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


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

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


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

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

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

             (Exact name of registrant as specified in its charter)


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

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


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




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

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

       Class:  Common Stock, par value $.10 per share
        Outstanding at November 10, 2001:   932,285

<PAGE>

                            Advance Financial Bancorp

                                      Index

                                                                           Page
                                                                          Number
                                                                          ------

Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

                 Consolidated Balance Sheet ( Unaudited)  as of
                    September 30, 2001 and June 30, 2001                       3

                 Consolidated Statement of Income (Unaudited)
                    For the Three Months ended September 30, 2001 and 2000     4

                 Consolidated Statement of Cash Flows (Unaudited)
                    For the Three Months ended September 30, 2001 and 2000     5

                 Notes to the Unaudited Consolidated Financial Statements    6-8


        Item 2 - Management's Discussion and Analysis                       9-13

Part II - OTHER INFORMATION

        Item 1 - Legal Proceedings                                            14

        Item 2 - Changes in Securities                                        14

        Item 3 - Default Upon Senior Securities                               14

        Item 4 - Submissions of Matters to a vote of Security Holders         14

        Item 5 - Other Information                                            14

        Item 6 - Exhibits and Reports on Form 8-K                             14

SIGNATURES                                                                    15

<PAGE>
                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,       JUNE 30,
                                                                                     2001            2001
                                                                               -------------    -------------
<S>                                                                          <C>              <C>
Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                         $   1,353,533    $   1,177,728
       Interest bearing deposits with other institutions                           4,024,098        7,375,450
                                                                               -------------    -------------
          Total cash and cash equivalents                                          5,377,631        8,553,178
                                                                               -------------    -------------

     Investment securities:
       Securities held to maturity (fair value of $501,596 and $742,057)             500,000          749,934
       Securities available for sale                                              11,174,128       11,147,919
                                                                               -------------    -------------
          Total investment securities                                             11,674,128       11,897,853
                                                                               -------------    -------------
     Mortgaged-backed securities:
       Securities held to maturity (fair value of $1,868,470 and $1,601,960)       1,829,968        1,595,349
       Securities available for sale                                               7,846,255        8,383,075
                                                                               -------------    -------------
          Total mortgage-backed securities                                         9,676,223        9,978,424
                                                                               -------------    -------------

     Loans held for sale                                                           2,211,556          439,949
     Loans receivable,  (net of allowance for loan losses
          of $965,910 and $779,170 )                                             157,384,463      129,595,542
     Office properties and equipment, net                                          3,797,782        3,828,367
     Federal Home Loan Bank Stock, at cost                                         1,190,000        1,075,000
     Accrued interest receivable                                                   1,119,277        1,017,024
     Other assets                                                                  1,374,235        1,101,725
                                                                               -------------    -------------
          TOTAL ASSETS                                                         $ 193,805,295    $ 167,487,062
                                                                               =============    =============

Liabilities:
     Deposits                                                                  $ 155,615,925    $ 130,499,131
     Advances from Federal Home Loan Bank                                         20,000,000       20,000,000
     Advance payments by borrowers for taxes and insurance                           255,534          146,095
     Accrued interest payable and other liabilities                                  865,489          499,119
                                                                               -------------    -------------
          TOTAL LIABILITIES                                                      176,736,948      151,144,345
                                                                               -------------    -------------
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                                                   10,347,266       10,339,790
     Retained earnings - substantially restricted                                  9,220,820        8,806,639
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                (402,464)        (424,154)
     Unallocated shares held by Restricted Stock Plan (RSP)                         (263,326)        (316,480)
     Treasury Stock (152,165 shares at cost)                                      (2,233,265)      (2,233,265)
     Accumulated other comprehensive income                                          290,871           61,742
                                                                               -------------    -------------
          TOTAL STOCKHOLDERS' EQUITY                                              17,068,347       16,342,717
                                                                               -------------    -------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 193,805,295    $ 167,487,062
                                                                               =============    =============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                      -3-
<PAGE>
                            ADVANCE FINANCIAL BANCORP
                   CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                                             SEPTEMBER 30,
                                                                           2001         2000
                                                                        ----------   ----------
<S>                                                                   <C>          <C>
INTEREST AND DIVIDEND INCOME
    Loans                                                               $2,847,990   $2,542,551
    Investment securities                                                  168,339      170,278
    Interest-bearing deposits with other institutions                       50,107       46,745
    Mortgage-backed securities                                             154,264       59,395
    Dividends on Federal Home Loan Bank Stock                               21,154       14,579
                                                                        ----------   ----------

         Total interest and dividend income                              3,241,854    2,833,548
                                                                        ----------   ----------
INTEREST EXPENSE
    Deposits                                                             1,532,529    1,436,647
    Advances from Federal Home Loan Bank                                   295,187      165,010
                                                                        ----------   ----------

         Total interest expense                                          1,827,716    1,601,657
                                                                        ----------   ----------

NET INTEREST INCOME                                                      1,414,138    1,231,891

Provision for loan losses                                                   66,300       30,000
                                                                        ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                      1,347,838    1,201,891
                                                                        ----------   ----------
NONINTEREST INCOME
    Service charges on deposit accounts                                    135,694      105,580
    Gain on sale of loans                                                   32,379        5,116
    Other income                                                           101,794       72,414
                                                                        ----------   ----------
         Total noninterest income                                          269,867      183,110
                                                                        ----------   ----------
NONINTEREST EXPENSE
    Compensation and employee benefits                                     524,730      499,490
    Occupancy and equipment                                                196,675      179,432
    Professional fees                                                       31,702       29,517

    Advertising                                                             21,105       25,646

    Data processing charges                                                 64,305       55,554
    Other expenses                                                         278,500      236,993
                                                                        ----------   ----------

         Total noninterest expenses                                      1,117,017    1,026,632
                                                                        ----------   ----------

Income before income taxes                                                 500,688      358,369
Income taxes                                                               197,852      141,697
                                                                        ----------   ----------
Income before extaordinary item                                            302,836      216,672
Extraordinary item- Excess over cost on net assets acquired in merger      201,206            -
                                                                        ----------   ----------
Net Income                                                                 504,042      216,672
                                                                        ==========   ==========

EARNINGS PER SHARE - INCOME BEFORE EXTRAORDINARY ITEM
         Basic                                                          $      .34   $      .25
         Diluted                                                        $      .34   $      .25

EARNINGS PER SHARE - NET INCOME
         Basic                                                          $      .57   $      .25
         Diluted                                                        $      .57   $      .25
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                           SEPTEMBER 30,
                                                                         2001           2000
                                                                     -----------    -----------
<S>                                                                <C>            <C>
OPERATING ACTIVITIES
     Net Income                                                      $   504,042    $   216,672
     Adjustments to reconcile net income to net cash provided by
        operating activities:
          Depreciation, amortization and accretion, net                  149,969        152,024
          Provision for loan losses                                       66,300         30,000
          Gain on sale of loans                                          (32,379)        (5,116)
          Extraordinary gain on net assets acquired in merger           (201,206)             -
          Origination of loans held for sale                          (4,693,270)    (1,440,984)
          Proceeds from the sale of loans                              2,954,042        875,600
          Increase in other assets and liabilities                       134,093        (41,324)
                                                                     -----------    -----------
               Net cash used in operating activities                  (1,118,409)      (213,128)
                                                                     -----------    -----------
INVESTING ACTIVITIES
     Investment securities held to maturity:
          Purchases                                                            -              -
          Maturities and repayments                                      250,000              -
     Investment securities available for sale:
          Purchases                                                     (256,808)             -
          Maturities and repayments                                    3,343,200          1,130
     Mortgage-backed securities held to maturity:
          Maturities and repayments                                      113,740        128,589
     Mortgage-backed securities available for sale:
          Maturities and repayments                                      683,653         42,457
     Purchase of Federal Home Loan Bank Stock                           (115,000)             -
     Sale of Federal Home Loan Bank Stock                                445,900              -
     Net increase in loans                                            (1,092,113)    (2,346,873)
     Purchases of premises and equipment                                 (73,952)       (78,562)
                                                                     -----------    -----------

               Net cash provided by (used in) investing activities     3,298,620     (2,253,259)
                                                                     -----------    -----------
FINANCING ACTIVITIES
     Net increase in deposits                                            768,242      1,492,482
     Net increase in short term advances from FHLB                             -      1,000,000
     Net change in advances for taxes and insurance                        3,845        (60,534)
     Net cash purchase of OSFS stock                                  (6,041,007)             -
     Cash dividends paid                                                 (86,838)       (85,305)
                                                                     -----------    -----------
               Net cash (used in) provided by financing activities    (5,355,758)     2,346,643
                                                                     -----------    -----------
               Decrease in cash and cash equivalents                  (3,175,547)      (119,744)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                       8,553,178      5,751,624
                                                                     -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                           $ 5,377,631    $ 5,631,880
                                                                     ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
          Interest on deposits and borrowings                        $ 1,837,498    $ 1,716,612
          Income taxes                                               $   160,230    $   169,930

</TABLE>

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

<PAGE>
                            ADVANCE FINANCIAL BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

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

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements.  The information  furnished reflects all adjustments,  which are, in
the  opinion  of  management,  necessary  for a fair  statement  of  results  of
operations.  All such adjustments are of a normal recurring nature.  The results
of  operations  for the interim  periods are not  necessarily  indicative of the
results  to be  expected  for the fiscal  year ended June 30,  2002 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 2001 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.


                                                         Three Months Ended
                                                            September 30

                                                         2001          2000
                                                      ----------    ----------

Weighted-average common shares outstanding             1,084,450     1,084,450
Average treasury stock shares                           (152,165)     (152,165)
Average unearned ESOP and RSP shares                     (49,712)      (57,048)
                                                      ----------    ----------

Weighted-average common shares and
    common stock equivalents used to
    calculate basic earnings per share                   882,573       875,237

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              882,573       875,237
                                                      ==========    ==========

                                       -6-
<PAGE>

NOTE 3 - COMPREHENSIVE INCOME

Other accumulated  comprehensive  income consists solely of net unrealized gains
and  losses  on  available  for sale  securities.  For the  three  months  ended
September 30, 2001,  comprehensive income totaled $733,171. For the three months
ended September 30, 2000, comprehensive income totaled $295,175.


NOTE 4 - MERGER

As of the close of business  September 7, 2001, the Company  acquired all of the
outstanding stock of Ohio State Financial Services "OSFS". The total cost of the
acquisition by the Company was  $7,861,147.  The acquisition was a cash purchase
of all outstanding stock of OSFS and was accounted for under the purchase method
of accounting.  The Consolidated  Statement of Income for the three-month period
ended  September  30,  2001,  includes  the results of operation of the acquired
institution from September 8, 2001.

OSFS was a bank  holding  company for  Bridgeport  Savings  and Loan,  which had
branch offices in Bridgeport and Shadyside, Ohio. The merger was entered into to
enhance the Company's  return on equity by  geographical  diversification,  more
profitable deployment of excess capital and market area expansion.

The  following is a proforma  Statement of Income of Income for the  three-month
periods ended September 30, 2001 and 2000. The proforma  statements are intended
to present  the  business  combination's  effect on  earnings  per share for the
comparable periods had both entities been combined a the start of each period.


                                                             PROFORMA
                                                        THREE-MONTHS ENDED
                                                           SEPTEMBER 30,
                                                         2001         2000
                                                      ----------   ----------

Total Interest Income                                 $3,661,336   $3,431,585
Total Interest Expense                                 2,007,200    1,859,729
                                                      ----------   ----------
Net Interest Income                                    1,654,136    1,571,856
Provision for loan losses                                 97,215       30,000
                                                      ----------   ----------
Net Interest Income after Provision for Loan Losses    1,556,921    1,541,856
                                                      ----------   ----------
Noninterest Income                                       275,627      194,620
Noninterest Expense                                    1,317,624    1,274,127
                                                      ----------   ----------
Income before income taxes                               514,924      462,349
Income taxes                                             198,241      178,654
                                                      ----------   ----------
Net Income                                            $  316,683   $  283,695
                                                      ==========   ==========

Earnings per share:
     Basic                                            $     0.36   $     0.32
     Diluted                                          $     0.36   $     0.32

                                       -7-
<PAGE>

NOTE 5 - EXTRAORDINARY ITEM

As a result of the merger  with OSFS,  the fair  market  value of the net assets
acquired  by the Company  from OSFS  exceeded  the amount paid by  approximately
$2,697,000.  In accordance with FASB 141, the excess was allocated as a pro rata
reduction of the amounts  assigned to all  nonfinancial  and noncurrent  assets.
This pro rata allocation accounted for approximately $2,496,000 of the excess to
be reduced. The remaining portion of the excess,  $201,206, was recognized as an
extraordinary gain for the period ended September 30, 2001.



NOTE 6 - PRESS RELEASE CORRECTION

On November 2, 2001,  the Company  issued a press release for the quarter ending
September 30, 2001. The amounts as previously  reported in the press release are
corrected as set forth below:


                                                   AS PREVIOUSLY
                                                    REPORTED ON      CORRECTED
                                                 NOVEMBER 2, 2001     AMOUNTS
                                                 -------------------------------

BALANCE SHEET
Investment Securities                                  22,520           22,540
Loans                                                 156,763          157,384
Total Assets                                          193,515          193,805
Deposits                                              155,527          155,616
Shareholder Equity                                     16,867           17,068


STATEMENT OF INCOME
Extraordinary item - excess over cost on net
    assets acquired in merger                               -              201
Net Income                                                303              504
Basic Earnings per share - net income                     .34              .57
Diluted Earnings per share - net income                   .34              .57

                                       -8-

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS

     The Private  Securities  Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and expenses, and general economic conditions

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

OVERVIEW
--------

On September 7, 2001,  the Company's  growth was bolstered by the  completion of
the  acquisition of Ohio State Financial  Services,  Inc ("OSFS") and its wholly
owned subsidiary  Bridgeport  Savings and Loan Association.  The acquisition was
accounted for under the purchase method of accounting in a cash transaction.  As
a result of the completion of the acquisition,  the Company paid $7.8 million to
the  shareholders of OSFS. With the completion of the  acquisition,  the Company
added two additional branches located in Bridgeport and Shadyside, Ohio bringing
the total  branch  locations of the Company to five.  The results of  operations
from September 8, 2001 include the operations of OSFS.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30,2001 AND JUNE 30, 2001
------------------------------------------------------------------------

The  Company's   total  assets   increased  by   approximately   $26,318,000  to
$193,805,295  at September  30, 2001,  from  $167,487,062  at June 30, 2001 as a
result of the acquisition of OSFS which  increased  assets  $24,935,000,  net of
$7,861,000 of cash paid for the acquisition. .

Loans  receivable,  net and  deposits  grew to  $157,384,463  and  $155,615,925,
respectively  at  September  30,  2001  from   $129,595,542  and   $130,499,131,
respectively at June 30, 2001. The acquisition of OSFS  contributed  $26,763,000
to loans receivable,  net consisting  primarily of $25,300,000 in 1-4 family and
construction  loans and $700,000 in  automobile  loans.  Additionally,  the OSFS
acquisition  contributed  approximately  $24,349,000  to  deposits,   consisting
primarily of  12,630,000  in core savings and NOW  accounts and  $11,719,000  in
certificates of deposit.

Stockholders'  Equity  increased   approximately   $725,600  to  $17,068,347  at
September  30, 2001 from  $16,342,717  at June 30, 2001.  This  increase was the
result of net income of $504,000 for the period, of which $201,200 relates to an
extraordinary  gain as a result of the merger,  the recognition of shares in the
Employee  Stock  Ownership  Plan and  Restricted  Stock Plan of $79,400,  and an
increase in the net unrealized gain on securities of $229,000 were offset by the
payment of cash dividends of $86,800.


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2001 AND 2000
-------------

Net interest income  increased  $182,000 or 14.79%,  to $1,414,000 for the three
months ended September 30, 2001 from $1,232,000 for the comparable  period ended
2000. The increase in net interest income resulted primarily from an increase in
the average  volume of the  underlying  principle  balances in interest  earning
assets and  liabilities.  The net  interest  spread for the three  months  ended
September 30, 2001 decreased to 2.93% from 3.04% for the comparable period ended
2000. See "Average  Balance Sheet" for the  three-month  periods ended September
30, 2001 and 2000.

                                       -9-
<PAGE>

The provision for loan losses increased $36,300 to $66, 300 for the three months
ended September 30, 2001 from $30,000 for the comparable  period ended 2000. The
increase is primarily  the result of increasing  delinquencies  in the Company's
loan portfolio as nonperforming loans to total net loans have increased to 1.63%
at September 30, 2001 from .92% for the comparable  period ended 2000. See "Risk
Elements".

Noninterest income increased $87,000 or 47.38%, to $270,000 for the three months
ended September 30, 2001 from $183,000 for the comparable period ended 2000. For
the three month period of 2001,  miscellaneous fees and fees on deposit accounts
increased  by  $51,000  as a result of  increased  core  customers  and  related
activity.  Gains on sales of fixed  rate  loans  and  related  servicing  rights
increased  $38,000 due to the current fixed rate mortgage  loan  environment  in
comparison to the comparable period ended 2000.

Noninterest  expense  increased  $90,000 or 8.80%,  to $1,117,000  for the three
months ended  September 30, 2001 from $1,027,000 for the comparable 2000 period.
For the three month period ended September 30, 2001,  compensation  and employee
benefits  increased a net $25,000 or 5.05%.  The  increase in  compensation  and
employee benefits totalled $44,000 due to the hiring of employees to operate the
two  branches  created  by the  merger  of OSFS and  additional  cost of  living
increases for other full time employees. This increase was offset by an increase
of $19,000 in deferred labor costs as a result of increased loan production. For
the three period ended  September 30, 2001,  occupancy  and equipment  increased
$17,000.  The  increase  is due in part  to the  operation  of the two  branches
created by the merger  with OSFS,  as well as, an increase  in  depreciation  on
equipment  and an increase  on the  property  tax  assessment  of the  Company's
Wintersville facility. Other Expenses have increased $42,000 for the three month
period  ended  September  30, 2001.  The increase in other  expense is due to an
increase in supplies, telephone and postage of $12,000, an increase in fees paid
for ATM and  consumer  card usage of $13,000 and  increase  in charges  from the
Federal  Reserve for item  processing  of $9,000.  Each of these  increases  are
related  to  customer  activity  due  to the  increase  in  the  Company's  core
customers.  In addition,  state franchise taxes have increased  $3,000 due to an
increase in the  Company's  capital.  Board and  committee  fees have  increased
$4,000  primarily as a result of the  creation of the advisory  board made up of
nonemployee directors of the former OSFS.

Net  income  was  bolstered  for the  period  ending  September  30,  2001 by an
extraordinary gain as a result of the merger with OSFS. The gain of $201,206 was
the result of an excess  over cost of the fair value of the net assets  acquired
in the merger. See Note 5 to the financial statements for a complete discussion.


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

As of  September  30,  2001,  the  Company  had  commitments  to fund  loans  of
approximately  $2,277,000.  These loan  commitments are expected to be funded by
October 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 September 30, 2001, 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 13.75%, 13.00%, 8.66% and 11.85%, 11.10%, and 7.35%, respectively, at
September 30, 2001.

                                      -10-

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                   Period Ended September 30,
                                          -------------------------------------------------------------------------------
                                                         2001                                   2000
                                          -------------------------------------   ------------------------------------
                                            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)                     $136,211      $2,848         8.36%     $120,805      $2,543         8.42%
  Investment securities (2)                  19,094         240         5.02%       14,123         232         6.56%
  Mortgage-backed securities                  9,663         154         6.39%        3,553          59         6.69%
                                           --------      ------       ------      --------      ------       ------
     Total interest-earning assets          164,968       3,242         7.86%      138,481       2,834         8.18%
                                                         ------       ------                    ------       ------
Non-interest-earning assets                   7,152                                  7,177
                                           --------                               --------
     Total assets                          $172,120                               $145,658
                                           ========                               ========
Interest-bearing liabilities:
  Interest-bearing demand deposits         $ 21,043         142         2.69%     $ 19,622         173         3.53%
  Certificates of deposit                    86,604       1,247         5.76%       76,649       1,138         5.94%
  Savings deposits                           20,683         144         2.79%       17,629         126         2.85%
  FHLB borrowings                            20,000         295         5.90%       10,667         165         6.19%
                                           --------      ------       ------      --------      ------       ------
     Total interest-bearing liabilities     148,330       1,828         4.93%      124,567       1,602         5.14%
                                                         ------       ------                    ------       ------
Non-interest bearing liabilities              7,244                                  5,876
                                           --------                               --------
     Total liabilities                      155,574                                130,443
Stockholders' equity                         16,546                                 15,215
                                           --------                               --------
     Total liabilities and stockholders'
       equity                              $172,120                               $145,658
                                           ========                               ========
Net interest income                                     $ 1,414                                 $1,232
                                                        =======                                 ======
Interest rate spread (3)                                                2.93%                                  3.04%
                                                                      ======                                 ======
Net yield on interest-earning assets (4)                                3.43%                                  3.56%
                                                                      ======                                 ======
Ratio of average interest-earning assets
  to average interest-bearing liabilities                             111.22%                                111.17%
                                                                      ======                                 ======
</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.

                                      -11-
<PAGE>

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


                                                         September 30,  June 30,
                                                             2001         2001
                                                         -------------  --------

Loans on a nonaccrual basis                                   $1,737    $  535
Loans past due 90 days or more and still accruing                826       668
                                                              ------    -------
         Total nonperforming loans                             2,563     1,203
                                                              ------    -------

Other real estate                                                425       355
Repossessed assets                                                23        13
                                                              ------    -------
         Total nonperforming assets                           $3,011    $1,571
                                                              ------    -------


Nonperforming loans as a percentage of total net loans          1.63%     0.92%
                                                              ======    =======

Nonperforming assets as a percentage of total assets            1.56%     0.94%
                                                              ======    =======

Allowance for loan losses to nonperforming loans               37.69%    64.77%
                                                              ======    =======

As of September 30, 2001,  the total  investment in impaired loans was $513,509,
and such amount was subject to a specific allowance for loan losses of $131,527.
The average  investment in impaired  loans for the quarter  ended  September 30,
2001 was $513,509.  The interest income  potential based upon the original terms
of the  contracts  of these  impaired  loans was $11,920  for the quarter  ended
September 30, 2001. No interest  income on these  impaired  loans was recognized
during the quarter.

Nonaccrual  loans  , net of the  impaired  loans  discussed  above,  consist  of
$733,000 in one to four family  residential  mortgages,  $42,000 in multi-family
mortgages and $448,000 in non-residential real estate mortgages at September 30,
2001.  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.

                                      -12-
<PAGE>

The following is a breakdown of the loan portfolio  composition at September 30,
2001 and June 30, 2001:

                                    September 30,           June 30,
                                        2001                 2001
                                    ------------          -----------
Mortgage loans:
           1-4 family               $ 89,437,841          $64,696,315
           Multi-family                6,129,596            6,002,553
           Non-residential            27,626,371           27,956,885
           Construction                3,058,400            2,455,751
                                    ------------         ------------
                                     126,252,208          101,111,504
                                    ------------         ------------
Consumer Loans:
           Home Improvement            1,103,551            1,208,279
           Automobile                 14,613,324           13,000,468
           Share loans                 1,384,068            1,594,755
           Other                       2,626,786            2,778,630
                                    ------------         ------------
                                      19,727,729           18,582,132
                                    ------------         ------------

                                    ------------         ------------
Commercial Loans                      14,678,540           12,651,451
                                    ------------         ------------

Less:
           Loans in process            2,233,354            1,861,360
           Net deferred loan fees         74,750              109,015
           Allowance for loan losses     965,910              779,170
                                    ------------         ------------
                                       3,274,014            2,749,545
                                    ------------         ------------
                Total               $157,384,463         $129,595,542
                                    ============         ============

                                      -13-
<PAGE>

PART II - OTHER INFORMATION


Item 1 - Legal Proceedings

          NONE

Item 2 - Changes in securities

          NONE

Item 3 - Defaults upon senior securities

          NOT APPLICABLE

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

          NONE

Item 5 - Other information

          NONE

Item 6  - Exhibits and reports on Form 8-K

(a)      List of Exhibits:
<TABLE>
<CAPTION>
      <S>     <C>
         3 (i)  Certificate of Incorporation of Advance Financial Bancorp *
         3 (ii) Amended Bylaws of Advance Financial Bancorp *****
         4 (i)  Specimen Stock Certificate *
         4 (ii) 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 ****
</TABLE>

               (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.


                                      -14-
<PAGE>

SIGNATURES

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


                                   Advance Financial Bancorp

Date:  November 13, 2001           By:/s/Stephen M. Gagliardi
                                      ------------------------------------------
                                      Stephen M. Gagliardi
                                      President and Chief Executive Officer

Date:  November 13, 2001           By:/s/Stephen M. Magnone
                                      ------------------------------------------
                                      Stephen M. Magnone
                                      Vice President and CFO


                                       -15-