -
                                                                                             -----------           -----------
              Total mortgage-backed securities                                                 4,305,526               339,362
                                                                                             -----------           -----------

Loans held for sale                                                                                    -             1,454,700
Loans receivable (net of allowance for loan losses of
 $582,280 and $477,654)                                                                      109,899,551            95,590,197
Premises and equipment, net                                                                    4,084,793             4,082,857
Federal Home Loan Bank stock, at cost                                                            629,500               622,200
Accrued interest receivable                                                                      664,058               617,980
Other assets                                                                                     501,967               384,237
                                                                                            ------------          ------------

              TOTAL ASSETS                                                                  $129,926,636          $114,185,413
                                                                                            ============          ============

LIABILITIES
Deposits                                                                                    $105,338,770          $ 88,551,543
Advances from Federal Home Loan Bank                                                           9,000,000            10,000,000
Advance payments by borrowers for taxes and insurance                                            196,993               193,346
Accrued interest payable and other liabilities                                                   397,421               512,402
                                                                                            ------------         -------------
              TOTAL LIABILITIES                                                              114,933,184            99,257,291
                                                                                            ------------         -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value; authorized 500,000 shares; none issued                                -                     -
Common stock, $.10 par value, 2,000,000 shares authorized;
 1,084,450 shares issued at June 30, 1999 and 1998                                               108,445               108,445
Additional paid in capital                                                                    10,316,719            10,288,928
Retained earnings - substantially restricted                                                   7,623,733             7,130,056
Unallocated shares held by Employee Stock Ownership Plan (ESOP)                                 (597,767)             (715,158)
Unallocated shares held by Restricted Stock Plan (RSP)                                          (682,357)             (869,636)
Treasury stock (103,165 and 53,802 shares at cost)                                            (1,626,890)           (1,000,863)
Accumulated other comprehensive loss                                                            (148,431)              (13,650)
                                                                                            -------------         ------------
              TOTAL STOCKHOLDERS' EQUITY                                                      14,993,452            14,928,122
                                                                                            ------------          ------------

              TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $129,926,636          $114,185,413
                                                                                            ============          ============
</TABLE>

See accompanying notes to the consolidated financial statements.




<PAGE>
--------------------------------------------------------------------------------

                            ADVANCE FINANCIAL BANCORP
                        CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                                                                   Year Ended June 30,
                                                                                               ---------------------------------
                                                                                                   1999                1998
                                                                                               -----------          ------------

<S>                                                                                          <C>                  <C>
INTEREST AND DIVIDEND INCOME
     Loans                                                                                     $ 8,516,921          $7,736,893
     Investment securities                                                                         188,158             303,509
     Interest-bearing deposits with other institutions                                             325,233             298,514
     Mortgage-backed securities                                                                    120,688              33,087
     Federal Home Loan Bank stock                                                                   40,560              37,973
                                                                                               -----------          ----------
              Total interest and dividend income                                                 9,191,560           8,409,976
                                                                                               -----------          ----------

INTEREST EXPENSE
     Deposits                                                                                    4,311,105           3,786,395
     Advances from Federal Home Loan Bank                                                          486,141             505,356
                                                                                               -----------          ----------
              Total interest expense                                                             4,797,246           4,291,751
                                                                                               -----------          ----------

NET INTEREST INCOME                                                                              4,394,314           4,118,225

Provision for loan losses                                                                          150,000             253,606
                                                                                               -----------          ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                              4,244,314           3,864,619
                                                                                               -----------          ----------

NONINTEREST INCOME
     Service charges on deposit accounts                                                           374,831             268,941
     Gain on sale of loans                                                                          92,909              97,668
     Gain on sale of investments                                                                    13,745                   -
     Other income                                                                                  267,703             191,606
                                                                                               -----------          ----------
              Total noninterest income                                                             749,188             558,215
                                                                                               -----------          ----------

NONINTEREST EXPENSE
     Compensation and employee benefits                                                          1,743,773           1,376,134
     Occupancy and equipment                                                                       588,702             384,261
     Professional fees                                                                             143,285             182,041
     Advertising                                                                                   120,726             121,155
     Data processing                                                                               340,113             295,323
     Other operating expenses                                                                      791,151             694,913
                                                                                               -----------          ----------
              Total noninterest expense                                                          3,727,750           3,053,827
                                                                                               -----------          ----------

Income before income taxes                                                                       1,265,752           1,369,007
Income taxes                                                                                       481,925             520,797
                                                                                               -----------          ----------

NET INCOME                                                                                     $   783,827         $   848,210
                                                                                               ===========         ===========

EARNINGS PER SHARE:
     Basic                                                                                     $       .83         $       .85
     Diluted                                                                                   $       .83         $       .85


</TABLE>

See accompanying notes to the consolidated financial statements.



<PAGE>
                            ADVANCE FINANCIAL BANCORP
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                         Retained    Unallocated  Unallocated               Accumulated    Total
                                           Additional    Earnings      Shares       Shares                      Other      Stock-
                                 Common     Paid In    Substantially    Held         Held      Treasury    Comprehensive  holders'
                                 Stock      Capital     Restricted     By ESOP      By RSP      Stock          Loss       Equity
                                 -----      -------     ----------     -------      ------      -----          ----       ------
<S>                           <C>         <C>          <C>          <C>         <C>          <C>           <C>         <C>
Balance, June 30, 1997           $108,445  $10,221,528  $6,597,836    $(796,195)  $       -            -   $   (6,569)  $16,125,045
Comprehensive income:
   Net income                                              848,210                                                          848,210
   Net unrealized
     loss on securities                                                                                        (7,081)       (7,081)
                                                                                                                        -----------
Comprehensive income                                                                                                        841,129
Purchase of treasury stock                                                                    (1,000,863)                (1,000,863)
Purchase of stock for RSP                                                          (893,587)                               (893,587)
Accrued compensation expense
   for RSP                                                                           67,583                                  67,583
RSP forfeited shares                                                                (43,632)                                (43,632)
Release of earned ESOP shares                   67,400                   81,037                                             148,437
Cash dividends declared
  ($.32 per share)                                        (315,990)                                                        (315,990)
                               ----------  -----------  ----------   ----------  ----------   ----------   ----------   -----------

Balance, June 30, 1998            108,445   10,288,928   7,130,056     (715,158)   (869,636)  (1,000,863)     (13,650)   14,928,122
Comprehensive income:
   Net income                                              783,827                                                          783,827
   Net unrealized
     loss on securities                                                                                      (134,781)     (134,781)
                                                                                                                        -----------
Comprehensive income                                                                                                        649,046
Purchase of treasury stock                                                                      (626,027)                  (626,027)
Accrued compensation expense
  for RSP                                                                           201,881                                 201,881
RSP forfeited shares                                                                (14,602)                                (14,602)
Release of earned ESOP shares                   27,791                  117,391                                             145,182
Cash dividends declared
   ($.32 per share)                                       (290,150)                                                        (290,150)
                               ----------  -----------  ----------   ----------  ----------   -----------------------   -----------

Balance  June 30, 1999         $  108,445  $10,316,719  $7,623,733   $ (597,767) $ (682,357)  $ (1,626,890) $(148,431)  $14,993,452
                               ==========  ===========  ==========   ==========  ==========   ============ ==========   ===========
</TABLE>
See accompanying notes to the consolidated financial statements.


<PAGE>

                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                                   Year Ended June 30,
                                                                                         --------------------------------------

                                                                                               1999                  1998
                                                                                         ---------------         --------------
<S>                                                                                        <C>                  <C>
OPERATING ACTIVITIES
     Net income                                                                             $    783,827           $   848,210
     Adjustments to reconcile net income to net cash provided by
      operating activities:
         Depreciation, amortization and accretion, net                                           423,127               135,894
         Provision for loan losses                                                               150,000               253,606
         Gain on sale of investments                                                             (13,745)                    -
         Gain on sale of loans                                                                   (92,909)              (97,668)
         Origination of loans held for sale                                                   (8,658,980)           (8,136,349)
         Proceeds from the sale of loans                                                      10,206,589             6,779,317
         (Increase) decrease in accrued interest receivable                                      (46,078)               37,687
         Increase in accrued interest payable                                                      3,644                10,029
         Other, net                                                                               65,687               (13,339)
                                                                                            ------------            --------------

              Net cash provided by (used for) operating activities                             2,821,162              (182,613)
                                                                                            ------------            ------------

INVESTING ACTIVITIES
     Investment securities held to maturity:
         Purchases                                                                            (2,987,051)           (1,000,000)
         Maturities and repayments                                                             3,737,988             7,100,000
     Investment securities available for sale:
         Purchases                                                                            (4,498,871)             (231,875)
         Maturities and repayments                                                                11,440                11,555
         Proceeds from sale                                                                      139,995                     -
     Mortgage-backed securities held to maturity:
         Purchases                                                                            (2,516,658)                    -
         Maturities and repayments                                                               380,968                28,210
     Mortgage-backed securities available for sale:
         Purchases                                                                            (2,046,363)                    -
         Maturities and repayments                                                               149,274                     -
     Purchases of Federal Home Loan Bank Stock                                                    (7,300)              (45,500)
     Net increase in loans                                                                   (14,459,354)           (9,703,390)
     Purchases of premises and equipment                                                        (324,250)           (2,211,714)
                                                                                            -------------           -------------

              Net cash used for investing activities                                         (22,420,182)           (6,052,714)
                                                                                            ------------            ------------

FINANCING ACTIVITIES
     Net increase in deposits                                                                 16,787,227             8,482,465
     Proceeds of advances from Federal Home Loan Bank                                                  -             7,000,000
     Repayments of advances from Federal Home Loan Bank                                       (1,000,000)           (4,747,449)
     Net change in advances for taxes and insurance                                                3,647                 6,608
     Purchase of treasury stock                                                                 (626,027)           (1,000,863)
     Purchase of RSP stock                                                                             -              (893,587)
     Cash dividends paid                                                                        (290,150)             (320,074)
                                                                                            ------------            ----------

         Net cash provided by financing activities                                            14,874,697             8,527,100
                                                                                            ------------            ----------

         (Decrease) increase in cash and cash equivalents                                     (4,724,323)            2,291,773

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                 9,084,193             6,792,420
                                                                                            ------------            ----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                                    $  4,359,870            $9,084,193
                                                                                            ============            ==========

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



<PAGE>
                            ADVANCE FINANCIAL BANCORP
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary of significant  accounting and reporting  policies applied in the
     presentation of the accompanying financial statements follows:

     Nature of Operations and Basis of Presentation
     ----------------------------------------------

     In December 1996,  Advance  Financial Bancorp (the "Company") was formed as
     part of a corporate  reorganization completed in connection with the mutual
     - to - stock conversion of Advance Financial Savings Bank, (the "Bank"). As
     a  result  of this  transaction,  the  Bank  and its  wholly-owned  service
     corporation  subsidiary,  Advance  Financial  Service  Corporation  of West
     Virginia became wholly-owned  subsidiaries of the Company.  The Company and
     its  subsidiaries  derive  substantially  all their income from banking and
     bank-related  services which include interest  earnings on residential real
     estate,  commercial  real  estate,  commercial  loans,  and  consumer  loan
     financing,   as  well  as  interest  earnings  on  investment   securities,
     interest-bearing  deposits with other financial  institutions,  and charges
     for deposit  services to its customers.  The Bank is a federally  chartered
     stock savings bank located in  Wellsburg,  WV. The Company and the Bank are
     subject to regulation and supervision by the Office of Thrift Supervision.

     The consolidated  financial  statements include the accounts of the Company
     and its wholly-owned subsidiary, the Bank, and its wholly-owned subsidiary,
     Advance  Financial  Service  Corporation  of West  Virginia.  All  material
     intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.  The Company's  fiscal year end for  financial  reporting is
     June 30. For  regulatory  and income tax  reporting  purposes,  the Company
     reports on a December 31 calendar year basis.

     The consolidated financial statements have been prepared in conformity with
     generally  accepted  accounting  principles.  In preparing the consolidated
     financial  statements,   management  is  required  to  make  estimates  and
     assumptions  that affect the reported  amounts of assets and liabilities as
     of the date of the balance  sheet and revenues and expenses for the period.
     Actual results could differ  significantly from those estimates.  The major
     accounting policies and practices are summarized below.

     Investment Securities Including Mortgage-Backed Securities
     ----------------------------------------------------------

     Debt and Equity  securities  consist of  mortgage-backed  securities,  U.S.
     Government  and federal agency  obligations,  money funds and common stock.
     Securities  are  classified  as available for sale or held to maturity upon
     their acquisition based upon management's  intent and ability.  The company
     does not hold any securities as trading.  Securities  classified as held to
     maturity are stated at cost and adjusted  for  amortization  of premium and
     accretion  of discount,  which are computed  using a level yield method and
     are recognized as adjustments of interest income.  Securities classified as
     available  for sale are  carried at  estimated  fair value with  unrealized
     holding gains and losses reflected as a separate component of shareholders'
     equity. Realized gains and losses on the sale of debt and equity securities
     are  computed  using  the  specific  identification  method.  Interest  and
     dividends on investment securities are recognized as income when earned.

     Common  stock  of the  Federal  Home  Loan  Bank  (the  "FHLB")  represents
     ownership  in an  institution  which is  wholly  owned  by other  financial
     institutions.  This equity  security is accounted  for at cost and reported
     separately on the accompanying Consolidated Balance Sheet.

     Loans Held for Sale
     -------------------

     Mortgage  loans  originated  and held for sale in the secondary  market are
     carried at the lower of cost or market  value  determined  on an  aggregate
     basis.  Net  unrealized  losses are  recognized  in a  valuation  allowance
     through  charges to income.  Gains and losses on the sale of loans held for
     sale are determined using the specific  identification  method. At June 30,
     1999,  there were no loans  held for sale.  At June 30,  1998,  the cost of
     loans held for sale approximated market value.


<PAGE>
1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Loans
     -----

     Loans are stated at unpaid principal balances,  less loans in process,  net
     deferred loan fees, and the allowance for loan losses. Interest on loans is
     credited  to income as earned on an accrual  basis.  Loan  origination  and
     commitment  fees and  certain  direct  loan  origination  costs  are  being
     deferred  and the net amount  amortized  as an  adjustment  of the  related
     loan's yield.  The Company is amortizing these amounts over the contractual
     life of the related loans using the interest method.

     A loan is  considered  impaired  when it is probable that the borrower will
     not repay the loan according to the original  contractual terms of the loan
     agreement.   Management  has  determined   that  first  mortgage  loans  on
     one-to-four family properties and all consumer loans represent large groups
     of   smaller-balance,   homogeneous  loans  that  are  to  be  collectively
     evaluated. Management considers an insignificant delay, which is defined as
     less than 90 days by the Company, will not cause a loan to be classified as
     impaired. A loan is not impaired during a period of delay in payment if the
     Company  expects to collect all amounts due including  interest  accrued at
     the  contractual  interest  rate  during  the  period of  delay.  All loans
     identified  as impaired are  evaluated  independently  by  management.  The
     Company  estimates  credit  losses on  impaired  loans based on the present
     value of expected cash flows or the fair value of the underlying collateral
     if the loan  repayment  is expected to come from the sale or  operation  of
     said collateral.  Impaired loans or portions thereof,  are charged-off when
     it is determined  that a realized  loss has  occurred.  Until such time, an
     allowance for loan losses is maintained for estimated losses. Cash receipts
     on impaired loans are applied first to accrued interest receivable,  unless
     otherwise required by the loan terms,  except when an impaired loan is also
     a nonaccrual  loan,  in which case the portion of the  receipts  related to
     interest is recognized as income.

     Loans considered to be nonperforming  include  nonaccrual  loans,  accruing
     loans  delinquent  more  than  90  days  and  restructured  loans.  A loan,
     including an impaired loan, is classified as nonaccrual when collectability
     is in doubt. When a loan is placed on nonaccrual status, unpaid interest is
     reversed and an allowance is established by a charge to income equal to all
     accrued interest. Income is subsequently recognized only to the extent that
     cash payments are received.  Loans are returned to accrual  status when, in
     management's  judgement,  the  borrower  has the ability and intent to make
     periodic  principal and interest payments (this generally requires that the
     loan be brought current in accordance with its original terms).

     Allowance for Loan Losses
     -------------------------

     The  allowance  for loan  losses  represents  the amount  which  management
     estimates  is  adequate  to  provide  for  potential  losses  in  its  loan
     portfolio.  The  allowance  method is used in  providing  for loan  losses.
     Accordingly,  all  loan  losses  are  charged  to  the  allowance  and  all
     recoveries are credited to it. The allowance for loan losses is established
     through a provision for loan losses  charged to  operations.  The provision
     for loan losses is based on management's  periodic evaluation of individual
     loans,  economic  factors,  past  loan  loss  experience,  changes  in  the
     composition and volume of the portfolio,  and other relevant  factors.  The
     estimates  used in  determining  the  adequacy  of the  allowance  for loan
     losses,  including the amounts and timing of future cash flows  expected on
     impaired loans, are particularly susceptible to changes in the near term.

     Real Estate Acquired in Settlement of Loans
     -------------------------------------------

     Real estate  acquired in  settlement of loans is classified at the lower of
     the recorded  investment in the property or its fair value minus  estimated
     costs of sale. Prior to foreclosure, the value of the underlying collateral
     is written down by a charge to the allowance for loan losses, if necessary.
     Any  subsequent   write-downs  are  charged  against  operating   expenses.
     Operating expenses of such properties,  net of related income and losses on
     their disposition are included in other expenses.

     Premises and Equipment
     ----------------------

     Land is carried at cost;  buildings and equipment are stated at cost,  less
     accumulated  depreciation.  The  provision  for  depreciation  is  computed
     primarily by the straight-line method based upon the estimated useful lives
     of the  assets  which  range  from five to forty  years.  Expenditures  for
     maintenance  and repairs are charged  against income as incurred.  Costs of
     major additions and improvements are capitalized.
<PAGE>
1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Income Taxes
     ------------

     Deferred tax assets and  liabilities  are  reflected  at currently  enacted
     income tax rates  applicable to the period in which the deferred tax assets
     or  liabilities  are expected to be realized or settled.  As changes in tax
     laws or rates are enacted, deferred tax assets and liabilities are adjusted
     through the  provision for income  taxes.  Deferred  income tax expenses or
     benefits  are based on the changes in the  deferred  tax asset or liability
     from period to period.  The Company and its subsidiary  file a consolidated
     income tax return.

     Earnings Per Share
     ------------------

     The Company  provides dual  presentation of basic and diluted  earnings per
     share.  Basic  earnings  per share is  calculated  by  dividing  net income
     available to common stockholders by the  weighted-average  number of common
     shares  outstanding  during  the  period.  Diluted  earnings  per  share is
     calculated  by  dividing  net  income  available  to  common  stockholders,
     adjusted   for   the   effects   of  any   dilutive   securities,   by  the
     weighted-average  number of common  shares  outstanding,  adjusted  for the
     effects of any dilutive securities.

     Comprehensive Income
     --------------------

     Effective  July  1,  1998,  the  Company  adopted  Statement  of  Financial
     Accounting Standards No. 130, "Reporting Comprehensive Income." In adopting
     Statement No. 130, the Company is required to present  comprehensive income
     and its components in a full set of  general-purpose  financial  statements
     for all periods presented. The Company has elected to report the effects of
     Statement  No.  130 as part of the  Consolidated  Statement  of  Changes in
     Shareholders' Equity.

     Cash Flow Information
     ---------------------

     The Company has defined cash and cash equivalents as cash on hand,  amounts
     due from depository  institutions,  and overnight deposits with the Federal
     Home Loan Bank and the Federal Reserve Bank.

     Cash  payments  for  interest  for the fiscal years ended June 30, 1999 and
     1998 were $4,793,602 and $4,281,722, respectively. Cash payments for income
     taxes for the fiscal  years ended June 30, 1999 and 1998 were  $468,000 and
     $533,795, respectively.

     Stock Options
     -------------

     The Company maintains a stock option plan for the directors,  officers, and
     employees.  The stock options  typically have expiration terms of ten years
     subject  to  certain  extensions  and  early  terminations.  The per  share
     exercise price of a stock option shall be, at a minimum,  equal to the fair
     value of a share of common stock on the date the option is granted. Because
     the exercise  price of the Company's  stock options equals the market price
     of the underlying  stock on the date of grant, no  compensation  expense is
     recognized in the Company's financial statements. If applicable,  pro forma
     net income and  earnings per share would be presented to reflect the impact
     of the stock option plan  assuming  compensation  expense had been affected
     based on the fair value of the stock options granted under this plan.

     Recent Accounting Pronouncements
     --------------------------------

     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, 2000.
<PAGE>
1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Recent Accounting Pronouncements (continued)
     --------------------------------------------

     The Financial Accounting Standards Board also issued Statement of Financial
     Accounting  Standards No. 134,  "Accounting for Mortgage-backed  Securities
     Retained  After the  Securitization  of  Mortgage  Loans Held for Sale by a
     Mortgage  Banking  Enterprise."  This  statement  requires  that  after the
     securitization   of  mortgage  loans,  an  entity  classify  the  resulting
     mortgage-backed  securities or other retained interest based on its ability
     and intent to sell or hold these  securities in accordance  with  Statement
     No. 115. This Statement applies to the first fiscal quarter beginning after
     December 31, 1998.

     The Company does not believe the effect of the adoption of these accounting
     statements will be material.

     Reclassification of Comparative Amounts
     ---------------------------------------

     Certain  comparative  account  balances  for the  prior  period  have  been
     reclassified  to  conform  to  the  current  period  classifications.  Such
     reclassifications did not effect net income.

2.   EARNINGS PER SHARE

     Basic "Earnings Per Share" (EPS) is based on the weighted average number of
     common  shares  outstanding  during the year.  Diluted  EPS is based on the
     weighted average of common shares  outstanding and common share equivalents
     outstanding during the year.

     There were no  convertible  securities  which would effect the numerator in
     calculating basic and diluted earnings per share; therefore,  net income as
     presented on the Consolidated Statement of Income for 1999 and 1998 will be
     used as the numerator.  The following table sets forth a reconciliation  of
     the denominator of the basic and diluted earnings per share computation.
<TABLE>
<CAPTION>
                                                                            1999         1998
                                                                       -----------  ------------
<S>                                                                     <C>         <C>
         Denominator:
              Denominator for basic earnings per share
               weighted-average shares                                     946,576     1,001,108
         Effect of dilutive securities:
              Employee stock options                                             -           423
                                                                       -----------  ------------
         Dilutive potential common shares                                        -           423
                                                                       -----------  ------------
         Denominator for diluted earnings per share - adjusted
               weighted-average assumed conversion                         946,576     1,001,531
                                                                       ===========  ============
</TABLE>
<PAGE>
3.   INVESTMENT SECURITIES

     The amortized  cost and estimated  fair value of investments at June 30 are
as follows:

<TABLE>
<CAPTION>
                                                                                  1999
                                                         ---------------------------------------------------------
                                                                          Gross          Gross
                                                          Amortized      Unrealized     Unrealized      Fair
                                                            Cost          Gains         Losses          Value
                                                          ----------- -----------      ----------      -----------
<S>                                                      <C>         <C>              <C>             <C>
     Held-to-maturity
     ----------------
         U.S. Government and Agency Obligations           $   999,896 $         -      $  (28,982)     $   970,914
                                                          ----------- -----------      ----------      -----------
     Available-for-sale
     ------------------
         U.S. Government and Agency Obligations             4,498,042           -        (136,664)       4,361,378
         Common stocks                                        105,625           -         (16,875)          88,750
         Money Fund Securities                                 40,682           -          (9,335)          31,347
                                                         ------------ -----------      -----------    ------------
              Total available for sale                      4,644,349           -        (162,874)       4,481,475
                                                          ----------- -----------       ----------      ----------
              Total Investment Securities                  $5,644,245 $         -       $(191,856)      $5,452,389
                                                           ========== ===========       ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                  1998
                                                         ---------------------------------------------------------
                                                                          Gross          Gross
                                                          Amortized      Unrealized   Unrealized        Fair
                                                            Cost          Gains         Losses          Value
                                                           ---------- -----------      ----------       ----------
<S>                                                       <C>        <C>              <C>              <C>
     Held-to-maturity
     ----------------
         U.S. Government and Agency Obligations            $1,745,667 $     8,344      $     (686)      $1,753,325
                                                           ---------- -----------      ----------       ----------
     Available-for-sale
     ------------------
         Common stocks                                        231,875           -         (11,250)         220,625
         Money Fund Securities                                 52,827           -          (9,432)          43,395
                                                         ------------------------      ----------     ------------
              Total available for sale                        284,702           -         (20,682)         264,020
                                                          -----------------------      ----------      -----------

              Total Investment Securities                  $2,030,369  $    8,344      $  (21,368)      $2,017,345
                                                           ==========  ==========      ==========       ==========
</TABLE>

     The weighted average  interest rate on investment  securities was 6.58% and
6.69% at June 30, 1999 and 1998, respectively.

     The  amortized  cost and estimated  fair value of investment  securities at
     June  30,  1999,  by  contractual  maturity,   are  shown  below.  Expected
     maturities will differ from contractual  maturities  because  borrowers may
     have  the  right  to call or  repay  obligations  with or  without  call or
     repayment penalties.

                                                Amortized        Fair
                                                  Cost           Value
                                                ----------     ----------
         One year or less                      $   105,625    $    88,750
         After one through five years            1,499,730      1,470,238
         After five through ten years            2,040,505      1,985,750
         After ten years                         1,998,385      1,907,651
                                                ----------     ----------
              Total                             $5,644,245     $5,452,389
                                                ==========     ==========

     Gains on sales were  $13,745  and $0 for the years  ended June 30, 1999 and
     1998,  respectively.  No losses on sales were  realized  during either year
     ended June 30,  1999 and 1998.  Proceeds on sale of  investment  securities
     available for sale were $139,995 and $-0- for the years ended June 30, 1999
     and 1998 respectively.
<PAGE>

4.   MORTGAGE-BACKED SECURITIES

     The amortized cost and estimated fair value of  mortgage-backed  securities
at June 30 are as follows:

<TABLE>
<CAPTION>
                                                                                   1999
                                                            ----------------------------------------------------
                                                                             Gross       Gross
                                                           Amortized      Unrealized   Unrealized       Fair
                                                               Cost          Gains       Losses         Value
                                                             ----------   ----------     ---------    ----------
<S>                                                        <C>             <C>        <C>            <C>
     Held-to-maturity
     ----------------
         Government National Mortgage Association           $   837,676     $  7,701   $   (2,465)    $  842,912
         Federal Home Loan Mortgage Corporation                 133,581        9,893            -        143,474
         Federal National Mortgage Association                1,501,424           -       (31,165)     1,470,259
                                                             ----------      -------     ---------    ----------
              Total held to maturity                          2,472,681       17,594      (33,630)     2,456,645
                                                             ----------      -------     ---------    ----------

     Available-for-sale
     ------------------
         Government National Mortgage Association             1,413,784            -      (48,958)     1,364,826
         Federal National Mortgage Association                  481,081            -      (13,062)       468,019
                                                            -----------      -------     ---------   -----------
              Total available for sale                        1,894,865            -      (62,020)     1,832,845
                                                             ----------      -------     ---------    ----------

              Total Mortgage backed securities               $4,367,546      $17,594     $(95,650)    $4,289,490
                                                             ==========      =======     =========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                   1998
                                                            ----------------------------------------------------
                                                                             Gross       Gross
                                                             Amortized    Unrealized   Unrealized       Fair
                                                               Cost          Gains       Losses         Value
                                                             ----------      -------    ---------     ----------
<S>                                                         <C>             <C>       <C>            <C>
     Held-to-maturity
     ----------------
         Government National Mortgage Association            $  174,659      $10,875   $        -     $  185,534
         Federal Home Loan Mortgage Corporation                 164,703       13,794            -        178,497
                                                             ----------      -------    ---------     ----------
              Total mortgage backed securities               $  339,362      $24,669   $        -     $  364,031
                                                             ==========      =======   ==========     ==========
</TABLE>

     Mortgage-backed securities provide for periodic, generally monthly payments
     of principal and interest and have contractual  maturities ranging from ten
     to thirty years at June 30, 1999. However,  due to expected repayment terms
     being significantly less than the underlying mortgage loan pool contractual
     maturities,  the estimated lives of these securities could be significantly
     shorter.  Mortgage  backed  securities  with a book value of $705,780 and a
     fair value of $703,515 are one year adjustable  types currently  paying 6%.
     The remaining  instruments are all fixed rate types ranging from 6% to 10%.
     Certain  instruments  have been  recorded as available  for sale based upon
     managements'  evaluation of liquidity needs while optimizing  return at the
     time of purchase.

     There were no sales of mortgage  backed  securities for either period ended
June 30, 1999 or 1998.



<PAGE>


5.   LOANS RECEIVABLE

     Loans receivable are comprised of the following at June 30:
<TABLE>
<CAPTION>
                                                         1999                 1998
                                                      -------------      -------------
<S>                                                   <C>               <C>
         Mortgage loans:
              1 - 4 family                               59,673,803        $57,904,667
              Multi-family                                2,689,531          1,786,427
              Non-residential                            23,216,018         15,581,130
              Construction                                2,073,165          5,017,202
                                                      -------------       ------------
                   Total mortgage loans                  87,652,517         80,289,426
                                                      -------------       ------------

         Consumer loans:
              Home improvement                         $  1,195,518          1,000,801
              Automobile                                  8,647,953          7,659,017
              Share loans                                 1,360,054          1,296,684
              Other                                       2,384,401          2,389,041
                                                       ------------      -------------
                   Total consumer loans                  13,587,926         12,345,543
                                                       ------------       ------------

         Commercial loans                                10,387,570          6,675,780
                                                       ------------       ------------

         Less:
              Loans in process                            1,006,813          3,061,801
              Net deferred loan fees                        139,369            181,097
              Allowance for loan losses                     582,280            477,654
                                                       ------------      -------------
                                                          1,728,462          3,720,552
                                                       ------------       ------------

                  Total loans                          $109,899,551        $95,590,197
                                                       ============        ===========
</TABLE>

     Single  family  mortgage  loans  serviced  for Freddie  Mac,  which are not
     included  in  the  Consolidated  Balance  Sheet,  totaled  $19,040,615  and
     $10,972,452 at June 30, 1999 and 1998, respectively.

     The Company is a party to financial instruments with off-balance-sheet risk
     in the  normal  course  of  business  to meet  the  financing  needs of its
     customers.  These  financial  instruments  include  commitments  to  extend
     credit. These instruments  involve, to varying degrees,  elements of credit
     risk in excess of the  amount  recognized  in the  statement  of  financial
     condition.  The contract amounts of these instruments reflect the extent of
     involvement the Company has in particular classes of financial instruments.

     The Company's exposure to credit loss in the event of nonperformance by the
     other party to the financial instrument for commitments to extend credit is
     represented by the  contractual  amount of those  instruments.  The Company
     uses the  same  credit  policies  in  making  commitments  and  conditional
     obligations  as it does for  on-balance-sheet  instruments.  No losses  are
     anticipated by management as a result of these commitments.

     The following  represents  financial  instruments  whose  contract  amounts
represent credit risk at June 30:
<TABLE>
<CAPTION>
                                                         1999               1998
                                                      -----------       ------------
<S>                                                  <C>                 <C>
         Commitments to originate loans
              Fixed rate                              $   637,060         $1,875,700
              Variable rate                           $ 1,467,300         $1,639,200
         Loans in process                             $ 1,006,813         $3,061,801
         Unused lines of credit                       $ 7,456,372         $5,951,178
         Letters of credit                            $    22,500         $   48,214
</TABLE>

     The range of interest  rates on fixed rate loan  commitments  was 7.375% to
9.25% at June 30, 1999.



<PAGE>

5.   LOANS RECEIVABLE (CONTINUED)

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no violation of any condition established in the contract. Loan
     commitments  generally  expire  within  30 days or have  other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do  not  necessarily  represent  future  cash  requirements.   The  Company
     evaluates each customer's  creditworthiness  on a case-by-case  basis.  The
     amount of  collateral  obtained,  if deemed  necessary  by the Company upon
     extension of credit,  is based on  management's  credit  evaluation  of the
     counter  party.   Collateral  held  consists   primarily  of  single-family
     residences and income-producing commercial properties.

     In the  normal  course  of  business,  loans  are  extended  to  directors,
     executive officers and their associates.  In management's  opinion,  all of
     these loans are on substantially  the same terms and conditions as loans to
     other individuals and businesses of comparable creditworthiness.  A summary
     of loan  activity  for  those  directors,  executive  officers,  and  their
     associates  with loan balances in excess of $60,000 for the year ended June
     30, 1999 is as follows:

                                            Amount
           1998           Additions         Collected            1999
         ---------        -------------     ----------        -----------

          $969,459           $1,544,500       $809,935         $1,704,024

     The Company's  primary business  activity is with customers  located within
     its local trade  area.  Residential,  consumer,  and  commercial  loans are
     granted. The Company also selectively funds loans originated outside of its
     trade area provided such loans meet its credit policy guidelines.  Although
     the Company has a diversified  loan  portfolio,  at June 30, 1999 and 1998,
     loans  outstanding  to  individuals  and  businesses are dependent upon the
     local economic conditions in its immediate trade area.

6.   ALLOWANCE FOR LOAN LOSSES

     Activity  in the  allowance  for loan losses for the years ended June 30 is
summarized as follows:

                                                     1999                1998
                                                   ----------          ---------

         Balance, beginning of period                $477,654           $367,779
         Add:
              Provisions charged to operations        150,000            253,606
              Loan recoveries                           1,529             14,280
                                                   ----------          ---------
                  Total                               629,183            635,665
         Less loans charged off                        46,903            158,011
                                                    ---------           --------

         Balance, end of period                      $582,280           $477,654
                                                     ========           ========

     Nonperforming  loans  totaled  $765,126  and  $449,481 at June 30, 1999 and
1998, respectively.

     At June 30, 1999, the total investment in impaired loans was $385,922.  The
     entire  $385,922  was  subject to a specific  allowance  for loan losses of
     $25,468.  The average  investment  in impaired  loans during the year ended
     June 30, 1999 was $377,753,  and interest income recognized during the year
     was $12,315.  The interest income potential based upon the original term of
     the contracts on these  impaired  loans was $31,313 for the year ended June
     30,  1999.  At June  30,  1998,  the  Company  had no  loans  that  met the
     definition of impaired.



<PAGE>

7.   PREMISES AND EQUIPMENT, NET

     Premises and equipment are summarized by major classification as follows:

                                                  1999                1998
                                                -----------       ------------

         Land                                   $   303,857         $  303,857
         Buildings and improvements               3,409,515          3,376,313
         Furniture, fixtures, and equipment       1,909,094          1,622,477
                                                -----------         ----------
              Total                               5,622,466          5,302,647
         Less accumulated depreciation            1,537,673          1,219,790
                                                -----------         ----------

              Premises and equipment, net       $ 4,084,793         $4,082,857
                                                ===========         ==========

     Depreciation  charged to  operations  amounted to $322,314 and $184,508 for
the years ended June 30, 1999 and 1998, respectively.

8.   FEDERAL HOME LOAN BANK STOCK

     The Bank is a member of the Federal Home Loan Bank System. As a member, the
     Bank  maintains an investment in the capital stock of the Federal Home Loan
     Bank of  Pittsburgh,  at cost, in an amount not less than the greater of 1%
     of its outstanding  home loans or 5% of its  outstanding  borrowings to the
     Federal Home Loan Bank of  Pittsburgh  as calculated at December 31 of each
     year.

9.   ACCRUED INTEREST RECEIVABLE

     Accrued interest receivable consists of the following:

                                                    1999                1998
                                                  ---------          ---------

         Investment securities                     $ 43,509          $  33,741
         Mortgage-backed securities                  28,741              6,436
         Loans receivable                           591,808            577,803
                                                   --------           --------
              Total                                $664,058           $617,980
                                                   ========           ========

10.  DEPOSITS

     Deposit accounts are summarized at June 30 as follows:
<TABLE>
<CAPTION>
                                                                   1999                          1998
                                                     ----------------------------   ----------------------------
                                                                      Percent of                     Percent of
                                                       Amount          Portfolio      Amount          Portfolio
                                                      -------------   -----------    ------------    -----------
<S>                                                  <C>                 <C>        <C>                   <C>
         Non-interest-bearing                         $   3,734,867       3.6%       $  2,159,434          2.4%
                                                      -------------    ------        ------------       ------

         Savings accounts                                16,379,596      15.6          14,877,841         16.8
         NOW accounts                                     9,060,464       8.6           8,135,315          9.2
         Money market accounts                           12,447,642      11.8           9,278,592         10.5
                                                      -------------     -----        ------------       ------
                                                         37,887,702      36.0          32,291,748         36.5
                                                      -------------     -----        ------------       ------

         Time certificates of deposit:
              2.00 -  4.00%                               2,260,291       2.1           1,675,183          1.9
              4.01 -  6.00%                              45,841,219      43.5          32,688,606         36.9
              6.01 - 8.00%                               15,614,691      14.8          19,736,572         22.3
                                                      -------------     -----        ------------       ------
                                                         63,716,201      60.4          54,100,361         61.1
                                                      -------------     -----        ------------       ------

                  Total                                $105,338,770     100.0%        $88,551,543        100.0%
                                                       ============     =====         ===========        =====
</TABLE>


<PAGE>

10.  DEPOSITS (CONTINUED)

     The scheduled  maturities of time  certificates of deposit at June 30, 1999
are as follows:

                                                            Amount
                                                            ------

         Within one year                                   $46,016,799
         Beyond one year but within two years               10,532,169
         Beyond two years but within three years             2,703,099
         Beyond three years but within five years            2,992,677
         Beyond five years                                   1,471,457
                                                          ------------

              Total                                        $63,716,201
                                                           ===========

     The Company had time certificates  with a minimum  denomination of $100,000
     in the amount of  approximately  $7,258,263 and $9,762,016 at June 30, 1999
     and 1998,  respectively.  Deposits in excess of $100,000 are not  Federally
     insured. The Company does not have any brokered deposits.

     Interest  expense by  deposit  category  for the years  ended June 30 is as
follows:

                                                      1999            1998
                                                    ----------    ------------

         Passbooks                                  $  404,099      $  414,293
         NOW and Money Market Deposit accounts         649,652         558,786
         Time certificates                           3,257,354       2,813,316
                                                    ----------      ----------
              Total                                 $4,311,105      $3,786,395
                                                    ==========      ==========

11.  ADVANCES FROM FEDERAL HOME LOAN BANK

     Advances  from  the  Federal  Home  Loan  Bank at June 30  consists  of the
following:

           Principal        Interest    Interest
               Due             Due        Rate        1999            1998
          -----------       ---------   --------   -----------   -------------

 Advance  03-25-2002        Monthly       5.51%     $3,000,000     $ 3,000,000
 Advance  11-04-2002        Monthly       5.37%      5,000,000       5,000,000
 Advance  01-23-2008        Monthly       4.88%         -            1,000,000
 Advance  01-23-2008        Monthly       4.94%      1,000,000       1,000,000
                                                    ----------    ------------
                                                    $9,000,000     $10,000,000
                                                    ==========     ===========

     These  borrowings  are subject to the terms and conditions of the Advances,
     Collateral Pledge and Security Agreement between the Federal Home Loan Bank
     of Pittsburgh  and the Bank.  All advances have fixed  interest  rates with
     putable options.

     In addition,  the Bank entered into a "RepoPlus" Advance credit arrangement
     which is renewable annually and incurs no service charges. During 1999, the
     Bank had a borrowing  limit of  approximately  $52 million  with a variable
     rate of interest,  based upon the FHLB's cost of funds. All borrowings from
     the FHLB are secured by a blanket  lien on  qualified  collateral,  defined
     principally as investment  securities and mortgage loans which are owned by
     the Bank free and clear of any liens or encumbrances.




<PAGE>
12.  INCOME TAXES

     The  components  of income  tax  expense  for the years  ended  June 30 are
summarized as follows:

                                                1999                1998
                                             ----------          ---------
         Currently payable:
              Federal                          $410,461           $435,077
              State                              59,453             66,422
                                               --------           --------
                                                469,914            501,499
              Deferred                           12,011             19,298
                                               --------           --------
                  Total                        $481,925           $520,797
                                               ========           ========

     The  following  temporary  differences  gave rise to deferred tax asset and
liabilities:

<TABLE>
<CAPTION>
                                                            1999                 1998
                                                           ---------          ---------
<S>                                                       <C>                 <C>
         Deferred tax assets
              Allowance for loan losses                    $ 197,975           $162,402
              Loan origination fees, net                      21,520             32,820
              Net unrealized loss on securities               76,464              7,032
              Other, net                                      10,241             11,110
                                                           ---------          ---------
                  Deferred tax assets                        306,200            213,364
                                                           ---------           --------
         Deferred tax liabilities
              Premise and equipment depreciation             235,712            211,607
              Bad debt reserves for tax reporting purposes    91,802            110,162
              Other, net                                      54,867             25,197
                                                           ---------          ---------
                  Deferred tax liabilities                   382,381            346,966
                                                           ---------           --------
                  Net deferred tax liabilities             $  76,181           $133,602
                                                           =========           ========
</TABLE>
     During 1996 the Small  Business Job  Protection  Act (the "Act") was signed
     into law. The Act  eliminated  the  percentage  of taxable  income bad debt
     deduction for thrift  institutions  for tax years  beginning after December
     31, 1995. The Act provides that bad debt reserves accumulated prior to 1988
     be  exempt  from  recapture.  The  recapture  tax will be paid in six equal
     installments  beginning  with the 1998 tax year. At December 31, 1998,  the
     Bank had accumulated $270,005 in post 1987 bad debt reserves.

     The  reconciliation  between the actual  provision for income taxes and the
     amount of income taxes which would have been  provided at  statutory  rates
     for the years ended June 30 is as follows:
<TABLE>
<CAPTION>
                                                                              1999                    1998
                                                                  ---------------------     --------------------
                                                                   Amount       Percent      Amount      Percent
<S>                                                                <C>          <C>         <C>          <C>
         Provision at statutory rate                                $430,356     34.0%       $465,331     34.0%
         State income tax expense, net of federal
          tax benefit                                                 40,504      3.2          43,839      3.2
         Tax exempt interest                                          (8,441)     (.7)         (6,294)     (.5)
         Other, net                                                   19,506      1.5          17,921      1.3
                                                                    --------    -----        --------    -----
              Actual expense and effective rate                     $481,925     38.0%       $520,797     38.0%
                                                                    ========     ====        ========     ====
</TABLE>
13.  RETIREMENT PLAN

     The Company has a  profit-sharing  plan with a 401(k)  feature.  The 401(k)
     allows  employees  to make  contributions  to the  plan up to 12% of  their
     annual compensation. The Company will match 50% of the employees' voluntary
     contributions up to 3% of the employee's compensation.  Additional employer
     contributions  are made at the  discretion of the Board of  Directors.  The
     plan covers  substantially all employees with more than one year's service.
     The Company's  contributions for the benefit of covered employees  amounted
     to  $25,579  and  $37,019  for the  years  ended  June 30,  1999 and  1998,
     respectively.
<PAGE>

14.  RESTRICTED STOCK PLAN (RSP)

     In 1998,  the  Board of  Directors  adopted  a RSP for  certain  directors,
     officers  and  employees  which was approved by  stockholders  at a special
     meeting held on January 20, 1998.  The  objective of this Plan is to enable
     the Company and the Bank to retain its corporate  officers,  key employees,
     and directors who have the experience and ability necessary to manage these
     entities.  Directors,  officers,  and key  employees  who are  selected  by
     members of a Board  appointed  committee  are eligible to receive  benefits
     under the RSP. The non-employee directors of the Company and the Bank serve
     as trustees for the RSP, which has the  responsibility  to invest all funds
     contributed by the Bank to the Trust created for the RSP.

     On February 23, 1998,  the Trust  purchased  with funds  contributed by the
     Bank,  43,378  shares of the common  stock of the  Company.  As of June 30,
     1999,  15,180  shares have been issued to  non-employee  directors,  23,438
     shares have been issued to officers,  and 4,760 shares  remained  unissued.
     Directors, officers, and key employees who terminate their association with
     the Company  shall  forfeit the right to any shares  which were awarded but
     not  earned.  Shares are vested  over a four year  period  from their grant
     date.  A total of 16,856  shares  were  vested as of June 30,  1999.  Total
     operating  expense  attributed  to the RSP amounted to $201,881 and $67,583
     for the years ended June 30, 1999 and 1998 respectively.

15.  EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

     In conjunction  with the Bank's  conversion from mutual to stock,  the Bank
     adopted an ESOP for the  benefit of  officers  and  employees  who have met
     certain eligibility  requirements  related to age and length of service. An
     ESOP trust was created,  and acquired  86,756 shares of common stock in the
     Company's  initial public offering,  using proceeds of a loan obtained from
     the Company,  which bears  interest at the Wall Street  Journal prime rate,
     adjusted  quarterly.  The loan,  which is  secured  by the  shares of stock
     purchased,  calls for quarterly  interest over a ten year period and annual
     principal payments of $86,756.

     The Bank makes quarterly  contributions  to the trust to allow the trust to
     make the required  loan  payments to the Company.  Shares are released from
     collateral based upon the proportion of annual  principle  payments made on
     the loan each year and  allocated  to  qualified  employees.  As shares are
     released from collateral,  the Bank reports compensation expense based upon
     the amounts  contributed or committed to be  contributed  each year and the
     shares become  outstanding for earnings per share  computations.  Dividends
     paid on  allocated  ESOP shares are  recorded  as a  reduction  in retained
     earnings.  Dividends paid on  unallocated  shares were added to participant
     accounts  and  reported as  compensation  for the year ended June 30, 1999.
     Compensation  expense for the ESOP was  $145,182 and $148,437 for the years
     ended June 30, 1999 and 1998, respectively.

     The following table represents the components of the ESOP shares:

                                                        1999         1998
                                                      ----------   ----------

         Allocated shares                                22,632       11,549

         Shares released for allocation                   4,338        4,338

         Shares distributed                              (1,922)      (1,015)

         Unreleased shares                               59,786       70,869
                                                         ------       ------

              Total ESOP shares                          84,834       85,741
                                                         ======       ======

         Fair value of unreleased ESOP shares           $717,432   $1,293,350
                                                        ========   ==========


<PAGE>

16.  STOCK OPTION PLAN

     In December  1997,  the Board of Directors  adopted a Stock Option Plan for
     the directors,  officers,  and employees which was approved by stockholders
     at a special  meeting  held on January 20,  1998.  An  aggregate of 108,445
     shares of authorized but unissued common stock of the Company were reserved
     for  future  issuance  under the plan.  The stock  options  typically  have
     expiration  terms of ten years  subject  to  certain  extensions  and early
     terminations. The per share exercise price of a stock option shall be, at a
     minimum, equal to the fair value of a share of common stock on the date the
     option is granted.  Proceeds  from the  exercise  of the stock  options are
     credited  to common  stock for the  aggregate  par value and the  excess is
     credited to additional paid-in capital.

     On January 20, 1998,  qualified stock options were granted for the purchase
     of 65,061 shares  exercisable  at the market price of $18.75 per share at a
     rate of one fourth per year beginning  January 20, 1998. All options expire
     ten years  from the date of grant.  At June 30,  1999,  the  initial  stock
     options granted remain outstanding with none being exercised.

     Effective  July  1,  1996,  the  Company  adopted  Statement  of  Financial
     Accounting   Standards  Statement  No.  123,  "Accounting  for  Stock-Based
     Compensation." This statement encourages,  but does not require the Company
     to  recognize  compensation  expense  for all awards of equity  instruments
     issued.  The statement  establishes a fair value based method of accounting
     for  stock-based   compensation   plans.   The  standard   applies  to  all
     transactions  in which an entity  acquires  goods or  services  by  issuing
     equity  instruments  or by incurring  liabilities  in amounts  based on the
     price of the entity's common stock or other equity  instruments.  Statement
     No. 123 permits  companies  to  continue  to account for such  transactions
     under Accounting  Principles Board No. 25,  "Accounting for Stock Issued to
     Employees," but requires  disclosure in a note to the financial  statements
     pro forma net income and  earnings  per share as if the Company had applied
     the new method of accounting.

     Under Accounting  Principles Board Opinion 25, no compensation  expense has
     been  recognized with respect to the options granted under the stock option
     plans. Had compensation  expense been determined on the basis of fair value
     pursuant to Statement No.
     123, net income and earnings per share would have been reduced as follows:

                                                     1999                1998
                                                 -----------          ----------

         Net Income:
              As reported                          $783,827             $848,210
                                                   ========             ========

              Pro forma                            $767,939             $601,588
                                                   ========             ========

         Basic Earnings Per Share:
              As reported                       $       .83         $        .85
                                                ===========         ============
              Pro forma                         $       .81         $        .60
                                                ===========         ============

         Diluted Earnings Per Share:
              As reported                       $       .83         $        .85
                                                ===========         ============
              Pro forma                         $       .81         $        .60
                                                ===========         ============

     The following table presents share data related to the stock option plans:

                                                     1999                 1998
                                                     -------             -------

         Outstanding, beginning                       65,061                   -

              Granted                                      -              65,061
              Exercised                                    -                   -
              Forfeited                                    -                   -
                                                     -------             -------

         Outstanding, ending (at $18.75 per share)    65,061              65,061
                                                      ======              ======


<PAGE>

16.  STOCK OPTION PLAN (CONTINUED)

     The fair value of the option grant was  estimated  using the  Black-Scholes
     option-pricing model with the following  weighted-average  assumptions used
     for the grant in 1999 and 1998,  respectively:  expected  dividend yield of
     2.67% and 1.71%; expected volatility of 8.9% and 20.94%; risk-free interest
     rate of 6.02% and 5.55%; and expected lives of 8 and 9 years.

     Dividend  Equivalent  Rights  may be granted  concurrently  with any option
     granted.  These  rights  provide that upon the payment of a dividend on the
     Common  Stock,  the  holder  of  such  Options  shall  receive  payment  of
     compensation  in an amount  equivalent  to the dividend  payable as if such
     Options had been  exercised  and such Common  Stock held as of the dividend
     date. Dividend Equivalent Rights were granted  concurrently with respect to
     the stock options granted in 1998.

     Compensation  expense resulting from Dividend Equivalent Rights was $20,820
     and $5,205 for the years ended June 30, 1999 and 1998, respectively.

17.  PREFERRED SHARE PURCHASE RIGHTS PLAN

     In July 1997,  the Board of Directors  adopted a Preferred  Share  Purchase
     Rights Plan and  correspondingly  issued one Preferred Share Purchase Right
     ("a  Right")  for each  share of common  stock of the  Company.  Each Right
     entitles  the   registered   holder  to  purchase   from  the  Company  one
     one-hundredth  of a share of the Company's junior  Participating  Preferred
     Stock,   Series  A  ("Preferred   Shares"),   at  a  price  of  $37.00  per
     one-hundredth  of a Preferred  Share. The Rights will not be exercisable or
     separable  from the common shares until ten business days after a person or
     group  acquire  15% or more  or  tenders  for 50% or more of the  Company's
     outstanding  common  shares.  The Plan also  provides that if any person or
     group  becomes  an  "Acquiring  Person,"  each  Right,  other  than  Rights
     beneficially owned by the Acquiring Person (which will thereafter be void),
     will  entitle  its holder to receive  upon  exercise  that number of common
     shares having a market value of two times the exercise  price of the Right.
     In the  event  the  Company  is  acquired  in a merger  or  other  business
     combination transaction, each Right will entitle its holder to receive upon
     exercise of the Right,  at the Right's then current  exercise  price,  that
     number of the  acquiring  company's  common shares having a market value of
     two times the  exercise  price of the Right.  The  company is  entitled  to
     redeem  the  Rights at a price of one cent per  Right at any time  prior to
     them becoming exercisable, and the Rights expire on July 17, 2007. The Plan
     was designed to protect the interest of the Company's  shareholders against
     certain coercive tactics sometimes employed in takeover attempts.

18.  COMMITMENTS AND CONTINGENT LIABILITIES

     Lease Commitments
     -----------------

     The future  lease  commitments  as of June 30, 1999 for all  noncancellable
     equipment and land leases follows:
                                       Fiscal Year
                                     Ending June 30,         Amount
                                     ---------------         ------

                                           2000              $   71,758
                                           2001                  73,558
                                           2002                  76,338
                                           2003                  78,338
                                           2004                  77,518
                                    2005 and thereafter       1,827,700
                                                             ----------
                                                             $2,205,210
                                                             ==========

     Litigation
     ----------

     The  Company is  involved  in  litigation  arising in the normal  course of
     business.  Management believes that liabilities, if any, arising from these
     proceedings  will not have a material  adverse  effect on the  consolidated
     financial position, operating results, or liquidity.


<PAGE>

19.  OTHER COMPREHENSIVE INCOME

     Other  comprehensive  income  included  in the  Consolidated  Statement  of
     Stockholders'  Equity  consists  solely of  unrealized  gains and losses on
     available  for  sale  securities.  The  change  in net  unrealized  loss on
     available for sale  securities  includes  reclassification  adjustments  to
     reclassify  gains,  net of tax for sales of the related  security of $4,673
     and $-0- for the years ended June 30, 1999 and 1998.

20.  CONVERSION AND REORGANIZATION

     In accordance with regulations,  at the time that the Bank converted from a
     mutual savings bank to a stock savings bank, a portion of retained earnings
     was  restricted by  establishing  a liquidation  account.  The  liquidation
     account will be maintained for the benefit of eligible  account holders who
     continue  to maintain  their  accounts  at the Bank after  conversion.  The
     liquidation  account will be reduced  annually to the extent that  eligible
     account  holders  have  reduced  their  qualifying   deposits.   Subsequent
     increases  will not restore an eligible  account  holder's  interest in the
     liquidation  account.  In the event of a complete  liquidation  of the Bank
     each  account  holder will be entitled to receive a  distribution  from the
     liquidation  account in an amount  proportionate  to the  current  adjusted
     qualifying balances for accounts then held.

21.  FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

     The estimated carrying amounts and fair values at June 30 are as follows:
<TABLE>
<CAPTION>
                                                            1999                               1998
                                                --------------------------------  ------------------------------
                                                                    Estimated         Estimated
                                                   Carrying            Fair            Carrying          Fair
                                                    Amount             Value           Amount            Value
                                                    ------             -----           ------            -----

<S>                                            <C>                <C>            <C>              <C>
         Financial assets:
              Cash and cash equivalents           $  4,359,870      $  4,359,870   $  9,084,193     $  9,084,193
              Investment securities
                    Held to maturity                   999,896           970,914      1,745,667        1,753,325
                    Available-for-sale               4,481,475         4,481,475        264,020          264,020
              Mortgage-backed securities:
                   Held to maturity                  2,472,681         2,456,645        339,362          364,031
                   Available for sale                1,832,845         1,832,845              -                -
              Loans receivable                     109,899,551       110,308,000     95,590,197       96,816,000
              Federal Home Loan Bank Stock             629,500           629,500        622,200          622,200
              Accrued interest receivable              664,058           664,058        617,980          617,980
              Loans held for sale                            -                 -      1,454,700        1,454,700
                                                  ------------      ------------   ------------     ------------
                  Total                           $125,339,876      $125,703,307   $109,718,319     $110,976,449
                                                  ============      ============   ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                                               1999                               1998
                                                --------------------------------  ------------------------------
                                                                    Estimated         Estimated
                                                   Carrying            Fair           Carrying           Fair
                                                    Amount             Value           Amount            Value
                                                    ------             -----           ------            -----
<S>                                              <C>               <C>             <C>             <C>
         Financial liabilities:
              Deposits                            $105,338,770      $105,243,000    $ 88,551,543    $ 88,954,000
              Advances from Federal
               Home Loan Bank                        9,000,000         9,000,000      10,000,000       9,992,000
              Advance payment by borrowers
               for taxes and insurance                 196,993           196,993         193,346         193,346
              Accrued interest payable                  50,357            50,357          46,713          46,713
                                                  ------------      ------------    ------------    ------------
                  Total                           $114,586,120      $114,490,350    $ 98,791,602    $ 99,186,059
                                                  ============      ============    ============    ============
</TABLE>


<PAGE>

21.  FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS (CONTINUED)

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

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

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

     As certain  assets such as deferred tax assets and  premises and  equipment
     are not  considered  financial  instruments,  the  estimated  fair value of
     financial instruments would not represent the full value of the Company.

     The Company employed  simulation modeling in determining the estimated fair
     value of  financial  instruments  for which quoted  market  prices were not
     available based upon the following assumptions:

     Cash and Cash Equivalents,  Federal Home Loan Bank Stock, Accrued  Interest
     ---------------------------------------------------------------------------
     Receivable,  Accrued Interest Payable, and Advance Payment by Borrowers for
     ---------------------------------------------------------------------------
     Taxes and Insurance
     -------------------

     The fair value is equal to the current carrying value.

     Investment Securities, Mortgage-backed Securities, and Loans Held for Sale
     --------------------------------------------------------------------------

     The fair value of investment  securities,  mortgage-backed  securities  and
     loans held for sale 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.

     Loans, Deposits, and Advances from Federal Home Loan Bank
     ---------------------------------------------------------

     The fair value of loans is estimated by  discounting  the future cash flows
     using a  simulation  model  which  estimates  future cash flows and employs
     discount  rates  that  consider   reinvestment   opportunities,   operating
     expenses, non-interest income, credit quality, and prepayment risk. Demand,
     savings, and money market deposit accounts are valued at the amount payable
     on demand as of year end.  Fair values for time  deposits and advances from
     Federal  Home  Loan  Bank  are  estimated  using  a  discounted  cash  flow
     calculation  and applies  contractual  costs currently being offered in the
     existing  portfolio to current  market rates being offered for deposits and
     notes of similar remaining maturities.

     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,  are not  considered  material for
     disclosure.  The contractual amounts of unfunded  commitments are presented
     in Note 4.



<PAGE>

22.  CAPITAL REQUIREMENTS

     The Company,  on a consolidated  basis, and the Bank are subject to various
     regulatory  capital  requirements  administered  by the federal  regulatory
     agencies. Failure to meet minimum capital requirements can initiate certain
     mandatory,  and possibly additional discretionary actions by the regulators
     that, if undertaken,  could have a direct  material  effect on the entity's
     financial statements.  Under capital adequacy guidelines and the regulatory
     framework for prompt corrective  action, the Company and the Bank must meet
     specific  capital  guidelines  that  involve  quantitative  measures of the
     entities'  assets,  liabilities,  and  certain  off-balance  sheet items as
     calculated under  regulatory  accounting  practices.  The Company's and the
     Bank's capital amounts and  classification  are also subject to qualitative
     judgments by the regulators  about  components,  risk-weighting,  and other
     factors.

     Quantitative  measures  established  by the  regulation  to ensure  capital
     adequacy  require the Company and the Bank to maintain  minimum amounts and
     ratios of Total and Tier I  capital  (as  defined  in the  regulations)  to
     risk-weighted  assets,  and of tangible and core capital (as defined in the
     regulations)  to adjusted  assets (as defined).  Management  believes as of
     June 30,  1999  that the  Company  and the Bank meet all  capital  adequacy
     requirements to which they are subject.

     As of June 30, 1999,  the most recent  notification  from the Company's and
     Bank's primary  regulatory  authorities have categorized the entity as well
     capitalized under the regulatory framework for prompt corrective action. To
     be  categorized  as well  capitalized,  the Company must  maintain  minimum
     tangible,  core,  and risk-based  ratios.  There have been no conditions or
     events since that  notification  that management  believes have changed the
     Company's or the Bank's category.

     The following  table  reconciles  the  Company's  and Bank's  capital under
     generally accepted accounting principles to regulatory capital:
<TABLE>
<CAPTION>
                                                            Company                           Bank
                                                            June 30,                         June 30,
                                                 -------------------------------  ------------------------------
                                                      1999             1998            1999             1998
                                                 -------------    --------------  -------------    -------------

<S>                                               <C>               <C>            <C>              <C>
         Total equity                              $14,993,452       $14,928,122    $13,481,216      $12,804,649
         Unrealized loss on debt securities            137,293             6,225        137,293            6,225
                                                 -------------     -------------  -------------   --------------

         Tier I, core, and tangible capital         15,130,745        14,934,347     13,618,509       12,810,874

         Allowance for loan losses                     582,280           477,654        582,280          477,654
                                                 -------------     -------------   ------------    -------------

         Risk-based capital                        $15,713,025       $15,412,001    $14,200,789      $13,288,528
                                                   ===========       ===========    ===========      ===========
</TABLE>


<PAGE>
22.  CAPITAL REQUIREMENTS (CONTINUED)

     The actual capital amounts and ratios were as follows:
<TABLE>
<CAPTION>
                                                                             Company at June 30,
                                                              --------------------------------------------------
                                                                          1999                          1998
                                                              ----------------------      ----------------------
                                                               Amount        Ratio         Amount         Ratio
                                                               ------        -----         ------         -----
<S>                                                          <C>             <C>         <C>             <C>
     Total Capital to Risk-Weighted Assets
     -------------------------------------
         Actual                                               $15,713,025     17.02%      $15,412,001     19.27%
         For Capital Adequacy Purposes                          7,385,779      8.00         6,398,080      8.00
         To be "Well Capitalized"                               9,232,224     10.00         7,997,600     10.00

     Tier I Capital to Risk-Weighted Assets
         Actual                                               $15,130,745     16.39%      $14,934,347     18.67%
         For Capital Adequacy Purposes                          3,692,890      4.00         3,199,040      4.00
         To be "Well Capitalized"                               5,539,334      6.00         4,798,560      6.00

     Core Capital to Adjusted Assets
         Actual                                               $15,130,745     11.58%      $14,934,347     12.95%
         For Capital Adequacy Purposes                          5,227,400      4.00         4,612,000      4.00
         To be "Well Capitalized"                               6,534,250      5.00         5,765,000      5.00

     Tangible Capital to Adjusted Assets
         Actual                                               $15,130,745     11.58%      $14,934,347     12.95%
         For Capital Adequacy Purposes                          1,960,530      1.50         1,729,500      1.50
         To be "Well Capitalized"                                 N/A         N/A             N/A          N/A
</TABLE>

<TABLE>
<CAPTION>
                                                                                  Bank at June 30,
                                                              ------------------------------------------------------
                                                                        1999                       1998
                                                              ---------------------      ---------------------------
                                                               Amount        Ratio         Amount         Ratio
                                                               ------        -----         ------         -----
<S>                                                          <C>              <C>        <C>             <C>
     Total Capital to Risk-Weighted Assets
         Actual                                               $14,200,789      15.79%     $13,288,528     17.31%
         For Capital Adequacy Purposes                          7,193,840       8.00        6,139,760      8.00
         To be "Well Capitalized"                               8,992,300      10.00        7,674,700     10.00

     Tier I Capital to Risk-Weighted Assets
         Actual                                               $13,618,509      15.14%     $12,810,874     16.69%
         For Capital Adequacy Purposes                          3,596,920       4.00        3,069,880      4.00
         To be "Well Capitalized"                               5,395,380       6.00        4,604,820      6.00

     Core Capital to Adjusted Assets
         Actual                                               $13,618,509      10.42%     $12,810,874     11.13%
         For Capital Adequacy Purposes                          5,227,400       4.00        4,602,840      4.00
         To be "Well Capitalized"                               6,534,250       5.00        5,753,550      5.00

     Tangible Capital to Adjusted Assets
         Actual                                               $13,618,509      10.42%     $12,810,874     11.13%
         For Capital Adequacy Purposes                          1,960,275       1.50        1,726,065      1.50
         To be "Well Capitalized"                                 N/A           N/A           N/A          N/A

</TABLE>


<PAGE>

23.  PARENT COMPANY

     The following are parent only condensed financial statements:


                             CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>

                                                                           June 30,
                                                                      1999           1998
                                                                  -----------   -----------
<S>                                                              <C>           <C>
ASSETS
Cash                                                              $       576   $       300
Deposits with subsidiary bank                                       2,170,019     2,819,809
Investment in subsidiary bank                                      12,883,449    12,089,491
Securities available for sale                                          88,750       220,625
Loan receivable from ESOP                                             597,767       715,158
Other assets                                                            9,204        43,136
                                                                  -----------   -----------

     TOTAL ASSETS $                                               $15,749,765   $15,888,519
                                                                  ===========   ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
Restricted stock plan payable                                     $   682,357   $   869,634
Other liabilities                                                      73,956        90,763
Stockholders' equity                                               14,993,452    14,928,122
                                                                  -----------   -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $15,749,765   $15,888,519
                                                                  ===========   ===========

</TABLE>

                          CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>

                                                                    Year Ended June 30,
                                                                     1999         1998
                                                                  ---------    ---------
<S>                                                              <C>          <C>
INCOME
     Interest income - loans                                      $  52,536    $  64,468
     Interest income - investments                                    2,802       16,550
     Gain On sale of investments                                     13,745         --
                                                                  ---------    ---------
              Total interest income                                  69,083       81,018

OPERATING EXPENSES                                                  114,542      131,706
                                                                  ---------    ---------

     Loss before equity in undistributed earnings of subsidiary     (45,459)     (50,688)
     Equity in undistributed earnings of subsidiary                 807,472      877,871
                                                                  ---------    ---------
                Income before income taxes                          762,013      827,183
     Income tax benefit                                              21,814       21,027
                                                                  ---------    ---------

              NET INCOME                                          $ 783,827    $ 848,210
                                                                  =========    =========
</TABLE>



<PAGE>

23.  PARENT COMPANY (CONTINUED)


                        CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                            Year Ended June 30,
                                                                              1999           1998
                                                                         -----------    -----------
<S>                                                                     <C>            <C>
OPERATING ACTIVITIES
     Net income                                                          $   783,827    $   848,210
     Adjustments to reconcile net income to net cash
      provided by operating activities:
         Undistributed net income of subsidiary                             (807,472)      (877,871)
         Gain on sale of investments                                         (13,745)          --
         Other, net                                                           46,667         73,833
                                                                         -----------    -----------
                  Net cash provided by operating activities                    9,277         44,172
                                                                         -----------    -----------

INVESTING ACTIVITIES
     Purchase of securities available for sale                                  --         (231,875)
     Proceeds from sale of investment securities                             139,995           --
     ESOP loan repayments                                                    117,391         81,037
                                                                         -----------    -----------
                  Net cash provided by (used for) investing activities       257,386       (150,838)
                                                                         -----------    -----------

FINANCING ACTIVITIES
     Purchase of Treasury Stock                                             (626,027)    (1,000,863)
     Cash dividends paid                                                    (290,150)      (320,074)
                                                                         -----------    -----------
                  Net cash used for financing activities                    (916,177)    (1,320,937)
                                                                         -----------    -----------

                  Decrease in cash and cash equivalents                     (649,514)    (1,427,603)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                            2,820,109      4,247,712
                                                                         -----------    -----------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                $ 2,170,595    $ 2,820,109
                                                                         ===========    ===========
</TABLE>

38