SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]  Annual report  pursuant to section 13 or 15 (d) of the Securities  Exchange
     Act of 1934

     For the fiscal year ended   June 30, 1999

                                       OR

[  ]     Transition report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the transition period from              to             .
                                        ------------    ------------

Commission File No. 0-21885

                            Advance Financial Bancorp
                            -------------------------
                 (Name of Small Business Issuer in Its Charter)

Delaware                                                         55-0753533
-------------------------------                              -------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

1015 Commerce Street, Wellsburg, West Virginia                     26070
----------------------------------------------                     -----
(Address of Principal Executive Offices)                         (Zip Code)

Issuer's Telephone Number, Including Area Code:                (304) 737-3531
                                                              ----------------

Securities registered under to Section 12(b) of the Exchange Act:       None
                                                                        ----

Securities registered under to Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                         Preferred Share Purchase Rights
                         -------------------------------
                                (Title of Class)

         Check  whether  the issuer:  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES  X     NO
    ---       ---

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         State issuer's revenues for its most recent fiscal year.  $9,941,000

         The aggregate  market value of the voting and non-voting common  equity
held by  non-affiliates  of the  registrant,  based on the average bid and asked
price of the registrant's Common Stock on August 31, 1999, was $8.1 million.

         As of August 31, 1999, there were issued and outstanding 971,285 shares
of the registrant's Common Stock.

         Transition Small Business Disclosure Format (check one):  YES    NO  X
                                                                       ---   ---

                       DOCUMENTS INCORPORATED BY REFERENCE

     1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal  Year
          ended June 30, 1999. (Part II)

     2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders
          for the Fiscal Year ended June 30, 1999. (Part III)


<PAGE>

                                     PART I

         Advance  Financial  Bancorp (the  "Company") may from time to time make
written or oral "forward-looking  statements," including statements contained in
the Company's  filings with the  Securities and Exchange  Commission  (including
this Annual Report on Form 10-KSB and the exhibits  thereto),  in its reports to
Stockholders and in other communications by the Company,  which are made in good
faith by the Company  pursuant to the "Safe  Harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes;  acquisitions;  changes in consumer spending
and  savings  habits;  and the  success  of the  Company at  managing  the risks
involved in the foregoing.

         The Company  cautions that the foregoing  list of important  factors is
not  exclusive.  The Company does not  undertake  to update any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the company.

Item 1.  Business
-----------------

General

         The Company is a Delaware  corporation  organized in September  1996 at
the  direction  of  Advance  Financial  Savings  Bank (the  "Bank"  or  "Advance
Financial")  to acquire  all of the  capital  stock that the Bank  issued in its
conversion  from the mutual to 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
of 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 of West Virginia, is a federally chartered stock savings bank headquartered
in Wellsburg,  West Virginia.  Advance  Financial is subject to examination  and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits  are  federally  insured  by the  Savings  Association  Insurance  Fund
("SAIF").  The  Bank is a

                                       2
<PAGE>

member of and owns capital stock in the FHLB of Pittsburgh,  which is one of the
12 regional banks in the FHLB System.

         Advance  Financial  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.

Competition

         Advance  Financial is one of many  financial  institutions  serving its
market area which  consists of Brooke and Hancock  counties of West Virginia and
portions of Jefferson  County,  Ohio and Washington  County,  Pennsylvania.  The
competition for deposit products comes from other insured financial institutions
such as commercial banks,  thrift  institutions,  credit unions, and multi-state
regional banks in the Bank's market area.  Deposit  competition  also includes a
number of insurance  products sold by local agents and investment  products such
as mutual funds and other  securities sold by local and regional  brokers.  Loan
competition varies depending upon market conditions and comes from other insured
financial  institutions such as commercial banks,  thrift  institutions,  credit
unions, multi-state regional banks, and mortgage bankers.



                                       3


<PAGE>



Lending Activities

         Analysis of Loan  Portfolio.  Set forth below is selected data relating
to the  composition  of the Bank's loan  portfolio  by type of loan on the dates
indicated:

<TABLE>
<CAPTION>
                                                                   June 30,
                                             -------------------------------------------------
                                                      1999                         1998
                                             ------------------------- -----------------------
                                                Amount       Percent   Amount        Percent
                                                ------       -------   ------        -------
                                                          (Dollars in Thousands)
<S>                                          <C>             <C>     <C>           <C>
Type of Loans:
Real Estate Loans:
  One- to four-family(1) ................... $  59,674         53.45% $  59,359       58.91%
  Non-residential ..........................    23,216         20.80     15,581       15.46
  Construction .............................     2,073          1.86      5,017        4.98
  Multi-family .............................     2,689          2.41      1,786        1.77
                                             ---------    ----------   ---------   --------
Total real estate loans ....................    87,652         78.52     81,743       81.12
                                             ---------    ----------   ---------   --------
Consumer Loans:
  Automobile ...............................     8,648          7.74      7,659        7.60
  Other ....................................     2,344          2.10      2,347        2.33
  Share ....................................     1,360          1.22      1,297        1.29
  Home improvement .........................     1,195          1.07      1,001         .99
  Education ................................        41           .04         42         .04
                                             ---------    ----------   ---------   --------
Total consumer loans .......................    13,588         12.17     12,346       12.25
                                             ---------    ----------   ---------   --------

Commercial loans ...........................    10,388          9.31      6,676        6.63
                                             ---------    ----------  ---------   ---------
     Total loans ...........................   111,628        100.00%   100,765      100.00%
                                                          ==========              =========

Less:
  Loans in process .........................    (1,007)                  (3,061)
  Deferred loan origination fees and costs..      (139)                    (181)
  Allowance for loan losses ................      (582)                    (478)
                                             ---------                 --------
     Total loans, net ...................... $ 109,900                 $ 97,045
                                             =========                 ========
</TABLE>

         -------------------------------

         (1)      At June 30, 1998, includes loans held for sale of $1,455.

                                       4
<PAGE>






Loan Maturity Tables

         The  following  table sets forth the  estimated  maturity of the Bank's
loan portfolio,  including loans held for sale, at June 30, 1999. The table does
not include  prepayments or scheduled principal  repayments.  All mortgage loans
are shown as maturing based on contractual maturities.
<TABLE>
<CAPTION>
                                                     Due after
                                      Due within     1 through      Due after
                                        1 year        5 years        5 years        Total
                                        ------        -------        -------        -----
                                                         (In Thousands)

<S>                                     <C>            <C>          <C>          <C>
One- to four-family real estate...       $  5,841       $  2,519       $ 51,314    $  59,674
Non-residential real estate.......            121          1,076         22,019       23,216
Construction......................          2,073             --             --        2,073
Multi-family real estate..........             14            125          2,550        2,689
Consumer..........................            862         10,795          1,931       13,588
Commercial........................          2,134          3,147          5,107       10,388
                                          -------        -------        -------     --------
Total.............................       $ 11,045       $ 17,662       $ 82,921    $ 111,628
                                          =======        =======        =======     ========
</TABLE>

         The following table sets forth the dollar amount of all loans due after
June 30,  2000,  which have fixed  interest  rates and  floating  or  adjustable
interest rates.
<TABLE>
<CAPTION>
                                                             Floating or
                                          Fixed Rates     Adjustable Rates             Total
                                          -----------     ----------------             -----
                                                            (In Thousands)
<S>                                            <C>                <C>               <C>
     One- to four-family real estate...         $ 22,532           $ 31,301          $  53,833
     Non-residential real estate.......           12,240             10,855             23,095
     Construction......................               --                 --                 --
     Multi-family......................            1,418              1,258              2,676
     Consumer..........................           12,726                 --             12,726
     Commercial........................            2,246              6,007              8,253
                                                --------           --------           --------
         Total.........................         $ 51,162           $ 49,421          $ 100,583
                                                 =======            =======           ========
</TABLE>

         One- to  Four-Family  Residential  Loans.  The Bank's  primary  lending
activity consists of the origination of one- to four-family residential mortgage
loans secured by property located in the Bank's primary market areas. The Bank's
one- to four-family  residential  loan portfolio also includes  second  mortgage
loans and home equity  loans  secured by second  mortgages.  The Bank  generally
originates  owner-occupied  one- to  four-family  residential  mortgage loans in
amounts up to 80% of the lesser of the  appraised  value or selling price of the
mortgaged property without requiring mortgage insurance. The Bank will originate
a mortgage loan in an amount up to 95% of the lesser of the  appraised  value or
selling price of a mortgaged property,  however,  mortgage insurance is required
for the amount in excess of 80% of such  value.  Non-owner-occupied  residential
mortgage loans are originated up to 80% of the lesser of the appraised  value or
selling price of the property.  The Bank also originates  construction permanent
loans on one- to four-family  residences.  The Bank retains most of the mortgage
loans  that it  originates.  Adjustable-rate  mortgage  loans,  which can adjust
annually or every three or five years over the life of the loan depending on the
type of the loan, can have  maturities of up to 30 years.  Fixed-rate  loans can
have maturities of up to 30 years depending on the type of the loan.

         For all adjustable-rate  mortgage loans, the Bank requires the borrower
to qualify  at the  initial  rate.  The Bank's  adjustable-rate  mortgage  loans
provide for periodic  interest rate adjustments of plus or minus 1% to 2% with a
maximum  adjustment over the term of the loan as set forth in the loan agreement
and

                                       5
<PAGE>

usually  ranges from 6% to 7% above the initial  interest rate  depending on the
terms of the loan.  Adjustable-rate  mortgage  loans reprice  every year,  every
three  years or every five  years,  and provide for terms of up to 30 years with
most  loans  having  terms  of  between  15  and  30  years.   The  Bank  offers
adjustable-rate  loans with initial  interest  rates set below the fully indexed
rate.

         The Bank offers  adjustable-rate  mortgage  loans indexed to the weekly
average of the one year U.S.  Treasury bill.  Interest rates charged on mortgage
loans are competitively priced based on market conditions and the Bank's cost of
funds. Generally, the Bank's standard underwriting guidelines for mortgage loans
conform to the Federal Home Loan Mortgage  Corporation  ("FHLMC") guidelines and
most of the Bank's loans are salable in the secondary  market. It is the current
policy of the Bank to remain a portfolio lender for its adjustable rate loans.

         Adjustable-rate  mortgage  loans  decrease  the risks  associated  with
changes in interest rates by more closely reflecting these changes,  but involve
other risks because as interest rates increase,  the underlying  payments by the
borrower increase,  thus increasing the potential for default. At the same time,
the  marketability  of the underlying  collateral  may be adversely  affected by
higher interest  rates.  Upward  adjustment of the contractual  interest rate is
also limited by the adjustable-rate mortgage loan documents, thereby potentially
limiting their  effectiveness  during periods of rising  interest  rates.  These
risks have not had an adverse effect on the Bank.

         Non-Residential  Real Estate Loans.  Non-residential  real estate loans
consist  of  loans  made  for the  purpose  of  purchasing  or  refinancing  the
non-residential  real estate used as  collateral  and includes  loans secured by
mixed  residential and commercial use property,  professional  office buildings,
churches  and  restaurants.  Loans  secured by  non-residential  property may be
originated in amounts up to 80% of the appraised  value for a maximum term of 20
years.   Non-residential  lending  entails  significant  additional  risks  when
compared   with  one-  to   four-family   residential   lending.   For  example,
non-residential loans typically involve larger loan balances to single borrowers
or groups of related  borrowers,  the payment experience on such loans typically
is dependent on the  successful  operation of the project and these risks can be
significantly  impacted by the cash flow of the  borrowers and supply and demand
conditions in the market for commercial office, retail and warehouse space.

         Construction Loans. The Bank makes construction loans primarily for the
construction of single-family  dwellings.  Approximately 90% of these loans were
made to persons who are  constructing  properties  for the purpose of  occupying
them. Such loans may also be made to builders to construct  properties for sale.
Loans made to builders are generally "pure construction" loans which require the
payment  of  interest  at fixed  rates  during the  construction  period and the
payment of the principal in full at the end of the construction  period. At June
30, 1999, such loans amounted to $2,073,000.  Loans made to individual  property
owners are either  pure  construction  loans or  "construction-permanent"  loans
which  generally  provide for the payment of interest only during a construction
period, after which the loans convert to a permanent loan at fixed or adjustable
interest  rates having terms  similar to other one- to  four-family  residential
loans. At June 30, 1999, such loans amounted to $1,923,000.

         Construction  loans made to builders  who are building to resell have a
maximum  loan-to-value  ratio of 80% of the  appraised  value  of the  property.
Construction  loans to  individuals  who intend to occupy the finished  premises
generally have a maximum loan-to-value ratio of 80%.

         Consumer  Loans.  The Bank offers  consumer loans in order to provide a
wider range of financial services to its customers. Federal savings associations
are  permitted to make secured and unsecured  consumer  loans up to 35% of their
assets. In addition,  savings  associations have lending authority above

                                       6
<PAGE>

the 35% limitation for certain consumer loans, such as home improvement,  credit
card, education, savings account or passbook loans.

         The Bank  originates  automobile  loans with terms of up to 6 years for
new  automobiles  and up to 5 1/2  years  for  used  automobiles.  Most of these
automobile  loans are originated  directly by the Bank. The Bank also originates
automobile  loans  indirectly by purchasing such loans from  automobile  dealers
with whom the Bank provides floor plan financing.  Indirect automobile loans are
underwritten by the Bank and a fee is remitted to the automobile dealer upon the
successful underwriting and closing of the loan. The fee is rebated to the Bank,
on a pro rata basis, if the loan is repaid within the first six months. The Bank
generally does not have recourse against the automobile dealer in the event of a
default by the  borrower.  Each  indirect  auto loan is originated in accordance
with its underwriting standards and procedures, which are intended to assess the
applicant's ability to repay the amounts due on the loan and the adequacy of the
financed  vehicle  as  collateral.  At June 30,  1999,  the  Bank  had  indirect
automobile  loans  of  $3,010,000,  or,  22.15%,  of  its  total  consumer  loan
portfolio.

         Commercial Loans.  Commercial loans,  other than commercial real estate
loans, consist of, among other things, commercial lines of credit (which include
automobile  floor plan lines of credit),  commercial  vehicle loans, and working
capital loans and are typically  secured by residential or commercial  property,
receivables or inventory, vehicles comprising the automobile floor plan, or some
other form of collateral. Floor plan financing involves continuing financing for
an automobile  dealer that is secured by automobiles  physically  located on the
dealer's lot. The Bank holds the title to the automobiles during the pendency of
the sale. Floor plan financing  typically  involves high loan origination volume
and repayment within 90 days of origination.

         Loan Approval  Authority  and  Underwriting.  The Bank has  established
various lending limits for its officers and maintains a Loan Committee. A report
of all mortgage loans originated is presented to the Board of Directors monthly.
The President  and Senior Vice  President of the Bank each have the authority to
approve  applications  for mortgage  loans up to $100,000,  consumer loans up to
$40,000 for secured  loans and up to $10,000 for  unsecured  loans.  Eight other
loan officers have authority to approve  secured credit  applications in varying
amounts up to $35,000.

         The loan committee  considers all  applications for commercial loans up
to $250,000,  whether  secured or unsecured,  and all consumer  loans in amounts
above the lending limit  established  above. All loans in excess of those limits
set for the loan committee  require the consideration and approval of the entire
Board of Directors.

         Upon  receipt  of a  completed  loan  application  from  a  prospective
borrower,  a credit  report is  generally  ordered,  income  and  certain  other
information is verified and, if necessary,  additional financial  information is
requested.  An  appraisal  from a  licensed  fee  appraiser  of the real  estate
intended  to be used  as  security  for  the  proposed  loan  is  obtained.  For
construction/permanent  loans,  funds advanced during the construction phase are
held in a  loan-in-process  account and disbursed  based upon various  stages of
completion in accordance  with the results of inspection  reports that are based
upon physical inspection of the construction by a loan officer.  For real estate
loans,  each title is reviewed by the attorney  for the Bank to  determine  that
title is clear.  Historically,  the Bank has not required title insurance except
in those  instances  where the  attorney  has seen a need for  title  insurance.
Borrowers must also obtain fire and casualty insurance.  Flood insurance is also
required for loans on property that is located in a flood zone.

         Loan  Commitments.  The Bank issues written  commitments to prospective
borrowers on all approved  mortgage loans which generally  expire within 30 days
of the date of issuance. The Bank charges

                                       7
<PAGE>

no  commitment  fees or points to secure  commitments.  A customer may lock in a
fixed rate for 30 days by depositing a nonrefundable  fee with the Bank. In some
instances, after a review of the rate, terms, and circumstances, commitments may
be renewed or extended  beyond the 30-day limit.  At June 30, 1999, the Bank had
$2,104,000  of  outstanding  commitments  to  originate  loans and  $857,000  in
undisbursed funds related to construction loans.

         Loans to One  Borrower.  A savings  association  may not make a loan or
extend  credit to a single or related group of borrowers in excess of 15% of the
associations's unimpaired capital and surplus. An additional amount may be lent,
equal to 10% of the unimpaired capital and surplus, under certain circumstances.

Non-Performing and Problem Assets

         Loan Delinquencies.  The Bank's collection procedures provide that when
a mortgage loan is 30 days past due, a delinquent notice is sent to the borrower
and a late charge is imposed in  accordance  with the  mortgage or Deed of Trust
agreement.  If payment is still  delinquent  after 90 days,  the  borrower  will
receive a notice of default establishing a date by which the borrower must bring
the account current or foreclosure proceedings will be instituted.  Late charges
are also imposed in accordance with the mortgage or Deed of Trust agreement.  If
the delinquency continues,  similar subsequent efforts are made to eliminate the
delinquency.  If the loan continues in a delinquent  status for 90 days past due
and no  repayment  plan is in effect,  the account is turned over to an attorney
for  foreclosure.  Management  meets  regularly  to determine  when  foreclosure
proceedings  should be initiated and the borrower is notified  when  foreclosure
has been commenced.

         Loans are  reviewed  on a monthly  basis and are placed on  non-accrual
status when considered  doubtful of collection by management.  Generally,  loans
past due 90 days or more as to  principal  or  interest  and,  in the opinion of
management,  are not  adequately  secured to insure the collection of the entire
outstanding  balance  of the loan  including  accrued  interest  are  placed  on
non-accrual status.  Interest accrued and unpaid at the time a loan is placed on
non-accrual status is charged against interest income.  Subsequent cash payments
are applied to interest  income.  Loans are returned to accrual  status when, in
management's  judgment, 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).


                                       8
<PAGE>

         Non-Performing  Assets.  The  following  table sets  forth  information
regarding  non-accrual  loans,  real estate owned, and certain other repossessed
assets and loans. As of the dates indicated,  the Bank had no loans  categorized
as troubled debt restructuring within the meaning of SFAS 15.


                                                             At June 30,
                                                          ----------------
                                                           1999      1998
                                                           ----      ----
                                                       (Dollars in Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
  One- to four-family.................................     $ 90      $185
  Multi-family........................................        2       --
  Non-residential.....................................      317       --
  Construction........................................       47       --
Consumer..............................................      --          2
Commercial............................................      --         96
                                                           ----      ----
    Total non-accrual loans...........................      456       283
                                                           ----      ----
Accruing loans greater than 90 days past due:
Mortgage loans:
    One- to four-family...............................      --        --
    Multi-family......................................      --        --
    Commercial........................................      --        --
    Construction......................................      --        --
Consumer..............................................      220       169
Commercial............................................       89       --
                                                           ----      ----
Total accruing loans greater than 90 days past due....      309       169
                                                           ----      ----
Total non-performing loans............................      765       452
Real estate acquired in settlement of loans...........       50        76
Other non-performing assets...........................        9        13
                                                           ----      ----
Total non-performing assets...........................     $824      $541
                                                           ====      ====
Total non-performing loans to total loans.............      .69%      .45%
                                                           ====      ====
Total non-performing loans to total assets............      .59%      .40%
                                                           ====      ====
Total non-performing assets to total assets...........      .63%      .47%
                                                           ====      ====

         Interest income that would have been recorded on loans accounted for on
a non-accrual basis was not material for the year ended June 30, 1999.

         Classified Assets. OTS regulations provide for a classification  system
for problem assets of insured  institutions.  Under this classification  system,
problem  assets  of  insured   institutions  are  classified  as  "substandard,"
"doubtful," or "loss." An asset is considered  substandard if it is inadequately
protected by the current net worth and paying  capacity of the obligor or of the
collateral  pledged,  if any.  Substandard assets include those characterized by
the "distinct possibility" that the insured institution will sustain "some loss"
if the deficiencies are not corrected. Assets classified as doubtful have all of
the  weaknesses  inherent in those  classified  as  substandard,  with the added
characteristic  that the weaknesses  present make  "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable  and  improbable."  Assets  classified as loss are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without the  establishment  of a specific loss reserve is not

                                       9
<PAGE>

warranted.  Assets may be  designated  "special  mention"  because of  potential
weakness  that  does  not  currently  warrant   classification  in  one  of  the
aforementioned categories.

         When  an  insured  institution  classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. An institution's  determination as to the classification of its
assets and the amount of its  valuation  allowances  is subject to review by the
OTS, which may order the  establishment  of additional  general or specific loss
allowances.  A portion of general loss allowances  established to cover possible
losses  related to assets  classified as substandard or doubtful may be included
in determining an institution's  regulatory  capital,  while specific  valuation
allowances for loan losses generally do not qualify as regulatory capital.

         The  following  table  sets  forth  the  Bank's  classified  assets  in
accordance with the Bank's classification system:

                                                      At June 30, 1999
                                                      ----------------
                                                      (In Thousands)
                            Special Mention.........     $   201
                            Substandard.............       1,049
                            Doubtful................          22
                            Loss....................         --
                                                         -------
                            Total...................     $ 1,272
                                                         =======

         Real Estate  Acquired in Settlement of Loans.  Real estate  acquired by
the  Bank as a  result  of  foreclosure  or by deed  in lieu of  foreclosure  is
classified as real estate owned until it is sold. When property is acquired,  it
is recorded at the fair value at the date of foreclosure less estimated costs of
disposition.

         Allowances for Loan Losses.  It is  management's  policy to provide for
losses on unidentified loans in its loan portfolio.  A provision for loan losses
is charged to operations based on management's evaluation of the losses that may
be incurred in the Bank's loan  portfolio.  Such  evaluation,  which  includes a
review of all loans of which full  collectibility  of interest and principal may
not be reasonably assured, considers the Bank's past loan loss experience, known
and inherent  risks in the  portfolio,  adverse  situations  that may affect the
borrower's ability to repay, estimated value of any underlying  collateral,  any
existing guarantees,  past performance of the loan, available  documentation for
the loan, legal impediments to collection,  financial condition of the borrower,
and current economic conditions.

         Management  will  continue  to review  the  entire  loan  portfolio  to
determine the extent, if any, to which further additional loss provisions may be
deemed  necessary.  There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional provisions for losses will not be required.


                                      10
<PAGE>

         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates indicated:


<TABLE>
<CAPTION>
                                                                      Year Ended June 30,
                                                                      -------------------
                                                                       1999          1998
                                                                       ----          ----
                                                                    Dollars in Thousands)

<S>                                                                <C>           <C>
Total loans outstanding............................................ $ 111,628     $ 100,765
                                                                    =========     =========
Average loans outstanding..........................................   103,764     $  93,708
                                                                    =========     =========

Allowance balance (at beginning of period)......................... $     478     $     368
Provision:
  Real estate......................................................        70           178
  Consumer.........................................................        24            40
  Commercial.......................................................        56            36
Charge-offs:
  Real estate......................................................        (8)           (6)
  Consumer.........................................................       (20)          (34)
  Commercial.......................................................       (20)         (118)
Recoveries:
  Real estate......................................................        --            --
  Consumer.........................................................         2            14
  Commercial.......................................................        --            --
                                                                    ---------     ---------
Allowance balance (at end of period)............................... $     582     $     478
                                                                    =========     =========

Allowance for loan losses as a percent of total loans outstanding..       .52%          .47%
                                                                    =========     =========
Net loans charged off as a percent of average loans outstanding....       .04%          .17%
                                                                    =========     =========
</TABLE>


                                       11
<PAGE>



Analysis of the Allowance for Loan Losses

         The  following  table sets forth the  allocation  of the  allowance  by
category,  which  management  believes can be allocated  only on an  approximate
basis.  The  allocation  of the  allowance to each  category is not  necessarily
indicative  of future loss and does not  restrict  the use of the  allowance  to
absorb losses in any category.

                                              June 30,
                           -------------------------------------------------
                                 1999                        1998
                           ---------------------   -------------------------
                                     Percent of                  Percent of
                                      Loans in                    Loans in
                                        Each                        Each
                                      Category                    Category
                                      to Total                    to Total
                            Amount     Loans            Amount     Loans
                            ------     -----            ------     -----
                                        (Dollars in Thousands)
Types of Loans
Real Estate:
  One- to four-family......  $  93     53.45%            $ 128     58.91%
  Non-residential..........    230     20.80                89     15.46
  Multi-family.............     16      2.41                11      1.77
  Construction.............     --      1.86                --      4.98
Consumer...................    115     12.17               102     12.25
Commercial.................    128      9.31               148      6.63
                              ----      ----               ---      ----
     Total.................  $ 582    100.00%            $ 478    100.00%
                              ====    ======             =====    ======

Investment Activities and Mortgage-Backed Securities

         General.  The Bank is required under federal  regulations to maintain a
minimum  amount of liquid  assets which may be invested in specified  short term
securities  and certain other  investments.  The Bank has maintained a liquidity
portfolio  in  excess  of  regulatory  requirements.  Liquidity  levels  may  be
increased or decreased depending upon the yields on investment  alternatives and
upon management's judgment as to the attractiveness of the yields then available
in relation to other  opportunities  and its expectation of future yield levels,
as well as management's  projections as to the short term demand for funds to be
used in the Bank's loan  origination and other  activities.  The Bank classifies
its investments as securities available for sale or investments  securities held
to  maturity in  accordance  with SFAS No.  115.  At June 30,  1999,  the Bank's
investment  portfolio  policy allowed  investments  in instruments  such as U.S.
Treasury  obligations,   U.S.  federal  agency  or  federally  sponsored  agency
obligations,   municipal  obligations,   mortgage-backed  securities,   banker's
acceptances,  certificates of deposit,  federal funds,  including FHLB overnight
and term  deposits (up to six months),  as well as  investment  grade  corporate
bonds,  commercial paper and the mortgage  derivative  products described below.
The Board of Directors may authorize additional investments.

         The Bank's securities available for sale and investment securities held
to maturity portfolios at June 30, 1999 did not contain securities of any issuer
with an aggregate  book value in excess of 10% of the Bank's  equity,  excluding
those issued by the United States Government or its agencies.

                                       12
<PAGE>

         Mortgage-Backed  Securities. To supplement lending activities, the Bank
has  invested  in  residential   mortgage-backed   securities.   Mortgage-backed
securities can serve as collateral for borrowings and, through repayments,  as a
source  of  liquidity.  Mortgage-backed  securities  represent  a  participation
interest in a pool of  single-family  or other type of mortgages,  the principal
and interest payments on which are passed from the mortgage originators, through
intermediaries (generally  quasi-governmental  agencies) that pool and repackage
the participation interests in the form of securities,  to investors such as the
Bank. Such quasi-governmental agencies, which guarantee the payment of principal
and  interest  to  investors,  primarily  include  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC"),  Government National Mortgage Association ("GNMA"),  and
Federal National Mortgage Association ("FNMA").

         The  Bank's  mortgage-backed  securities  were  classified  as  held to
maturity  and  available  for sale at June 30, 1999 and were all issued by GNMA,
FNMA or FHLMC, representing participating interests in direct pass-through pools
of  long-term  mortgage  loans  originated  and  serviced  by the issuers of the
securities.  Expected maturities will differ from contractual  maturities due to
scheduled  repayments and because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.

         Mortgage-backed  securities  typically are issued with stated principal
amounts and the securities are backed by pools of mortgages that have loans with
interest  rates  that  are  within  a range  and have  varying  maturities.  The
underlying   pool  of  mortgages  can  be  composed  of  either   fixed-rate  or
adjustable-rate  mortgage  loans.   Mortgage-backed   securities  are  generally
referred to as mortgage participation certificates or pass-through certificates.
As a result,  the interest rate risk  characteristics  of the underlying pool of
mortgages (i.e., fixed-rate or adjustable-rate), as well as prepayment risk, are
passed on to the certificate holder. The life of a mortgage-backed  pass-through
security  is  equal  to the life of the  underlying  mortgages.  Mortgage-backed
securities issued by FHLMC, FNMA and GNMA make up a majority of the pass-through
certificates market.

Investment Activities

         Investment Portfolio. The following table sets forth the carrying value
of the Bank's securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                                         At June 30,
                                                                                   -----------------------
                                                                                      1999          1998
                                                                                   --------     ----------
                                                                                        (In Thousands)
<S>                                                                               <C>           <C>
          Securities held to maturity:
            Interest-bearing deposits in other financial institutions...........   $ 2,964       $ 7,749
            U.S. government agency securities...................................     1,000         1,746
            FHLB stock..........................................................       630           622
            Mortgage-backed securities..........................................     2,473           339
                                                                                    ------        ------
              Total securities held to maturity.................................     7,067        10,456
                                                                                    ------        ------
          Securities available for sale:
            U.S. government and agency securities...............................     4,361            --
            Common stock........................................................        89           221
            Money fund securities...............................................        31            43
            Mortgage-backed securities..........................................     1,833            --
                                                                                    ------        ------
              Total securities available for sale...............................     6,314           264
                                                                                    ------        ------
          Total investment and mortgage-backed securities.......................   $13,381       $10,720
                                                                                    ======        ======
</TABLE>

                                       13
<PAGE>



         The  following  table sets forth  information  regarding  the scheduled
maturities,  carrying  values,  market value and weighted average yields for the
Bank's  investment  securities  portfolio at June 30, 1999. The following  table
does not take into  consideration  the effects of  scheduled  repayments  or the
effects of possible prepayments.

<TABLE>
<CAPTION>
                                                                      At June 30, 1999
                              ------------------------------------------------------------------------------------------------------
                                 Less than           1 to            Over 5 to           Over 10                 Total
                                  1 year            5 years          10 years             years                Securities
                              ----------------  ---------------   --------------    -----------------   ----------------------------
                              Carrying Average  Carrying Average  Carrying Average   Carrying Average   Carrying           Market
                               Value    Yield    Value    Yield    Value    Yield     Value    Yield      Value   Yield     Value
                               -----    -----    -----    -----    -----    -----     -----    -----      -----   -----     -----
                                                                     (Dollars in Thousands)
<S>                            <C>        <C>    <C>      <C>    <C>        <C>     <C>        <C>     <C>        <C>    <C>
Securities held to maturity:
  Interest-bearing deposits
    in other financial
    institutions..............  $2,964     5.24%  $  --       --% $   --       --%   $   --       --%   $ 2,964    5.24%  $ 2,964
  U.S. government and
    agency securities.........      --       --      --       --     500     6.33       500     6.74      1,000    6.54       971
  FHLB stock(1)...............     630     6.50      --       --      --       --        --       --        630    6.50       630
  Mortgage-backed securities..      --       --      --       --      --       --     2,473     6.73      2,473    6.73     2,457
                                 -----             ----             ----              -----               -----             -----
      Total securities held
        to maturity...........   3,594     6.48      --       --     500     6.33     2,973     6.73      7,067    6.07     7,022
                                 -----     ----    ----     ----     ---     ----     -----     ----      -----    ----     -----

Securities available for sale:
  U.S. government and
    agency securities.........      --       --   1,470     5.81   1,460     6.50     1,431     8.68      4,361    6.53     4,361
  Common stock................      89     1.40      --       --      --       --        --       --         89    1.40        89
  Money fund securities.......      --       --      --       --      31     7.50        --       --         31    7.50        31
  Mortgage-backed securities..      --       --      --       --      --       --     1,833     6.44      1,833    6.44     1,833
                                 -----            -----            -----              -----               -----             -----
      Total securities
        available for sale....      89     1.40   1,470     5.81   1,491     6.52     3,264     6.55      6,314    6.44     6,314
                                 -----     ----   -----     ----   -----     ----     -----     ----      -----    ----     -----

Total investment and
  mortgage-backed securities..  $3,683     5.36% $1,470     5.81% $1,991     6.47%   $6,237     6.84%   $13,381    6.25%  $13,336
                                 =====     ====   =====     ====   =====     ====     =====     ====     ======    ====    ======

</TABLE>
----------------------------
(1)  Recorded at cost.


                                       14
<PAGE>



Sources of Funds

         General. Deposits are the major external source of the Bank's funds for
lending and other investment purposes.  The Bank derives funds from amortization
and prepayment of loans and, to a much lesser  extent,  maturities of investment
securities,  borrowings,  mortgage-backed  securities and operations.  Scheduled
loan principal repayments are a relatively stable source of funds, while deposit
inflows and  outflows  and loan  prepayments  are  significantly  influenced  by
general interest rates and market conditions.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from within the Bank's  primary  market area through the offering of a selection
of  deposit  instruments  including  regular  savings  accounts,   money  market
accounts, and term certificate accounts. Deposit account terms vary according to
the minimum balance required,  the time period the funds must remain on deposit,
and the interest rate,  among other  factors.  At June 30, 1999, the Bank had no
brokered accounts.

         Time Deposits.  The following  table indicates the amount of the Bank's
time deposits of $100,000 or more by time  remaining  until  maturity as of June
30, 1999.

                       Maturity Period                    Time Deposits
                       ---------------                    -------------
                                                         (In Thousands)

                Within three months..................        $   700
                More than three through six months...          1,032
                More than six through nine months....          1,885
                Over nine months.....................          3,641
                                                             -------
                Total................................        $ 7,258
                                                              ======

Borrowings

         The Bank may obtain  advances from the FHLB of Pittsburgh to supplement
its supply of lendable funds. Advances from the FHLB of Pittsburgh are typically
secured by a pledge of the Bank's stock in the FHLB of Pittsburgh  and a portion
of the Bank's first  mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities.  The Bank, if the need arises,  may also access the Federal  Reserve
Bank  discount  window to  supplement  its supply of lendable  funds and to meet
deposit withdrawal requirements.

Employees

         At June 30, 1999 the Bank had 54 full-time  and 4 part-time  employees.
None of the Bank's employees are represented by a collective  bargaining  group.
The Bank believes that its relationship with its employees is good.

Regulation

         Set forth below is a brief description of certain laws which related to
the regulation of the Company and the Bank. The description  does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.


                                       15
<PAGE>

Company Regulation

         General.  The  Company is a unitary  savings and loan  holding  company
subject to regulatory  oversight by the OTS. As such, the Company is required to
register  and  file  reports  with  the OTS and is  subject  to  regulation  and
examination by the OTS. In addition,  the OTS has enforcement authority over the
Company and its non-savings association  subsidiaries,  should such subsidiaries
be formed,  which also permits the OTS to restrict or prohibit  activities  that
are determined to be a serious risk to the subsidiary savings association.  This
regulation  and  oversight  is  intended  primarily  for the  protection  of the
depositors of the Bank and not for the benefit of stockholders of the Company.

         Qualified  Thrift  Lender Test.  As a unitary  savings and loan holding
company, the Company generally is not subject to activity restrictions, provided
the Bank  satisfies  the Qualified  Thrift  Lender  ("QTL") test. If the Company
acquires  control of another savings  association as a separate  subsidiary,  it
would become a multiple savings and loan holding company,  and the activities of
the  Company  and any of its  subsidiaries  (other  than the  Bank or any  other
SAIF-insured   savings   association)   would  become  subject  to  restrictions
applicable to bank holding  companies unless such other  associations  each also
qualify  as a QTL  and  were  acquired  in a  supervisory  acquisition.
See  "-Regulation of the Bank - Qualified Thrift Lender Test."

Regulation of the Bank

         General. As a federally  chartered,  SAIF-insured  savings association,
the Bank is subject to  extensive  regulation  by the OTS and the FDIC.  Lending
activities and other  investments must comply with various federal statutory and
regulatory   requirements.   The  Bank  is  also  subject  to  certain   reserve
requirements promulgated by the Federal Reserve Board.

         The OTS, in conjunction with the FDIC,  regularly examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law,  especially in such matters as the ownership of savings  accounts
and the form and content of the Bank's mortgage documents.

         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.

         Insurance of Deposit  Accounts.  The deposit  accounts held by the Bank
are insured by the SAIF to a maximum of  $100,000  for each  insured  member (as
defined by law and  regulation).  Insurance of deposits may be terminated by the
FDIC  upon a finding  that the  institution  has  engaged  in unsafe or  unsound
practices,  is in an unsafe or unsound  condition to continue  operations or has
violated any applicable law, regulation, rule, order or condition imposed by the
FDIC or the institution's primary regulator.


                                       16
<PAGE>

         A member of the SAIF pays an annual insurance premium to the FDIC of at
least 0.064% of total deposits of that member.  The FDIC also maintains  another
insurance  fund,  the Bank  Insurance  Fund  ("BIF"),  which  primarily  insures
commercial bank deposits. Most members of BIF pay a lower premium to the FDIC.

         After 1999, assessments for BIF and SAIF members should be the same. It
is expected that these continuing assessments for both SAIF and BIF members will
be used to repay outstanding Financing Corporation bond obligations.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted  assets,  (2) a leverage ratio (core capital) equal to
at least 4% of total adjusted assets (3% for institutions  receiving the highest
rating on the CAMEL financial  institution rating system),  and (3) a risk-based
capital requirement equal to 8.0% of total risk-weighted assets.

         Dividend and Other Capital  Distribution  Limitations.  OTS regulations
require  the  Bank  to  give  the OTS 30 days  advance  notice  of any  proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory  powers to prohibit  the payment of  dividends  to the  Company.  In
addition,  the Bank may not declare or pay a cash  dividend on its capital stock
if the dividend  would (1) reduce the  regulatory  capital of the Bank below the
amount required for the liquidation  account  established in connection with the
conversion  from mutual to stock form or (2) reduce the amount of capital of the
Bank below the amounts required in accordance with other OTS regulations.

         Qualified  Thrift  Lender Test.  Savings  institutions  must meet a QTL
test. If the Bank maintains an appropriate level of Qualified Thrift Investments
(primarily  residential  mortgages and related  investments,  including  certain
mortgage-related  securities) ("QTIs") and otherwise qualifies as a QTL, it will
continue to enjoy full borrowing  privileges  from the FHLB of  Pittsburgh.  The
required  percentage of QTIs is 65% of portfolio  assets  (defined as all assets
minus  intangible  assets,  property used by the  institution  in conducting its
business and liquid  assets equal to 10% of total  assets).  Certain  assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying  QTIs. An  association  must be in compliance  with the QTL test on a
monthly basis in nine out of every 12 months.  As of June 30, 1999, the Bank was
in compliance  with its QTL  requirement  with 74.26% of its assets  invested in
QTIs.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Pittsburgh,  which  is  one of 12  regional  FHLBs  that  administers  the  home
financing credit function of savings associations. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies and procedures established by the Board of Directors of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Pittsburgh  in an amount equal to at least 1% of its  aggregate  unpaid
residential mortgage loans, home purchase contracts or similar obligations or 5%
of its  outstanding  borrowings to the FHLB of  Pittsburgh,  at the beginning of
each year.

         Liquidity  Requirements.  All  savings  associations  are  required  to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity  requirement may

                                       17
<PAGE>

vary from time to time (between 4% and 10%) depending  upon economic  conditions
and savings  flows of all savings  associations.  At June 30,  1999,  the Bank's
actual liquid asset ratio was 13.69%.

         Federal  Reserve  System.   The  Federal  Reserve  Board  requires  all
depository  institutions to maintain  non-interest bearing reserves at specified
levels against their transaction  accounts (primarily  checking,  NOW, and Super
NOW checking accounts) and non-personal time deposits.  The balances  maintained
to meet the reserve  requirements  imposed by the Federal  Reserve  Board may be
used to satisfy the liquidity  requirements that are imposed by the OTS. At June
30,  1999,  the  Bank  was  in  compliance  with  these  Federal  Reserve  Board
requirements.

Item 2.  Description of Property
--------------------------------

         (a)      Properties.

                  The Bank operates from its main office and two branch office.
<TABLE>
<CAPTION>

                                                                                 Year Leased
                  Location                                Leased or Owned        or Acquired
                  --------                                ---------------        -----------

<S>                 <C>                                  <C>                          <C>
                    1015 Commerce Street                  Owned                        1984
                    Wellsburg, West Virginia

                  OFFICES:
                    1409 Main Street                      Leased (1)                   1996
                    Follansbee, West Virginia

                    805 Main Street
                    Wintersville, Ohio                    Leased (2)                   1997
</TABLE>

                  -----------------------
                  (1)      The Bank holds a 40 year lease on the land upon which
                           its  branch  office  is  located.  The Bank  owns the
                           branch building. In addition,  the Bank owns property
                           at 901 Main Street, Follansbee,  West Virginia, which
                           was formerly a branch office.

                  (2)      The Wintersville office opened June 8, 1998. The Bank
                           holds a ten year  lease  (with two five year  renewal
                           options) on the land upon which its branch  office is
                           located. The Bank owns the branch building.

         (b) Investment  Policies.  See "Item 1.  Business"  above for a general
description  of the Bank's  investment  policies and any  regulatory or Board of
Directors' percentage of assets limitations  regarding certain investments.  The
Bank's  investments are primarily  acquired to produce  income,  and to a lesser
extent, possible capital gain.

                  (1)    Investments in Real Estate or Interests in Real Estate.
See "Item 1.  Business - Lending  Activities  and - Regulation of the Bank," and
"Item 2. Description of Property."

                  (2)    Investments in Real Estate Mortgages.  See "Item 1.
Business - Lending Activities and - Regulation of the Bank."

                  (3)  Investments  in  Securities  of or  Interests  in Persons
Primarily  Engaged in Real Estate  Activities.  See "Item 1.  Business - Lending
Activities and - Regulation of the Bank."


                                       18
<PAGE>

         (c)     Description of Real Estate and Operating Data.  Not Applicable.

Item 3.  Legal Proceedings
--------------------------

         There are various  claims and lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
-----------------------------------------------------------------

         The  information  contained under the section  captioned  "Stock Market
Information" of the Company's  Annual Report to stockholders for the fiscal year
ended June 30, 1999 (the "Annual Report") is incorporated herein by reference.

Item 6.  Management's Discussion and Analysis or Plan of Operation
------------------------------------------------------------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item 7.  Financial Statements
-----------------------------

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.

Item 8.  Changes  in  and  Disagreements  with  Accountants  On  Accounting  and
         Financial Disclosure.
--------------------------------------------------------------------------------

         Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
        with Section 16(a) of the Exchange Act.
--------------------------------------------------------------------------------

         The  information  required  under this item is  incorporated  herein by
reference  to the  Proxy  Statement  for the 1999  Annual  Meeting  (the  "Proxy
Statement")  contained under the sections  captioned  "Section 16(a)  Beneficial
Ownership  Reporting  Compliance,"  "Proposal I - Election of Directors," and "-
Biographical Information."


                                       19
<PAGE>

Item 10.  Executive Compensation
--------------------------------

         The  information  required by this item is incorporated by reference to
the  Proxy  Statement  contained  under  the  section  captioned  "Director  and
Executive Officer Compensation."

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners
         (b)      Security Ownership of Management

                  The information required by these items is incorporated herein
                  by  reference  to the  Proxy  Statement  contained  under  the
                  sections  captioned  "Principal  Holders"  and  "Proposal  I -
                  Election of Directors."

         (c)      Management of the Company knows of no arrangements,  including
                  any pledge by any person of  securities  of the  Company,  the
                  operation of which may at a subsequent date result in a change
                  in control of the Company.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference to the Proxy Statement  contained under the section captioned "Certain
Relationships and Related Transactions."

Item 13. Exhibits, List, and Reports on Form 8-K
------------------------------------------------

         (a) Listed below are all  financial  statements  and exhibits  filed as
part of this report.

               1.   The consolidated balance sheets 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 each of the years in the two year
                    period ended June 30, 1999,  together with the related notes
                    and the  independent  auditors'  report of S. R.  Snodgrass,
                    A.C. independent certified public accountants.

               2.   Schedules omitted as they are not applicable.


                                       20
<PAGE>



                  3. The  following  exhibits  are  included  in this  Report or
incorporated herein by reference:
<TABLE>
<CAPTION>

                     (a)      List of Exhibits:
                            <S>    <C>
                               3(i)   Certificate of Incorporation of Advance Financial Bancorp *
                               3(ii)  Amended Bylaws of Advance Financial Bancorp
                               4(i)   Specimen Stock Certificate *
                               4(ii)  Shareholder Rights Plan **
                              10      Employment Agreement between the Bank and Stephen M.
                                      Gagliardi ***
                              10.1    1998  Stock   Option  Plan  ****
                              10.2    Restricted  Stock  Plan and Trust  Agreement ****
                              13      Portions  of the 1999 Annual Report to
                                      Stockholders
                              21      Subsidiaries  of  the Registrant
                                      (See "Item  1- Description of Business")
                              23      Consent  of S.R.  Snodgrass, A.C.
                              27      Financial Data Schedule  (electronic filing only)
</TABLE>

         -------------------
          *    Incorporated by reference to the  registration  statement on Form
               S-1  (File  No.  333-13021)  declared  effective  by  the  SEC on
               November 12, 1996.
          **   Incorporated  by  reference  to the Form 8-K (File  No.  0-21885)
               filed with the SEC on July 17, 1997.
          ***  Incorporated  by  reference to the June 30, 1997 Form 10KSB filed
               with the SEC on September 24, 1997.
          **** Incorporated  by reference to the Proxy Statement for the Special
               Meeting of  Stockholders  on January  20, 1998 and filed with the
               SEC on December 12, 1997.

         (b)   None.


                                       21
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its   behalf   by   the   undersigned,   thereunto   duly   authorized   as   of
September 23, 1999.

                           ADVANCE FINANCIAL BANCORP


                           By:   /s/Stephen M. Gagliardi
                                 -----------------------------------------------
                                 Stephen M. Gagliardi
                                 President, Chief Executive Officer and Director
                                 (Duly Authorized Representative)

         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated as of September 23, 1999.


/s/Stephen M. Gagliardi                              /s/George H. Johnson
------------------------------------------           ---------------------------
Stephen M. Gagliardi                                 George H. Johnson
President, Chief Executive Officer and Director      Director
(Principal Executive Officer)

/s/John R. Sperlazza                                 /s/Steven D. Martino
------------------------------------------           ---------------------------
John R. Sperlazza                                    Steven D. Martino
Director                                             Senior Vice President

/s/William E. Watson                                 /s/Gary Young
------------------------------------------           ---------------------------
William E. Watson                                    Gary Young
Director                                             Director

/s/James R. Murphy                                   /s/William B. Chesson
------------------------------------------           ---------------------------
James R. Murphy                                      William B. Chesson
Director                                             Director


/s/Stephen M. Magnone
------------------------------------------
Stephen M. Magnone
Treasurer (Principal Accounting Officer)