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 April 23, 1999:   981,285



<PAGE>

                            Advance Financial Bancorp

                                      Index


                                                                           Page
                                                                          Number
                                                                          ------


Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

                 Consolidated Balance Sheet (Unaudited) as of
                     March 31, 1999 and June 30, 1998                          3

                 Consolidated Statement of Income (Unaudited)
                       For the Nine Months ended March 31, 1999 and 1998       4

                 Consolidated Statement of Income (Unaudited)
                        For the Three Months ended March 31, 1999 and 1998     5

                 Consolidated Statement of Cash Flows (Unaudited)
                       For the Nine Months ended March 31, 1999 and 1998       6

                 Notes to the Unaudited Consolidated Financial Statements   7--8


          Item 2 - Management's Discussion and Analysis                    9--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                                                                    18



<PAGE>

                            ADVANCE FINANCIAL BANCORP
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               March 31,          June 30,
                                                                                  1999             1998
                                                                            -------------    -------------
<S>                                                                        <C>              <C>          
Assets
    Cash and Cash Equivalents:
      Cash and amounts due from banks                                       $   1,178,173    $   1,334,831
      Interest-bearing deposits with other institutions                         4,951,114        7,749,362
                                                                            -------------    -------------
         Total cash and cash equivalents                                        6,129,287        9,084,193

    Investment Securities:
      Securities held to maturity (fair value of $991,138 and $1,753,325)         999,740        1,745,667
      Securities available for sale                                             2,076,109          264,020
                                                                            -------------    -------------
         Total investment securities                                            3,075,849        2,009,687

    Mortgage-backed Securites:
      Securities held to maturity (fair value $1,140,117 and $379,084)          1,122,254          339,362
      Securities available for sale                                             1,946,699             --
                                                                            -------------    -------------
         Total mortgage-backed securities                                       3,068,953          339,362

    Loans held for sale                                                           994,500        1,454,700
    Loans receivable,  (net of allowance for loan losses
       of $575,622 and $477,654 )                                             105,645,149       95,590,197
    Office properties and equipment, net                                        4,011,593        4,082,857
    Federal Home Loan Bank Stock, at cost                                         622,200          622,200
    Accrued interest receivable                                                   677,428          617,980
    Other assets                                                                  425,583          384,237
                                                                            -------------    -------------
         TOTAL ASSETS                                                       $ 124,650,542    $ 114,185,413
                                                                            =============    =============

Liabilities:
    Deposits                                                                $ 100,251,497    $  88,551,543
    Advances from Federal Home Loan Bank                                        9,000,000       10,000,000
    Advances from borrowers for taxes and insurance                               141,319          193,346
    Accrued interest payable and other liabilities                                425,505          512,402
                                                                            -------------    -------------
         TOTAL LIABILITIES                                                    109,818,321       99,257,291
                                                                            -------------    -------------

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 and outstanding                         108,445          108,445
    Additional paid-in capital                                                 10,325,461       10,288,928
    Retained earnings - substantially restricted                                7,434,924        7,130,056
    Unearned Employee Stock Ownership Plan shares (ESOP)                         (630,956)        (715,158)
    Unearned Restricted Stock Plan shares (RSP)                                  (721,886)        (869,636)
    Treasury Stock (103,165 and 53,802 shares, at cost)                        (1,626,890)      (1,000,863)
    Accumulated Other Comprehensive Income                                        (56,877)         (13,650)
                                                                            -------------    -------------
         TOTAL STOCKHOLDERS' EQUITY                                            14,832,221       14,928,122
                                                                            -------------    -------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 124,650,542    $ 114,185,413
                                                                            =============    =============


</TABLE>


See accompanying notes to the unaudited consolidated financial statements.

                                       -3-

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

                                                          NINE MONTHS ENDED
                                                               MARCH 31
                                                            1999        1998
                                                        ----------   ----------
INTEREST AND DIVIDEND INCOME
    Loans                                               $6,335,060   $5,751,640
    Investment securities                                  119,705      271,825
    Interest-bearing deposits with other institutions      259,931      195,562
    Mortgage-backed securities                              55,565       25,111
    Dividends on Federal Home Loan Bank Stock               30,360       27,902
                                                        ----------   ----------
         Total interest and dividend income              6,800,621    6,272,040
                                                        ----------   ----------

INTEREST EXPENSE
    Deposits                                             3,215,903    2,808,676
    Advances from Federal Home Loan Bank                   365,672      375,547
                                                        ----------   ----------
         Total interest expense                          3,581,575    3,184,223
                                                        ----------   ----------

NET INTEREST INCOME                                      3,219,046    3,087,817

Provision for loan losses                                  112,500       59,865
                                                        ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      3,106,546    3,027,952
                                                        ----------   ----------

NONINTEREST INCOME
    Service charges on deposit accounts                    277,191      195,664
    Gain on sale of loans                                   86,567       73,220
    Gain on sale of investments                             13,745         --
    Other income                                           205,219       80,560
                                                        ----------   ----------
         Total noninterest income                          582,722      349,444
                                                        ----------   ----------

NONINTEREST EXPENSE
    Compensation and employee benefits                   1,306,900    1,001,706
    Occupancy and equipment                                441,627      274,127
    Professional fees                                      107,998      145,875
    Advertising                                             98,663       89,253
    Data processing charges                                257,060      221,491
    Other expenses                                         612,422      525,907
                                                        ----------   ----------
         Total noninterest expenses                      2,824,670    2,258,359
                                                        ----------   ----------

Income before income taxes                                 864,598    1,119,037
Income taxes                                               335,592      426,319
                                                        ----------   ----------

NET INCOME                                              $  529,006   $  692,718
                                                        ==========   ==========

EARNINGS PER SHARE
         Basic                                                0.56         0.69
         Diluted                                              0.56         0.69




See accompanying notes to the unaudited consolidated financial statements.


                                       -4-
<PAGE>
                            ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

                                                           THREE MONTHS ENDED
                                                                MARCH 31
                                                            1999       1998
                                                        ----------   ----------
INTEREST AND DIVIDEND INCOME
    Loans                                               $2,139,788   $1,999,281
    Investment securities                                   56,170       50,870
    Interest-bearing deposits with other institutions       50,190       78,675
    Mortgage-backed securities                              38,846        8,228
    Dividends on Federal Home Loan Bank Stock                9,972        9,362
                                                        ----------   ----------
         Total interest and dividend income              2,294,966    2,146,416
                                                        ----------   ----------

INTEREST EXPENSE
    Deposits                                             1,049,053      927,376
    Advances from Federal Home Loan Bank                   119,145      140,511
                                                        ----------   ----------
         Total interest expense                          1,168,198    1,067,887
                                                        ----------   ----------

NET INTEREST INCOME                                      1,126,768    1,078,529

Provision for loan losses                                   37,500       13,500
                                                        ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      1,089,268    1,065,029
                                                        ----------   ----------

NONINTEREST INCOME
    Service charges on deposit accounts                     91,106       70,465
    Gain on sale of loans                                   16,332       33,534
    Gain on sale of investments                             13,745         --
    Other income                                            67,906       31,967
                                                        ----------   ----------
         Total noninterest income                          189,089      135,966
                                                        ----------   ----------

NONINTEREST EXPENSE
    Compensation and employee benefits                     447,863      358,866
    Occupancy and equipment                                148,419       92,772
    Professional fees                                       22,636       30,819
    Advertising                                             34,665       30,045
    Data processing charges                                 84,883       76,006
    Other expenses                                         203,053      160,451
                                                        ----------   ----------
         Total noninterest expenses                        941,519      748,959
                                                        ----------   ----------

Income before income taxes                                 336,838      452,036
Income taxes                                               128,140      179,538
                                                        ----------   ----------

NET INCOME                                              $  208,698   $  272,498
                                                        ==========   ==========

EARNINGS PER SHARE
         Basic                                          $      .23         0.28
         Diluted                                        $      .23         0.28




See accompanying notes to the unaudited consolidated financial statements.

                                     -5-

<PAGE>
                            ADVANCE FINANCIAL BANCORP
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                             NINE MONTHS ENDED
                                                                                  MARCH 31
                                                                             1999           1998
                                                                       ------------    ------------
<S>                                                                   <C>             <C>         
OPERATING ACTIVITIES
     Net Income                                                        $    529,006    $    692,718
     Adjustments to reconcile net income to net cash provided by
        operating activities:
         Depreciation, amortization and accretion, net                      158,545         126,224
         Provision for loan losses                                          112,500          59,865
         Amortization of unearned ESOP and RSP                              268,485         141,950
         Gain on sale of investments                                        (13,745)           --
         Gain on sale of loans                                              (86,567)        (73,220)
         Origination of loans held for sale                              (8,302,946)     (5,202,939)
         Proceeds from the sale of loans                                  8,849,713       5,359,855
         (Increase) decrease in other assets and liabilities                (87,186)         98,279
                                                                       ------------    ------------
              Net cash (used in) provided by operating activities         1,427,805       1,202,732
                                                                       ------------    ------------

INVESTING ACTIVITIES
     Investment securities held to maturity:
         Purchases                                                       (2,987,988)     (1,000,000)
         Maturities and repayments                                        3,737,988       6,600,000
     Investment securities available for sale:
         Purchases                                                       (2,000,000)       (126,250)
         Maturities and repayments                                          146,512           8,725
     Mortgage-backed securities held to maturity:
         Purchases                                                       (1,006,296)           --
         Maturities and repayments                                          225,855          14,953
     Mortgage-backed securities available for sale:
         Purchases                                                       (2,034,336)           --
         Maturities and repayments                                           73,959            --
     Net increase in loans                                              (10,167,452)     (8,981,945)
     Purchases of premises and equipment                                   (168,715)     (1,024,262)
                                                                       ------------    ------------
              Net cash used in investing activities                     (14,180,473)     (4,508,779)
                                                                       ------------    ------------

FINANCING ACTIVITIES
     Net increase in deposits                                            11,699,954       2,541,500
     (Repayments) Proceeds from advances from Federal Home Loan Bank     (1,000,000)      3,973,157
     Net change in advances for taxes and insurance                         (52,027)        (51,399)
     Purchase of treasury stock                                            (626,027)       (216,882)
     Purchase of RSP stock                                                     --          (893,813)
     Cash dividends paid                                                   (224,138)       (239,981)
                                                                       ------------    ------------
              Net cash provided by financing activities                   9,797,762       5,112,582
                                                                       ------------    ------------

              (Decrease) increase  in cash and cash equivalents          (2,954,906)      1,806,535

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                          9,084,193       6,792,420
                                                                       ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                             $  6,129,287    $  8,598,955
                                                                       ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
        Interest on deposits and borrowings                            $  3,578,452    $  3,177,733
        Income taxes                                                        250,476         230,118
</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,  1999 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 1998 and related  notes which are included on
the Form 10-KSB (file no. 0-21885)

NOTE 2 - EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                              Nine Months Ended March 31
                                                                    1999        1998
                                                                 ---------   ---------
<S>                                                               <C>       <C>      
Denominator:
       Denominator for basic earnings per share
          Weighted-average shares                                  951,949   1,003,628

Effect of dilutive securities:
         Employee stock options                                       --         1,158
                                                                 ---------   ---------

Dilutive potential common shares                                   951,949   1,004,786

  Denominator;
          Denominator for dilutive earnings per share adjusted
             Weighted-average shares                               951,949   1,004,786
                                                                 =========   =========
</TABLE>
                                       -7-


<PAGE>

NOTE 2 - EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                           Three Months Ended March 31
                                                                 1999       1998
                                                                 -------   -------
<S>                                                            <C>       <C>      
Denominator:
       Denominator for basic earnings per share
          Weighted-average shares                                982,082
                                                                           921,500

Effect of dilutive securities:
         Employee stock options                                     --       1,158
                                                                 -------   -------

Dilutive potential common shares                                 921,500   983,240

  Denominator;
          Denominator for dilutive earnings per share adjusted
             Weighted-average shares                             921,500   983,240
                                                                 =======   =======
                                                                      
</TABLE>




NOTE 3 - COMPREHENSIVE INCOME

Effective July 1, 1998,  the Bank adopted the Statement of Financial  Accounting
Standards No. 130, "Reporting  Comprehensive  Income." For the nine months ended
March 31, 1999, comprehensive income totaled $485,779.


                                       -8-


<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND JUNE 30, 1998
---------------------------------------------------------------------

Total assets increased by approximately $10,465,000 to $124,650,542 at March 31,
1999 from $114,185,413 at June 30, 1998, primarily as a result of the opening in
June 1998 of the  Wintersville,  Ohio branch (the  "Wintersville  Branch").  The
Wintersville  branch  contributed  approximately  $9 million in loan and deposit
growth during the nine-month period ended March 31, 1999.

Interest-bearing   deposits  with  other  financial  institutions  decreased  by
$2,798,248  to  $4,951,114  at March 31, 1999 from  $7,749,362 at June 30, 1998.
This decrease was used primarily to purchase  investment  securities,  including
available for sale fixed  mortgage-backed  securities and Federal Home Loan Bank
("FHLB") Bonds and held to maturity adjustable rate mortgaged-backed securities.

Investment  securities  available for sale increased by $1,812,089 to $2,076,109
at March 31, 1999 from $264,020 at June 30, 1998. This increased included two $1
million  FHLB  bonds  with  callable  options  in  December  of 1999 with  rates
averaging  approximately  6%.  Management  placed  these  investments  into this
category for liquidity  purposes while  maximizing  interest yields in excess of
the federal overnight rates paid on interest-bearing demand deposits.

Investment  securities  held to  maturity  decreased  by $745,927 to $999,740 at
March 31, 1999 from  $1,745,667 at June 30, 1998. This decrease is the result of
four $500,000 and one $250,000 bonds being called during the nine-month  period.
Management   replaced  all  but  two  of  these  types  of  bonds  with  similar
instruments.

Mortgaged-backed securities held to maturity increased by $782,892 to $1,122,254
at March 31, 1999 from  $339,362 at June 30, 1998.  This  increase  included the
purchase of two adjustable rate mortgage-backed  instruments.  Management placed
these  investments  into this category due to the instruments  ability to absorb
rate fluctuations.

As part of the Company's  asset/liability  management  to control  interest rate
risk, in December 1998, the Company began to purchase fixed rate mortgage-backed
securities  and classify  them as  available  for sale.  At March 31, 1999,  the
balance of mortgage-backed  securities  available for sale was $1,946,699.  This
included four separate instruments with rates ranging from 6.25% to 7%. Three of
the instruments have 15 year maturites, while the other matures in 30 years.

Net loans  receivable  increased by $9,594,752 to $106,639,649 at March 31, 1999
from  $97,044,897  at June 30, 1998. The new  Wintersville,  Ohio branch and the
growth of the Bank's commercial  lending have bolstered loan demand. The primary
result is an increase in non-residential  mortgages of approximately  $6,270,000
and commercial loans of approximately $2,900,000. See "Risk Elements".

Deposits  increased  by  $11,699,954  to  $100,251,497  at March  31,  1999 from
$88,551,543  at June 30, 1998.  This increase is  represented  by an increase in
regular  savings  deposits,  demand  deposits and fifteen to  twenty-five  month
certificate  of  deposit  products.  Regular  savings  deposits  have  increased
approximately  $789,000 over the  nine-month  period and a net increase over the
past three month period of  approximately  $868,000.  Demand deposits  increased
approximately  $5,070,000 which is comprised of an increase in the "Money Market
over $10,000" type of $3,395,000,  an increase in non-interest bearing demand of
$1,037,000, and an increase in commercial checking of $700,000.  Certificates of
Deposits  yielding  5% to 5.5%  with  maturities  ranging  from  nine  months to
twenty-five  months have increased  $6,825,000 of which $1,000,000 has come from
renewals  of  various  types of short and long term  certificate  products.  The
competitiveness  of these  certificate  products coupled with the opening of the
new Wintersville branch has led to an increase in the bank's customer base.

                                       -9-

<PAGE>

COMPARISON OF FINANCIAL CONDITION AT MARCH 31,1999 AND JUNE 30,1998 (CON'T)
---------------------------------------------------------------------------

Equity capital  decreased by  approximately,  $96,000 or .6% from $14,928,122 at
June 30, 1998 to  $14,832,221  at March 31, 1999. Net income of $529,006 and the
recognition of shares in the Employee Stock Ownership Plan and Restricted  Stock
Plan of $268,485  were offset by the payment of cash  dividends of  $224,000,  a
decline in net  unrealized  loss on  securities  of $43,000 and the  purchase of
49,363 shares of treasury  stock.  The total cost of the treasury stock purchase
was  $626,027 for an average of $12.68 per share.  The Board of  Directors  will
determine future dividend policies in light of earnings and financial  condition
of the Company, including applicable governmental regulations and policies.




                                       -10-

<PAGE>

COMPARISON  OF THE RESULTS OF  OPERATIONS  FOR THE THREE AND NINE  MONTHS  ENDED
MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------

Net interest income increased $48,000 or 4.4% to $1,126,770 for the three months
ended March 31, 1999,  Compared to  $1,078,530  for the three months ended March
31, 1998. The increase in interest income resulted primarily from an increase in
fluctuations of average volume of the underlying  principle balances in interest
earning  assets.  Interest income  increased  $148,550 or 6.9% primarily from an
increase in  earnings  on loans of  $140,500 or 7.0 %, as the average  principle
balance  increased  $10,614,000 or 11.2% from  $94,984,000  for the period ended
1998 to $105,598,000  for the period ended 1999.  Interest income on investments
and  interest-bearing  deposits  with  other  financial  institutions  increased
approximately  $8,000, as average principal balances increased $1,860,000 or 19%
from $9,737,198 for the period ended 1998 compared to $11,597,689 for the period
ended 1999.

Net interest income increased $132,000 or 4.3% to $3,219,000 for the nine months
ended March 31, 1999, compared to $3,087,000 for the nine months ended March 31,
1998.  The increase in interest  income  resulted  primarily from an increase in
fluctuations of average volume of the underlying  principle balances in interest
earning  assets.  Interest  income  increased  $528,600 or 8.4%  primarily  from
earnings on loans  which  increased  $583,500 or 10.1% as the average  principle
balance  increased  $10,590,000 or 11.5% from  $91,931,000  for the period ended
1998 to $102,521,000  for the period ended 1999.  Offsetting this increase was a
decrease in earnings on  investments  and  interest-bearing  deposits with other
financial  institutions  of  $54,800  as  average  principal  balances  remained
consistent at approximately $10,830,000 for both nine month periods.

Interest expense increased $100,300 or 9.4% for the three months ended March 31,
1999 compared to the same period ended 1998.  This increase was primarily due to
an increase  in  interest  on  deposits of $121,700 or 13.1 % resulting  from an
increase in average  deposits of $16,135,000 or 20.4% from  $79,178,000  for the
period ended 1998 compared to $95,313,000 for the period ended 1999.  Offsetting
this increase in interest expense on deposits was a decrease in interest expense
on advances from the FHLB of $21,000 or 15.2% as the average balance on advances
decreased  $2,391,800  from  $11,391,831  for the period ended 1998  compared to
$9,000,000 for the period ended 1999.

Interest expense increased $397,400 or 12.5% for the nine months ended March 31,
1999 compared to the same period ended 1998.  This increase was primarily due to
an increase  in  interest  on  deposits of $407,200 or 14.5 % resulting  from an
increase in average  deposits of  $13,055,000 or 16.5% for the period ended 1999
compared to the same period ended 1998.

Based upon management's  continuing  evaluation of the adequacy of the allowance
for loan losses  which  encompasses  the  overall  risk  characteristics  of the
various portfolio segments,  past experience with losses, the impact of economic
conditions  on  borrowers,  and other  relevant  factors,  the provision of loan
losses  increased by $24,000 and $52,635,  respectively,  for the three and nine
months  ended  March  31,  1999  compared  to the same  period  1998.  See "Risk
Elements".

Noninterest  income increased  $53,100 or 39.1% to $189,089 for the three months
ended March 31, 1999 from  $135,966  for the same period  ended March 31,  1998.
This  increase  is  primarily  due to gains on the sale of fixed  rate loans and
related  servicing rights of $11,100,  a gain on sale of an equity investment of
$13,745 and an increase in service charges on deposits of $20,600.








                                      -11-
<PAGE>

COMPARISON  OF THE RESULTS OF  OPERATIONS  FOR THE THREE AND NINE  MONTHS  ENDED
MARCH 31, 1999 and 1998 (CONTINUED)


Noninterest  income increased  $233,300 or 68% from $349,444 for the nine months
ended March 31, 1998 to $582,722 for the same period ended 1999. Service charges
on deposit  accounts  increased  $81,500 from 1998 to 1999  primarily  due to an
increase  in volume  from the  Wintersville  branch.  The bank sold  fixed  rate
mortgages in the secondary market during the nine-month  period,  which resulted
in an  increase in gains on the sale of loans and  related  servicing  rights of
$107,500.

Noninterest expense increased $192,560 or 25.7% to $941,500 for the three months
ended March 31, 1999 from $749,000 for the same 1998 period. Noninterest expense
increased  $566,300 or 25.1% to  $2,824,700  for the nine months ended March 31,
1999 from  $2,258,400  for the same 1998  period.  For the three and nine  month
periods of 1999,  compensation  and  employee  benefits  increased  $89,000  and
$305,000,  respectively, due to the hiring of new employees and related benefits
for the new branch facility, as well as, additional costs for the Employee Stock
Ownership and Restricted Stock Plans.  Occupancy and equipment increased $56,000
and $167,500,  respectively,  due primarily to an increase in  depreciation  and
occupancy  expenses  of the new  branch  facility.  For the  nine  months  ended
professional fees decreased $37,900 due to a decrease in services for compliance
with  regulatory  requirements  and  employee  benefit  plans.  Data  processing
expenses  increased  for the  three and nine  months  ended  1999 by $9,000  and
$36,000, respectively, due primarily to the increase in transaction volumes as a
result of the Wintersville  branch. Other expenses increased $42,600 and $86,500
for the three and nine months ended 1999, respectively,  due to benefit costs in
connection with the Company's  directors,  as well as,  operational costs due to
additional transaction volume.




                                      -12-
<PAGE>

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

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

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

The Bank,  as of March 31, 1999,  had  outstanding  advances from the FHLB of $9
million.  The outstanding advances were used to fund the loan demand for the 1-4
family fixed rate  residential  loan portfolio and to fund the  construction and
furnishing of the new branch  facility in  Wintersville,  Ohio. The advances are
secured  by a blanket  lien on  qualified  collateral,  defined  principally  as
investment  securities  and mortgage  loans which are owned by the Bank free and
clear of any  liens or  encumbrances.  Advances  amounting  to $8  million  with
effective interest rates approximating 5.45% will mature in 2002.

As of March 31,  1999 the Bank has  commitments  to fund loans of  approximately
$2,573,000 as a direct  result of the economic  health of the Bank's market area
and the competitive pricing of the Bank's loan products.

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 March 31, 1999,  both the Company and the Bank
exceeded the minimum  risk-based and leveraged capital ratio  requirements.  The
Company's and the Bank's total risk-based, Tier I risk-based and Tier I leverage
ratios are 18.05%, 17.37%, 11.89% and 16.04%, 15.38%, and 10.66%,  respectively,
at March 31, 1999.









                                      -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.


                                                      March 31,   June 30,
                                                         1999      1998
                                                       ------    ------

Loans on a nonaccrual basis                            $  693    $  283
Loans past due 90 days or more and still accruing         254       169
                                                       ------    ------
         Total nonperforming loans                        947       452
                                                       ------    ------

Other real estate                                          58        76
Repossessed assets                                         26        13
                                                       ------    ------
         Total nonperforming assets                    $1,031    $  541
                                                       ------    ------



Nonperforming loans as a percentage of total loans       0.89%     0.46%
                                                       ======    ======

Nonperforming assets as a percentage of total assets     0.83%     0.47%
                                                       ======    ======

Allowance for loan losses to nonperforming loans        60.78%   105.68%
                                                       ======    ======


Management  monitors  impaired  loans on a  continual  basis.  As of March 1999,
impaired  loans had no material  effect on the company's  financial  position or
results from operations.

During the nine month period ended March 31, 1999, loans increased approximately
$9,595,000 and  nonperforming  loans increased  $495,000 while the allowance for
loan losses increased  $98,000 for the same period.  Specifically,  as discussed
herein,  the  Bank's  market  area  has  generated  significant  growth  in  the
commercial  real estate and commercial  loan segments.  The level of funding for
the  provision  is a  reflection  of  the  overall  loan  demand  and  is not an
indication of any decline in the quality of the loan portfolio. Nonaccrual loans
consist of  $204,000 in one to four family  residential  mortgages,  $368,000 in
commercial  real  estate  and  $96,000  in  commercial   loans.  The  collateral
requirements on such loans reduce the risk of potential  losses to an acceptable
level in management's opinion.

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.




                                      -14-

<PAGE>

RISK ELEMENTS  (CONTINUED)
--------------------------

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 coupled
with  the  recent  change  in mix of the  loan  portfolio  i.e.,  growth  in the
commercial  real estate and  commercial  loan  portfolios.  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 which  might  result from the change in the
mix of the loan portfolio.

Changing  economic  conditions and changing loan demand of the Company's lending
area has altered the mix of the loan portfolio.  The following is a breakdown of
the loan portfolio mix at March 31, 1999 and June 30, 1998:

                                          March 31,      June 30,
                                           1999           1998
                                       ------------   ------------
Mortgage loans:
           1-4 family                  $ 57,839,406   $ 57,904,667
           Multi-family                   1,936,194      1,786,427
           Non-residential               21,490,057     15,581,130
           Construction                   3,164,678      5,017,202
                                       ------------   ------------
                                         84,430,335     80,289,426
                                       ------------   ------------
 Consumer Loans:
           Home Improvement               1,163,531      1,000,801
           Automobile                     8,283,789      7,659,017
           Share loans                    1,373,438      1,296,684
           Other                          2,290,919      2,389,041
                                       ------------   ------------
                                         13,111,677     12,345,543
                                       ------------   ------------

                                       ------------   ------------
 Commercial Loans                         9,575,465      6,675,780
                                       ------------   ------------

Less:
           Loans in process                 788,891      3,061,801
           Net deferred loan fees           107,815        181,097
           Allowance for loan losses        575,622        477,654
                                       ------------   ------------
                                          1,472,328      3,720,552
                                       ------------   ------------
                Total                  $105,645,149   $ 95,590,197
                                       ============   ============







                                      -15-

<PAGE>

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

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

Successful  and  timely  completion  of the year  2000  project  is  based  upon
management's  best estimates  derived from various  assumptions of future events
which are inherently  uncertain.  These events include readiness of all vendors,
suppliers and customers.  No assurance can be given that the year 2000 plan will
be successfully completed by the year 2000 in which case the Company could incur
data processing delays, mistakes or failures. These delays, mistakes or failures
could have a  significant  adverse  impact on the  financial  statements  of the
Company.

BANK'S OWN  COMPUTERS.  As of March 31, 1999, the Bank has upgraded its computer
system to comply with the year 2000 risk.  Such costs expended were not material
to the financial statements of the Company.

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

COMPUTERS OF OTHERS WHO PROVIDE US WITH DATA  PROCESSING  This risk is primarily
focused on one third party  service  bureau that  provides  virtually all of the
Bank's data  processing.  Effective  November of 1998,  this service  bureau has
advised the Bank that they are now year 2000 compliant.

CONTINGENCY  PLAN.  The Bank is continuing to monitor any changes to the service
bureau and any effects that might have on their  status as year 2000  compliant.
If the service  bureau  fails,  the Bank will  attempt to locate an  alternative
service bureau that is year 2000  compliant.  If the Bank is  unsuccessful,  the
Bank will enter deposit balances and interest with its existing computer system.
If this  labor-intensive  approach is necessary,  management  and employees will
become much less efficient.  However,  the Bank believes that they would be able
to operate in this manner indefinitely,  until their existing service bureau, or
their replacement,  is able to again provide data processing  services.  If very
few  institutional  service  bureaus were operating in the year 2000, the Bank's
replacement  costs,  assuming the Bank could  negotiate an  agreement,  could be
material.  The Bank's written  contingency plan is currently in its final phases
of completion. The Bank believes that the plan will be completed,  validated and
approved by June 30, 1999.





                                      -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
<TABLE>
<CAPTION>
        <S>    <C>      <C>
          (a)  List of Exhibits:

               3(i)      Certificate of Incorporation of Advance Financial Bancorp *
               3(ii)     Bylaws of Advance Financial Bancorp *
               4(i)      Specimen Stock Certificate *
               4(ii)     Shareholders Rights Plan **
               10        Employment  Agreement  between the Bank and Stephen M.  Gagliardi**
               10.1      1998 Stock Option Plan ****
               10.2      Restricted Stock Plan and Trust Agreement ****
               27        Financial Data Schedule (electronic filing only)

          (b)    None

</TABLE>
-----------------

*    Incorporated by reference to the  Registration  Statement on Form S-1 (File
     No. 333-13021) declared effective by the SEC on November 12, 1996

**   Incorporated  by reference to the Form 8-K ( File No.  0-21885)  filed 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.




                                      -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:   May 6, 1999               By:  /s/Stephen M. Gagliardi
                                       ----------------------------------------
                                       Stephen M. Gagliardi
                                       President and Chief Executive Officer


Date:   May 6, 1999               By:  /s/Stephen M. Magnone
                                       ----------------------------------------
                                       Stephen M. Magnone
                                       Vice President and CFO





























                                       -18-