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
incorporation or organization)                            Identification No.)


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

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




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

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

       Class:  Common Stock, par value $.10 per share
        Outstanding at February 10, 2000:   932,285


<PAGE>

                            Advance Financial Bancorp

                                      Index

                                                                           Page
                                                                          Number


Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

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

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

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

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

                 Notes to the Unaudited Consolidated Financial Statements   7-8


          Item 2 - Management's Discussion and Analysis                     9-14

Part II - OTHER INFORMATION

           Item 1 - Legal Proceedings                                       15

           Item 2 - Changes in Securities                                   15

           Item 3 - Default Upon Senior Securities                          15

           Item 4 - Submissions of Matters to a vote of Security Holders    15

           Item 5 - Other Information                                       15

           Item 6 - Exhibits and Reports on Form 8-K                        16

SIGNATURES                                                                  17

<PAGE>
                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                            DECEMBER 31,            JUNE 30,
                                                                                              1999                    1999
                                                                                         -----------------    -------------------
<S>                                                                                           <C>                     <C>
Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                                         $2,324,108              $1,395,704
       Interest bearing deposits with other institutions                                        2,562,893               2,964,166
                                                                                         -----------------    -------------------
          Total cash and cash equivalents                                                       4,887,001               4,359,870
                                                                                         -----------------    -------------------
     Investment securities:
       Securities held to maturity (fair value of $1,183,904 and $970,914)                      1,249,453                 999,896
       Securities available for sale                                                            8,200,413               4,481,475
                                                                                         -----------------    -------------------
          Total investment securities                                                           9,449,866               5,481,371
                                                                                         -----------------    -------------------
     Mortgaged-backed securities:
       Securities held to maturity (fair value of $2,230,585 and $2,456,645)                    2,275,330               2,472,681
       Securities available for sale                                                            1,641,695               1,832,845
                                                                                         -----------------    -------------------
          Total mortgage-backed securities                                                      3,917,025               4,305,526
                                                                                         -----------------    -------------------
     Loans receivable,  (net of allowance for loan losses
          of $606,920 and $582,280 )                                                          118,261,571             109,899,551
     Office properties and equipment, net                                                       4,114,529               4,084,793
     Federal Home Loan Bank Stock, at cost                                                        800,000                 629,500
     Accrued interest receivable                                                                  833,530                 664,058
     Other assets                                                                                 934,891                 501,967
                                                                                         -----------------    -------------------
          TOTAL ASSETS                                                                       $143,198,413            $129,926,636
                                                                                         =================    ===================
Liabilities:
     Deposits                                                                                $112,041,671            $105,338,770
     Advances from Federal Home Loan Bank                                                      16,000,000               9,000,000
     Advance payments by borrowers for taxes and insurance                                        190,650                 196,993
     Accrued interest payable and other liabilities                                               352,789                 397,421
                                                                                         -----------------    -------------------
          TOTAL LIABILITIES                                                                   128,585,110             114,933,184
                                                                                         -----------------    -------------------
Stockholders' Equity:
     Preferred stock, $.10 par value; 500,000 shares
         authorized, none issued                                                               -                       -
     Common stock, $.10 par value; 2,000,000 shares
          authorized 1,084,450 shares issued                                                      108,445                 108,445
     Additional paid in capital                                                                10,326,840              10,316,719
     Retained earnings - substantially restricted                                               7,866,214               7,623,733
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                             (554,387)               (597,767)
     Unallocated shares held by Restricted Stock Plan (RSP)                                      (571,245)               (682,357)
     Treasury Stock (152,165  and 103,165 shares at cost)                                      (2,233,265)             (1,626,890)
     Accumulated other comprehensive loss                                                        (329,299)               (148,431)
                                                                                         -----------------    -------------------
          TOTAL STOCKHOLDERS' EQUITY                                                           14,613,303              14,993,452
                                                                                         -----------------    -------------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $143,198,413            $129,926,636
                                                                                         =================    ===================
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                      -3-
<PAGE>
                            ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                THREE MONTHS ENDED
                                                                                                    DECEMBER 31,
                                                                                           1999                   1998
                                                                                       ----------------     ------------------
<S>                                                                                       <C>                    <C>
INTEREST AND DIVIDEND INCOME
    Loans                                                                                   $2,370,995             $2,150,478
    Investment securities                                                                      177,137                 36,230
    Interest-bearing deposits with other institutions                                           28,368                 89,658
    Mortgage-backed securities                                                                  65,267                  9,002
    Dividends on Federal Home Loan Bank Stock                                                   13,721                 10,194
                                                                                       ----------------     ------------------
         Total interest and dividend income                                                  2,655,488              2,295,562
                                                                                       ----------------     ------------------
INTEREST EXPENSE
    Deposits                                                                                 1,218,001              1,088,214
    Advances from Federal Home Loan Bank                                                       205,986                121,793
                                                                                       ----------------     ------------------
         Total interest expense                                                              1,423,987              1,210,007
                                                                                       ----------------     ------------------
NET INTEREST INCOME                                                                          1,231,501              1,085,555

Provision for loan losses                                                                       37,500                 37,500
                                                                                       ----------------     ------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                          1,194,001              1,048,055
                                                                                       ----------------     ------------------

NONINTEREST INCOME
    Service charges on deposit accounts                                                        112,931                 99,654
    Gain on sale of loans                                                                        3,528                 37,010
    Other income                                                                                62,088                 71,289
                                                                                       ----------------     ------------------
         Total noninterest income                                                              178,547                207,953
                                                                                       ----------------     ------------------
NONINTEREST EXPENSE
    Compensation and employee benefits                                                         483,359                428,332
    Occupancy and equipment                                                                    165,456                152,482
    Professional fees                                                                           25,512                 47,742
    Advertising                                                                                 28,280                 30,269
    Data processing charges                                                                     85,136                 86,658
    Other expenses                                                                             245,384                212,471
                                                                                       ----------------     ------------------
         Total noninterest expenses                                                          1,033,127                957,954
                                                                                       ----------------     ------------------
Income before income taxes                                                                     339,421                298,054
Income taxes                                                                                   130,657                112,575
                                                                                       ----------------     ------------------
NET INCOME                                                                                    $208,764               $185,479
                                                                                       ================     ==================
EARNINGS PER SHARE
         Basic                                                                         $           .23                   0.19
         Diluted                                                                       $           .23                   0.19
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       -4-
<PAGE>
                            ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED
                                                               DECEMBER 31,
                                                                   1999                    1998
                                                             ------------------     -------------------
<S>                                                                <C>                     <C>
INTEREST AND DIVIDEND INCOME
    Loans                                                           $4,632,901              $4,195,272
    Investment securities                                              309,324                  63,535
    Interest-bearing deposits with other institutions                   82,069                 209,741
    Mortgage-backed securities                                         129,580                  16,719
    Dividends on Federal Home Loan Bank Stock                           24,431                  20,388
                                                             ------------------     -------------------
         Total interest and dividend income                          5,178,305               4,505,655
                                                             ------------------     -------------------
INTEREST EXPENSE
    Deposits                                                         2,387,345               2,166,850
    Advances from Federal Home Loan Bank                               351,376                 246,527
                                                             ------------------     -------------------
         Total interest expense                                      2,738,721               2,413,377
                                                             ------------------     -------------------
NET INTEREST INCOME                                                  2,439,584               2,092,278

Provision for loan losses                                               75,000                  75,000
                                                             ------------------     -------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                  2,364,584               2,017,278
                                                             ------------------     -------------------
NONINTEREST INCOME
    Service charges on deposit accounts                                217,895                 186,085
    Gain on sale of loans                                                4,139                  70,235
    Other income                                                       121,982                 137,313
                                                             ------------------     -------------------
         Total noninterest income                                      344,016                 393,633
                                                             ------------------     -------------------
NONINTEREST EXPENSE
    Compensation and employee benefits                                 939,899                 859,037
    Occupancy and equipment                                            327,297                 293,208
    Professional fees                                                   58,022                  85,363
    Advertising                                                         63,108                  63,999
    Data processing charges                                            175,305                 172,176
    Other expenses                                                     464,726                 409,368
                                                             ------------------     -------------------
         Total noninterest expenses                                  2,028,357               1,883,151
                                                             ------------------     -------------------
Income before income taxes                                             680,243                 527,760
Income taxes                                                           266,382                 207,452
                                                             ------------------     -------------------
NET INCOME                                                            $413,861                $320,308
                                                             ==================     ===================
EARNINGS PER SHARE
         Basic                                               $             .46                    0.33
         Diluted                                             $             .46                    0.33

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       -5-
<PAGE>


                       ADVANCE FINANCIAL BANCORP
              CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        SIX MONTHS ENDED
                                                                                           DECEMBER,31
                                                                                   1999                 1998
                                                                              ----------------     ----------------
<S>                                                                               <C>                  <C>
OPERATING ACTIVITIES
     Net Income                                                                      $413,861             $320,308
     Adjustments to reconcile net income to net cash provided by
        operating activities:
         Depreciation, amortization and accretion, net                                282,974              308,992
         Provision for loan losses                                                     75,000               75,000
         Gain on sale of loans                                                         (4,139)             (70,235)
         Origination of loans held for sale                                        (1,056,640)          (6,169,869)
         Proceeds from the sale of loans                                            1,060,779            5,692,648
         Increase in other assets and liabilities                                    (142,717)            (205,385)
                                                                              ----------------     -----------------
              Net cash provided by (used in) operating activities                     629,118              (48,541)
                                                                              ----------------     -----------------
INVESTING ACTIVITIES
     Investment securities held to maturity:
         Purchases                                                                   (249,453)          (1,500,000)
         Maturities and repayments                                                          -            2,000,000
     Investment securities available for sale:
         Purchases                                                                 (4,467,656)          (3,013,675)
         Maturities and repayments                                                    503,740                6,895
     Mortgage-backed securities held to maturity:
         Purchases                                                                          -           (1,006,296)
         Maturities and repayments                                                    196,166                7,448
     Mortgage-backed securities available for sale:
         Purchases                                                                          -                    -
         Maturities and repayments                                                    162,660                    -
     Purchases of Federal Home Loan Bank Stock                                       (170,500)
     Net increase in loans                                                         (8,794,518)          (7,296,031)
     Purchases of premises and equipment                                             (201,228)            (147,925)
                                                                              ----------------     -----------------
              Net cash used in investing activities                               (13,020,789)         (10,949,584)
                                                                              ----------------     -----------------
FINANCING ACTIVITIES
     Net increase in deposits                                                       6,702,901            8,484,964
     Net Proceeds (Repayments) from advances from Federal Home Loan Bank            7,000,000           (1,000,000)
     Net change in advances for taxes and insurance                                    (6,343)             (10,605)
     Purchase of treasury stock                                                      (606,375)                   -
     Cash dividends paid                                                             (171,381)            (144,203)

                                                                              ----------------     -----------------
              Net cash provided by financing activities                            12,918,802            7,330,156
                                                                              ----------------     -----------------
              Increase (decrease) in cash and cash equivalents                        527,131           (3,667,969)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                    4,359,870            9,084,193
                                                                              ----------------     -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $4,887,001           $5,416,224
                                                                              ================     =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest on deposits and borrowings                                       $2,656,284           $2,414,931
         Income taxes                                                                $267,672             $230,779

</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,  2000 or any other
interim period.

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

NOTE 2 - EARNINGS PER SHARE

 The following table sets forth a reconciliation of the denominator of the basic
and dilutive earnings per share computation in accordance with SFAS No. 128.
<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                 December 31

                                                                           1999                1998
                                                                       --------------     ---------------
<S>                                                                         <C>                 <C>
Denominator:
       Denominator for basic earnings per share
          Weighted-average shares                                            900,878             956,287

Effect of dilutive securities:
         Employee stock options                                                    -                   -
                                                                       --------------     ---------------
Dilutive potential common shares                                             900,878             956,287

  Denominator;
          Denominator for dilutive earnings per share adjusted
             Weighted-average shares                                         900,878             956,287
                                                                       ==============     ===============
</TABLE>
                                      -7-
<PAGE>
NOTE 2 - EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                   December 31
                                                                           1999                1998
                                                                       --------------     ----------------
<S>                                                                      <C>                     <C>
Denominator:
       Denominator for basic earnings per share
          Weighted-average shares                                         888,110                 958,096

Effect of dilutive securities:
         Employee stock options                                                 -                       -
                                                                       --------------     ----------------
Dilutive potential common shares                                          888,110                 958,096

  Denominator;
          Denominator for dilutive earnings per share adjusted
             Weighted-average shares                                      888,110                 958,096
                                                                       ==============     ================
</TABLE>



NOTE 3 - COMPREHENSIVE INCOME

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


                                       -8-

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

     The Private  Securities  Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest  rates,  risks  associated with the ability to control costs
and  expenses,  Year 2000  issues,  and  general  economic  conditions.  Advance
Financial  Bancorp (the "Company")  undertakes no obligation to publicly release
the results of any revisions to those  forward-looking  statements  which may be
made to reflect events or circumstances  after the date hereof or to reflect the
occurrence of unanticipated events.

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

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31,1999 AND JUNE 30, 1999
-----------------------------------------------------------------------
Total assets  increased  $13,272,000 to  $143,198,000 at December 31, 1999, from
$129,926,000  at June 30, 1999. At December 31, 1999,  deposits and Federal Home
Loan Bank ("FHLB") advances increased  $6,703,000 and $7,000,000,  respectively.
These  increases  were  used  to  fund  loan  demand,  to  purchase   investment
securities, and to fund cash liquidity for the Year 2000.

Cash and amounts due from banks  increased by $928,000 to $2,324,000 at December
31,  1999 from  $1,396,000  at June 30,  1999.  This  increase  was  funded by a
short-term  advance from the FHLB in anticipation of Y2K liquidity needs.  These
excess  funds were  returned  to the  Federal  Reserve  in January  2000 and the
outstanding advance from the FHLB was reduced by $1 million.

Interest-bearing   deposits  with  other  financial  institutions  decreased  by
$401,000 to $2,563,000 at December 31, 1999,  from  $2,964,000 at June 30, 1999.
This decrease was used primarily to purchase investment securities.

Investment  securities  available for sale increased by $3,719,000 to $8,200,000
at December 31, 1999, from  $4,481,000 at June 30, 1999. This increase  includes
approximately  $1,470,000 in three FHLB bonds with callable options ranging from
6 months to 2 years and an effective  weighted  average  interest rate of 7.11%.
The funding for these bonds came from the strong  deposit  growth and the use of
interest-bearing  deposits with other financial institutions.  In November 1999,
the Company had one $500,000 FHLB bond called and the proceeds were used to fund
loan demand  during the month of December  1999.  The increase also includes the
purchase of a $2,500,000 15-year FHLB bond in August 1999 with a callable option
of 1-year and an effective  interest  yield of 8.10%.  The funding for this bond
came from a FHLB advance  that matures in August 2000 and has an effective  cost
of funds of 5.94%.  Management  placed these  investments into this category for
liquidity  purposes while  maximizing  interest  yields in excess of the federal
overnight rates paid on interest-bearing demand deposits.

Net loans  receivable  increased by $8,362,000 to  $118,262,000  at December 31,
1999, from  $109,900,000 at June 30, 1999. The loan increase was spread over the
entire portfolio. Loans secured by 1-4 family residences increased by $2,850,000
due to demand for ARMs and the bank's "no fee"  Equity  Line of Credit  program.
The  company's  "no  fee"  program  ended  during  November  1999.  Multi-family
residential  loans  increased  by  $2,880,000  due to strong loan demand for the
Company's   competitively  priced  ARM  products.   Automobile  loans  increased
$1,180,000  due  principally  to increased  loan activity  written by automobile
dealership  customers of the Company.  Commercial  loans increased by $1,040,000
due principally to the addition of a new automobile  dealership to the Company's
customer base. See "Risk Elements".

                                       -9-
<PAGE>

Deposits  increased  by  $6,703,000  to  $112,042,000  at December  31,1999 from
$105,339,000  at June 30, 1999.  Within the deposit line item,  certificates  of
deposit  increased  by  $7,002,000  to  $70,718,000  at  December  31, 1999 from
$63,716,000  at June 30,  1999.  This  increase is  primarily  the result of two
certificate of deposit  specials.  The first was called  "Advantage  2000", this
certificate  offered above market rates on  certificates of deposit at 5.25% for
12 months and 5.50% for 18 months.  The "advantage" of this product was that the
customers had a 10-day option at the end of 1999 to redeem the certificate  with
no penalty.  This successful special was offered from June 20, 1999 to September
30,  1999.   During  the  ten  day  option  period  of  1999,  the  Company  had
approximately  $2,350,000 of the "Advantage 2000" certificates  redeemed without
penalty  which  was  approximately  35% of the  total  amount  deposited  in the
certificate  product.  The  Company  was able to  retain  all but  approximately
$330,000 of the redeemed certificates with customers generally  transferring the
funds into another of the  certificate  products  called  "Fives Are Wild".  The
second  certificate  of  deposit  special  was called  "Fives  Are  Wild",  this
certificate  offered above market  interest rates on  certificates of deposit of
5.55% for five months,  5.75% for ten months,  and 6.0% for 15 or 18 months. The
"Fives Are Wild" program  began in mid October and is currently  still in place.
During the latter part of  December  1999,  the company  added to the "Fives Are
Wild" program a 21 month product at 6.07%.

Savings deposits increased $287,000 while demand deposits decreased $586,000 for
the six-month  period ended December 31, 1999.  The demand deposit  decrease was
primarily  the net result of an increase  in  non-interest  bearing  deposits of
$900,000 and a decrease in large money market demand accounts of $1,375,000. The
majority  of the  money  withdrawn  from the money  market  demand  account  was
generally deposited in a "Fives Are Wild" certificate product.

Advances from the FHLB  increased by $7,000,000 to  $16,000,000  at December 31,
1999 from  $9,000,000 at June 30, 1999.  This increase  involves  three separate
advances.  The first advance was for $2,500,000 with a weighted  average rate of
5.94% that has a  one-year  maturity  of August of 2000.  The  proceeds  of this
advance  were used to  purchase a FHLB bond  described  above  under  investment
securities.  The second advance was to increase an existing  $3,000,000 callable
advance to $5,000,000 with a weighted  average rate of 5.52% that has an initial
call date in October  2001.  The  additional  $2,000,000  in proceeds  from this
advance were used to fund a three year  adjustable rate mortgage loan originated
in October 1999.  The third advance was for $2,500,000  with a weighted  average
rate of 5.76% that  matured in January  2000.  The proceeds of this advance were
held to fund Y2K  liquidity.  At maturity of this advance in January  2000,  the
Company repaid  $1,000,000 of the outstanding  amount by utilizing excess liquid
resources  remaining  after December 31, 1999. The remaining  $1,500,000 was put
onto the RepoPlus line of credit.

In addition to the  increases  and changes to advances  from the FHLB  discussed
above,  during the quarter  ended  December 31, 1999,  the FHLB called all three
outstanding  advances at June 30,  1999,  amounting to  $9,000,000.  The Company
elected to renew these  advances at the  proposed  higher  rates  offered by the
FHLB.  The new  weighted  average  rate of the  renewed  $9,000,000  in advances
increased to 5.63% from 5.37% prior to the calls.

Equity capital decreased by  approximately,  $380,000 to $14,613,000 at December
31, 1999 from  $14,993,000  at June 30,  1999.  Net income of  $413,900  and the
recognition of shares in the Employee Stock Ownership Plan and Restricted  Stock
Plan of $164,700,  were offset by the payment of cash dividends of $171,300,  an
increase in net  unrealized  loss on  securities of $180,900 and the purchase of
49,000  shares  of  treasury   stock  for  $606,400,   at  an  average  cost  of
approximately $12.38 per share.

                                     -10-
<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED
---------------------------------------------------------------------------
DECEMBER 31, 1999 AND 1998
--------------------------

Net interest income  increased  $146,000 or 13.44%,  to $1,232,000 for the three
months ended December 31, 1999 from  $1,086,000 for the comparable  period ended
1998. The increase in net interest income resulted primarily from an increase in
the average  volume of the  underlying  principle  balances in interest  earning
assets and  liabilities.  The net  interest  spread for the three  months  ended
December 31, 1999 decreased to 3.25% from 3.30% for the comparable  period ended
1998. The average yield on interest  earning assets decreased by 19 basis points
to 7.91% for the three  months  ended  December  31,  1999,  from  8.10% for the
comparable  period ended 1998.  The average cost of funds  decreased by 14 basis
points to 4.66% for the three months ended  December 31, 1999 from 4.80% for the
comparable period ended 1998.

Net interest  income  increased  $347,000 or 16.60%,  to $2,440,000  for the six
months ended December 31, 1999 from  $2,092,000 for the comparable  period ended
1998. The increase in net interest income resulted primarily from an increase in
the average  volume of the  underlying  principle  balances in interest  earning
assets  and  liabilities.  The net  interest  spread  for the six  months  ended
December 31, 1999 increased to 3.27% from 3.23% for the comparable  period ended
1998. The average yield on interest  earning assets decreased by 20 basis points
to 7.89%  for the six  months  ended  December  31,  1999,  from  8.09%  for the
comparable  period ended 1998.  The average cost of funds  decreased by 24 basis
points to 4.62% for the six months  ended  December  31, 1999 from 4.86% for the
comparable period ended 1998.

Interest and dividend income  increased  $360,000 or 15.68% for the three months
ended  December 31, 1999  compared to the same period ended 1998.  This increase
was primarily due to an increase in earnings on loans of $221,000 as the average
principle  balance  increased  $13,276,000 to $116,418,000  for the period ended
December 31, 1999, from  $103,142,000  for the comparable 1998 period.  Interest
and dividend  income on  investments  and  interest-bearing  deposits with other
financial  institutions  increased  approximately  $139,000 as average principal
balances  increased  $7,691,000 to $17,850,000 for the period ended December 31,
1999, from $10,159,000 for the comparable 1998 period.

Interest and  dividend  income  increased  $673,000 or 14.92% for the six months
ended  December 31, 1999  compared to the same period ended 1998.  This increase
was primarily due to an increase in earnings on loans of $438,000 as the average
principle  balance  increased  $13,094,000 to $114,076,000  for the period ended
December 31, 1999, from  $100,982,000  for the comparable 1998 period.  Interest
and dividend  income on  investments  and  interest-bearing  deposits with other
financial  institutions  increased  approximately  $235,000 as average principal
balances  increased  $6,665,000 to $17,117,000 for the period ended December 31,
1999, from $10,452,000 for the comparable 1998 period.

Interest  expense  increased  $214,000  or 17.68%,  for the three  months  ended
December  31, 1999  compared to the same period  ended 1998.  This  increase was
primarily  due to an increase in interest on deposits of $130,000 as the average
balance increased  $15,816,000 to $107,572,000 for the period ended December 31,
1999,  from  $91,756,000  for the comparable  1998 period.  Interest  expense on
advances  increased  $84,000 as the  average  balance  increased  $5,750,000  to
$14,750,000  for the period ended  December 31, 1999,  from  $9,000,000  for the
comparable 1998 period.

Interest expense increased $325,000 or 13.48%, for the six months ended December
31, 1999 compared to the same period ended 1998. This increase was primarily due
to an increase  in  interest  on  deposits  of  $220,000 as the average  balance
increased  $15,842,000 to  $106,030,000  for the period ended December 31, 1999,
from  $90,188,000 for the comparable 1998 period.  Interest  expense on advances
increased  $105,000 as the average balance  increased  $3,417,000 to $12,500,000
for the period ended December 31, 1999,  from $9,083,000 for the comparable 1998
period.

                                      -11-
<PAGE>

Based upon management's  continuing  evaluation of the adequacy of the allowance
for loan losses  which  encompasses  the  overall  risk  characteristics  of the
various portfolio segments,  past experience with losses, the impact of economic
conditions  on  borrowers,  and other  relevant  factors,  the provision of loan
losses  remained  stable  for  the  three  and six  months  ended  December  31,
1999,compared to the same 1998 periods. See "Risk Elements".

Noninterest income decreased $29,000 or 14.14%, to $179,000 for the three months
ended  December  31, 1999 from  $208,000 for the  comparable  period ended 1998.
Noninterest  income decreased  $50,000 or 12.60%, to $344,000 for the six months
ended December 31, 1999 from $394,000 for the comparable  period ended 1998. For
the three and six month  periods of 1999,  gains on sales of fixed rate mortgage
loans and related servicing rights decreased by a combined $59,000 and $117,000,
respectively.  These  decreases  are due to the lack of  demand  of  fixed  rate
mortgages as a result of the changing  interest rate environment  during the six
months ended December 31, 1999 in comparison to the rate environment  during the
same period ended 1998.  Offsetting  these decreases for the three and six month
periods of 1999 are increases in service charges on deposit accounts of $ 13,000
and $32,000,  respectively,  and ATM income of $8,000 and $19,000, respectively.
These increases are due to increased customer activity.

Noninterest  expense  increased  $75,000 or 7.85%,  to $1,033,000  for the three
months ended December 31, 1999,  from $958,000 for the  comparable  1998 period.
Noninterest  expense  increased  $145,000 or 7.71%,  to  $2,028,000  for the six
months ended December 31, 1999 from  $1,883,000 for the comparable  1998 period.
For the three and six month periods ended  December 31, 1999,  compensation  and
employee benefits increased $55,000 and $81,000, respectively, due to the hiring
of additional employees for loan collection,  accounting and data processing, as
well as,  additional  costs of living  increases  for all full  time  employees.
Occupancy  and  equipment  increased  $13,000  and  $34,000,  respectively,  due
primarily to the incurrence of real estate taxes for the Wintersville  branch of
$7,500  and  $15,000,  respectively,  and  an  increase  in  combined  equipment
depreciation and maintenance of $3,000 and $18,000,  respectively.  Professional
fees  decreased  $22,000  and  $27,000,  respectively,   primarily  due  to  the
preparation of regulatory  reports  internally that were previously out sourced.
Other  expenses  increased  $33,000 and $55,000,  respectively  due primarily to
board fees in  connection  with the  Company's  directors of $4,000 and $11,000,
respectively,   ATM   expense   due   to   increased   usage   of   $5,000   and
$7,000,respectively,  loan  expenses in connection  with the  Company's  Line of
Credit program of $2,000 and $6,000, respectively, and additional Ohio franchise
tax due to the Wintersville branch of $8,000 and $16,000, respectively.


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

As of  December  31,  1999,  the  Company  had  commitments  to  fund  loans  of
approximately $232,200. These loan commitments were funded in January 2000.

Management  monitors both the Company's and the Bank's total risk-based,  Tier I
risk-based  and Tier I leveraged  capital  ratios in order to assess  compliance
with regulatory guidelines.  At December 31, 1999, both the Company and the Bank
exceeded the minimum  risk-based and leveraged capital ratio  requirements.  The
Company's and the Bank's total risk-based, Tier I risk-based and Tier I leverage
ratios are 16.25%, 15.61%, 10.43% and 15.01%,  14.39%, and 9.70%,  respectively,
at December 31, 1999.


                                      -12-
<PAGE>

YEAR 2000
---------

The Company relies on computers to conduct its business and information  systems
processing.  Industry  experts  were  concerned  that on January  1, 2000,  some
computers might not be able to interpret the new year properly, causing computer
malfunctions.  Some banking experts remain concerned that some computers may not
be able to interpret additional dates in the year 2000 properly. The Company has
operated and evaluated its computer  operating systems following January 1, 2000
and  has  not  identified  any  errors  or  experienced   any  computer   system
malfunctions.  Additionally,  the Company  began  in-house  item  processing  on
January 3, 2000.  The item  processing  equipment  and  software  was tested and
validated for Year 2000  compliance  prior to December 31, 1999. The Company has
operated and evaluated this equipment and software following January 3, 2000 and
has  not  identified  any  errors  or  experienced  any  computer  malfunctions.
Nevertheless,  the Company continues to monitor its information system to assess
whether  its systems are at risk of  misinterpreting  any future  dates and will
develop,  if needed,  appropriate  contingency  plans to prevent  any  potential
system  malfunction  or correct  any system  failures.  The Company has not been
informed of any such problem experienced by its vendors or its customers.

However,  it is too soon to conclude that there will not be any problems arising
from the Year 2000 problem. The Company will continue to monitor its significant
vendors  of goods and  services  and  customers  with  respect  to any Year 2000
problems they may encounter,  as those issues may effect its ability to continue
operations, or might adversely affect the company's financial position,  results
of operations  and cash flows.  At this time,  the Company does not believe that
these  potential  problems  will  materially  impact  the  ability  to  continue
operations. However, no assurance can be given that this will be the case.

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.


                                                        December 31,  June 30,
                                                            1999        1999
                                                      -------------  -----------

Loans on a nonaccrual basis                                   $237       $456
Loans past due 90 days or more and still accruing              188        309
                                                      -------------  ---------
         Total nonperforming loans                             425        765
                                                      -------------  ---------
Other real estate                                              407         50
Repossessed assets                                               -          9
                                                      -------------  ---------
         Total nonperforming assets                           $832       $824
                                                      -------------  ---------
Nonperforming loans as a percentage of total loans           0.36%       0.69%
                                                      =============  =========
Nonperforming assets as a percentage of total assets         0.58%       0.63%
                                                      =============  =========
Allowance for loan losses to nonperforming loans           142.80%      76.12%
                                                      =============  =========

                                      -13-
<PAGE>

Management  monitors  impaired  loans on a continual  basis.  As of December 31,
1999,  impaired loans had no material effect on the Company's financial position
or result of operations. During the quarter ended December 31, 1999, the Company
transferred  $355,000 of impaired loans,  which were classified as nonperforming
loans as of September 30, 1999, into Other Real Estate. The Company has realized
no loss on such loans.

During  the six month  period  ended  December  31,  1999,  net loans  increased
approximately  $8,362,000 and nonperforming  loans decreased  $340,000 while the
allowance for loan losses  increased  $25,000 for the same period.  The level of
funding for the  provision is a reflection  of the overall  increase in the loan
portfolio  and the  change in the mix of the loan  portfolio.  Nonaccrual  loans
consist of $181,000 in one to four family residential mortgages and $56,000 in a
commercial real estate mortgage.

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.

The following is a breakdown of the loan  portfolio mix at December 31, 1999 and
June 30, 1999:

                                         December 31,           June 30,
                                             1999                 1999
                                       -----------------    -----------------
Mortgage loans:
           1-4 family                       $62,514,904          $59,673,803
           Multi-family                       5,572,020            2,689,531
           Non-residential                   22,948,730           23,216,018
           Construction                       3,307,813            2,073,165
                                       -----------------    -----------------
                                             94,343,467           87,652,517
                                       -----------------    -----------------
Consumer Loans:
           Home Improvement                   1,154,655            1,195,518
           Automobile                         9,828,931            8,647,953
           Share loans                        1,232,722            1,360,054
           Other                              2,581,007            2,384,401
                                       -----------------    -----------------
                                             14,797,315           13,587,926
                                       -----------------    -----------------

                                       -----------------    -----------------
Commercial Loans                             11,425,936           10,387,570
                                       -----------------    -----------------

Less:
           Loans in process                   1,573,052            1,006,813
           Net deferred loan fees               125,175              139,369
           Allowance for loan losses            606,920              582,280
                                       -----------------    -----------------
                                              2,305,147            1,728,462
                                       -----------------    -----------------
                Total                      $118,261,571         $109,899,551
                                       =================    =================

                                      -14-
<PAGE>


PART II - OTHER INFORMATION


Item 1 - Legal Proceedings

                NONE

Item 2 - Changes in securities

                NONE

Item 3 - Defaults upon senior securities

                NOT APPLICABLE

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

The annual  meeting of the  shareholders  of the Company was held on October 19,
1999 and the following matters were voted upon:

PROPOSAL I - Election of Directors with term to expire in 2002.

                                         FOR         WITHHELD
                                         ---         --------
     George H. Johnson                 506,734          950
     John R. Sperlazza                 504,334        3,335

Directors continuing in office are William B. Chesson, Stephen M. Gagliardi,
James R. Murphy, William E. Watson, and Frank Gary Young.

PROPOSAL II - Ratification of the appointment of S.R. Snodgrass, AC., as
              independent auditors for the Company, for the fiscal year ending
              June 30, 2000.

                                         FOR         AGAINST     ABSTAIN
                                         ---         -------     -------
                                       506,684        1,000         0

Item 5 - Other information

                   NONE



                                      -15-
<PAGE>

Item 6  - Exhibits and reports on Form 8-K

     (a)    List of Exhibits:

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

     (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 23, 1999.


                                      -16-
<PAGE>

SIGNATURES

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


                                      Advance Financial Bancorp

Date:  February 14, 2000              By:/s/Stephen M. Gagliardi
                                         ---------------------------------------
                                         Stephen M. Gagliardi
                                         President and Chief Executive Officer

Date:  February 14, 2000              By:/s/Stephen M. Magnone
                                         ---------------------------------------
                                         Stephen M. Magnone
                                         Vice President and CFO




                                      -17-