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 EXCHANGE
     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 May 1, 2001:   932,285

<PAGE>

                            Advance Financial Bancorp

                                      Index



                                                                           Page
                                                                          Number
                                                                          ------


Part I - FINANCIAL INFORMATION

        Item 1 - Financial Statements

                 Consolidated Balance Sheet (Unaudited) as of
                   March 31, 2001 and June 30, 2000                         3

                 Consolidated Statement of Income (Unaudited)
                   For the Three Months ended March 31, 2001 and 2000       4

                 Consolidated Statement of Income (Unaudited)
                   For the Nine Months ended March 31, 2001 and 2000        5

                 Consolidated Statement of Cash Flows (Unaudited)
                   For the Nine Months ended March 31, 2001 and 2000        6

                 Notes to the Unaudited Consolidated Financial Statements   7-8


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

Part II - OTHER INFORMATION

           Item 1 - Legal Proceedings                                         16

           Item 2 - Changes in Securities                                     16

           Item 3 - Default Upon Senior Securities                            16

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

           Item 5 - Other Information                                         16

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

SIGNATURES                                                                    17


<PAGE>
                            ADVANCE FINANCIAL BANCORP
                      CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                  MARCH 31,         JUNE 30,
                                                                                    2001             2000
                                                                               -------------    -------------
<S>                                                                          <C>              <C>
Assets
     Cash and cash equivalents:
       Cash and amounts due from banks                                         $     969,657    $   1,109,746
       Interest bearing deposits with other institutions                           9,868,455        4,641,878
                                                                               -------------    -------------
          Total cash and cash equivalents                                         10,838,112        5,751,624
                                                                               -------------    -------------
     Investment securities:
       Securities held to maturity (fair value of $747,560 and $1,187,625)           749,867        1,249,672
       Securities available for sale                                              12,429,775        8,234,637
                                                                               -------------    -------------
          Total investment securities                                             13,179,642        9,484,309
                                                                               -------------    -------------
     Mortgaged-backed securities:
       Securities held to maturity (fair value of $1,768,550 and $2,027,016)       1,743,414        2,089,010
       Securities available for sale                                               6,382,952        1,556,172
                                                                               -------------    -------------
          Total mortgage-backed securities                                         8,126,366        3,645,182
                                                                               -------------    -------------
     Loans held for sale                                                             764,771             --
     Loans receivable,  (net of allowance for loan losses
          of $711,193 and $682,103 )                                             125,702,544      119,721,308
     Office properties and equipment, net                                          3,909,768        4,070,295
     Federal Home Loan Bank Stock, at cost                                         1,075,000          800,000
     Accrued interest receivable                                                   1,019,382          870,955
     Other assets                                                                    918,065          920,767
                                                                               -------------    -------------
          TOTAL ASSETS                                                         $ 165,533,650    $ 145,264,440
                                                                               =============    =============

Liabilities:
     Deposits                                                                  $ 128,715,969    $ 118,930,939
     Advances from Federal Home Loan Bank                                         20,000,000       10,500,000
     Advance payments by borrowers for taxes and insurance                           140,777          203,320
     Accrued interest payable and other liabilities                                  532,929          561,907
                                                                               -------------    -------------
          TOTAL LIABILITIES                                                      149,389,675      130,196,166
                                                                               -------------    -------------
Stockholders' Equity:
     Preferred stock, $.10 par value; 500,000 shares
         authorized, none issued                                                           -                -
     Common stock, $.10 par value; 2,000,000 shares
          authorized 1,084,450 shares issued                                         108,445          108,445
     Additional paid in capital                                                   10,334,137       10,329,885
     Retained earnings - substantially restricted                                  8,612,394        8,181,053
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                (445,844)        (510,915)
     Unallocated shares held by Restricted Stock Plan (RSP)                         (357,500)        (505,849)
     Treasury Stock (152,165 shares at cost)                                      (2,233,265)      (2,233,265)
     Accumulated other comprehensive income (loss)                                   125,608         (301,080)
                                                                               -------------    -------------
          TOTAL STOCKHOLDERS' EQUITY                                              16,143,975       15,068,274
                                                                               -------------    -------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 165,533,650    $ 145,264,440
                                                                               =============    =============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements
                                      -3-

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

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                                MARCH 31,
                                                           2001         2000
                                                        ----------   ----------
<S>                                                   <C>          <C>
INTEREST AND DIVIDEND INCOME
    Loans                                               $2,675,618   $2,434,748
    Investment securities                                  211,270      172,683
    Interest-bearing deposits with other institutions       70,433       42,812
    Mortgage-backed securities                             145,273       63,615
    Dividends on Federal Home Loan Bank Stock               17,892       13,426
                                                        ----------   ----------
         Total interest and dividend income              3,120,486    2,727,284
                                                        ----------   ----------
INTEREST EXPENSE
    Deposits                                             1,539,014    1,263,373
    Advances from Federal Home Loan Bank                   306,432      208,344
                                                        ----------   ----------
         Total interest expense                          1,845,446    1,471,717
                                                        ----------   ----------
NET INTEREST INCOME                                      1,275,040    1,255,567

Provision for loan losses                                   48,300       51,000
                                                        ----------   ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      1,226,740    1,204,567
                                                        ----------   ----------

NONINTEREST INCOME
    Service charges on deposit accounts                    121,967      105,844
    Gain on sale of loans                                   36,163        1,994
    Loss on other real estate owned                              -            -
    Loss on sale of investments                                  -            -
    Other income                                            87,299       62,766
                                                        ----------   ----------
         Total noninterest income                          245,429      170,604
                                                        ----------   ----------
NONINTEREST EXPENSE
    Compensation and employee benefits                     527,848      502,256
    Occupancy and equipment                                192,027      178,320
    Professional fees                                       24,583       23,212
    Advertising                                             29,860       28,253
    Data processing charges                                 68,432       71,951
    Other expenses                                         250,460      215,231
                                                        ----------   ----------
         Total noninterest expenses                      1,093,210    1,019,223
                                                        ----------   ----------
Income before income taxes                                 378,959      355,948
Income taxes                                               131,379      140,100
                                                        ----------   ----------
NET INCOME                                              $  247,580   $  215,848
                                                        ==========   ==========
EARNINGS PER SHARE
         Basic                                          $      .29   $      .24
         Diluted                                        $      .29   $      .24

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                       -4-
<PAGE>
                           ADVANCE FINANCIAL BANCORP
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED
                                                                 MARCH 31,
                                                            2001           2000
                                                        -----------    -----------
<S>                                                   <C>            <C>
INTEREST AND DIVIDEND INCOME
    Loans                                               $ 7,879,632    $ 7,067,649
    Investment securities                                   557,171        482,007
    Interest-bearing deposits with other institutions       212,613        124,881
    Mortgage-backed securities                              302,764        193,195
    Dividends on Federal Home Loan Bank Stock                47,982         37,857
                                                        -----------    -----------
         Total interest and dividend income               9,000,162      7,905,589
                                                        -----------    -----------
INTEREST EXPENSE
    Deposits                                              4,482,580      3,650,718
    Advances from Federal Home Loan Bank                    713,432        559,720
                                                        -----------    -----------
         Total interest expense                           5,196,012      4,210,438
                                                        -----------    -----------
NET INTEREST INCOME                                       3,804,150      3,695,151

Provision for loan losses                                   119,100        126,000
                                                        -----------    -----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       3,685,050      3,569,151
                                                        -----------    -----------
NONINTEREST INCOME
    Service charges on deposit accounts                     357,295        323,739
    Gain on sale of loans                                    45,574          6,133
    Loss on other real estate owned                         (20,000)             -
    Loss on sale of investments                              (1,705)             -
    Other income                                            226,956        184,748
                                                        -----------    -----------
         Total noninterest income                           608,120        514,620
                                                        -----------    -----------
NONINTEREST EXPENSE
    Compensation and employee benefits                    1,538,020      1,442,155
    Occupancy and equipment                                 563,678        505,617
    Professional fees                                        81,210         81,234
    Advertising                                              83,089         91,361
    Data processing charges                                 181,766        247,256
    Other expenses                                          730,346        679,957
                                                        -----------    -----------
         Total noninterest expenses                       3,178,109      3,047,580
                                                        -----------    -----------
Income before income taxes                                1,115,061      1,036,191
Income taxes                                                426,255        406,482
                                                        -----------    -----------
NET INCOME                                              $   688,806    $   629,709
                                                        ===========    ===========

EARNINGS PER SHARE
         Basic                                          $       .79    $       .70
         Diluted                                        $       .79    $       .70
</TABLE>

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

<PAGE>
                              ADVANCE FINANCIAL BANCORP
                   CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                        NINE MONTHS ENDED
                                                                             MARCH 31,
                                                                       2001            2000
                                                                   ------------    ------------
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
     Net Income                                                    $    688,806    $    629,709
     Adjustments to reconcile net income to net cash provided by
        operating activities:
          Depreciation, amortization and accretion, net                 454,991         414,673
          Provision for loan losses                                     119,100         126,000
          Loss on other real estate owned                                20,000               -
          Loss on sale of investments                                     1,705               -
          Gain on sale of loans                                         (45,574)         (6,133)
          Origination of loans held for sale                         (4,437,165)     (1,758,832)
          Proceeds from the sale of loans                             3,717,968       1,617,073
          (Increase) decrease in other assets and liabilities          (345,023)         46,198
                                                                   ------------    ------------
               Net cash provided by operating activities                174,808       1,068,688
                                                                   ------------    ------------

INVESTING ACTIVITIES
     Investment securities held to maturity:
          Purchases                                                           -        (249,453)
     Investment securities available for sale:
          Purchases                                                  (7,736,171)     (4,467,656)
          Maturities and repayments                                   4,510,025         504,545
     Mortgage-backed securities held to maturity:
          Maturities and repayments                                     343,965         291,248
     Mortgage-backed securities available for sale:
          Purchases                                                  (5,002,344)              -
          Maturities and repayments                                     349,358         221,657
     Purchase of Federal Home Loan Bank Stock                          (275,000)       (170,500)
     Net increase in loans                                           (6,100,336)    (10,872,341)
     Purchases of premises and equipment                               (142,840)       (298,227)
                                                                   ------------    ------------
               Net cash used in investing activities                (14,053,343)    (15,040,727)
                                                                   ------------    ------------

FINANCING ACTIVITIES
     Net increase in deposits                                         9,785,030      12,544,805
     Net (decrease) increase in short term advances from FHLB        (2,500,000)      2,500,000
     Net Proceeds from advances from the FHLB                        12,000,000       2,000,000
     Net change in advances for taxes and insurance                     (62,543)        (44,538)
     Purchase of treasury stock                                               -        (606,375)
     Cash dividends paid                                               (257,464)       (253,220)
                                                                   ------------    ------------
               Net cash provided by financing activities             18,965,023      16,140,672
                                                                   ------------    ------------
               Increase in cash and cash equivalents                  5,086,488       2,168,633

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                      5,751,624       4,359,870
                                                                   ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $ 10,838,112    $  6,528,503
                                                                   ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
          Interest on deposits and borrowings                      $  4,607,835    $  4,202,908
          Income taxes                                             $    448,332    $    267,672

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.
                                      -6-
<PAGE>
                            ADVANCE FINANCIAL BANCORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

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

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements.  The information  furnished reflects all adjustments,  which are, in
the  opinion  of  management,  necessary  for a fair  statement  of  results  of
operations.  All such adjustments are of a normal recurring nature.  The results
of  operations  for the interim  periods are not  necessarily  indicative of the
results  to be  expected  for the fiscal  year ended June 30,  2001 or any other
interim period.

These statements should be read in conjunction with the consolidated  statements
of and for the year ended June 30, 2000 and related  notes which are included on
the Form 10-KSB (file no. 0-21885).

NOTE 2 - EARNINGS PER SHARE

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



                                                 Nine Months Ended
                                                      March 31
                                                 2001          2000
                                              ----------    ----------

Weighted-average common shares outstanding     1,084,450     1,084,450
Average treasury stock shares                   (152,165)     (127,298)
Average unearned ESOP and RSP shares             (55,683)      (62,551)
                                              ----------    ----------

Weighted-average common shares and
    common stock equivalents used to
    calculate basic earnings per share           876,602       894,601

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      876,602       894,601
                                              ==========    ==========

                                       -7-
<PAGE>

NOTE 2 - EARNINGS PER SHARE (CONTINUED)



                                                 Three Months Ended
                                                      March 31
                                                 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             (53,655)      (60,654)
                                              ----------    ----------

Weighted-average common shares and
    common stock equivalents used to
    calculate basic earnings per share           878,630       871,631

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      878,630       871,631
                                              ==========    ==========


NOTE 3 - COMPREHENSIVE INCOME

Other accumulated  comprehensive income (loss) consists solely of net unrealized
gains and losses on available for sale securities. For the three and nine months
ended March 31, 2001,  comprehensive  income  totaled  $369,318 and  $1,115,494,
respectively.  For the three and nine months ended March 31, 2000, comprehensive
income totaled $237,007 and $470,000, respectively.


NOTE 4 - SUBSEQUENT EVENT

On April 18, 2001,  the Company  entered into a definitive  merger  agreement to
acquire Ohio State Financial Services,  Inc. of Bridgeport,  Ohio ("OSFS").  The
merger is subject to regulatory  approvals,  OSFS's shareholders  approval,  and
other conditions.  The Company will acquire all of the outstanding  common stock
of OSFS for $16.00  per share in cash,  or  approximately  $8.0  million.  It is
anticipated that the merger will close by the end of the Company's first quarter
of fiscal 2002.

                                       -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.  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.

OVERVIEW
--------
     On April 18, 2001, the Company entered into a definitive  merger  agreement
to acquire Ohio State Financial Services, Inc. of Bridgeport, Ohio ("OSFS"). The
merger is subject to regulatory approvals, OSFS's shareholder approval and other
conditions. The Company will acquire all of the outstanding common stock of OSFS
for $16.00 per share in cash, or approximately  $8.0 million.  It is anticipated
that the merger will close by the end of the  company's  first quarter of fiscal
2002.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2001 AND JUNE 30, 2000
---------------------------------------------------------------------
Total assets increased by approximately $20,269,000 to $165,533,650 at March 31,
2001,  from  $145,264,440  at June 30, 2000. The increase is  distributed  among
increases  in  interest-bearing  deposits  with  other  financial  institutions,
investment and  mortgage-backed  securities,  as well as, increased loan demand.
Advances from the Federal Home Loan Bank ("FHLB") and deposits,  which increased
by $9,500,000 and $9,785,000, respectively, were used to fund the asset growth.

Investment  securities increased by $3,695,000 to $13,179,642 at March 31, 2001,
from  $9,484,309 at June 30, 2000. The increase is attributed to the purchase of
municipal  and  corporate  securities  offset by  multiple  calls on FHLB bonds.
During the nine month period,  the Company has purchased five long-term  insured
municipal   bond   securities   classified  as  available  for  sale   totalling
approximately  $5,800,000  that  have a tax  equivalent  yield of  approximately
7.66%. Also during this period,  the Company purchased three 36-month  corporate
bonds classified as available for sale totalling approximately $2,000,000 with a
yield of approximately  6.0%. The purchases of the municipal and corporate bonds
were offset by having five FHLB bonds  called  totalling  $4,500,000  during the
period.

Mortgage-backed  securities  increased by  $4,481,000 to $8,126,366 at March 31,
2001,  from $3,645,182 at June 30, 2000. The increase is primarily the result of
a GNMA security  classified as available for sale that was purchased in November
2000. The security has a weighted-average coupon of 7.5%.

Net loans receivable  increased by $5,981,000 to $125,702,544 at March 31, 2001,
from  $119,721,308  at June 30, 2000. The increase in loans was primarily due to
an increase in  non-residential  mortgages of  $3,150,000,  commercial  loans of
$1,641,000 and automobile  loans of $1,531,000.  Non-residential  mortgage loans
and  commercial  loans have  increased  due to strong  demand for the  Company's
competitively  priced adjustable rate mortgage products and demand from existing
customers.  Automobile  loans have  increased due  principally to increased loan
activity written by automobile  dealership  customers of the Company.  See "Risk
Elements".

                                       -9-
<PAGE>

Deposits  increased  by  $9,785,000  to  $128,715,969  at March  31,  2001  from
$118,930,939  at June 30, 2000.  Within the deposit line item,  certificates  of
deposit   increased  by  $9,266,000  to  $85,277,814  at  March  31,  2001  from
$76,011,529  at June  30,  2000.  This  increase  is  primarily  the  result  of
certificate  of deposit  specials  that have been  offered  over the  nine-month
period  ended March 31,  2001.  Although  the same  specials  are being  offered
currently  with the  exception of the eleven (11) month  special  which has been
eliminated, the annual percentage rates have been reduced for each term from the
rates  reported in the prior two three month  periods.  The seven month  special
currently  has an annual  percentage  rate of 4.50%,  down from 5.87% and 6.66%,
respectively, the thirteen (13) month special currently has an annual percentage
rate of 4.55%,  down from 5.92% and 6.92%,  respectively,  and the nineteen (19)
month special  currently has an annual percentage rate of 4.60%, down from 5.92%
and 6.92%, respectively.

The seven and nineteen month maturity areas continue to be equally  popular with
the Company's customers. Savings deposits and demand deposits increased $263,000
and $256,000,  respectively, for the nine-month period ended March 31, 2001. The
increase in core  deposits is a reversal of the trend  noticed  during the first
six-month  period.   The  core  deposit  increases  and  significant  growth  in
certificates can be attributed to customers altering their investment options.

Advances from the FHLB  increased  $9,500,000 to  $20,000,000  at March 31, 2001
from  $10,500,000 at June 30, 2000.  This increase is the net result of activity
over the current period.  During the nine month period ended March 31, 2001, the
Company has taken out three $5 million  convertible  select advances.  The first
was  obtained  in  November  2000 and has a  maturity  of  November  2010 with a
conversion date of November 2003, it is priced at 6.05%. The second was obtained
in December 2000 and has a maturity of December  2010 with a conversion  date of
December  2004,  it is priced at 5.54%.  The third advance was obtained in March
2001 and has a maturity  of March 2011 with a  conversion  date of March 2002 if
three-month Libor exceeds 6.99%, it is priced at 4.96%. The increase in advances
is offset by the maturity of a $2,500,000 short term advance and the payoff of a
$3 million  dollar  advance  that was priced at 5.52% and was to be converted in
October 2001. The additional $9,500,000 in funds were used primarily to purchase
investment and mortgage-backed securities.


Stockholders'  Equity increased by  approximately,  $1,076,000 to $16,143,975 at
March 31, 2001 from  $15,068,274 at June 30, 2000.  Net income of $689,000,  the
recognition of shares in the Employee Stock Ownership Plan and Restricted  Stock
Plan of $217,000,  and an increase in the net  unrealized  gain on securities of
$427,000 were offset by the payment of cash dividends of $257,000.


COMPARISON  OF THE RESULTS OF  OPERATIONS  FOR THE THREE AND NINE  MONTHS  ENDED
--------------------------------------------------------------------------------
MARCH 31, 2001 AND 2000
-----------------------

Net interest  income  increased  $19,000 or 1.55%,  to $1,275,000  for the three
months  ended March 31, 2001 from  $1,256,000  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 March
31, 2001 decreased to 2.80% from 3.25% for the comparable period ended 2000. See
"Average  Balance  Sheet" for the  three-month  periods ended March 31, 2001 and
2000.

Net  interest  income  increased  $109,000  or  2.95%,  to  $3,804,000  for  the
nine-months ended March 31, 2001 from $3,695,000 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 nine-months ended March
31, 2001 decreased to 2.96% from 3.27% for the comparable period ended 2000. See
"Average  Balance  Sheet" for the  nine-month  periods  ended March 31, 2001 and
2000.


                                      -10-
<PAGE>

Noninterest income increased $74,000 or 43.86%, to $245,000 for the three months
ended  March 31,  2001 from  $171,000  for the  comparable  period  ended  2000.
Noninterest  income increased  $93,000 or 18.17% to $608,000 for the nine-months
ended March 31, 2001 from $515,000 for the comparable period ended 2000. For the
three and nine  month  period of 2001,  miscellaneous  fees and fees on  deposit
accounts increased by $27,000 and $62,000,  respectively,  also gain on sales of
fixed rate loans and related  servicing  rights  increased  $48,000 and $54,000,
respectively.  These net  increases  were offset by a  write-down  of Other Real
Estate Owned of $20,000 and a recognized loss on an investment of $2,000 for the
nine-month period.


Noninterest  expense  increased  $74,000 or 7.26%,  to $1,093,000  for the three
months  ended March 31, 2001 from  $1,019,000  for the  comparable  2000 period.
Noninterest  expense  increased  $131,000 or 4.28%,  to $3,178,000  for the nine
months  ended March 31, 2001 from  $3,048,000  for the  comparable  period ended
2000.  For the three and nine month periods  ended March 31, 2001,  compensation
and  employee  benefits  increased  $26,000  or  5.10%,  and  $96,000  or 6.65%,
respectively. The increases in compensation and employee benefits are due to the
hiring of additional employees for loan collection and data processing,  as well
as,  additional costs of living  increases for all full time employees.  For the
three and nine month  periods  ended March 31,  2001,  occupancy  and  equipment
increased $14,000 and $58,000  respectively.  The increases are due primarily to
an increase in combined  equipment  depreciation  and  maintenance of $6,000 and
$54,000 for the three and nine month  periods,  respectively.  The increases are
directly related to the in-house item-processing department that began formation
during the latter part of 1999. Data  processing  charges  decreased  $3,000 and
$65,000 for the three and nine-month periods ended March 31, 2001. The decreases
are due to the  completion  of the  conversion  to in house item  processing  in
January 2000. The decreases in data  processing are offset by similar  increases
in "occupancy and  equipment" for  maintenance  and  depreciation  and in "other
expenses" for supplies,  communications and postage, which increased $10,000 and
$35,000 for the three and nine month periods, respectively.  Other Expenses have
increased $35,000 and $50,000, respectively for the three and nine month periods
ended March 31, 2001.  In addition to the  increases  in  supplies,  postage and
communications discussed above, state franchise taxes have increased $12,000 and
$11,000,  respectively,  and expenses  related to the  company's  merchant  card
program have increased $7,000 and $10,000, respectively.


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

As of March 31, 2001, the Company had commitments to fund loans of approximately
$997,650. These loan commitments are expected to be funded by April 30, 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 March 31, 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 15.38%, 14.72%, 9.68% and 14.68%, 14.03%, and 9.18%, respectively, at
March 31, 2001.

                                      -11-

<PAGE>


Average Balance Sheet for the Three-Month Period Ended March 31

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

<TABLE>
<CAPTION>
                                                                            Period Ended March 31,
                                                     --------------------------------------------------------------------
                                                                   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)                               $126,640    $2,676      8.45%     $119,039      $2,435      8.18%
  Investment securities (2)                            19,898       299      6.02%       13,135         229      6.97%
  Mortgage-backed securities                            8,305       145      6.98%        3,841          63      6.56%
                                                     ---------  --------   --------    ---------   ---------   --------
     Total interest-earning assets                    154,843     3,120      8.06%      136,015       2,727      8.02%
                                                                --------   --------                ---------   --------
Non-interest-earning assets                             7,182                             7,226
                                                     ---------                         ---------
     Total assets                                    $162,025                          $143,241
                                                     =========                         =========

Interest-bearing liabilities:
  Interest-bearing demand deposits                    $19,093       156      3.27%      $20,010         170      3.39%
  Certificates of deposit                              83,298     1,262      6.06%       71,987         979      5.44%
  Savings deposits                                     17,236       121      2.81%       16,983         115      2.71%
  FHLB borrowings                                      20,750       306      5.90%       14,417         208      5.78%
                                                     ---------  --------   --------    ---------   ---------   --------
     Total interest-bearing liabilities               140,377     1,845      5.26%      123,397       1,472      4.77%
                                                                --------   --------                ---------   --------
Non-interest bearing liabilities                        5,691                             5,105
                                                     ---------                         ---------
     Total liabilities                                146,068                           128,502
Stockholders' equity                                   15,957                            14,739
                                                     ---------                         ---------
     Total liabilities and stockholders'
       equity                                        $162,025                          $143,241
                                                     =========                         =========

Net interest income                                              $1,275                              $1,255
                                                                ========                           =========
Interest rate spread (3)                                                     2.80%                               3.25%
                                                                           ========                            ========
Net yield on interest-earning assets (4)                                     3.29%                               3.69%
                                                                           ========                            ========
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                     110.31%                             110.23%
                                                                           ========                            ========
</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.

<PAGE>
Average Balance Sheet for the Nine-Month Period Ended March 31

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

<TABLE>
<CAPTION>

                                                                             Period Ended March 31,
                                                      ----------------------------------------------------------------------
                                                                    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)                                $123,688     $7,880      8.49%      $115,731      $7,068      8.14%
  Investment securities (2)                             16,552        817      6.58%        13,056         644      6.58%
  Mortgage-backed securities                             5,932        303      6.81%         4,014         193      6.41%
                                                      ---------   --------   --------     ---------   ---------   --------
     Total interest-earning assets                     146,172      9,000      8.21%       132,801       7,905      7.94%
                                                                  --------   --------                 ---------   --------
Non-interest-earning assets                              7,123                               7,184
                                                      ---------                           ---------
     Total assets                                     $153,295                            $139,985
                                                      =========                           =========

Interest-bearing liabilities:
  Interest-bearing demand deposits                     $19,335        497      3.43%       $20,701         521      3.36%
  Certificates of deposit                               79,929      3,619      6.04%        69,578       2,792      5.35%
  Savings deposits                                      17,287        367      2.83%        16,734         337      2.69%
  FHLB borrowings                                       15,416        713      6.17%        13,139         560      5.68%
                                                      ---------   --------   --------     ---------   ---------   --------
     Total interest-bearing liabilities                131,967      5,196      5.25%       120,152       4,210      4.67%
                                                                  --------   --------                 ---------   --------
Non-interest bearing liabilities                         5,760                               4,957
                                                      ---------                           ---------
     Total liabilities                                 137,727                             125,109
Stockholders' equity                                    15,568                              14,876
                                                      ---------                           ---------
     Total liabilities and stockholders'
       equity                                         $153,295                            $139,985
                                                      =========                           =========

Net interest income                                                $3,804                               $3,695
                                                                  ========                            =========
Interest rate spread (3)                                                       2.96%                                3.27%
                                                                             ========                             ========
Net yield on interest-earning assets (4)                                       3.47%                                3.71%
                                                                             ========                             ========
Ratio of average interest-earning assets  to
  average interest-bearing liabilities                                       110.76%                              110.53%
                                                                             ========                             ========
</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.

<PAGE>

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


                                                        March 31,  June 30,
                                                           2001      2000
                                                         ------    ------

Loans on a nonaccrual basis                              $  669    $  304
Loans past due 90 days or more and still accruing           546       189
                                                         ------    ------
         Total nonperforming loans                        1,215       493
                                                         ------    ------

Other real estate                                           387       407
Repossessed assets                                           16        21
                                                         ------    ------
         Total nonperforming assets                      $1,618    $  921
                                                         ------    ------


Nonperforming loans as a percentage of total net loans     0.97%     0.41%
                                                         ======    ======

Nonperforming assets as a percentage of total assets       0.98%     0.63%
                                                         ======    ======
Allowance for loan losses to nonperforming loans          58.53%   138.36%
                                                         ======    ======


Nonaccrual loans consist of $443,000 in one to four family residential mortgages
and  $226,000  in  non-residential  real  estate  mortgages  at March 31,  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.

                                      -14-
<PAGE>

The following is a breakdown of the loan portfolio composition at March 31, 2001
and June 30, 2000:

                                          March 31,      June 30,
                                            2001           2000
                                       ------------   ------------
Mortgage Loans:
           1-4 family                  $ 61,686,418   $ 62,163,992
           Multi-family                   5,909,990      5,469,906
           Non-residential               27,693,943     24,543,795
           Construction                   3,157,391      3,241,801
                                       ------------   ------------
                                         98,447,742     95,419,494
                                       ------------   ------------
Consumer Loans:
           Home Improvement               1,327,553      1,439,387
           Automobile                    12,434,755     10,903,416
           Share loans                    1,546,547      1,406,328
           Other                          2,686,545      2,675,498
                                       ------------   ------------
                                         17,995,400     16,424,629
                                       ------------   ------------

                                       ------------   ------------
Commercial Loans                         12,141,009     10,500,256
                                       ------------   ------------

Less:
           Loans in process               2,058,296      1,812,877
           Net deferred loan fees           112,118        128,091
           Allowance for loan losses        711,193        682,103
                                       ------------   ------------
                                          2,881,607      2,623,071
                                       ------------   ------------
                Total                  $125,702,544   $119,721,308
                                       ============   ============


                                      -15-
<PAGE>

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

                NONE

Item 2 - Changes in securities

                NONE

Item 3 - Defaults upon senior securities

                NOT APPLICABLE

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

                NONE

Item 5 - Other information

                NONE

Item 6  - Exhibits and reports on Form 8-K

(a)      List of Exhibits:
<TABLE>
<CAPTION>
     <S>           <C>
             2      Agreement and Plan of Merger between Advance Financial Bancorp and
                    Ohio State Financial Services, Inc.******
             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.

******  Incorporated by reference to Form 8K filed April 19, 2001.

                                      -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:  May 15, 2001                    By: /s/Stephen M. Gagliardi
                                           -------------------------------------
                                           Stephen M. Gagliardi
                                           President and Chief Executive Officer

Date:  May 15, 2001                    By: /s/Stephen M. Magnone
                                           -------------------------------------
                                           Stephen M. Magnone
                                           Vice President and CFO



                                       -17