United States Securities and Exchange Commission
                             Washington, D.C. 20552
                                   FORM 10QSB


{x}  QUARTERLY REPORT UNDER SECTION 13 OF 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

{ }  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCAHANGE
         ACT


For the transition period from                   to
                               -----------------    -------------------

                         Commission file Number 0-21885
                         ------------------------------

                            Advance Financial Bancorp
                            -------------------------

             (Exact name of registrant as specified in its charter)


West Virginia                                   55-0753533
-------------                                   ----------
(State or jurisdiction of           (IRS Employer Identification No.)
  incorporation or organization)

                    1015 Commerce Street, Wellsburg, WV 26070
                    -----------------------------------------
                    (Address of principal executive offices)

                                 (304) 737-3531
                                 --------------
              (Registrant's telephone number, including area code)




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

State the  number of shares  outstanding  for each of the  issuer's  classes  of
common equity as of the latest practicable date:

      Class: Common Stock, par value $.10 per share
      Outstanding at November 9, 1999: 952,285



<PAGE>
                            Advance Financial Bancorp

                                      Index



                                                                            Page
                                                                          Number
                                                                          ------


Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

                 Consolidated Balance Sheet ( Unaudited)  as of
                   September 30, 1999 and June 30, 1999                        3

                 Consolidated Statement of Income (Unaudited)
                   For the Three Months ended September 30, 1999 and 1998      4

                 Consolidated Statement of Cash Flows (Unaudited)
                   For the Three Months ended September 30, 1999 and 1998      5

                 Notes to the Unaudited Consolidated Financial Statements      6


        Item 2 - Management's Discussion and Analysis                       7-12

Part II - OTHER INFORMATION

        Item 1 - Legal Proceedings                                            13

        Item 2 - Changes in Securities                                        13

        Item 3 - Default Upon Senior Securities                               13

        Item 4 - Submissions of Matters to a vote of Security Holders         13

        Item 5 - Other Information                                            13

        Item 6 - Exhibits and Reports on Form 8-K                             13

SIGNATURES                                                                    14


<PAGE>
                           ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30,      JUNE 30,
                                                                                    1999             1999
                                                                               -------------    -------------

<S>                                                                          <C>              <C>
Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                         $   1,193,812    $   1,395,704
       Interest bearing deposits with other institutions                           1,800,118        2,964,166
                                                                               -------------    -------------
          Total cash and cash equivalents                                          2,993,930        4,359,870
                                                                               -------------    -------------

     Investment securities:
       Securities held to maturity (fair value of $1,210,260 and $970,914)         1,249,453          999,896
       Securities available for sale                                               8,892,306        4,481,475
                                                                               -------------    -------------
          Total investment securities                                             10,141,759        5,481,371
                                                                               -------------    -------------

     Mortgaged-backed securities:
       Securities held to maturity (fair value of $2,335,524 and $2,456,645)       2,357,928        2,472,681
       Securities available for sale                                               1,698,875        1,832,845
                                                                               -------------    -------------
          Total mortgage-backed securities                                         4,056,803        4,305,526
                                                                               -------------    -------------

     Loans receivable,  (net of allowance for loan losses
          of $606,084 and $582,280 )                                             114,414,775      109,899,551
     Office properties and equipment, net                                          4,119,000        4,084,793
     Federal Home Loan Bank Stock, at cost                                           629,500          629,500
     Accrued interest receivable                                                     767,164          664,058
     Other assets                                                                    445,783          501,967
                                                                               -------------    -------------
          TOTAL ASSETS                                                         $ 137,568,714    $ 129,926,636
                                                                               =============    =============

Liabilities:
     Deposits                                                                  $ 110,591,136    $ 105,338,770
     Advances from Federal Home Loan Bank                                         11,500,000        9,000,000
     Advance payments by borrowers for taxes and insurance                           126,143          196,993
     Accrued interest payable and other liabilities                                  397,627          397,421
                                                                               -------------    -------------
          TOTAL LIABILITIES                                                      122,614,906      114,933,184
                                                                               -------------    -------------

Stockholders' Equity:
     Preferred stock, $.10 par value; 500,000 shares
         authorized, none issued                                                        --               --
     Common stock, $.10 par value; 2,000,000 shares
          authorized 1,084,450 shares issued                                         108,445          108,445
     Additional paid in capital                                                   10,321,328       10,316,719
     Retained earnings - substantially restricted                                  7,741,200        7,623,733
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                (576,077)        (597,767)
     Unallocated shares held by Restricted Stock Plan (RSP)                         (626,801)        (682,357)
     Treasury Stock (119,165  and 103,165 shares at cost)                         (1,824,590)      (1,626,890)
     Accumulated other comprehensive loss                                           (189,697)        (148,431)
                                                                               -------------    -------------
          TOTAL STOCKHOLDERS' EQUITY                                              14,953,808       14,993,452
                                                                               -------------    -------------

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 137,568,714    $ 129,926,636
                                                                               =============    =============

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                      -3-


<PAGE>
                            ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>

                                                                               THREE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                                 1999         1998
                                                                                 ----         ----
<S>                                                                         <C>          <C>
INTEREST AND DIVIDEND INCOME
    Loans                                                                    $2,261,906   $2,044,794
    Investment securities                                                       132,187       27,305
    Interest-bearing deposits with other institutions                            53,701      120,083
    Mortgage-backed securities                                                   64,313        7,717
    Dividends on Federal Home Loan Bank Stock                                    10,710       10,194
                                                                             ----------   ----------
         Total interest and dividend income                                   2,522,817    2,210,093
                                                                             ----------   ----------
INTEREST EXPENSE
    Deposits                                                                  1,169,344    1,078,636
    Advances from Federal Home Loan Bank                                        145,390      124,734
                                                                             ----------   ----------
         Total interest expense                                               1,314,734    1,203,370
                                                                             ----------   ----------
NET INTEREST INCOME                                                           1,208,083    1,006,723

Provision for loan losses                                                        37,500       37,500
                                                                             ----------   ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                           1,170,583      969,223
                                                                             ----------   ----------

    Service charges on deposit accounts                                         104,964       86,431
    Gain on sale of loans                                                           611       33,225
    Other income                                                                 59,894       66,024
                                                                             ----------   ----------
         Total noninterest income                                               165,469      185,680
                                                                             ----------   ----------
NONINTEREST EXPENSE
    Compensation and employee benefits                                          456,540      430,705
    Occupancy and equipment                                                     161,841      140,726
    Professional fees                                                            32,510       37,621
    Advertising                                                                  34,828       33,730
    Data processing charges                                                      90,169       85,518
    Other expenses                                                              219,342      196,897
                                                                             ----------   ----------
         Total noninterest expenses                                             995,230      925,197
                                                                             ----------   ----------
Income before income taxes                                                      340,822      229,706
Income taxes                                                                    135,725       94,877
                                                                             ----------   ----------
NET INCOME                                                                   $  205,097   $  134,829
                                                                             ==========   ==========
EARNINGS PER SHARE
         Basic                                                               $      .23   $     0.15
         Diluted                                                             $      .23   $     0.15

</TABLE>

See accompanying notes to the unaudited consolidated financial statements

                                       -4-


<PAGE>
                        ADVANCE FINANCIAL BANCORP
              CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                          SEPTEMBER 30,
                                                                                     1999                 1998
                                                                              ----------------    -----------------

<S>                                                                             <C>                  <C>
OPERATING ACTIVITIES
     Net Income                                                                      $205,097             $134,829
     Adjustments to reconcile net income to net cash provided by
        operating activities:
         Depreciation, amortization and accretion, net                                145,812              180,806
         Provision for loan losses                                                     37,500               37,500
         Gain on sale of loans                                                           (611)             (33,225)
         Origination of loans held for sale                                          (170,000)          (1,839,749)
         Proceeds from the sale of loans                                              170,611            2,772,324
         Decrease in other assets and liabilities                                      (1,973)            (136,761)
                                                                              ----------------    -----------------
              Net cash provided by operating activities                               386,436            1,115,724
                                                                              ----------------    -----------------
INVESTING ACTIVITIES
     Investment securities held to maturity:
         Purchases                                                                   (249,453)            (500,000)
         Maturities and repayments                                                          -            1,000,000
     Investment securities available for sale:
         Purchases                                                                 (4,467,656)                   -
         Maturities and repayments                                                      2,005                3,610
     Mortgage-backed securities held to maturity:
         Purchases                                                                          -                    -
         Maturities and repayments                                                    114,076                3,911
     Mortgage-backed securities available for sale:
         Purchases                                                                          -                    -
         Maturities and repayments                                                    126,063                    -
     Net increase in loans                                                         (4,552,724)          (3,338,885)
     Purchases of premises and equipment                                             (120,873)             (97,413)
                                                                              ----------------    -----------------
              Net cash used in investing activities                                (9,148,562)          (2,928,777)
                                                                              ----------------    -----------------
FINANCING ACTIVITIES
     Net increase in deposits                                                       5,252,366            3,721,389
     Proceeds (Repayments) from advances from Federal Home Loan Bank                2,500,000           (1,000,000)
     Net change in advances for taxes and insurance                                   (70,850)             (63,362)
     Purchase of treasury stock                                                      (197,700)                   -
     Cash dividends paid                                                              (87,630)             (75,910)
                                                                              ----------------    -----------------
              Net cash provided by financing activities                             7,396,186            2,582,117
                                                                              ----------------    -----------------

              (Decrease) increase  in cash and cash equivalents                    (1,365,940)             769,064

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    4,359,870            9,084,193
                                                                              ----------------    -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $2,993,930           $9,853,257
                                                                              ================    =================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest on deposits and borrowings                                       $1,309,940           $1,186,998
         Income taxes                                                                $135,255             $155,000

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                      -5-

<PAGE>

                            ADVANCE FINANCIAL BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The  consolidated   financial  statements  of  Advance  Financial  Bancorp  (the
"Company"), includes its wholly-owned subsidiary, Advance Financial Savings Bank
(the  "Bank"),  and  its  wholly-owned  subsidiary,  Advance  Financial  Service
Corporation  of  West  Virginia.  All  significant   intercompany  balances  and
transactions have been eliminated.

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements.  The information  furnished reflects all adjustments,  which are, in
the  opinion  of  management,  necessary  for a fair  statement  of  results  of
operations.  All such adjustments are of a normal recurring nature.  The results
of  operations  for the interim  periods are not  necessarily  indicative of the
results  to be  expected  for the fiscal  year ended June 30,  2000 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 1999 and related  notes which are included on
the Form 10-KSB (file no. 0-21885)

NOTE 2 - EARNINGS PER SHARE

 The following table sets forth a reconciliation of the denominator of the basic
and dilutive earnings per share computation in accordance with SFAS No. 128.

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                   September 30
                                                                  1999      1998
                                                                --------- ---------
<S>                                                            <C>       <C>
Denominator:
       Denominator for basic earnings per share
          Weighted-average shares                                906,441   955,418
Effect of dilutive securities:
         Employee stock options                                     --        --
                                                                 -------   -------

Dilutive potential common shares                                 906,441   955,418

  Denominator;
          Denominator for dilutive earnings per share adjusted
             Weighted-average shares                             906,441   955,418
                                                                 =======   =======
</TABLE>

NOTE 3 - COMPREHENSIVE INCOME

Other  comprehensive  income consists  solely of unrealized  gains and losses on
available for sale  securities.  For the three months ended  September 30, 1999,
comprehensive income totaled $163,831.

                                       -6-


<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30,1999 AND JUNE 30, 1999
------------------------------------------------------------------------

Total assets increased by approximately  $7,642,000 to $137,568,714 at September
30,1999,  from  $129,926,636  at June 30,  1999.  Deposits,  which  increased by
$5,252,000,   were  used  to  fund  loan  demand  and  purchases  of  investment
securities.

Interest-bearing   deposits  with  other  financial  institutions  decreased  by
$1,164,000  to $1,800,118  at September  30, 1999,  from  $2,964,166 at June 30,
1999.  This  decrease  was used  primarily  to purchase  Federal  Home Loan Bank
("FHLB") bonds classified as available for sale.

Investment  securities  available for sale increased by $4,411,000 to $8,892,306
at September 30, 1999 from $4,481,475 at June 30, 1999.  This increase  includes
approximately $1,970,000 in four FHLB bonds with callable options ranging from 3
months to 2 years and an effective  weighted average interest rate of 7.45%. The
funding  for these  bonds  came from the  strong  deposit  growth and the use of
interest-bearing  deposits with other financial institutions.  The increase also
includes the purchase of a $2,500,000  15-year FHLB bond with a callable  option
of 1-year and an effective  interest  yield of 8.10%.  The funding for this bond
came from a FHLB advance  that matures in one year and has an effective  cost of
funds of 5.94%.  Management  placed  these  investments  into this  category for
liquidity  purposes while  maximizing  interest  yields in excess of the federal
overnight rates paid on interest-bearing demand deposits.

Net loans  receivable  increased by $4,515,000 to  $114,414,775 at September 30,
1999,  from  $109,899,551  at June 30, 1999. The loan demand was spread over the
entire portfolio. Loans secured by 1-4 family residences increased by $2,300,000
due to demand for ARMs and the bank's "no fee"  Equity  Line of Credit  program.
Multi-family  residential  loans increased by $932,000 due to strong loan demand
for the Company's competitively priced ARM products.  Automobile loans increased
$600,000  due  principally  to increased  loan  activity  written by  automobile
dealership customers of the Company.  Commercial loans increased by $517,000 due
principally  to the addition of a new  automobile  dealership  to the  Company's
customer base. See "Risk Elements".

Deposits  increased by  $5,252,000  to  $110,591,136  at September  30,1999 from
$105,338,770  at June 30,  1999.  This  increase  is  primarily  the result of a
certificate of deposit special called "Advantage 2000" that offered above market
rates on certificates of deposit at 5.25% for 12 months and 5.50% for 18 months.
The  "advantage"  of this product is that the customers  have a 10-day option at
the end of 1999 to redeem  the  certificate  with no  penalty.  This  successful
special  was offered  from June 20,  1999 to  September  30,  1999.  The Company
believes they will be able to retain these deposits  during the option period by
continuing  to offer the most  competitive  rates in their market area.  Savings
deposits  increased  $427,000 while demand deposits  decreased  $472,000 for the
quarter.  The demand deposit  decrease was primarily the result of a decrease in
commercial checking of $1,278,000.

                                       -7-
<PAGE>

Equity capital decreased by  approximately,  $40,000 to $14,953,808 at September
30, 1999 from  $14,993,452  at June 30,  1999.  Net income of  $205,000  and the
recognition of shares in the Employee Stock Ownership Plan and Restricted  Stock
Plan of  $81,900,  were offset by the payment of cash  dividends  of $87,600,  a
increase in net  unrealized  loss on  securities  of $41,200 and the purchase of
16,000 shares of treasury  stock for $197,700,  or an average cost of $12.36 per
share.


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
1999 AND 1998
-------------

Net interest income  increased  $201,000 or 19.96%,  to $1,208,000 for the three
months ended September 30, 1999, from $1,007,000 for the comparable period ended
1998. The increase in net interest income resulted primarily from an increase in
fluctuations of average volume of the underlying  principle balances in interest
earning  assets and  liabilities.  The net interest  spread for the three months
ended September 30, 1999 increased to 3.29% from 3.15% for the comparable period
ended 1998. The average yield on interest  earning assets  decreased by 19 basis
points to 7.88% for the three months ended  September  30, 1999,  from 8.07% for
the  comparable  period ended 1998.  The average  cost of funds  decreased by 33
basis points to 4.59% for the three months ended  September  30, 1999 from 4.92%
for the comparable period ended 1998.

Interest  income  increased  $313,000  or 14.15%  primarily  from an increase in
earnings  on loans of  $217,000  or 10.62%,  as the  average  principle  balance
increased  $12,912,000 or 13.07%, to $111,734,000 for the period ended September
30, 1999, from  $98,822,000  for the comparable 1998 period.  Interest income on
investments  and  interest-bearing  deposits with other  financial  institutions
increased  approximately  $96,000  or  57.84%,  as  average  principal  balances
increased $5,642,000 or 52.51% to $16,387,000 for the period ended September 30,
1999, from $10,745,000 for the comparable 1998 period.

Interest  expense  increased  $112,000 or 9.25%,  primarily  from an increase in
interest  on  deposits  of $91,000 or 8.4%,  as the  average  balance  increased
$15,867,000 or 17.9%, to  $104,488,000  for the three months ended September 30,
1999,  from  $88,621,000  for the comparable  1998 period.  Interest  expense on
advances   increased  $21,000  or  16.56%,  as  the  average  balance  increased
$1,083,000 or 11.81%,  to $10,250,000  for the three months ended  September 30,
1999, from $9,167,000 for the comparable 1998 period.

Based upon management's  continuing  evaluation of the adequacy of the allowance
for loan losses  which  encompasses  the  overall  risk  characteristics  of the
various portfolio segments,  past experience with losses, the impact of economic
conditions  on  borrowers,  and other  relevant  factors,  the provision of loan
losses remained stable for the three months ended September 30, 1999,compared to
the same 1998 period. See "Risk Elements".

Noninterest income decreased $20,000 or 10.88%, to $166,000 for the three months
ended  September  30, 1999 from $186,000 for the  comparable  period ended 1998.
This  decrease is primarily  due to the decrease in gains on sales of fixed rate
mortgage   loans  and  related   servicing   rights  of  $33,000  and   $26,000,
respectively.  Offsetting these  decreases,  are increases in service charges on
deposit  accounts  and ATM income of $18,500 and $11,300,  respectively,  due to
increased activity.

Noninterest expense increased $70,000 or 7.57%, to $995,000 for the three months
ended September 30, 1999, from $925,000 for the comparable 1998 period.  For the
three month period ended,  compensation and employee benefits  increased $26,000
or 6.04%,  due to the hiring of additional  employees  and related  benefits for
loan collection, accounting and data processing, as well as, additional costs of
living increases for all full time employees.  Occupancy and equipment increased
$21,000 or 14.92% due  primarily to the  incurrence of real estate taxes for the
Wintersville  branch of $7,400  and an  increase  in  depreciation  expense  for
equipment of $11,000.  Other expenses increased $22,400 or 11.38%, due mainly to
benefit costs in connection with the Company's  directors of $6,100, as well as,
additional Ohio franchise tax of $8,000 due to the Wintersville branch.

                                       -8-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The  Company's   primary  sources  of  funds  are  deposits,   amortization  and
prepayments of loans,  maturities of investment  securities,  and funds provided
from operations.  While scheduled loan  prepayments are a relatively  predicable
source of funds,  deposit flows and loan  prepayments are greatly  influenced by
general interest rates,  economic conditions and competition.  In addition,  the
Company invests excess funds in overnight  deposits,  which provide liquidity to
meet lending requirements.

The Company has other  sources of  liquidity  if the need for  additional  funds
arises.  An additional  source of funds  includes a RepoPlus line of credit with
the Federal Home Loan Bank of Pittsburgh  amounting to $10 million.  The Company
currently has no outstanding amount due on the RepoPlus line of credit.

As of  September  30,  1999,  the  Company  had  commitments  to fund  loans  of
approximately $1,358,600. These loan commitments were funded in October 1999.

The Company has  developed a cash and  liquidity  plan as a result of their year
2000 preparedness and contingency planning. The plan involves the potential need
for additional cash in the event that customers and business react unpredictably
to possible year 2000 related problems.  Part of that reaction could include the
demand for increased  amount of cash by customers.  The process of preparing for
this contingency  will require the bank to withdraw money from  interest-earning
deposit  accounts or increase  their  borrowings  to fund this  infusion of cash
resources. In the event that customers do react unpredictably,  the Company will
have an  adequate  cash  supply  to meet the  customer  demands,  however,  this
activity may cause shrinkage in deposits amounts.  If such an event occurs,  net
income for the quarter ended December 31, 1999 may slightly decrease

Management  monitors both the Company's and the Bank's total risk-based,  Tier I
risk-based  and Tier I leveraged  capital  ratios in order to assess  compliance
with regulatory guidelines. At September 30, 1999, both the Company and the Bank
exceeded the minimum  risk-based and leveraged capital ratio  requirements.  The
Company's and the Bank's total risk-based, Tier I risk-based and Tier I leverage
ratios are 16.53%, 15.88%, 10.87% and 15.34%,  14.70%, and 9.94%,  respectively,
at September 30, 1999.




                                       -9-
<PAGE>

RISK ELEMENTS
-------------

The table below presents information  concerning  nonperforming assets including
nonaccrual loans,  renegotiated loans, loans 90 days past due, other real estate
loans and repossessed  assets.  A loan is classified as nonaccrual  when, in the
opinion of management, there are serious doubts about collectibility of interest
and  principal.  At the time the  accrual of interest  is  discontinued,  future
income is recognized  only when cash is received.  Renegotiated  loans are those
loans which terms have been  renegotiated  to provide a reduction or deferral of
principal or interest as a result of the deterioration of the borrower.


                                                     September 30,    June 30,
                                                         1999          1999
                                                     -------------   -----------

Loans on a nonaccrual basis                            $535            $456
Loans past due 90 days or more and still accruing       165             309
                                                       ----            ----
         Total nonperforming loans                      700             765
                                                       ----            ----

Other real estate                                        50              50
Repossessed assets                                      --                9
                                                       ----            ----
         Total nonperforming assets                    $750            $824
                                                       ----            ----


Nonperforming loans as a percentage of total loans     0.61%           0.69%
                                                       ====            ====

Nonperforming assets as a percentage of total assets   0.55%           0.63%
                                                       ====            ====

Allowance for loan losses to nonperforming loans      86.58%          76.12%
                                                      =====           =====


As of September 30, 1999,  the total  investment in impaired loans was $385,922,
and such amount was subject to a specific  allowance for loan losses of $31,322.
The average  investment in impaired loans during the quarter ended September 30,
1999 was $385,922. The interest income potential based upon the original term of
the contracts of these impaired loans was $8,704 for the quarter ended September
30, 1999. No interest income was recognized during the quarter. In October 1999,
the Company concluded a foreclosure action on the properties securing all of the
impaired  loans as of September  30, 1999 and  reclassified  them as "Other Real
Estate Owned".  Such  properties  were recorded at fair market value,  which was
approximately $355,000.

During the three month period ended  September  30,  1999,  net loans  increased
approximately  $4,515,000 and  nonperforming  loans decreased  $65,000 while the
allowance for loan losses  increased  $23,800 for the same period.  The level of
funding for the  provision is a reflection of the overall loan demand and is not
an  indication of any decline in the quality of the loan  portfolio.  Nonaccrual
loans consist of $149,000 in one to four family residential mortgages,  $317,000
in  commercial  real  estate and $69,000 in  commercial  loans.  The  nonaccrual
commercial  real estate loan and commercial  loan are classified as impaired and
are included above

Management regularly performs an analysis to identify the inherent risks of loss
in its loan portfolio. This evaluation includes evaluations of concentrations of
credit,  past  loss  experience,   current  economic   conditions,   amount  and
composition of loan portfolio  (including loans being specifically  monitored by
management),  estimated fair value of underlying  collateral,  loan  commitments
outstanding, delinquencies, and other information available at such times.

                                      -10-
<PAGE>

The Company monitors its allowance for loan losses and makes future  adjustments
to the allowance  through the  provision for loan losses as economic  conditions
dictate. Management continues to offer a wide variety of loan products. Although
the Company maintains its allowance for loan losses at a level that it considers
to be adequate to provide for the inherent risk of loss in its portfolio,  there
can be no assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods due
to the higher degree of credit risk included in the loan portfolio.

The following is a breakdown of the loan portfolio mix at September 30, 1999 and
June 30, 1999:

                                       September 30,    June 30,
                                           1999           1999
                                      --------------  ------------
Mortgage loans:
           1-4 family                  $ 61,997,029   $ 59,673,803
           Multi-family                   3,621,659      2,689,531
           Non-residential               23,235,164     23,216,018
           Construction                   2,420,688      2,073,165
                                       ------------   ------------
                                         91,274,540     87,652,517
                                       ------------   ------------
Consumer Loans:
           Home Improvement               1,144,195      1,195,518
           Automobile                     9,253,534      8,647,953
           Share loans                    1,333,841      1,360,054
           Other                          2,557,287      2,384,401
                                       ------------   ------------
                                         14,288,857     13,587,926
                                       ------------   ------------

                                       ------------   ------------
Commercial Loans                         10,904,760     10,387,570
                                       ------------   ------------

Less:
           Loans in process               1,313,543      1,006,813
           Net deferred loan fees           133,755        139,369
           Allowance for loan losses        606,084        582,280
                                       ------------   ------------
                                          2,053,382      1,728,462
                                       ------------   ------------
                Total                  $114,414,775   $109,899,551
                                       ============   ============


YEAR 2000 EVALUATION
--------------------

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


                                      -11-
<PAGE>

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

BORROWERS The Company has evaluated most of their borrowers and does not believe
the year 2000 problem  should,  on an aggregate  basis,  impact their ability to
make  payments  to  the  Company.  The  Company  believes  that  most  of  their
residential  borrowers are not dependent on their home  computers for income and
that none of their commercial  borrowers are so large that the year 2000 problem
would  render them unable to collect  revenue or rent and, in turn,  continue to
make loan  payments to the  Company.  The Company  does not expect any  material
costs to address this risk area  throughout  the remainder of calendar 1999, and
believes they are year 2000 compliant in this risk area.

DATA PROCESSING This risk is primarily focused on one third party service bureau
that provides  virtually all of the Company's  data  processing.  In November of
1998,  this  service  bureau has  advised  the  Company  that they are year 2000
compliant.  Additionally,  on January 1, 2000,  the Company will begin  in-house
item processing.  The equipment and software  purchased to perform this function
is certified by the vendor as being year 2000  compliant.  In-house  testing and
validation of the equipment is expected to be completed by November 30, 1999.

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

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

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

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

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



                                      -12-
<PAGE>

PART II - OTHER INFORMATION


Item 1 - Legal Proceedings

                NONE

Item 2 - Changes in securities

                NONE

Item 3 - Defaults upon senior securities

                NOT APPLICABLE

Item 4 - Submission of matters to a vote of security holders

                NONE

Item 5 - Other information

                NONE

Item 6  - Exhibits and reports on Form 8-K

(a)      List of Exhibits:

               3(i) Certificate  of  Incorporation  of  Advance   Financial
                    Bancorp *
               3(ii)Amended Bylaws of Advance Financial Bancorp *****
               4(i) Specimen Stock Certificate * 4 (ii) Shareholders  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 ****
               27   Financial Data Schedule (electronic filing only)

--------------------------------------------------------------------------------
               (b)    None


o    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 July
     17, 1997

***  Incorporated  by  reference  to the June 30,  1997  Form  10K-SB  (File No.
     0-21885) filed September 23, 1997

**** Incorporated by reference to the proxy statement for the Special Meeting of
     the Stockholders on January 20, 1998 and filed with the SEC on December 12,
     1997.

*****Incorporated  by  reference  to the June 30,  1999  Form  10KSB  (File  No.
     0-21885) filed on . September 23, 1999.

                                      -13-
<PAGE>

SIGNATURES

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


                                       Advance Financial Bancorp

Date:  November 12, 1999               By: /s/Stephen M. Gagliardi
                                           ----------------------------------
                                           Stephen M. Gagliardi
                                           President and Chief Executive Officer

Date:  November 12, 1999               By: /s/Stephen M. Magnone
                                           ----------------------------------
                                           Stephen M. Magnone
                                           Vice President and CFO






                                       -14-