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 February 1, 2001:   932,285

<PAGE>

                            Advance Financial Bancorp

                                      Index



                                                                           Page
                                                                          Number
                                                                          ------


Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

                 Consolidated Balance Sheet (Unaudited) as of
                   December 31, 2000 and June 30, 2000                      3

                 Consolidated Statement of Income (Unaudited)
                   For the Three Months ended December 31, 2000 and 1999    4

                 Consolidated Statement of Income (Unaudited)
                   For the Six Months ended December 31, 2000 and 1999      5

                 Consolidated Statement of Cash Flows (Unaudited)
                   For the Six Months ended December 31, 2000 and 1999      6

                 Notes to the Unaudited Consolidated Financial Statements   7-8


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

Part II - OTHER INFORMATION

           Item 1 - Legal Proceedings                                         16

           Item 2 - Changes in Securities                                     16

           Item 3 - Default Upon Senior Securities                            16

           Item 4 - Submissions of Matters to a vote of Security Holders      16

           Item 5 - Other Information                                         17

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

SIGNATURES                                                                    18
<PAGE>
                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
                                                                               DECEMBER 31,        JUNE 30,
                                                                                    2000             2000
                                                                               -------------    --------------------
<S>                                                                           <C>              <C>
Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                         $   1,101,274    $   1,109,746
       Interest bearing deposits with other institutions                           5,416,711        4,641,878
                                                                               -------------    -------------
          Total cash and cash equivalents                                          6,517,985        5,751,624
                                                                               -------------    -------------
     Investment securities:
       Securities held to maturity (fair value of $1,234,455 and $1,187,625)       1,249,803        1,249,672
       Securities available for sale                                              13,263,082        8,234,637
                                                                               -------------    -------------
          Total investment securities                                             14,512,885        9,484,309
                                                                               -------------    -------------
     Mortgaged-backed securities:
       Securities held to maturity (fair value of $1,843,585 and $2,027,016)       1,840,683        2,089,010
       Securities available for sale                                               6,590,628        1,556,172
                                                                               -------------    -------------
          Total mortgage-backed securities                                         8,431,311        3,645,182
                                                                               -------------    -------------
     Loans held for sale                                                             300,611                -
     Loans receivable,  (net of allowance for loan losses
          of $704,682 and $682,103 )                                             125,079,998      119,721,308
     Office properties and equipment, net                                          3,997,208        4,070,295
     Federal Home Loan Bank Stock, at cost                                         1,075,000          800,000
     Accrued interest receivable                                                   1,008,578          870,955
     Other assets                                                                    897,898          920,767
                                                                               -------------    -------------
          TOTAL ASSETS                                                         $ 161,821,474    $ 145,264,440
                                                                               =============    =============
Liabilities:
     Deposits                                                                  $ 123,807,750    $ 118,930,939
     Advances from Federal Home Loan Bank                                         21,500,000       10,500,000
     Advance payments by borrowers for taxes and insurance                           192,542          203,320
     Accrued interest payable and other liabilities                                  516,984          561,907
                                                                               -------------    -------------
          TOTAL LIABILITIES                                                      146,017,276      130,196,166
                                                                               -------------    -------------
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                                                   10,332,553       10,329,885
     Retained earnings - substantially restricted                                  8,451,670        8,181,053
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                (467,534)        (510,915)
     Unallocated shares held by Restricted Stock Plan (RSP)                         (391,541)        (505,849)
     Treasury Stock (152,165 shares at cost)                                      (2,233,265)      (2,233,265)
     Accumulated other comprehensive income (loss)                                     3,870         (301,080)
                                                                               -------------    -------------
          TOTAL STOCKHOLDERS' EQUITY                                              15,804,198       15,068,274
                                                                               -------------    -------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 161,821,474    $ 145,264,440
                                                                               =============    =============
</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
                                                                  DECEMBER 31,
                                                             2000          1999
                                                       ------------    -----------
<S>                                                   <C>            <C>
INTEREST AND DIVIDEND INCOME
    Loans                                               $ 2,661,463    $ 2,370,995
    Investment securities                                   175,623        177,137
    Interest-bearing deposits with other institutions        95,435         28,368
    Mortgage-backed securities                               98,096         65,267
    Dividends on Federal Home Loan Bank Stock                15,511         13,721
                                                        -----------    -----------
         Total interest and dividend income               3,046,128      2,655,488
                                                        -----------    -----------
INTEREST EXPENSE
    Deposits                                              1,506,919      1,218,001
    Advances from Federal Home Loan Bank                    241,990        205,986
                                                        -----------    -----------
         Total interest expense                           1,748,909      1,423,987
                                                        -----------    -----------
NET INTEREST INCOME                                       1,297,219      1,231,501

Provision for loan losses                                    40,800         37,500
                                                        -----------    -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       1,256,419      1,194,001
                                                        -----------    -----------

NONINTEREST INCOME
    Service charges on deposit accounts                     129,748        112,931
    Gain on sale of loans                                     4,295          3,528
    Loss on other real estate owned                         (20,000)             -
    Loss on sale of investments                              (1,705)             -
    Other income                                             67,243         62,088
                                                        -----------    -----------
         Total noninterest income                           179,581        178,547
                                                        -----------    -----------
NONINTEREST EXPENSE
    Compensation and employee benefits                      510,682        483,359
    Occupancy and equipment                                 192,219        165,456
    Professional fees                                        27,110         25,512
    Advertising                                              27,583         28,280
    Data processing charges                                  57,780         85,136
    Other expenses                                          242,893        245,384
                                                        -----------    -----------
         Total noninterest expenses                       1,058,267      1,033,127
                                                        -----------    -----------
Income before income taxes                                  377,733        339,421
Income taxes                                                153,179        130,657
                                                        -----------    -----------
NET INCOME                                              $   224,554    $   208,764
                                                        ===========    ===========

EARNINGS PER SHARE
         Basic                                          $       .25    $       .23
         Diluted                                        $       .25    $       .23

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                       -4-

<PAGE>
                          ADVANCE FINANCIAL BANCORP
                 CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                             SIX MONTHS ENDED
                                                                DECEMBER 31,
                                                            2000          1999
                                                        -----------    -----------
<S>                                                   <C>            <C>
INTEREST AND DIVIDEND INCOME
    Loans                                               $ 5,204,014    $ 4,632,901
    Investment securities                                   345,901        309,324
    Interest-bearing deposits with other institutions       142,180         82,069
    Mortgage-backed securities                              157,491        129,580
    Dividends on Federal Home Loan Bank Stock                30,090         24,431
                                                        -----------    -----------
         Total interest and dividend income               5,879,676      5,178,305
                                                        -----------    -----------
INTEREST EXPENSE
    Deposits                                              2,943,566      2,387,345
    Advances from Federal Home Loan Bank                    407,000        351,376
                                                        -----------    -----------
         Total interest expense                           3,350,566      2,738,721
                                                        -----------    -----------

NET INTEREST INCOME                                       2,529,110      2,439,584

Provision for loan losses                                    70,800         75,000
                                                        -----------    -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       2,458,310      2,364,584
                                                        -----------    -----------
NONINTEREST INCOME
    Service charges on deposit accounts                     235,328        217,895
    Gain on sale of loans                                     9,411          4,139
    Loss on other real estate owned                         (20,000)             -
    Loss on sale of investments                              (1,705)             -
    Other income                                            139,657        121,982
                                                        -----------    -----------
         Total noninterest income                           362,691        344,016
                                                        -----------    -----------
NONINTEREST EXPENSE
    Compensation and employee benefits                    1,010,172        939,899
    Occupancy and equipment                                 371,651        327,297
    Professional fees                                        56,627         58,022
    Advertising                                              53,229         63,108
    Data processing charges                                 113,334        175,305
    Other expenses                                          479,886        464,726
                                                        -----------    -----------
         Total noninterest expenses                       2,084,899      2,028,357
                                                        -----------    -----------
Income before income taxes                                  736,102        680,243

Income taxes                                                294,876        266,382
                                                        -----------    -----------
NET INCOME                                              $   441,226    $   413,861
                                                        ===========    ===========
EARNINGS PER SHARE
         Basic                                          $       .50    $       .46
         Diluted                                        $       .50    $       .46

</TABLE>

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

<PAGE>
                         ADVANCE FINANCIAL BANCORP
             CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED
                                                                          DECEMBER 31,
                                                                      2000             1999
                                                                  ------------    ------------
<S>                                                             <C>             <C>
OPERATING ACTIVITIES
    Net Income                                                    $    441,226    $    413,861
    Adjustments to reconcile net income to net cash provided by
       operating activities:
        Depreciation, amortization and accretion, net                  321,601         282,974
        Provision for loan losses                                       70,800          75,000
        Loss on other real estate owned                                 20,000               -
        Loss on sale of investments                                      1,705               -
        Gain on sale of loans                                           (9,411)         (4,139)
        Origination of loans held for sale                          (1,986,945)     (1,056,640)
        Proceeds from the sale of loans                              1,695,745       1,060,779
        Decrease in other assets and liabilities                      (291,777)       (142,717)
                                                                  ------------    ------------
             Net cash provided by operating activities                 262,944         629,118
                                                                  ------------    ------------
INVESTING ACTIVITIES
    Investment securities held to maturity:
        Purchases                                                            -        (249,453)
    Investment securities available for sale:
        Purchases                                                   (4,694,575)     (4,467,656)
        Maturities and repayments                                        9,330         503,740
    Mortgage-backed securities held to maturity:
        Maturities and repayments                                      247,312         196,166
    Mortgage-backed securities available for sale:
        Purchases                                                   (5,002,344)              -
        Maturities and repayments                                       82,611         162,660
    Purchase of Federal Home Loan Bank Stock                          (275,000)       (170,500)
    Net increase in loans                                           (5,429,490)     (8,794,518)
    Purchases of premises and equipment                               (129,850)       (201,228)
                                                                  ------------    ------------
             Net cash used in investing activities                 (15,192,006)    (13,020,789)
                                                                  ------------    ------------
FINANCING ACTIVITIES
    Net increase in deposits                                         4,876,811       6,702,901
    Net increase in short term advances from FHLB                    1,000,000       7,000,000
    Net Proceeds from advances from the FHLB                        10,000,000               -
    Net change in advances for taxes and insurance                     (10,778)         (6,343)
    Purchase of treasury stock                                               -        (606,375)
    Cash dividends paid                                               (170,610)       (171,381)
                                                                  ------------    ------------
             Net cash provided by financing activities              15,695,423      12,918,802
                                                                  ------------    ------------
             Increase in cash and cash equivalents                     766,361         527,131

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     5,751,624       4,359,870
                                                                  ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                        $  6,517,985    $  4,887,001
                                                                  ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the period for:
        Interest on deposits and borrowings                       $  3,406,798    $  2,656,284
        Income taxes                                              $    409,930    $    267,672

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                      -6-
<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,  2001 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 2000 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  numerator  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.

                                                  Six Months Ended
                                                     December 31
                                                 2000          1999
                                              ----------    ----------

Weighted-average common shares outstanding     1,084,450     1,084,450
Average treasury stock shares                   (152,165)     (120,451)
Average unearned ESOP and RSP shares             (56,301)      (63,121)
                                              ----------    ----------
Weighted -average common shares and
    common stock equivalents used to
    calculate basic earnings per share           875,984       900,878

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      875,984       900,878
                                              ==========    ==========

                                       -7-
<PAGE>

NOTE 2 - EARNINGS PER SHARE (CONTINUED)

                                                Three Months Ended
                                                   December 31
                                                  2000          1999
                                              ----------    ----------

Weighted-average common shares outstanding     1,084,450     1,084,450
Average treasury stock shares                   (152,165)     (134,665)
Average unearned ESOP and RSP shares             (54,711)      (61,675)
                                              ----------    ----------
Weighted -average common shares and
    common stock equivalents used to
    calculate basic earnings per share           877,574       888,110

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      877,574       888,110
                                              ==========    ==========


NOTE 3 - COMPREHENSIVE INCOME

Other accumulated  comprehensive income (loss) consists solely of net unrealized
gains and losses on available for sale securities.  For the three and six months
ended December 31, 2000,  comprehensive  income  totaled  $451,001 and $746,176,
respectively.   For  the  three  and  six  months   ended   December  31,  1999,
comprehensive income totaled $69,162 and $232,993, respectively.


                                       -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,  Year 2000  issues,  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.

     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.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31,2000 AND JUNE 30, 2000
-----------------------------------------------------------------------
Total assets increased by approximately  $16,557,000 to $161,821,474 at December
31, 2000,  from  $145,264,440 at June 30, 2000. The increase is primarily due to
increases in investment securities and mortgage-backed  securities,  as well as,
increased  loan demand.  Advances  from the Federal Home Loan Bank  ("FHLB") and
Deposits, which increased by $11,000,000 and $4,877,000, respectively, were used
to fund the asset growth.

Investment  securities  increased by $5,029,000 to  $14,512,885  at December 31,
2000,  from $9,484,309 at June 30, 2000. The increase is primarily the result of
four insured  municipal  bond  securities  classified as available for sale that
were purchased in December of 2000. The average tax equivalent yield of the four
securities approximates 7.70%.

Mortgage-backed securities increased by $4,786,000 to $8,431,311 at December 31,
2000,  from $3,645,182 at June 30, 2000. The increase is primarily the result of
a GNMA security  classified as available for sale that was purchased in November
2000. The security has a weighted-average coupon of 7.5%.

Net loans  receivable  increased by $5,359,000 to  $125,079,998  at December 31,
2000, from  $119,721,308 at June 30, 2000. The increase in loans was spread over
the entire loan portfolio. Loans secured by 1-4 family residences, including 1-4
family  construction,  increased by $808,000 due to demand for  adjustable  rate
mortgages.    Non-residential   mortgage   loans,   including    non-residential
construction,  increased  $2,328,000  due to  strong  demand  for the  Company's
competitively  priced  adjustable  rate  mortgage  products.   Automobile  loans
increased  $1,298,000  due  principally  to increased  loan activity  written by
automobile  dealership  customers of the Company.  Commercial loans increased by
$1,000,000 due  principally  to increased  demand from existing  customers.  See
"Risk Elements".

Deposits  increased  by  $4,877,000  to  $123,807,750  at December 31, 2000 from
$118,930,939  at June 30, 2000.  Within the deposit line item,  certificates  of
deposit  increased  by  $5,798,000  to  $81,809,500  at  December  31, 2000 from
$76,011,529  at June  30,  2000.  This  increase  is  primarily  the  result  of
certificate of deposit specials that have been offered over the six-month period
ended December 31, 2000. Although the same specials are being offered currently,
the  annual  percentage  rates  have been  reduced  for each term from the rates
reported in the prior three months period. The seven month special currently has
an annual  percentage  rate of 5.87% down from  6.66%,  the eleven  (11)  month,
thirteen (13) month,  and nineteen (19) month specials  currently have an annual
percentage  rate of 5.92% down from 6.66%,  6.92% and 6.92%,  respectively.  The
seven and  nineteen  month  maturity  areas have been  equally  popular with the
Company's customers.  There is a noticeable trend of customers withdrawing money
from  their  money  market  demand  accounts  and  placing  such  funds  in  the
seven-month certificate special.  Savings deposits and demand deposits decreased
$399,000 and $522,000, respectively, for the six-month period ended December 31,
2000.  The demand  deposit  decrease was primarily the net result of the current
short-term certificate special discussed above.

                                       -9-
<PAGE>

Advances from the FHLB increased $11,000,000 to $21,500,000 at December 31, 2000
from  $10,500,000 at June 30, 2000. This increase is the net result of three new
advances obtained over the current period.  The first is a $3,500,000 advance in
September  that replaced a matured  $2,500,000  advance.  This new advance has a
maturity  of March  2001 and is  priced at the 1 month  LIBOR  rate less 6 basis
points,  currently 6.65%. The second advance is a $5,000,000  convertible select
that was obtained in November 2000.  This new advance has a maturity of November
2010 with a conversion  date of November 2003 and is priced at 6.05%.  The third
advance is a $5,000,000  convertible  select that was obtained in December 2000.
This new  advance  has a maturity of  December  2010 with a  conversion  date of
December  2004 and is priced at 5.54%.  The  additional  funds were used to fund
current loan demand,  purchase investment securities and to strategically reduce
future cost of funds.

Equity capital increased by  approximately,  $736,000 to $15,804,670 at December
31,  2000  from  $15,068,274  at June 30,  2000.  Net  income of  $441,000,  the
recognition of shares in the Employee Stock Ownership Plan and Restricted  Stock
Plan of $160,000,  and an increase in the net  unrealized  gain on securities of
$305,000 were offset by the payment of cash dividends of $170,000.


COMPARISON  OF THE  RESULTS OF  OPERATIONS  FOR THE THREE AND SIX  MONTHS  ENDED
December 31, 2000 AND 1999
--------------------------------------------------------------------------------

Net interest  income  increased  $66,000 or 5.34%,  to $1,297,000  for the three
months ended December 31, 2000 from  $1,231,000 for the comparable  period ended
1999. 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
December 31, 2000 decreased to 3.05% from 3.25% for the comparable  period ended
1999. See "Average Balance Sheet" for the three-month periods ended December 31,
2000 and 1999.

Net interest income increased $89,000 or 3.67%, to $2,529,000 for the six-months
December 31, 2000 from  $2,440,000  for the  comparable  period ended 1999.  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 six months ended December 31,
2000  decreased to 3.05% from 3.27% for the  comparable  period ended 1999.  See
"Average  Balance  Sheet" for the six-month  periods ended December 31, 2000 and
1999.

Interest and dividend income  increased  $391,000 or 14.71% for the three months
ended December 31, 2000 compared to the same period ended 1999. Interest expense
increased  $325,000  or 22.82% for the  three-months  ended  December  31,  2000
compared to the same period  ended 1999.  See  "Average  Balance  Sheet" for the
three-month periods ended December 31, 2000 and 1999.

Interest and dividend  income  increased  $701,000 or 13.54% for the  six-months
ended December 31, 2000 compared to the same period ended 1999. Interest expense
increased $612,000 or 22.34% for the six-months ended December 31, 2000 compared
to the same period ended 1999.  See "Average  Balance  Sheet" for the  six-month
periods ended December 31, 2000 and 1999.

Noninterest  income  increased  $1,000 or .58%, to $180,000 for the three months
ended  December  31, 2000 from  $179,000 for the  comparable  period ended 1999.
Noninterest  income  increased  $19,000 or 5.43% to $363,000 for the  six-months
ended December 31, 2000 from $344,000 for the comparable  period ended 1999. For
the three and six month period of 2000,  miscellaneous  fees and fees on deposit
accounts increased by $27,000 and $37,000,  respectively,  also gain on sales of
fixed rate loans and related  servicing  rights  decreased  $4,000 for the three
month period and increased  $4,000 for the six-month  period of 2000.  These net
increases  were offset by a write-down of Other Real Estate Owned of $20,000 and
a recognized loss on an investment of $2,000.

                                      -10-
<PAGE>

Noninterest  expense  increased  $25,000 or 2.43%,  to $1,058,000  for the three
months ended December 31, 2000,  from $1,033,000 for the comparable 1999 period.
Noninterest expense increased $57,000 or 2.79%, to $2,085,000 for the six months
ended December 31, 2000 from  $2,028,000  for the comparable  period ended 1999.
For the three and six month periods ended  December 31, 2000,  compensation  and
employee   benefits   increased   $27,000  or  5.65%,   and  $70,000  or  7.48%,
respectively. The increases in compensation and employee benefits are due to the
hiring of additional employees for loan collection and data processing,  as well
as,  additional costs of living  increases for all full time employees.  For the
three and six month  periods  ended  December 31, 2000,  occupancy and equipment
increased $27,000 and $44,000  respectively.  The increases are due primarily to
an increase in combined  equipment  depreciation  and maintenance of $31,000 and
$48,000 for the three and six month  periods,  respectively.  The  increases are
directly related to the in-house item-processing department that began formation
during this three-month  period ended in 1999. Data processing charges decreased
$27,000 and $62,000 for the three and six month periods ended December 31, 2000.
The  decreases  are due to the  completion  of the  conversion  to in house item
processing  in January  2000.  The  decreases in data  processing  are offset by
similar  increases in "occupancy and equipment" for maintenance and depreciation
and  in  "other  expenses"  for  supplies,  communications  and  postage,  which
increased $11,000 and $22,000 for the three and six month periods, respectively.
Anticipated  future  decreases  in data  processing  will be offset  by  similar
increases in these line items.


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

As of  December  31,  2000,  the  Company  had  commitments  to  fund  loans  of
approximately  $865,337.  These loan  commitments  are  expected to be funded by
January 31, 2001.

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 December 31, 2000, 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 15.64%, 14.97%, 9.76% and 14.87%, 14.21%, and 9.18%, respectively, at
December 31, 2000.

                                      -11-
<PAGE>
Average Balance Sheet for the Three-Month Period ended December 31

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

<TABLE>
<CAPTION>
                                                                          Period Ended December 31,
                                              --------------------------------------------------------------------------------------
                                                             2000                                           1999
                                              ---------------------------------------     ------------------------------------------
                                               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)                         $123,618         $2,661         8.61%          $116,418         $2,371         8.15%
  Investment securities (2)                      15,635            287         7.33%            13,852            219         6.33%
  Mortgage-backed securities                      5,939             98         6.61%             3,995             65         6.54%
                                              ----------   ------------   -----------     -------------   ------------   -----------
     Total interest-earning assets              145,192          3,046         8.39%           134,265          2,655         7.91%
                                                           ------------   -----------                     ------------   -----------
Non-interest-earning assets                       7,011                                          8,043
                                              ----------                                  -------------
     Total assets                              $152,203                                       $142,308
                                              ==========                                  =============
Interest-bearing liabilities:
  Interest-bearing demand deposits              $19,290            168         3.48%           $20,685            175         3.39%
  Certificates of deposit                        79,839          1,219         6.11%            70,232            930         5.30%
  Savings deposits                               16,996            120         2.82%            16,655            113         2.71%
  FHLB borrowings                                14,833            242         6.53%            14,750            206         5.59%
                                              ----------   ------------   -----------     -------------   ------------   -----------
     Total interest-bearing liabilities         130,958          1,749         5.34%           122,322          1,424         4.66%
                                                           ------------   -----------                     ------------   -----------
Non-interest bearing liabilities                  5,714                                          5,087
                                              ----------                                  -------------
     Total liabilities                          136,672                                        127,409
Stockholders' equity                             15,531                                         14,899
                                              ----------                                  -------------
     Total liabilities and stockholders'
       equity                                  $152,203                                       $142,308
                                              ==========                                  =============
Net interest income                                            $ 1,297                                        $ 1,231
                                                           ============                                   ============
Interest rate spread (3)                                                       3.05%                                          3.25%
                                                                          ===========                                   ===========
Net Yield on interest-earning assets (4)                                       3.57%                                          3.67%
                                                                          ===========                                    ===========
Ratio of average interest-earning assets  to
  average interest-bearing liabilities                                       110.87%                                        109.76%
                                                                          ===========                                    ===========
</TABLE>
-----------------------
(1)  Average balances include non-accrual loans.
(2)  Includes interest-bearing deposits in other financial institutions and FHLB
     stock.
(3)  Interest-rate spread represents the difference between the average yield on
     interest   earning   assets  and  the  average  cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                      -12-
<PAGE>
Average Balance Sheet for the Six-Month Period ended December 31

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

<TABLE>
<CAPTION>
                                                                          Period Ended December 31,
                                             ---------------------------------------------------------------------------------------
                                                             2000                                           1999
                                             ----------------------------------------     ------------------------------------------
                                               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)                         $122,212         $5,204         8.52%          $114,076         $4,633         8.12%
  Investment securities (2)                      14,879            518         6.97%            13,017            416         6.39%
  Mortgage-backed securities                      4,746            158         6.64%             4,100            130         6.32%
                                             -----------   ------------   -----------     -------------   ------------   -----------
     Total interest-earning assets              141,837          5,880         8.29%           131,193          5,179         7.89%
                                                           ------------   -----------                     ------------   -----------
Non-interest-earning assets                       7,093                                          7,163
                                             -----------                                  -------------
     Total assets                              $148,930                                       $138,356
                                             ===========                                  =============
Interest-bearing liabilities:
  Interest-bearing demand deposits              $19,499            341         3.50%           $21,047            352         3.34%
  Certificates of deposit                        78,201          2,357         6.03%            68,374          1,813         5.30%
  Savings deposits                               17,313            246         2.84%            16,609            223         2.68%
  FHLB borrowings                                12,750            407         6.38%            12,500            351         5.62%
                                             -----------   ------------   -----------     -------------   ------------   -----------
     Total interest-bearing liabilities         127,763          3,351         5.24%           118,530          2,739         4.62%
                                                           ------------   -----------                     ------------   -----------
Non-interest bearing liabilities                  5,794                                          4,882
                                             -----------                                  -------------
     Total liabilities                          133,557                                        123,412
Stockholders' equity                             15,373                                         14,944
                                             -----------                                  -------------
     Total liabilities and stockholders'
       equity                                  $148,930                                       $138,356
                                             ===========                                  =============
Net interest income                                            $ 2,529                                        $ 2,440
                                                           ============                                   ============
Interest rate spread (3)                                                       3.05%                                          3.27%
                                                                          ===========                                    ===========
Net Yield on interest-earning assets (4)                                       3.57%                                          3.72%
                                                                          ===========                                    ===========
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                       111.02%                                        110.68%
                                                                          ===========                                    ===========
</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>
<CAPTION>

                                                           December 31,        June 30,
                                                              2000               2000
                                                           --------------   ----------------

<S>                                                             <C>                <C>
Loans on a nonaccrual basis                                         $282               $304
Loans past due 90 days or more and still accruing                    232                189
                                                           --------------   ----------------
         Total nonperforming loans                                   514                493
                                                           --------------   ----------------

Other real estate                                                    387                407
Repossessed assets                                                     8                 21
                                                           --------------   ----------------
         Total nonperforming assets                                 $909               $921
                                                           --------------   ----------------

Nonperforming loans as a percentage of total net loans              0.41%              0.41%
                                                           ==============   ================
Nonperforming assets as a percentage of total assets                0.56%              0.63%
                                                           ==============   ================
Allowance for loan losses to nonperforming loans                  137.10%            138.36%
                                                           ==============   ================
</TABLE>


Nonaccrual loans consist of $87,000 in one to four family residential mortgages,
$43,000 in  multi-family  mortgages,  $131,000  in  non-residential  real estate
mortgages  and $21,000 in  commercial  loans at December  31,  2000.  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.

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.


                                      -14-

<PAGE>

The following is a breakdown of the loan  portfolio  composition at December 31,
2000 and June 30, 2000:

                                       December 31,     June 30,
                                           2000           2000
                                       ------------   ------------
Mortgage loans:
           1-4 family                  $ 63,521,689   $ 62,163,992
           Multi-family                   5,353,845      5,469,906
           Non-residential               26,789,106     24,543,795
           Construction                   2,910,872      3,241,801
                                       ------------   ------------
                                         98,575,512     95,419,494
                                       ------------   ------------
Consumer Loans:
           Home Improvement               1,334,525      1,439,387
           Automobile                    12,201,802     10,903,416
           Share loans                    1,653,226      1,406,328
           Other                          2,641,154      2,675,498
                                       ------------   ------------
                                         17,830,707     16,424,629
                                       ------------   ------------

                                       ------------   ------------
Commercial Loans                         11,500,667     10,500,256
                                       ------------   ------------
Less:
           Loans in process               1,995,678      1,812,877
           Net deferred loan fees           126,528        128,091
           Allowance for loan losses        704,682        682,103
                                       ------------   ------------
                                          2,826,888      2,623,071
                                       ------------   ------------
                Total                  $125,079,998   $119,721,308
                                       ============   ============


                                      -15-
<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

The annual  meeting of the  shareholders  of the Company was held on October 24,
2000 and the following matters were voted upon:

PROPOSAL I - Election of Directors with term to expire in 2003.

                                              FOR         WITHHELD
                                              ---         --------
     William B. Chesson                     701,097        109,102
     Stephen M. Gagliardi                   703,496        106,703
     James R. Murphy                        703,272        106,927

Directors continuing in office are George H. Johnson, John R. Sperlazza, William
E. Watson, and Frank Gary Young.

PROPOSAL  II -  Ratification  of the  appointment  of S.R.  Snodgrass,  AC.,  as
                independent auditors for the Company, for the fiscal year ending
                June 30, 2001.

                                              FOR         AGAINST       ABSTAIN
                                              ---         -------       -------
                                            788,999         100         21,100


Item 5 - Other information

On December  21,  2000,  the  Company  issued a press  release to  announce  the
appointment  of Kelly M. Bethel to the Board of Directors of the Company and the
Bank.

                                      -16-


<PAGE>

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 ****

------------------------------------------------------------------
(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:  February 7, 2001                By: /s/Stephen M. Gagliardi
                                           -------------------------------------
                                           Stephen M. Gagliardi
                                           President and Chief Executive Officer

Date:  February 7, 2001                By: /s/Stephen M. Magnone
                                           -------------------------------------
                                           Stephen M. Magnone
                                           Treasurer (Chief Accounting Officer)


                                       -18