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)


       Deleware                                           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 10, 2002:  932,285


<PAGE>



                            Advance Financial Bancorp

                                      Index

                                                                           Page
                                                                          Number
                                                                          ------

Part I - FINANCIAL INFORMATION

       Item 1 - Financial Statements

                Consolidated Balance Sheet (Unaudited)  as of
                September 30, 2002 and June 30, 2002                         3

                Consolidated Statement of Income (Unaudited)
                For the Three Months ended September 30, 2002 and 2001       4

                Consolidated Statement of Cash Flows (Unaudited)
                For the Three Months ended September 30, 2002 and 2001       5

                Notes to the Unaudited Consolidated Financial Statements   6-8


       Item 2 - Management's Discussion and Analysis                       9-15

       Item 3 - Control and Procedures                                      16


Part II - OTHER INFORMATION

       Item 1 - Legal Proceedings                                           17

       Item 2 - Changes in Securities                                       17

       Item 3 - Default Upon Senior Securities                              17

       Item 4 - Submissions of Matters to a vote of Security Holders        17

       Item 5 - Other Information                                           17

       Item 6 - Exhibits and Reports on Form 8-K                            17

SIGNATURES



<PAGE>
                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)


<TABLE>
                                                                                 SEPTEMBER 30,             JUNE 30,
                                                                                     2002                   2002
                                                                                 -------------         -------------
<S>                                                                          <C>                   <C>

Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                           $  2,074,023          $  1,775,051
       Interest bearing deposits with other institutions                           14,211,239             9,995,389
                                                                                 -------------         -------------
          Total cash and cash equivalents                                          16,285,262            11,770,440
                                                                                 -------------         -------------

     Investment securities:
       Securities available for sale                                               12,882,880            12,999,362

     Mortgaged-backed securities:
       Securities held to maturity (fair value of $1,310,417 and $1,449,641)        1,260,519             1,396,306
       Securities available for sale                                                7,509,511             7,791,566
                                                                                 -------------         -------------
          Total mortgage-backed securities                                          8,770,030             9,187,872
                                                                                 -------------         -------------

     Loans held for sale                                                                    -               578,647
     Loans receivable,  (net of allowance for loan losses
          of $885,013 and $969,088 )                                              176,557,416           172,145,867
     Office properties and equipment, net                                           4,682,105             3,901,592
     Federal Home Loan Bank Stock, at cost                                          1,058,100             1,058,100
     Accrued interest receivable                                                    1,157,267             1,160,312
     Other assets                                                                   1,449,938             1,502,749
                                                                                 -------------         -------------
          TOTAL ASSETS                                                           $222,842,998          $214,304,941
                                                                                 =============         =============
Liabilities:
     Deposits                                                                    $182,594,646          $175,058,743
     Advances from Federal Home Loan Bank                                          20,000,000            20,000,000
     Advance payments by borrowers for taxes and insurance                            247,931               404,220
     Accrued interest payable and other liabilities                                 1,164,092               618,232
                                                                                 -------------         -------------
          TOTAL LIABILITIES                                                       204,006,669           196,081,195
                                                                                 -------------         -------------
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                                                    10,397,493            10,380,430
     Retained earnings - substantially restricted                                  10,704,757            10,274,004
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                 (315,704)             (337,394)
     Unallocated shares held by Restricted Stock Plan (RSP)                          (212,273)             (215,775)
     Treasury Stock (152,165 shares at cost)                                       (2,233,265)           (2,233,265)
     Accumulated other comprehensive income                                           386,876               247,301
                                                                                 -------------         -------------
          TOTAL STOCKHOLDERS' EQUITY                                               18,836,329            18,223,746
                                                                                 -------------         -------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $222,842,998          $214,304,941
                                                                                 =============         =============

</TABLE>

   See accompanying notes to the unaudited consolidated financial statements.


                                      -3-


<PAGE>



                            ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)


<TABLE>

                                                                                          THREE MONTHS ENDED
                                                                                               SEPTEMBER 30,
                                                                                          2002             2001
                                                                                      -----------     ------------
<S>                                                                               <C>              <C>

INTEREST AND DIVIDEND INCOME
    Loans                                                                             $3,178,795       $2,847,990
    Investment securities                                                                156,901          168,339
    Interest-bearing deposits with other institutions                                     42,258           50,107
    Mortgage-backed securities                                                           123,564          154,264
    Dividends on Federal Home Loan Bank Stock                                              8,668           21,154
                                                                                      -----------     ------------
         Total interest and dividend income                                            3,510,186        3,241,854
                                                                                      -----------     ------------
INTEREST EXPENSE
    Deposits                                                                           1,383,869        1,532,529
    Advances from Federal Home Loan Bank                                                 292,738          295,187
                                                                                      -----------     ------------
         Total interest expense                                                        1,676,607        1,827,716
                                                                                      -----------     ------------

NET INTEREST INCOME                                                                    1,833,579        1,414,138

Provision for loan losses                                                                 49,200           66,300
                                                                                      -----------     ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                    1,784,379        1,347,838
                                                                                      -----------     ------------

NONINTEREST INCOME
    Service charges on deposit accounts                                                  152,590          135,694
    Income from loan servicing activity                                                   66,235           25,652
    Gain on sale of loans                                                                 94,926           32,379
    Loss on sale of repossessed assets                                                  (12,539)                -
    Other income                                                                         102,529           76,142
                                                                                      -----------     ------------
         Total noninterest income                                                        403,741          269,867
                                                                                      -----------     ------------
NONINTEREST EXPENSE
    Compensation and employee benefits                                                   614,726          524,730
    Occupancy and equipment                                                              251,811          196,675
    Professional fees                                                                     36,016           31,702
    Advertising                                                                           26,795           21,105
    Data processing charges                                                               79,017           64,305
    Other expenses                                                                       347,476          278,500
                                                                                      -----------     ------------
         Total noninterest expenses                                                    1,355,841        1,117,017
                                                                                      -----------     ------------

Income before income taxes                                                               832,279          500,688
Income taxes                                                                             306,899          197,852
                                                                                      -----------     ------------

Income before extaordinary item                                                          525,380          302,836
Extraordinary item- Excess over cost on net assets acquired in merger                          -          201,206
                                                                                      -----------     ------------
Net Income                                                                               525,380          504,042
                                                                                      ===========     ============

EARNINGS PER SHARE - INCOME BEFORE EXTRAORDINARY ITEM
         Basic                                                                        $      .58      $       .34
         Diluted                                                                      $      .58      $       .34

EARNINGS PER SHARE - NET INCOME
         Basic                                                                        $      .58      $       .57
         Diluted                                                                      $      .58      $       .57

</TABLE>


   See accompanying notes to the unaudited consolidated financial statements.


                                       -4-


<PAGE>

                            ADVANCE FINANCIAL BANCORP
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


<TABLE>
                                                                                     THREE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                                    2002             2001
                                                                                ------------     ------------
<S>                                                                         <C>              <C>

OPERATING ACTIVITIES
     Net Income                                                                 $    525,380     $   504,042
     Adjustments to reconcile net income to net cash provided by
        operating activities:
          Depreciation, amortization and accretion, net                               87,212         149,969
          Provision for loan losses                                                   49,200          66,300
          Gain on sale of loans                                                      (94,926)        (32,379)
          Loss on sale of repossessed assets                                          12,539               -
          Extraordinary gain on net assets acquired in merger                              -        (201,206)
          Origination of loans held for sale                                      (7,654,419)     (4,693,270)
          Proceeds from the sale of loans                                          8,327,992       2,954,042
          Increase in other assets and liabilities                                   363,707         134,093
                                                                                ------------     ------------
               Net cash provided by (used in) operating activities                 1,616,685      (1,118,409)
                                                                                ------------     ------------
INVESTING ACTIVITIES
     Investment securities held to maturity:
          Maturities and repayments                                                       -          250,000
     Investment securities available for sale:
          Purchases                                                              (2,004,133)        (256,808)
          Maturities and repayments                                               2,300,550        3,343,200
     Mortgage-backed securities held to maturity:
          Maturities and repayments                                                 135,440          113,740
     Mortgage-backed securities available for sale:
          Purchases                                                              (1,000,050)               -
          Maturities and repayments                                               1,310,210          683,653
     Purchase of Federal Home Loan Bank Stock                                             -         (115,000)
     Sale of Federal Home Loan Bank Stock                                                 -          445,900
     Net increase in loans                                                       (4,210,749)      (1,092,113)
     Purchases of premises and equipment                                           (906,701)         (73,952)
                                                                                ------------     ------------
               Net cash (used in) provided by investing activities               (4,375,433)       3,298,620
                                                                                ------------     ------------
FINANCING ACTIVITIES
     Net increase in deposits                                                     7,535,903          768,242
     Net change in advances for taxes and insurance                                (156,289)           3,845
     Net cash purchase of OSFS stock                                                      -       (6,041,007)
     Cash dividends paid                                                           (106,044)         (86,838)
                                                                                ------------     ------------
               Net cash provided by (used in) financing activities                7,273,570       (5,355,758)
                                                                                ------------     ------------
               Increase (decrease) in cash and cash equivalents                   4,514,822       (3,175,547)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 11,770,440        8,553,178
                                                                                ------------     ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       16,285,262        5,377,631
                                                                                ============     ============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
          Interest on deposits and borrowings                                   $ 1,688,127      $ 1,837,498
          Income taxes                                                          $   285,000      $   160,230


</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,  2003 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 2002 and related  notes which are included on
the Form 10-KSB (file no. 0-21885).


NOTE 2 - EARNINGS PER SHARE

There were no  convertible  securities,  which would affect the  denominator  in
calculating  basic and  diluted  earnings  per share;  therefore,  net income as
presented on the Consolidated Statement of Income will be used as the numerator.
The following  table sets forth the composition of the  weighted-average  common
shares   (denominator)  used  in  the  basic  and  diluted  earnings  per  share
computation.

                                                         Three Months Ended
                                                            September 30

                                                      2002              2001
                                                  ------------      ------------

Weighted-average common shares outstanding          1,084,450        1,084,450
Average treasury stock shares                        (152,165)        (152,165)
Average unearned ESOP and RSP shares                  (42,382)         (49,712)
                                                   -----------      -----------

Weighted-average common shares and
    common stock equivalents used to
    calculate basic earnings per share                889,903          882,573

Additional common stock equivalents
    (stock options) used to calculate
    diluted earnings per share                              -                -
                                                   -----------     ------------
Weighted-average common shares and
    common stock equivalents used
    to calculate diluted earnings per share           889,903          882,573
                                                   ===========     ============




                                       -6-


<PAGE>

NOTE 3 - COMPREHENSIVE INCOME

Other accumulated  comprehensive  income consists solely of net unrealized gains
and  losses  on  available  for sale  securities.  For the  three  months  ended
September 30, 2002,  comprehensive income totaled $664,955. For the three months
ended September 30, 2001, comprehensive income totaled $733,171.

NOTE 4 - EXTRAORDINARY ITEM

As a result of the merger  with OSFS,  the fair  market  value of the net assets
acquired  by the Company  from OSFS  exceeded  the amount paid by  approximately
$2,697,000. In accordance with FASB 141, all non-current and non-financial asset
balances  were  reduced  until the excess fair value was  eliminated.  The total
non-current  and  non-financial  assets  created  as a result of the  merger was
$2,496,000,  therefore,  since  this total was less than the total  excess  fair
value,  these asset  balances were reduced to zero in accordance  with FASB 141.
After    eliminating    these    asset    balances,    approximately    $201,000
($2,697,000-$2,496,000) in excess fair value remained that could not be reduced.
In  accordance  with APB Opinion 30, any excess that remains  after  reducing to
zero the amounts that  otherwise  would have been assigned to those assets,  the
remaining excess shall be recognized as an extraordinary gain. The extraordinary
gain shall be  recognized  in the period in which the  business  combination  is
completed.  The remaining portion of the excess,  $201,206, was recognized as an
extraordinary gain for the period ended September 30, 2001.

NOTE 5 - BRANCH DEVELOPMENT

On  October  28,  2002,  the  Company  entered  into a purchase  and  assumption
agreement  to acquire the  deposits  of Second  National  Bank of  Warren's  two
Steubenville Ohio branches. The assumption includes approximately $92 million in
deposits,  loans of  $135,000  and real and  personal  property  with a value of
approximately  $450,000.  The  Company  is  paying a  premium  of  approximately
$6,000,000  for the deposits.  The deposit and branch  acquisition is subject to
the approval of regulatory authorities.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued FAS No. 145,  "Recission of FASB Statement  No.4,
44 and 64, Amendment of FASB Statement No. 13, and Technical  Corrections".  FAS
No.  145  rescinds  FAS  No.4,   which   required  all  gains  and  losses  from
extinguishment  of debt to be  aggregated  and, if  material,  classified  as an
extraordinary  item, net of related income tax effect. As a result, the criteria
in  Opinion  30 will  now be used to  classify  those  gains  and  losses.  This
statement   also  amends  FASB  FAS  No.  13  to  require  that  certain   lease
modifications that have economic effects similar to sale-leaseback  transactions
be  accounted  for in the  same  manner  as  sale-leaseback  transactions.  This
statement also makes technical corrections to existing pronouncements, which are
not substantive but in some cases may change accounting practice. FAS No. 145 is
effective for transactions occurring after May 15, 2002. The adoption of FAS No.
145 did not have a  material  effect  on the  Company's  financial  position  or
results of operations.

In July 2002, the FASB issued FAS No. 146,  Accounting for Costs Associated with
Exit or  Disposal  Activities,  which  requires  companies  to  recognize  costs
associated  with exit or disposal  activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. This statement replaces
EITF Issue No. 94-3,  Liability  Recognition  for Certain  Employee  Termination
Benefits and Other Costs to Exit an Activity  (Including  Certain Costs Incurred
in a  Restructuring).  The new statement  will be effective for exit or disposal
activities  initiated  after  December  31,  2002,  the adoption of which is not
expected to have a material effect on the Company's financial statements.



                                       -7-

<PAGE>


NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

On October 1, 2002, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement  No.  147,  Acquisitions  of  Certain  Financial  Institutions,  which
provides  guidance  on  the  accounting  for  the  acquisition  of  a  financial
institution,  except those between two or more mutual enterprises. The excess of
the fair  value of  liabilities  assumed  over the fair  value of  tangible  and
identifiable  intangible  assets acquired in a business  combination  represents
goodwill that should be accounted for under FASB Statement No. 142, Goodwill and
Other Intangible Assets. Thus, the specialized  accounting guidance in paragraph
5 of FASB Statement No. 72,  Accounting for Certain  Acquisitions  of Banking or
Thrift Institutions, will not apply after September 30, 2002. In accordance with
Statement  147, if previously  acquired  branches that meet the  definition of a
business  combination  as defined in Emerging  Issues Task Force Issue No. 98-3,
the  amount of the  unidentifiable  intangible  asset  will be  reclassified  to
goodwill  upon  adoption  of  that  Statement.  Financial  institutions  meeting
conditions  outlined in  Statement  147 will be  required to restate  previously
issued financial statements. The objective of that restatement requirement is to
present the balance  sheet and income  statement as if the amount  accounted for
under Statement 72 as an  unidentifiable  intangible asset had been reclassified
to goodwill as of the date Statement 142 was initially applied.  (For example, a
financial  institution  that  adopted  Statement  142 on January 1, 2002,  would
retroactively  reclassify the unidentifiable  intangible asset to goodwill as of
that  date and  restate  previously  issued  income  statements  to  remove  the
amortization  expense  recognized  in 2002).  Those  transition  provisions  are
effective on October 1, 2002; however, early application is permitted.


                                     - 8 -


<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.

     The Company conducts no significant business or operations of its own other
than holding all of the outstanding  stock of the Advance Financial Savings Bank
(the "Bank"). As a result, references to the Company generally refer to the Bank
unless the context indicates otherwise.

OVERVIEW
--------

On September 18, 2002, the Company began operations in its newly  constructed de
novo branch  located in the Hollywood  Plaza in  Steubenville,  Ohio.  This full
service  branch is staffed by seven full time  employees.  The total cost of the
facility totaled approximately  $800,000 and was paid for with cash from current
operations.

On  October  28,  2002,  the  Company  entered  into a purchase  and  assumption
agreement  to acquire the  deposits  of Second  National  Bank of  Warren's  two
Steubenville,  Ohio branches.  The assumption includes approximately $92 million
in deposits,  loans of $135,000 and real and personal  property  with a value of
approximately  $450,000.  The  Company  is paying a premium on the  deposits  of
approximately  $6,000,000.  The deposit and branch acquisition is subject to the
approval of the regulatory  authorities.  It is anticipated that the transaction
will close by the end of the Company's second fiscal quarter of 2003.

The company  expects that its  noninterest  expense in fiscal 2003 will increase
due to the costs associated with opening the three branches.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 AND JUNE 30, 2002
-------------------------------------------------------------------------

The Company's total assets increased by approximately $8,538,000 to $222,842,998
at September 30, 2002,  from  $214,304,941  at June 30, 2002.  Interest  Bearing
deposits with other  institutions  increased  $4,200,000 and net loans increased
$4,412,000  for  the  three-month  period.  These  increases  have  been  funded
primarily by an increase in longer-term certificate of deposit products.

Loans receivable, net increased $4,412,000 to $176,557,416 at September 30, 2002
from  $172,145,867 at June 30, 2002. The increase in net loans consist primarily
of one-to-four  family mortgages,  automobile dealer floor plan loans and dealer
originated   automobile  loans  which  increased   $1,208,000,   $1,736,000  and
$1,639,000, respectively.

Office  properties  and  equipment,  net  increased  $781,000 to  $4,682,105  at
September 30, 2002 from  $3,901,592 at June 30, 2002.  The increase is primarily
the result of the  construction and furnishing of the de novo branch facility in
the Hollywood  Plaza in  Steubenville,  Ohio that open for business on September
18, 2002.

Deposits  increased  $7,536,000  to  $182,594,646  at  September  30,  2002 from
$175,058,743  at June 30,  2002.  The  increase  is  primarily  the result of an
increase  in  longer-term  certificate  of  deposit  products.  The  certificate
increases  are spread  primarily  between the two year  special and 5 and 7 year
term  products.  The  increases in these longer term  products is  reflective of
customer's  desire  to  obtain a higher  rate of return  than  shorter  duration
products can provide in this current interest rate environment.


                                       -9-

<PAGE>

Stockholders'  Equity  increased   approximately   $613,000  to  $18,836,329  at
September  30, 2002 from  $18,223,746  at June 30, 2002.  This  increase was the
result of net income of $525,000 for the period,  the  recognition  of shares in
the Employee Stock  Ownership  Plan and Restricted  Stock Plan of $54,000 and an
increase in the net unrealized  gain on securities of $140,000.  These increases
were offset by the payment of cash dividends of $106,000.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2002 AND 2001
-------------

Net interest income  increased  $419,000 or 29.66%,  to $1,834,000 for the three
months ended September 30, 2002 from $1,414,000 for the comparable  period ended
2001. The increase in net interest income resulted primarily from an increase in
the average  volume of the  underlying  principle  balances in interest  earning
assets and  liabilities.  The net  interest  spread for the three  months  ended
September 30, 2002 increased to 3.21% from 2.93% for the comparable period ended
2001.  The 28 basis point increase in the net interest rate spread for the three
month period was  primarily  due to a 141 basis point decline in average cost of
funds which was offset by a 113 basis point decline in average yields on assets.
See "Average Balance Sheet" for the three-month periods ended September 30, 2002
and 2001.

The provision for loan losses decreased  $17,000 to $49,000 for the three months
ended September 30, 2002 from $66,000 for the comparable  period ended 2001. The
decrease  in the  provision  for loan losses was  precipitated  by a decrease in
nonperforming  loans of $412,000 from June 30, 2002. 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.  The  evaluation 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  basis 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 probable  that the Company  will be unable to
collect  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.

The  allowance  for  loan  losses  is  maintained  at a  level  that  represents
management's best estimates of losses in the loan portfolio at the balance sheet
date. However, 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 that
additional provision for loan losses will not be required. See "Risk Elements".



                                      -10-

<PAGE>


Noninterest  income  increased  $134,000 or 49.61%,  to  $404,000  for the three
months ended  September 30, 2002 from $270,000 for the  comparable  period ended
2001 For the three month period ended September 30, 2002, miscellaneous fees and
fees on deposit accounts  increased by $26,000 and $17,000,  respectively,  as a
result of an increase in core  customers  and  related  activity.  For the three
month period ended  September  30, 2002,  gains on sales of fixed rate loans and
related  loan  servicing   activity  income   increased   $63,000  and  $40,000,
respectively  due to  the  current  fixed  rate  mortgage  loan  environment  in
comparison to the comparable  period ended 2001. The gains of the sales of fixed
rate loans and related loan servicing activity income for the three month period
ended September 30, 2002, are not necessarily  indicative of anticipated  trends
for the remainder of the fiscal year ended June 30, 2003.

Noninterest  expense  increased  $239,000 or 21.38%, to $1,356,000 for the three
months ended September 30, 2002, from $1,117,000 for the comparable 2001 period.
For the three month period ended September 30, 2002,  compensation  and employee
benefits  increased  $90,000.  This  increase  includes  increases  in wages and
benefits  paid of $58,000 due to the hiring of thirteen  (13) new  employees  to
operate the two  branches  created by the merger with OSFS on September 7, 2001.
Also, the increase is the due to an additional cost of living increase for other
full time employees.  Occupancy and equipment,  professional fees, marketing and
data  processing  expenses have  increased by $81,000 for the three month period
ended September 30, 2002. Such increase is primarily due to the operation of the
two branches  created by the merger with OSFS in September  2001.  For the three
month period ended  September 30, 2002,  other expenses have increased  $69,000.
The increase in other expense is due to an increase in supplies,  communications
and postage of $17,000, in fees paid for ATM and consumer card usage of $12,000,
and in fees paid to the Federal  Reserve for item  processing  of $2,000 for the
three month period.  Each of these  increases are primarily  related to customer
activity due to the increase in the Company's core customers  created  primarily
by the  merger  with  OSFS in  September  2001.  Board of  directors  fees  have
increased  $19,000 for the three month period due primarily to the retirement of
one  director  on July 1, 2002 and the  accrual  of the  estimated  compensation
package  as an  honorarium  of that  director's  many  years of  service  to the
Company.  Expenses related to Other Real Estate and Repossessed assets increased
$16,000 for the three month period due to the increased activity in these areas.
Also, state franchise taxes have increased $4,000 for the three month period due
to the increase in the company's capital subject to Ohio Bank Franchise Tax.

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

As of  September  30,  2002,  the  Company  had  commitments  to fund  loans  of
approximately  $1,259,340.  These loan  commitments are expected to be funded by
October 31, 2002.

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, 2002, 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 12.86%, 12.26%, 8.09% and 11.84%, 11.24%, and 7.44%, respectively, at
September 30, 2002.



                                     - 11 -


<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 and
(ii) changes in rate.  Changes 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>

                                                              Period Ended September 30,
                                                    -----------------------------------------------
                                                         2002            vs             2001
                                                    -----------------------------------------------
                                                                   Increase (Decrease)
                                                                       Due to
                                                    -----------------------------------------------
                                                        Volume          Rate             Net
                                                    -----------------------------------------------
<S>                                                    <C>          <C>               <C>

Interest Income:
    Loans                                                 $805,679      $(474,874)        $330,805
    Investments                                             60,948       (123,421)         (62,473)
                                                    -----------------------------------------------
      Total interest-earning assets                        866,627       (598,295)         268,332
                                                    -----------------------------------------------
Interest Expense
    Core Deposits                                          152,960       (107,904)          45,056
    Certificates of Deposit                                270,149       (463,865)        (193,716)
    FHLB Borrowings                                         (2,449)        -                (2,449)
                                                    -----------------------------------------------
      Total interest-bearing liabilities                   420,660       (571,769)        (151,109)
                                                    -----------------------------------------------

Net change in interest income                             $445,967       $(26,526)        $419,441
                                                    ===============================================


</TABLE>




                                      -12-

<PAGE>




Average Balance Sheet for the Three-Month Period ended September 30
-------------------------------------------------------------------

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


<TABLE>

                                                                                     Period Ended September 30,
                                                      ----------------------------------------------------------------------
                                                                    2002                                2001
                                                      --------------------------------     ---------------------------------
                                                      Average                Average       Average                Average
                                                      Balance    Interest   Yield/Cost     Balance    Interest   Yield/Cost
                                                      --------   --------   ----------     --------   --------   ----------
<S>                                                <C>         <C>          <C>         <C>          <C>         <C>

Interest-earning assets:
  Loans receivable (1)                                $174,754    $3,179       7.28%       $136,211     $2,848      8.36%
  Investment securities (2)                             24,791       208       3.35%         19,094        240      5.02%
  Mortgage-backed securities                             8,994       123       5.50%          9,663        154      6.39%
                                                      ---------  --------   --------       ---------   --------   -------
     Total interest-earning assets                     208,539     3,510       6.73%        164,968      3,242      7.86%
                                                                 --------   --------                   --------   -------
Non-interest-earning assets                              8,942                                7,152
                                                      ---------                            ---------
     Total assets                                     $217,481                             $172,120
                                                      =========                            =========

Interest-bearing liabilities:
  Interest-bearing demand deposits                     $29,340       145       1.98%        $21,043        142      2.69%
  Certificates of deposit                              105,353     1,053       4.00%         86,604      1,247      5.76%
  Savings deposits                                      35,727       186       2.08%         20,683        144      2.79%
  FHLB borrowings                                       20,000       293       5.85%         20,000        295      5.90%
                                                      ---------  --------   --------       ---------   --------   -------
     Total interest-bearing liabilities                190,420     1,677       3.52%        148,330      1,828      4.93%
                                                                 --------   --------                   --------   -------
Non-interest bearing liabilities                         8,555                                7,244
                                                      ---------                            ---------
     Total liabilities                                 198,975                              155,574
Stockholders' equity                                    18,506                               16,546
                                                      ---------                            ---------
     Total liabilities and stockholders'
       equity                                         $217,481                             $172,120
                                                      =========                            =========

Net interest income                                              $ 1,833                               $ 1,414
                                                                 ========                              ========
Interest rate spread (3)                                                       3.21%                                2.93%
                                                                            ========                             ========

Net Yield on interest-earning assets (4)                                       3.52%                                3.43%
                                                                            ========                             ========
Ratio of average interest-earning assets  to
  average interest-bearing liabilities                                       109.52%                              111.22%
                                                                            ========                             ========

</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.



                                     - 13 -


<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.


<TABLE>
                                                          September 30,   June 30,
                                                              2002          2002
                                                          -----------   ------------
<S>                                                       <C>           <C>

Loans on a nonaccrual basis                                   $  689        $   864
Loans past due 90 days or more and still accruing                911          1,148
                                                          -----------   ------------
         Total nonperforming loans                             1,600          2,012
                                                          -----------   ------------

Other real estate                                                647            645
Repossessed assets                                                19             18
                                                          -----------   ------------
         Total nonperforming assets                           $2,266         $2,675
                                                          -----------   ------------


Nonperforming loans as a percentage of total net loans         0.91%          1.17%
                                                          ==========    ===========

Nonperforming assets as a percentage of total assets           1.02%          1.25%
                                                          ==========    ===========

Allowance for loan losses to nonperforming loans              55.31%         48.16%
                                                          ==========    ===========

</TABLE>


Nonaccrual  loans  consist  of  $518,746  in  one  to  four  family  residential
mortgages,  $41,352 in  multi-family  mortgages and $128,877 in  non-residential
real estate mortgages at September 30, 2002.

The Company considers a loan impaired when it is probable that the borrower will
not repay  the loan  according  to the  original  contractual  terms of the loan
agreement.  Management has  determined  that first mortgage loans on one-to-four
family   properties   and  all  consumer   loans   represent   large  groups  of
smaller-balance,  homogenous  loans  that  are  to  be  collectively  evaluated.
Management  considers an insignificant  delay,  which is defined as less than 90
days by the Company,  will not cause a loan to be classified as impaired. A loan
is not impaired  during the period of delay in payment if the Company expects to
collect all amounts due including  interest accrued at the contractual  interest
rate during the period of delay.  All loans identified as impaired are evaluated
independently  by management.  The Company  estimates  credit losses on impaired
loans  through  the  allowance  for  loan  losses  by  evaluating  the  recorded
investment in the impaired loan to the estimated present value of the underlying
collateral or the present value of expected cash flows.

As of September 30, 2002,  the total  investment in impaired loans was $784,892,
and such amount was subject to a specific  allowance for loan losses of $35,000.
The average  investment in the impaired loans for the  three-month  period ended
September 30, 2002 was $837,535.  The interest  income  potential based upon the
original  terms of the  contracts  of these  impaired  loans was $18,061 for the
three-month  period  ended  September  30,  2002. A total of $16,773 of interest
income has been recognized for the three month period ended September 30, 2002.



                                      -14-

<PAGE>

During the quarter ended September 30, 2002, the company  foreclosed upon a loan
with a balance of $102,228 that was  classified as impaired at June 30, 2002. As
a result of the foreclosure  action,  the asset  collaterallizing  this loan was
added to "Other Real Estate" in the amount of $75,000, which resulted in a write
down to the allowance for loan losses during the period ended September 30, 2002
of $27,517.

The  allowance  for loan  losses is based  upon  estimates  of  probable  losses
inherent in the loan portfolio.  The amount actually  observed in respect to the
losses  can vary  significantly  from the  estimated  amounts.  Our  methodology
includes  several  features that are intended to reduce the differences  between
estimated and actual losses.  The historical loss experience  model that is used
to established  the loan loss factors for problem graded loans is designed to be
self-correcting by taking into account our recent loss experience. Similarly, by
basing  the  past  graded  loss  factors  on  historical  loss  experience,  the
methodology is further designed to take our recent loss experience into account.
In addition to historical and recent loss trends,  our methodology  incorporates
the current volume and trend in delinquencies,  as well as, a self-assessment of
the status of the local economy.  Our methodology requires the monitoring of the
changing  loan  portfolio  mix and the effect that the  changing  mix has on the
trend in delinquencies, as well as, actually loss factors.

The combination of the historical loss factors, recent loss experience,  current
trend in delinquencies,  the local economic  environment,  and the assessment of
the changing loan portfolio mix are used in  conjunction  with the internal loan
grading system to adjust our allowance on a quarterly  basis.  Furthermore,  our
methodology includes our impaired loan assessment and permits adjustments to any
loss factor used in determining the allowance in the event that, in management's
judgement,  significant  conditions  which  effect  the  collectibility  of  the
portfolio as of the  evaluation  date are not reflected in the loss factors.  By
assessing  the probable  estimated  losses  inherent in the loan  portfolio on a
quarterly  basis,  we are able to adjust  specific and inherent  loss  estimates
based upon recent information, as it becomes available.

The following is a breakdown of the loan portfolio  composition at September 30,
2002 and June 30, 2002:

                                          September 30,           June 30,
                                               2002                 2002
                                         -----------------    -----------------
Mortgage loans:
           1-4 family                         $92,871,404          $91,663,131
           Multi-family                         7,226,421            6,864,328
           Non-residential                     34,060,252           36,146,830
           Construction                         3,878,478            4,338,936
                                         -----------------    -----------------
                                              138,036,555          139,013,225
                                         -----------------    -----------------
Consumer Loans:
           Home Improvement                       965,020              943,384
           Automobile                          19,277,572           17,176,464
           Share loans                          1,592,580            1,589,842
           Other                                2,709,473            2,613,244
                                         -----------------    -----------------
                                               24,544,645           22,322,934
                                         -----------------    -----------------

                                         -----------------    -----------------
Commercial Loans                               17,554,328           14,824,483
                                         -----------------    -----------------
Less:
           Loans in process                     2,599,897            2,961,044
           Net deferred loan fees                  93,202               84,643
           Allowance for loan losses              885,013              969,088
                                         -----------------    -----------------
                                                3,578,112            4,014,775
                                         -----------------    -----------------
                Total                        $176,557,416         $172,145,867
                                         =================    =================


                                      -15-

<PAGE>

CONTROLS AND PROCEDURES
-----------------------

(1) Evaluation of disclosure controls and procedures - Based on their evaluation
    ------------------------------------------------
as of a date within 90 days of the filing date of this Quarterly  Report on Form
10-QSB,  the Registrant's  principal  executive officer and principal  financial
officer have concluded that the Registrant's  disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c)  under the Securities  Exchange Act
of 1934 (the "Exchange Act")) are effective to ensure that information  required
to be  disclosed  by the Company in reports  that it files or submits  under the
Exchange Act is recorded,  processed,  summarized  and reported  within the time
periods specified in Securities and Exchange Commission rules and forms.

(2)  Changes in  internal  controls - There were no  significant  changes in the
     ------------------------------
Registrant's  internal  controls or in other  factors  that could  significantly
affect these controls subsequent to the date of their evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.




                                      -16-

<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 ****
               99    Certifications  pursuant to 18 U.S.C.  Section 1350, as
                     adopted pursuant to section 906 of the Sarbanes-Oxley Act
                     of 2002

         (b)  None


--------------------------------------------------------------------------------
*    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 28, 1999.



                                      -17-

<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, 2002              By:  /s/ Stephen M. Gagliardi
                                           -------------------------------------
                                           Stephen M. Gagliardi
                                           President and Chief Executive Officer



Date:  November 12, 2002              By:  /s/ Stephen M. Magnone
                                           -------------------------------------
                                           Stephen M. Magnone
                                           Treasurer (Chief Financial Officer)


<PAGE>


                            SECTION 302 CERTIFICATION


     I,   Stephen M. Gagliardi, certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Advance  Financial
     Bancorp;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: November 12, 2002                    /s/ Stephen M. Gagliardi
      -----------------------------        -------------------------------------
                                           Stephen M. Gagliardi
                                           President and Chief Executive Officer



<PAGE>


                            SECTION 302 CERTIFICATION


         I, Stephen M. Magnone, certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Advance  Financial
     Bancorp ;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: November 12, 2002                      /s/ Stephen M. Magnone
      -----------------------------          -----------------------------------
                                             Stephen M. Magnone
                                             Treasurer (Chief Financial Officer)