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, 2002
                               -------------

                                       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. [X]

         State issuer's revenues for its most recent fiscal year.  $14.7 million

         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 the  Nasdaq  Smallcap  Market  at
September 3, 2002, was $17.1 million.

         As of  September  3, 2002,  there were issued and  outstanding  932,285
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, 2002. (Part II)
2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended June 30, 2002. (Part III)
<PAGE>

                                     PART I

         Advance Financial Bancorp (the "Company" or "Registrant") 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") 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.  References to the
Company or Registrant generally refers to the consolidated entity which includes
the main operating company, the Bank, unless the context indicates otherwise.

                                        1

<PAGE>

         On September 7, 2001,  the Company  completed the  acquisition  of Ohio
State  Financial  Services,  Inc.  ("OSFS")  and  its  wholly  owned  subsidiary
Bridgeport Savings and Loan Association. With the completion of the acquisition,
the Company added two additional  branches  located in Bridgeport and Shadyside,
Ohio, increasing the Company's total branch locations to five. Additionally,  on
March 8, 2002, the Company was granted permission to establish a "denovo branch"
at 125 Dunbar Avenue in the Hollywood Shopping Plaza in Steubenville,  Ohio. The
Company  anticipates the completion of the denovo branch in the first quarter of
the 2003 fiscal year.

         The Bank is a federally  chartered stock savings bank  headquartered in
Wellsburg,  West  Virginia.  It 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 member of and owns capital  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.

Competition

         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  Registrant's  market area of Brooke,  Ohio,
Marshal and Hancock counties of West Virginia, Belmont and Jefferson Counties of
Ohio, and Washington County, Pennsylvania.

         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.

Lending Activities

         The following table sets forth the composition of the Registrant's loan
portfolio in dollar amounts and in  percentages of the respective  portfolios at
the dates indicated.

                                        2
<PAGE>

Lending Activities

         The following table sets forth the composition of the Registrant's loan
portfolio in dollar amounts, percentages of the respective portfolios, and types
of security, at the dates indicated.

<TABLE>
<CAPTION>
                                                                              June 30,
                                 --------------------------------------------------------------------------------------------------
                                        2002                   2001             2000                  1999                1998
                                 -----------------     ----------------    ----------------    -----------------    ---------------
                                     $        %            $        %          $        %          $        %           $       %
                                 --------   ------     --------  ------    --------   -----    --------   ------    -------  ------
                                                                        (Dollars in Thousands)
<S>                             <C>        <C>       <C>        <C>      <C>        <C>      <C>         <C>     <C>        <C>
Type of Loans:
-------------
Real Estate Loans:
  One- to four-family(1).......  $ 91,665    52.03%    $ 64,696   48.88%   $ 62,163   50.81%   $ 59,674    53.45%  $ 59,359   58.91%
  Non-residential..............    36,147    20.52       27,957   21.12      24,544   20.06      23,216    20.80     15,581   15.46
  Multi-family ................     4,339     2.46        6,003    4.54       5,470    4.47       2,689     2.41      1,786    1.77
  Construction.................     6,864     3.90        2,456    1.86       3,242    2.65       2,073     1.86      5,017    4.98
                                 --------   ------     --------  ------    --------   -----    --------   ------    -------  ------
Total real estate loans           139,015    78.91      101,112   76.40      95,419   77.99      87,652    78.52     81,743   81.12
                                  -------   ------      -------  ------     -------   -----    --------   ------    -------  ------
Consumer Loans:
  Automobile...................    17,176     9.75       13,000    9.82      10,904    8.91       8,648     7.74      7,659    7.60
  Other........................     2,591     1.47        2,756    2.08       2,653    2.17       2,344     2.10      2,347    2.33
  Share........................     1,590     0.90        1,595    1.21       1,406    1.15       1,360     1.22      1,297    1.29
  Home improvement.............       943     0.54        1,208    0.91       1,439    1.18       1,195     1.07      1,001    0.99
  Education....................        22     0.01           23    0.02          23    0.02          41     0.04         42    0.04
                                 --------   ------   ----------  ------   ---------   -----    --------  -------    -------  ------
Total consumer loans               22,322    12.67       18,582   14.04      16,425   13.43      13,588    12.17     12,346   12.25
                                 --------   ------     --------  ------    --------   -----    --------   ------    -------  ------

Commercial business loans......    14,824     8.42       12,651    9.56      10,500    8.58      10,388     9.31      6,676    6.63
                                 --------   ------     --------  ------    --------  ------    --------   ------    -------  ------
     Total loans                  176,161   100.00%     132,345  100.00%    122,344  100.00%    111,628   100.00%   100,765  100.00%
                                            ======               ======              ======               ======             ======
Less:
  Loans in process.............   (2,961)               (1,861)             (1,813)             (1,007)              (3,061)
  Deferred loan
     origination
     fees and costs............      (85)                 (109)               (128)               (139)                (181)
  Allowance for loan losses....     (969)                 (779)               (682)               (582)                (478)
                                --------              --------             -------            --------             --------
     Total loans, net           $172,146              $129,596            $119,721            $109,900             $ 97,045
                                ========              ========             =======            ========             ========
</TABLE>


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


                                                                        3

<PAGE>

Loan Maturity Tables

         The  following   table  sets  forth  the  estimated   maturity  of  the
Registrant's  loan  portfolio,  at June 30,  2002.  The table  does not  include
prepayments or scheduled principal  repayments.  All mortgage loans are shown as
maturing based on contractual maturities.


                                                Due after
                                   Due within   1 through  Due after
                                     1 year      5 years    5 years     Total
                                     ------      -------    -------     -----
                                                  (In Thousands)

One- to four-family real estate...   $10,064     $ 3,207   $ 78,394   $ 91,665
Non-residential real estate.......       275         343      6,246      6,864
Multi-family real estate..........       766       2,009     33,372     36,147
Construction......................     4,339          --         --      4,339
Consumer loans....................     1,008      17,047      4,267     22,322
Commercial business loans.........     3,706       5,485      5,633     14,824
                                     -------     -------   --------   --------
Total.............................   $20,158     $28,091   $127,912   $176,161
                                     =======     =======   ========   ========

         The following table sets forth as of June 30, 2002 the dollar amount of
all loans due after June 30, 2003,  which have fixed interest rates and floating
or adjustable interest rates.


                                                      Floating or
                                   Fixed Rates       Adjustable Rates     Total
                                   -----------       ----------------    -------
                                                     (In Thousands)
One- to four-family real estate...   $ 45,096             $ 36,505      $ 81,601
Multi-family real estate..........      2,916                3,673         6,589
Non-residential real estate.......     19,721               15,660        35,381
Consumer loans....................     21,164                  150        21,314
Commercial business loans.........      3,628                7,490        11,118
                                     --------             --------      --------
    Total.........................   $ 92,525             $ 63,478      $156,003
                                     ========             ========      ========

         One- To Four-Family Residential Loans. The Registrant's primary lending
activity consists of the origination of one- to four-family residential mortgage
loans secured by property  located in its primary  market areas.  The Registrant
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 Registrant
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. Fixed-rate loans
can have maturities of up to 30 years depending on the type of loan.

         For all  adjustable-rate  mortgage loans,  the Registrant  requires the
borrower to qualify at the initial  index  interest  rate.  The  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 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.

                                        4

<PAGE>

         The  Registrant  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
Registrant's cost of funds.  Generally,  the Registrant's  standard underwriting
guidelines  for  mortgage  loans  conform  to the  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC") guidelines and most of the Registrant's loans are salable
in the secondary  market. It is the current policy of the Registrant to remain a
portfolio  lender for its adjustable  rate loans.  Adjustable rate loans do have
higher  credit risks  compared to  fixed-rate  loans due to the  possibility  of
borrower  default when interest rates reset higher and monthly  payment  amounts
increase.

         The  Registrant's  one-to  four-family  residential loan portfolio also
includes second  mortgage loans and home equity loans.  Such loans are generally
secured by second liens on one-to  four-family  residential real estate. At June
30, 2002, such loans totalled  $12,487,000,  or 13%, of the Registrant's  one-to
four- family residential loan portfolio.

         Non-Residential  Real Estate Loans.  Non-residential  real estate loans
consist of 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 real estate loans have significantly more risk than
one-to four-family mortgage loans due to the usually higher loan amounts and the
credit risk, which arises from concentration of principal in a smaller number of
loans, the effects of general economic  conditions on income producing  property
and the difficulty of evaluating and monitoring the loans.

         Construction  Loans.  The  Registrant  originates   construction  loans
primarily  for the  construction  of  single  family  dwellings.  Loans  made to
builders are generally  "pure  construction"  loans which require the payment of
interest  at fixed  rates  during the  construction  term and the payment of the
principal in full at the end of the construction  period, which generally is for
a term of 12  months.  At June 30,  2002,  there were no  construction  loans to
builders.  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, 2002  construction on
loans to individuals totalled $4,339,000. Construction financing generally has a
higher degree of credit risk than one-to four-family residential loans. The risk
is dependent  largely on the value of the property when completed as compared to
the  estimated  cost,  including  interest,  of building  the  property.  If the
estimated value is inaccurate,  the Registrant may have a completed project with
a value too low to assure full repayment of the loan.

         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%.

         Multi-Family.  Multi-family  loans are  primarily  secured by apartment
houses,  located in the  Registrant's  primary  market  area.  Loans  secured by
multi-family  property may be  originated  in amounts up to 75% of the appraised
value with either fixed or  adjustable  rates of interest.  Fixed rate  interest
loans have maturities  generally of up to 20 years,  with principal and interest
payments  calculated on a 20 year  amortization  period.  Adjustable  rate loans
typically have a 15 to 30 year  amortization  period,  with repricing  following
every year,  three years,  or five years.  Multi-family  loans have credit risks
similar to non-residential real estate loans.

                                        5
<PAGE>

         Consumer Loans. Consumer loans primarily consist of direct and indirect
automobile loans. Direct automobile loans are generally originated with terms of
up to 6 years for new  automobiles  and up to 5 1/2 years for used  automobiles.
Indirect  automobile  loans are purchased from automobile  dealers with whom the
Registrant  generally provides floor plan financing.  Indirect  automobile loans
are  underwritten  by the  Registrant  and a fee is remitted  to the  automobile
dealer upon the  successful  underwriting  and  closing of the loan.  The fee is
amortized as a yield  adjustment  using the interest method over the life of the
loan. The fee is rebated to the Registrant,  on a pro rata basis, if the loan is
repaid  within the first six  months.  The  Registrant  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  the
Registrant's 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.  Direct and indirect  automobile  loans are
secured  by the new or used  automobile.  At June  30,  2002,  automobile  loans
totalled  $17,176,000 or, 77% of the  Registrant's  consumer loan portfolio.  Of
this amount,  indirect  automobile loans totalled  $9,799,000.  Loans secured by
assets that depreciate rapidly, such as automobiles, are generally considered to
entail greater risks than one-to four-family residential loans.

         The  Registrant  also  makes a variety  of other  loans  that  totalled
$5,146,000,  or 23%, of total consumer loans at June 30, 2002.  Included in this
total are home  improvement  loans,  credit card loans,  loan secured by deposit
accounts (share loans) and educational loans.  Underwriting  standards for these
loans vary based on the loan type and the creditworthiness of the borrower.

         Commercial Business Loans.  Commercial business loans primarily consist
of 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 Registrant
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.  Credit risks  involved are similar to commercial  real
estate loans  (non-residential and multi-family loans) with loan repayment often
dependent upon the business generating sufficient cash flow. However, commercial
business loans carry even more credit risk than commercial real estate loans due
to the nature of the collateral underlying the loan.

         Loan  Approval   Authority  and   Underwriting.   The   Registrant  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  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.
Eleven other loan officers have authority to approve secured credit applications
in varying amounts up to $35,000.

         The loan committee  reviews all applications for commercial loans up to
$250,000,  whether secured or unsecured, and all consumer loans in amounts above
the lending limit described above. All loans which the committee does not review
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

                                        6
<PAGE>

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  Registrant  to determine
that  title is  clear.  Historically,  the  Registrant  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.  Written loan  commitments  are given to prospective
borrowers on all approved  mortgage loans which generally  expire within 30 days
of the date of issuance.  No commitment fees or points to secure commitments are
charged to prospective  borrowers.  However, a customer may lock in a fixed rate
for 30 days by  depositing  a  nonrefundable  fee with the  Registrant.  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, 2002, the Registrant
had $2,093,000 of  outstanding  commitments  to originate  loans,  $1,351,000 in
undisbursed funds related to construction  loans and $10,507,000 in unused lines
of credit.

Non-Performing and Problem Assets

         Loan Delinquencies. The Registrant'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.  At  each  monthly  board  meeting,  the  Board  of  Directors
determines when foreclosure  proceedings should be initiated and the borrower is
notified when foreclosure has 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).

         Non-Performing  Assets.  The  following  table sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated. The
Registrant has no loans categorized as troubled debt  restructurings  within the
meaning of the  Statement of  Financial  Accounting  Standards  ("SFAS") 15. The
Registrant  has three  loans  totalling  $890,178  that meet the  definition  of
impaired  loans within SFAS 114, as amended by SFAS 118.  These  impaired  loans
have been subject to a specific allowance for loan losses of $48,202 at June 30,
2002.  Interest income that would have been recorded on loans accounted for on a
nonaccrual  basis under the original terms of such loans totaled $81,950 for the
year ended June 30, 2002. Of such amount, $40,061 was collected.

                                        7

<PAGE>

<TABLE>
<CAPTION>
                                                                       At June 30,
                                                     ----------------------------------------------
                                                      2002      2001      2000      1999      1998
                                                     ------    ------    ------    ------    ------

                                                                      (In Thousands)
<S>                                                <C>       <C>       <C>       <C>       <C>
Loans accounted for on a non-accrual basis:
Mortgage loans:
  One- to four-family ............................   $  495    $  252    $  286    $   90    $  185
  Non-residential ................................      327       240        16       317        --
  Multi-family ...................................       42        --        --         2        --
  Construction ...................................       --        --        --        47        --
  Commercial .....................................       --        --        --        --        --
Consumer .........................................       --        --         2        --         2
Commercial .......................................       --        --        --        --        96
                                                     ------    ------    ------    ------    ------
    Total non-accrual loans ......................      864       492       304       456       283
                                                     ------    ------    ------    ------    ------
Accruing loans greater than 90 days past due:
Mortgage loans:
    One- to four-family ..........................       --        --        --        --        --
    Non-residential ..............................       --        --        --        --        --
    Multi-family .................................       --        --        --        --        --
    Construction .................................       --        --        --        --        --
Consumer .........................................      413       140       189       220       169
Commercial .......................................      735       571        --        89        --
                                                     ------    ------    ------    ------    ------
Total accruing loans greater than 90 days past due    1,148       711       189       309       169
                                                     ------    ------    ------    ------    ------
Total non-performing loans .......................    2,012     1,203       493       765       452
Real estate acquired in settlement of loans ......      645       355       407        50        76
Other non-performing assets ......................       18        13        21         9        13
                                                     ------    ------    ------    ------    ------
Total non-performing assets ......................   $2,675    $1,571    $  921    $  824    $  541
                                                     ======    ======    ======    ======    ======
Total non-performing loans to total loans ........     1.17%      .92%      .41%      .69%      .45%
                                                     ======    ======    ======    ======    ======
Total non-performing loans to total assets .......      .94%      .71%      .34%      .59%      .40%
                                                     ======    ======    ======    ======    ======
Total non-performing assets to total assets ......     1.25%      .94%      .63%      .63%      .47%
                                                     ======    ======    ======    ======    ======
</TABLE>

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

                                        8

<PAGE>

         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 loan 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  Registrant's  classified  assets in
accordance with its classification system:


                                          At June 30, 2002
                                          ----------------
                                           (In Thousands)

Special Mention..................               $1,428
Substandard......................                2,104
Doubtful.........................                   95
Loss.............................                   --
                                                ------
Total............................               $3,627
                                                ======

         Allowances for Loan Losses. The Company maintains an allowance for loan
losses  adequate  to  absorb  estimated  probable  losses  inherent  in the loan
portfolio.  The  allowance  for loan losses  consists of specific  reserves  for
individual  credits and general reserves for types and portfolios of loans based
upon  historical  loan loss  experience,  adjusted  for  concentrations  and the
current  economic  environment.  All  outstanding  loans,  letters of credit and
binding  commitments  to provide  financing are  considered  in  evaluating  the
adequacy of the allowance  for loan losses.  Increases to the allowance for loan
losses are made by charges to the provision for loan losses.  Loans deemed to be
uncollectible  are charged against the allowance for loan losses.  Recoveries of
previously charged-off amounts are credited to the allowance for loan losses.

         In  determining   the  adequacy  of  the  allowance  for  loan  losses,
management  reviews and evaluates on a quarterly basis the potential risk in the
loan portfolio. This evaluation process is documented by management and approved
by the  Company's  Board of  Directors.  It is  performed  by senior  members of
management  with years of lending and review  experience.  Management  evaluates
homogenous  consumer-  oriented  loans,  such as 1-4 family  mortgage  loans and
retail consumer loans,  based upon all or a combination of  delinquencies,  loan
concentrations and charge-off  experience.  Management supplements this analysis
by reviewing the local economy,  political  trends  effecting local industry and
business  development  and other known  factors  which may impact  future credit
losses.  Nonhomogenous loans,  generally defined as commercial business and real
estate loans,  are selected by  management  to be reviewed on a quarterly  bases
upon the combination of  delinquencies,  concentrations  and other known factors
that  may  effect  the  local  economy  and  more  specifically  the  individual
businesses. During this evaluation, the individual loans are evaluated quarterly
by senior members of management for impairment as prescribed under SFAS No. 114,
"Accounting  by  Creditors  for  Impairment  of a Loan."  Impairment  losses are
assumed when,  based upon current  information,  it is probably that the Company
will be unable to collect

                                        9

<PAGE>

all  amounts  due  according  to the  contractual  terms of the loan  agreement.
Impairment is measured by a loan's  observable  market value,  fair value of the
collateral  or the present  value of future cash flows  discounted at the loan's
effective interest rate.

         This  data on  impairment  is  combined  with the  other  data used for
homogenous  loans and is used by the classified  asset  committee in determining
the adequacy of the allowance for loan losses.  Although  management believes it
uses the best  information  available to determine the adequacy of the allowance
for loan losses at the balance  sheet date,  there can be no assurance  that the
allowance for loan losses will be adequate to cover losses which may be realized
in the future and additional provision for loan losses will be required.

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

<TABLE>
<CAPTION>
                                                                        At June 30,
                                             -----------------------------------------------------------------
                                                2002          2001          2000          1999          1998
                                             ---------     ---------     ---------     ---------     ---------
                                                                  (Dollars in Thousands)

<S>                                        <C>           <C>           <C>           <C>           <C>
Total loans outstanding ..................   $ 172,146     $ 132,345     $ 122,344     $ 111,628     $ 100,765
                                             =========     =========     =========     =========     =========

Average loans outstanding ................     157,557       124,726       116,825       103,764        93,708
                                             =========     =========     =========     =========     =========

Allowance balance (at beginning of period)   $     779     $     682     $     582     $     478     $     368
Acquired allowance of OSFS ...............         170            --            --            --            --
Provision:
  Real estate ............................          22            56            57            70           178
  Consumer ...............................         107            93            64            24            40
  Commercial .............................         116            42            54            56            36
Charge-offs:
  Real estate ............................         (36)           --            --            (8)           (6)
  Consumer ...............................        (122)          (77)          (54)          (20)          (34)
  Commercial .............................         (83)          (20)          (25)          (20)         (118)
Recoveries:
  Real estate ............................          --            --            --            --            --
  Consumer ...............................          16             3             4             2            14
  Commercial .............................          --            --            --            --            --
                                             ---------     ---------     ---------     ---------     ---------
Allowance balance (at end of period) .....   $     969     $     779     $     682     $     582     $     478
                                             =========     =========     =========     =========     =========

Allowance for loan losses as a percent of
     total loans outstanding .............         .56%          .59%          .56%          .52%          .47%
                                             =========     =========     =========     =========     =========
Net loans charged off as a percent of
     average loans outstanding ...........         .14%          .08%          .06%          .04%          .15%
                                             =========     =========     =========     =========     =========
</TABLE>

                                       10

<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.


<TABLE>
<CAPTION>
                                                                       At June 30,
                         -----------------------------------------------------------------------------------------------------------
                               2002                  2001                  2000                  1999                1998
                         -----------------------------------------------------------------------------------------------------------
                                  Percent of            Percent of            Percent of            Percent of          Percent of
                                   Loans in              Loans in              Loans in              Loans in            Loans in
                                     Each                  Each                  Each                  Each                Each
                                  Category to           Category to           Category to           Category to          Category to
                          Amount  Total Loans  Amount   Total Loans   Amount  Total Loans  Amount   Total Loans  Amount  Total Loans
                          ------  -----------  ------   -----------   ------  -----------  ------   -----------  ------  -----------
<S>                      <C>        <C>      <C>          <C>      <C>         <C>       <C>          <C>      <C>          <C>
Types of Loans
Real Estate:
  One- to four-family....  $ 146      52.03%   $ 108        48.88%   $  93       50.81%    $  93        53.45%   $ 128        58.91%
  Non-residential .......    309      20.52      308        21.12      270       20.06       230        20.80       89        15.46
  Multi-family...........     32       3.90       36         4.54       33        4.47        16         2.41       11         1.77
  Construction...........     --       2.46       --         1.86       --        2.65        --         1.86       --         4.98
Consumer.................    231      12.67      176        14.04      129       13.43       115        12.17      102        12.25
Commercial...............    251       8.42      151         9.56      157        8.58       128         9.31      148         6.63
                           -----     ------     ----       ------    -----      ------     -----       ------    -----       ------
     Total...............  $ 969     100.00%   $ 779       100.00%   $ 682      100.00%    $ 582       100.00%   $ 478       100.00%
                           =====     ======     ====       ======    =====      ======     =====       ======    =====       ======
</TABLE>


                                                                             11

<PAGE>

Average Balance Sheet

     The  following  table  sets  forth  certain  information  relating  to  the
Registrant'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,
                                         -------------------------------------------------------------------------------------------

                                                     2002                           2001                            2000
                                         ----------------------------    ----------------------------   ----------------------------
                                                              Average                         Average                        Average
                                          Average             Yield/      Average             Yield/     Average              Yield/
                                          Balance  Interest    Cost       Balance  Interest    Cost      Balance   Interest    Cost
                                         --------  --------   -------    --------  --------   -------   --------   -------- --------
<S>                                    <C>        <C>        <C>      <C>        <C>         <C>     <C>         <C>        <C>
Interest-earning assets:
  Loans receivable (1)                   $157,557   $12,209     7.75%    $124,726   $10,611     8.51%   $116,825    $9,564     8.19%
  Investment securities (2)                20,165       832     4.12%      18,060     1,114     6.17%     13,627       879     6.45%
  Mortgage-backed securities                9,490       582     6.14%       6,595       439     6.66%      3,936       256     6.49%
                                         --------   -------   -------    --------  --------   -------   --------   -----------------
     Total interest-earning assets        187,212    13,623     7.28%     149,381    12,164     8.15%    134,388    10,699     7.96%
                                                    -------   -------              --------   -------              -----------------
Non-interest-earning assets                 7,789                           7,094                          7,151
                                         --------                        --------                       --------
     Total assets                        $195,001                        $156,475                       $141,539
                                         ========                        ========                       ========

Interest-bearing liabilities:
  Interest-bearing demand deposits       $ 25,010   $   608     2.43%     $19,534       637     3.26%    $20,630      $691     3.35%
  Certificates of deposit                  95,157     4,577     4.81%      81,172     4,874     6.00%     71,005     3,849     5.42%
  Savings deposits                         29,966       812     2.71%      17,499       488     2.79%     16,958       459     2.71%
  FHLB borrowings                          20,000     1,164     5.82%      16,563     1,003     6.06%     12,812       717     5.60%
                                         --------   -------   -------    --------  --------   -------   --------   -----------------
     Total interest-bearing liabilities   170,133     7,161     4.21%     134,768     7,002     5.20%    121,405     5,716     4.71%
                                                    -------   -------              --------   -------              -----------------
Non-interest bearing liabilities            7,608                           5,960                          5,237
                                         --------                        --------                       --------
     Total liabilities                    177,741                         140,728                        126,642
Stockholders' equity                       17,260                          15,747                         14,897
                                         --------                        --------                       --------
     Total liabilities and stockholders'
       equity                            $195,001                        $156,475                       $141,539
                                         ========                        ========                       ========

Net interest income                                 $ 6,462                         $ 5,162                        $ 4,983
                                                    =======                         =======                        =======
Interest rate spread (3)                                        3.07%                           2.95%                          3.25%
                                                             =======                         =======                        =======
Net Yield on interest-earning assets (4)                        3.45%                           3.46%                          3.71%
                                                             =======                         =======                        =======
Ratio of average interest-earning
  assets  to average interest-bearing
  liabilities                                                 110.04%                         110.84%                        110.69%
                                                             =======                         =======                        =======
</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.

                                                                            12

<PAGE>

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,            Year Ended June 30,
                                    -----------------------------   -------------------------------
                                             2002 vs 2001                   2001 vs 2000
                                    -----------------------------   -------------------------------
                                          Increase (Decrease)            Increase (Decrease)
                                                Due to                         Due to
                                    -----------------------------   -------------------------------
                                      Volume     Rate        Net      Volume       Rate       Net
                                    -----------------------------   -------------------------------
                                                               (Dollars in Thousands)
<S>                                <C>       <C>        <C>        <C>        <C>        <C>
Interest Income:
  Loans receivable                   $ 2,748   $(1,151)   $ 1,597    $   683    $   365    $ 1,048
  Investment securities                  122      (404)      (282)       274        (39)       235
  Mortgage-backed securities             189       (46)       143        178          5        183
                                     -------   -------    -------    -------    -------    -------
     Total interest-earning assets     3,059    (1,601)     1,458      1,135        331      1,466
                                     -------   -------    -------    -------    -------    -------


Interest Expense:
  Interest-bearing demand
   deposits                              176      (205)       (29)       (14)       (40)       (54)
  Certificates of Deposit                839    (1,136)      (297)       612        413      1,025
  Savings Deposits                       349       (25)       324         14         15         29
  FHLB borrowings                        207       (46)       161        227         59        286
                                     -------   -------    -------    -------    -------    -------
     Total interest-bearing
         liabilities                   1,571    (1,412)       159        839        447      1,286
                                     -------   -------    -------    -------    -------    -------

Net change in interest income        $ 1,488   $  (189)   $ 1,299    $   296    $  (116)   $   180
                                     =======   =======    =======    =======    =======    =======
</TABLE>

                                                               13

<PAGE>

Investment Activities

         The  Registrant  is required  under federal  regulations  to maintain a
sufficient amount of liquid assets which may be invested in specified short-term
securities  and  certain  other  investments.  The OTS  does  not  prescribe  by
regulations a minimum amount or percentage of liquid assets. The level of liquid
assets  varies  depending  upon several  factors,  including:  (i) the yields on
investment alternatives,  (ii) management's judgment as to the attractiveness of
the yields then available in relation to other opportunities,  (iii) expectation
of future yield levels,  and (iv) management's  projections as to the short-term
demand for funds to be used in loan origination and other activities. Investment
securities,  including mortgage-backed securities, are classified at the time of
purchase,  based upon management's  intentions and abilities, as securities held
to maturity or securities  available for sale. Debt securities acquired with the
intent and ability to hold to maturity  are  classified  as held to maturity and
are stated at cost and adjusted  for  amortization  of premium and  accretion of
discount,  which are  computed  using the level yield method and  recognized  as
adjustments  of interest  income.  All other debt  securities  are classified as
available for sale to serve principally as a source of liquidity.

         Current  regulatory  and  accounting  guidelines  regarding  investment
securities  (including  mortgage  backed  securities)  require the Registrant to
categorize  securities as "held to maturity," "available for sale" or "trading."
As of June  30,  2002,  Registrant  had  securities  (including  mortgage-backed
securities)  classified  as "held to maturity" and  "available  for sale" in the
amount  of  $12,450,000  and  $20,791,000,  respectively  and had no  securities
classified as  "trading."  Securities  classified  as  "available  for sale" are
reported  for  financial  reporting  purposes at the fair market  value with net
changes  in the  market  value  from  period to period  included  as a  separate
component of  stockholders'  equity,  net of income taxes. At June 30, 2002, the
Registrant's  securities available for sale had an amortized cost of $20,416,000
and market  value of  $20,791,000.  Changes in the  market  value of  securities
available for sale do not affect the Company's income.  In addition,  changes in
the  market  value of  securities  available  for sale do not  affect the Bank's
regulatory capital requirements or its loan-to-one borrower limit.

         At June 30, 2002, the Registrant's  investment portfolio policy allowed
investments in instruments  such as: (i) U.S.  Treasury  obligations,  (ii) U.S.
federal  agency or  federally  sponsored  agency  obligations,  (iii)  municipal
obligations,  (iv) mortgage-backed  securities,  (v) banker's acceptances,  (vi)
certificates  of  deposit,  and (vii)  investment  grade  corporate  bonds,  and
commercial paper. The board of directors may authorize additional investments.

         As a  source  of  liquidity  and  to  supplement  Registrant's  lending
activities,   the  Registrant   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.  Principal  and  interest  payments  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,  like us. The  quasi-governmental  agencies  guarantee the payment of
principal  and interest to investors  and include the Federal Home Loan Mortgage
Corporation    ("FreddieMac"),    Government   National   Mortgage   Association
("GinnieMae"), and Federal National Mortgage Association ("FannieMae").

         Mortgage-backed  securities  typically are issued with stated principal
amounts.  The  securities  are backed by pools of mortgages that have loans with
interest  rates that are  within a set 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.  The interest
rate risk characteristics of the underlying pool of

                                       14

<PAGE>

mortgages  (i.e.,  fixed rate or adjustable  rate) and the 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.  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   issued  by  FreddieMac,
GinnieMae,  and FannieMae  make up a majority of the  pass-through  certificates
market.

         At June 30, 2002, the Registrant's  securities  portfolio contained one
security  of an  issuer,  other  than  those  issued by U.S.  government  or its
agencies,  with an  aggregate  book  value in excess of 10% of the  Registrant's
equity.  That  security is a bank  qualified  triple A rated  municipal  general
obligation bond with a book value of $1,960,000 and a market value of $2,031,000
at June 30, 2002.

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


                                                          At June 30,
                                                  ---------------------------
                                                   2002      2001      2000
                                                  -------   -------   -------
                                                        (In Thousands)

Securities held to maturity:
  Interest-bearing deposits in other financial    $ 9,995   $ 7,375   $ 4,642
institutions
  U.S. government agency securities ...........        --       750     1,250
  FHLB stock ..................................     1,058     1,075       800
  Mortgage-backed securities ..................     1,397     1,595     2,089
                                                  -------   -------   -------
    Total securities held to maturity .........    12,450    10,795     8,781
                                                  -------   -------   -------
Securities available for sale:
  U.S. government and agency securities .......     5,098     2,933     8,129
  Common stock ................................        --       373        80
  Money fund securities .......................        17        20        26
  Mortgage-backed securities ..................     7,792     8,383     1,556
  Municipal bond obligations ..................     5,924     5,819        --
  Corporate bond obligations ..................     1,960     2,003        --
                                                  -------   -------   -------
    Total securities available for sale .......    20,791    19,531     9,791
                                                  -------   -------   -------
Total investment and mortgage-backed securities   $33,241   $30,326   $18,572
                                                  =======   =======   =======


                                       15

<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, 2002. The following  table
does not take into  consideration  the effects of  scheduled  repayments  or the
effects of possible prepayments.

<TABLE>
<CAPTION>
                                                                      At June 30, 2002
                              ------------------------------------------------------------------------------------------------------
                                Less than 1 year    1 to 5 years     Over 5 to 10 years   Over 10 years       Total 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....  $ 9,995    1.68%  $    --       --%  $   --        --%  $    --       --%  $ 9,995    1.68%  $ 9,995
  FHLB stock..................    1,058    3.25        --       --       --        --        --       --     1,058    3.25     1,058
  Mortgage-backed securities..       --      --        --       --      295      6.91     1,102     7.30     1,397    7.22     1,450
                                -------  ------   -------   ------   ------      ----   -------     ----   -------    ----   -------
      Total securities
         held to maturity.....   11,053    1.83        --       --      295      6.91     1,102     7.30    12,450    2.43    12,503
                                -------  ------   -------   ------   ------      ----   -------     ----   -------    ----   -------

Securities available for sale:
  U.S. government and agency
     securities...............      731    3.90     2,536     4.93      515      6.00     1,316     6.46     5,098    5.29     5,098
  Money fund securities.......       --      --        --       --       17      4.42        --       --        17    4.42        17
  Mortgage-backed securities..       --      --       347     5.50      920      5.70     6,525     6.01     7,792    5.95     7,792
  Municipal bond obligations..       --      --        --       --       --        --     5,924     5.31     5,924    5.31(1)  5,924
  Corporate bond obligations..       --      --     1,960     5.85       --        --        --       --     1,960    5.85     1,960
                                -------  ------   -------   ------   ------      ----   -------     ----   -------    ----   -------
      Total securities
         available for sale...      731    3.90     4,843     5.81    1,452      6.52    13,765     6.55    20,791    5.60    20,791
                                -------  ------   -------   ------   ------      ----   -------     ----   -------    ----   -------

Total investment and
  mortgage-backed
  securities..................  $11,784    1.96%  $ 4,843     5.81%  $1,747      6.59%  $14,867     6.61%  $33,241    4.41%  $33,294
                                =======   =====   -======     ====   ======     =====    ======     ====    ======    ====   =======
</TABLE>


(1)      Computed at actual value and not tax equivalent rate.


                                                                              16
<PAGE>

Sources of Funds

         General.  Deposits are the major  external  source of the  Registrant's
funds for lending and other investment  purposes.  The Registrant  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  Registrant'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, 2002, the
Registrant had no brokered accounts.

         Time  Deposits.  The  following  table  indicates  the  amount  of  the
Registrant's  time deposits of $100,000 or more by time remaining until maturity
as of June 30, 2002.


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

Within three months................................        $ 2,266
More than three through six months.................            612
More than six through nine months..................            321
Over nine months...................................         12,276
                                                           -------
         Total.....................................        $15,475
                                                           =======

Borrowings

         The  Registrant  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  Registrant's  stock in the FHLB of
Pittsburgh  and a portion of the  Registrant'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 Registrant, 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.  At June
30, 2002, borrowings with the FHLB totalled  $20,000,000,  which were classified
as long-term.

Employees

         At June 30,  2002,  the  Registrant  had 70  full-time  and 2 part-time
employees.  None of the  Registrant's  employees are represented by a collective
bargaining  group.  The  Registrant  believes  that  its  relationship  with its
employees is good.

Regulation

         Set forth below is a brief  description of certain laws which relate 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.

                                       17

<PAGE>

Regulation of the Company

         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  authority  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.

         As a unitary savings and loan holding company, the Company generally is
not  subject  to  any  restrictions  on  its  business  activities.   While  the
Gramm-Leach-Bliley  Act (the "GLB Act")  terminated the "unitary  thrift holding
company"  exemption  from  activity  restrictions  on a prospective  basis,  the
Company enjoys  grandfathered status under this provision of the GLB Act because
it acquired the Bank prior to May 4, 1999. As a result,  the  Company's  freedom
from activity restrictions as a unitary savings and loan holding company was not
affected by the GLB Act.  However,  if the Company were to acquire control of an
additional  savings  association,  its business  activities  would be subject to
restriction under the Home Owners' Loan Act. Furthermore, if the Company were in
the future to sell control of the Bank to any other company,  such company would
not succeed to the Company's grandfathered status under the GLB Act and would be
subject to the same activity  restrictions.  The  continuation  of the Company's
exemption from restrictions on business activities as a unitary savings and loan
holding company is also subject to the Company's  continued  compliance with the
Qualified  Thrift Lender ("QTL") test. See "- Regulation of the Bank - Qualified
Thrift Lender Test."

Regulation of the Bank

         General.  Set forth below is a brief  description  of certain laws that
relate to the  regulation of the Bank.  The  description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.  As a federally chartered,  SAIF-insured  savings association,  the
Bank is subject  to  extensive  regulation  by the OTS and the  Federal  Deposit
Insurance  Corporation  ("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  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  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.

                                       18

<PAGE>

         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.

         The Bank is required to pay insurance premiums based on a percentage of
its insured  deposits  to the FDIC for  insurance  of its  deposits by the SAIF.
Under  the  risk-based  system  established  by the  FDIC  for  setting  deposit
insurance  premiums,   the  2002  insurance  assessment  rates  for  SAIF-member
institutions  range from 0% to .27% of insured deposits on an annualized  basis,
with the  assessment  rate for most  savings  institutions  set at 0%.  The Bank
currently  qualifies  for the  lowest  assessment  rate  under the  risk-  based
assessment  system  and,   accordingly,   did  not  pay  any  deposit  insurance
assessments during the past fiscal year.

         In addition, all FDIC-insured institutions are required through 2017 to
pay  assessments  to the FDIC to fund  interest  payments on bonds issued by the
Financing Corporation ("FICO"), an agency of the Federal government  established
to  recapitalize  the  predecessor  to the SAIF.  For calendar 2001, the average
annual assessment rate was .0190% of insured deposits and, for 2002, the average
annual assessment rate will be approximately .0175% of insured deposits.

         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.
At June 30, 2002, the  Registrant's  lending limit for loans to one borrower was
approximately  $2,532,000 and the Registrant had no outstanding commitments that
exceeded the loans to one borrower limit at the time originated or committed.

         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) core capital equal to at least 3% of total
adjusted assets for savings  institutions  that receive the highest  supervisory
rating for safety and  soundness and 4% of total  adjusted  assets for all other
thrifts,  and (3) risk-based capital equal to 8% of total risk-weighted  assets.
At June 30,  2002,  the  Bank was in  compliance  with  its  regulatory  capital
requirements.

         For  purposes  of the OTS  capital  regulations,  tangible  capital  is
defined as core capital less all intangible assets,  except for certain mortgage
servicing  rights,  and less certain  investments.  Core,  or Tier 1, capital is
defined as common stockholders' equity,  noncumulative perpetual preferred stock
and minority  interests  in the equity  accounts of  consolidated  subsidiaries,
certain  nonwithdrawable   accounts  and  pledged  deposits  of  mutual  savings
associations and qualifying supervisory goodwill, less nonqualifying  intangible
assets, certain mortgage servicing rights and certain investments.

         The risk-based capital standard for savings  institutions  requires the
maintenance  of  total  risk-based  capital  of  8%  of  risk-weighted   assets.
Risk-based  capital  equals  the  sum of core  and  supplementary  capital.  The
components  of  supplementary  capital  include,  among other items,  cumulative
perpetual preferred stock,  perpetual  subordinated debt, mandatory  convertible
subordinated debt, intermediate-term preferred stock, general valuation loan and
lease loss allowances up to a maximum of 1.25% of risk-weighted  assets,  and up
to 45% of unrealized gains on equity securities.  Overall, supplementary capital
is limited to 100% of core capital.  A savings  association  must  calculate its
risk-weighted assets by multiplying each asset and

                                       19

<PAGE>

off-balance  sheet item by various risk factors as determined by the OTS,  which
range from 0% for cash to 100% for delinquent  loans,  property acquired through
foreclosure, commercial loans, and other assets.

         In addition to the above  regulatory  capital  requirements,  the OTS's
prompt corrective action regulation  classifies savings  associations by capital
levels and provides that the OTS will take various corrective actions, including
imposing significant operational restrictions,  against any thrift that fails to
meet  the  regulation's  capital  standards.  Under  this  regulation,  a  "well
capitalized"  savings  association  is one that has a total  risk-based  capital
ratio of at least 10%, a Tier 1  risk-based  capital  ratio of at least 6% and a
leverage  capital  ratio  of 5%,  and is not  subject  to any  capital  order or
directive.  A thrift is deemed  "adequately  capitalized"  category  if it has a
total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio
of at least 4%, and a leverage capital ratio of at least 4%.  Institutions  with
lower  capital  levels  are  deemed  to  be  "undercapitalized,"  "significantly
undercapitalized" or "critically  undercapitalized,"  depending on their capital
levels. A thrift that falls within any of the three undercapitalized  categories
is subject to severe  regulatory  sanctions under the prompt  corrective  action
regulation. At June 30, 2002, the Bank was classified as "well capitalized."

         Dividend and Other Capital  Distribution  Limitations.  The OTS imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends.

         A savings  association,  such as the Bank,  that is a  subsidiary  of a
savings and loan holding  company must file an  application or a notice with the
OTS at least 30 days before making a capital distribution.  Savings associations
are not  required  to file  an  application  for  permission  to make a  capital
distribution  and need only file a notice if the following  conditions  are met:
(1) they are eligible for expedited  treatment under OTS  regulations,  (2) they
would  remain  adequately  capitalized  after the  distribution,  (3) the annual
amount of capital  distribution does not exceed net income for that year to date
added to retained net income for the two  preceding  years,  and (4) the capital
distribution  would not violate any  agreements  between the OTS and the savings
association  or any OTS  regulations.  Any  other  situation  would  require  an
application to the OTS.

         The OTS may disapprove an application or notice if the proposed capital
distribution   would:  (i)  make  the  savings   association   undercapitalized,
significantly  undercapitalized,  or  critically  undercapitalized;  (ii)  raise
safety  or  soundness  concerns;  or (iii)  violate  a  statue,  regulation,  or
agreement  with  the OTS (or  with  the  FDIC),  or a  condition  imposed  in an
OTS-approved application or notice. Further, a federal savings association, like
the  Bank,  cannot  distribute   regulatory  capital  that  is  needed  for  its
liquidation account.

         Qualified Thrift Lender Test.  Federal savings  institutions  must meet
one of two Qualified Thrift Lender ("QTL") tests. To qualify as a QTL, a savings
institution must either (i) be deemed a "domestic building and loan association"
under the Internal  Revenue Code by maintaining at least 60% of its total assets
in specified types of assets,  including cash,  certain  government  securities,
loans  secured  by and  other  assets  related  to  residential  real  property,
educational loans and investments in premises of the institution or (ii) satisfy
the statutory QTL test set forth in the Home Owner's Loan Act by  maintaining at
least 65% of its "portfolio assets" in  certain"Qualified  Thrift  Investments".
Qualified thrift investments  consist primarily of an institution's  residential
mortgage  loans and other loans and  investments  relating to  residential  real
estate and manufactured housing and also include student,  credit card and small
business loans, stock issued by a Federal Home Loan Bank, the FreddieMac and the
FannieMae,  and other enumerated assets. For purposes of the statutory QTL test,
portfolio assets are defined as total assets minus intangible  assets,  property
used by the  institution in conducting its business,  and liquid assets equal to
10% of total assets. A savings  institution must maintain its status as a QTL on
a monthly basis in at least nine out of

                                       20

<PAGE>

every 12  months.  A failure  to  qualify  as a QTL would  result in a number of
sanctions,  including certain operating restrictions. At June 30, 2002, the Bank
was in compliance with its QTL requirement, with 82.49%of its assets invested in
Qualified Thrift Investments.

         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 the  greater of 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations at the beginning of each year or 5% of the Bank's  advances from the
FHLB. At June 30, 2002, the Bank was in compliance with this requirement.

         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,  2002,  the  Bank  was  in  compliance  with  these  Federal  Reserve  Board
requirements.

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

         (a)      Properties.

                  The  Registrant  operates from its main office and four branch
offices.


                                                                     Year Leased
Locations                                  Leased or Owned           or Acquired
---------                                  ---------------           -----------

MAIN OFFICE:
  1015 Commerce Street                      Owned                       1984
  Wellsburg, West Virginia

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

  805 Main Street
  Wintersville, Ohio                        Leased (2)                  1997

  435 Main Street                           Owned                       2001
  Bridgeport, Ohio

  4000 Central Avenue                       Owned                       2001
  Shadyside, Ohio

  125 Dunbar Avenue                         Leased (3)                  2002
  Steubenville, Ohio

-----------------------
(footnotes on next page)

                                       21

<PAGE>

                  (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.

                  (3)      The Bank holds a 20-year lease on the land in which a
                           future branch  office will be located.  The Bank will
                           own the branch building. The branch is expected to be
                           open for  business  during  the first  quarter of the
                           2003 fiscal year.

         (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."

         (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, 2002 (the "Annual Report") is incorporated herein by reference.

                                       22

<PAGE>

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 2002  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."

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 items (a) and (b) 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.
         (d)      Securities Authorized for Issuance Under  Equity  Compensation
                  Plans

                                       23

<PAGE>

         Set forth  below is  information  as of June 30,  2002 with  respect to
compensation   plans  under  which  equity  securities  of  the  Registrant  are
authorized for issuance.

<TABLE>
<CAPTION>

                                            EQUITY COMPENSATION PLAN INFORMATION

                                                (a)                      (b)                         (c)
                                                                                            NUMBER OF SECURITIES
                                       NUMBER OF SECURITIES        WEIGHTED-AVERAGE       REMAINING AVAILABLE FOR
                                         TO BE ISSUED UPON        EXERCISE PRICE OF         FUTURE ISSUANCE UNDER
                                            EXERCISE OF              OUTSTANDING          EQUITY COMPENSATION PLANS
                                       OUTSTANDING OPTIONS,       OPTIONS, WARRANTS         (EXCLUDING SECURITIES
                                       WARRANTS AND RIGHTS           AND RIGHTS           REFLECTED IN COLUMN (A))
                                       --------------------          -----------          ------------------------
<S>                                       <C>                        <C>                      <C>

Equity compensation plans
approved by shareholders:

1998 Stock Option Plan..............          65,061                    $18.75                      43,384
Restricted Stock Plan...............              --                        --                       1,954

Equity compensation plans
not approved by
shareholders(1).....................             n/a                       n/a                         n/a
                                              ------                    ------                      ------

     TOTAL.........................           65,061                    $18.75                      45,338
                                              ======                    ======                      ======
</TABLE>

---------------
(1)      Not applicable.


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, 2002 and 2001 and the related
                    consolidated  statements of income, changes in stockholders'
                    equity and cash  flows for each of the two years  ended June
                    30,  2002,   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.


                                       24

<PAGE>

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

                    (a)   List of Exhibits:
<TABLE>
<CAPTION>
                     <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 2002 Annual Report to Stockholders
                         21      Subsidiaries of the Registrant (See "Item 1-
                                 Description of Business")
                         23      Consent of S.R. Snodgrass, A.C.
                         99      Certification  pursuant to 18 U.S.C. Section 1350,
                                 as adopted  pursuant to Section 906 of the
                                 Sarbanes-Oxley Act of 2002.
</TABLE>

         (b)      Not Applicable.

<TABLE>
<CAPTION>
<S> <C>
-------------------
*       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 10-KSB 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.
*****   Incorporated  by  reference to the June 30, 1999 Form 10-KSB filed with the
        SEC on September 28, 1999.

</TABLE>

                                       25

<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 24,
2002.

                           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 24, 2002.


<TABLE>
<CAPTION>

<S>                                                     <C>

/s/Stephen M. Gagliardi                                       /s/Dominic J. Teramana, Jr.
-----------------------------------------------               --------------------------------
Stephen M. Gagliardi                                          Dominic J. Teramana, Jr.
President, Chief Executive Officer and Director               Director
(Principal Executive Officer)



/s/John R. Sperlazza                                          /s/Kelly M. Bethel
-----------------------------------------------               --------------------------------
John R. Sperlazza                                             Kelly M. Bethel
Director                                                      Director


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


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


/s/Stephen M. Magnone                                         /s/Walker Peterson Holloway, Jr.
-----------------------------------------------               --------------------------------
Stephen M. Magnone                                            Walker Peterson Holloway, Jr.
Treasurer                                                     Director
(Principal Accounting Officer)

</TABLE>