MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2008

FORWARD LOOKING STATEMENTS

In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements, as that term is defined in the U.S. federal securities laws. Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions made by or to be made by us, projections involving anticipated revenues, earnings, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as "anticipated," "believe," "expect," "intend," "plan," "estimate" or similar expressions.

Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. Forward-looking statements involve risks, uncertainties and assumptions (some of which are beyond our control), and as a result actual results may differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the following, as well as those discussed elsewhere herein:

o our investments in our businesses and in related technology could require additional incremental spending, and might not produce expected deposit and loan growth and anticipated contributions to our earnings;

o general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for loan losses or a reduced demand for credit or fee-based products and services;

o changes in the interest rate environment could reduce net interest income and could increase credit losses;

o the conditions of the securities markets could change, which could adversely affect, among other things, the value or credit quality of our assets, the availability and terms of funding necessary to meet our liquidity needs and our ability to originate loans and leases;

o changes in the extensive laws, regulations and policies governing bank holding companies and their subsidiaries could alter our business environment or affect our operations;

o the potential need to adapt to industry changes in information technology systems, on which we are highly dependent, could present operational issues or require significant capital spending;

o competitive pressures could intensify and affect our profitability, including as a result of continued industry consolidation, the increased availability of financial services from non-banks, technological developments such as the internet or bank regulatory reform; and

o acts or threats of terrorism and actions taken by the United States or other governments as a result of such acts or threats, including possible military action, could further adversely affect business and economic conditions in the United States generally and in our principal markets, which could have an adverse effect on our financial performance and that of our borrowers and on the financial markets and the price of our common stock.

You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new or future events except to the extent required by federal securities laws.

GENERAL

WVS Financial Corp. ("WVS" or the "Company") is the parent holding company of West View Savings Bank ("West View" or the "Savings Bank"). The Company was organized in July 1993 as a Pennsylvania-chartered unitary bank holding company and acquired 100% of the common stock of the Savings Bank in November 1993.

West View Savings Bank is a Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from six offices in the North Hills suburbs of Pittsburgh. The Savings Bank converted to the stock form of ownership in November 1993. The Savings Bank had no subsidiaries at December 31, 2008.

The operating results of the Company depend primarily upon its net interest income, which is determined by the difference between income on interest-earning assets, principally loans, mortgage-backed securities and investment securities, and interest expense on interest-bearing liabilities, which consist primarily of deposits and borrowings. The Company's net income is also affected by its provision for loan losses, as well as the level of its non-interest income, including loan fees and service charges, and its non-interest expenses, such as compensation and employee benefits, income taxes, deposit insurance and occupancy costs.

FINANCIAL CONDITION

The Company's assets totaled $444.8 million at December 31, 2008, as compared to $423.1 million at June 30, 2008. The $21.7 million or 5.1% increase in total assets was primarily comprised of a $15.1 million or 12.5% increase in investment securities - held to maturity, a $13.6 million or 145.0% increase in FDIC insured certificates of deposit, a $3.9 million or 56.9% increase in Federal Home Loan Bank ("FHLB") stock, and a $1.3 million or 2.2% increase in net loans receivable, which were partially offset by a $7.5 million or 93.9% decrease in investment securities - available for sale, a $4.3 million or 2.0% decrease in mortgage-backed securities - held to maturity, a $269 thousand or 12.7% decrease in accrued interest receivable, and a $173 thousand or 15.0% decrease in deferred taxes and other assets. The increase in investment securities - held to maturity was primarily attributable to purchases of $72.1 million of short-term investment grade commercial paper, $30.3 million of fixed-rate U.S. Government agency bonds, $5.4 million of investment grade fixed rate corporate bonds, and $2.0 million of investment grade floating-rate corporate bonds, which were partially offset by $47.3 million of issuer redemptions prior to maturity (i.e. calls) of fixed-rate U.S. Government agency bonds, $45.4 million of maturities of short-term investment grade commercial paper, and $2.3 million of maturities of investment grade corporate bonds. The increase in FDIC insured certificates of deposit was attributable to an increase of $16.2 million in bank certificates of deposit which was partially offset by $2.6 million in maturities and early redemptions of bank certificates of deposit. The increase in FHLB stock was attributable to higher levels of FHLB borrowings during the six months ended December 31, 2008, and associated FHLB stock purchase requirements. The decrease in investment securities - available for sale was attributable to $7.5 million of maturities of short-term investment grade commercial paper, while the decrease in mortgage-backed securities - held to maturity was attributable primarily to principal payments received. See "Asset and Liability Management".

The Company's total liabilities increased $22.1 million or 5.7% to $413.1 million as of December 31, 2008 from $391.0 million as of June 30, 2008. The $22.1 million increase in total liabilities was primarily comprised of a $46.2 million or 57.3% increase in Federal Reserve Bank short-term borrowings, which was partially offset by a $20.0 million or 100.0% decrease in other short-term borrowings, a 2.8 million or 1.9% decrease in total savings deposits, a $991 thousand or 32.0% decrease in other liabilities and a $223 thousand or 14.5% decrease in accrued interest payable. The respective changes in short-term borrowings were primarily due to more competitive Federal Reserve Bank ("FRB") pricing in contrast to the short-term repurchase agreement and FHLB markets. Certificates of deposit decreased $5.4 million, savings accounts

decreased $612 thousand, and advance payments by borrowers for taxes and insurance decreased $297 thousand, while demand deposits increased $2.2 million and money market accounts increased $1.3 million. The change in money market accounts and certificates of deposit may be in response to lower market yields on certificates of deposit and increased liquidity preferences by depositors in response to unsettled financial markets. Management believes that the changes in savings accounts and advance payments by borrowers for taxes and insurance were primarily attributable to seasonal payments of county, local and school real estate taxes, and transactional needs. The change in other liabilities is primarily attributable to decreases in deferred director compensation accounts and clearing balances due to the Federal Reserve, which were partially offset by increases in accrued income taxes payable and accrued contributions to the Employee Stock Ownership Plan.

Total stockholders' equity decreased $475 thousand or 1.5% to $31.7 million as of December 31, 2008, from approximately $32.1 million as of June 30, 2008. Capital expenditures for the Company's stock repurchase program and cash dividends totaled $1.5 million and $697 thousand, respectively, and accumulated other comprehensive income decreased $34 thousand, which were partially offset by net income of $1.8 million for the six months ended December 31, 2008. Book value per share increased to $14.86 at December 31, 2008 from $14.44 at June 30, 2008.

RESULTS OF OPERATIONS

General. WVS reported net income of $1.0 million or $0.47 earnings per share (basic and diluted) and $1.8 million or $0.81 earnings per share (basic and diluted) for the three and six months ended December 31, 2008, respectively. Net income decreased by $36 thousand or 3.4% and earnings per share (basic and diluted) increased $0.01 or 2.2% for the three months ended December 31, 2008, when compared to the same period in 2007. The decrease in net income was primarily attributable to a $38 thousand increase in income tax expense, a $16 thousand increase in provisions for loan losses, and a $7 thousand increase in non-interest expense, which were partially offset by a $14 thousand increase in net interest income and an $11 thousand increase in non-interest income. For the six months ended December 31, 2008, net income decreased $304 thousand or 14.7% when compared to the same period in 2007. The decrease in net income was primarily attributable to a $441 thousand decrease in net interest income, a $40 thousand increase in non-interest expense, and a $27 thousand increase in provisions for loan losses, which were partially offset by a $182 thousand decrease in income tax expense and a $22 thousand increase in non-interest income.

Net Interest Income. The Company's net interest income increased by $14 thousand or 0.6% and decreased $441 thousand or 9.5% for the three and six months ended December 31, 2008, respectively, when compared to the same periods in 2007. For the three months ended December 31, 2008, approximately $63 thousand of the increase in net interest income can be attributed to the favorable overall impact of declining market interest rates on the Company's financial assets and liabilities, which was partially offset by a $23 thousand decrease in net interest income attributable to lower overall balances in the Company's financial assets and liabilities when compared to the same period in 2007. For the six months ended December 31, 2008, approximately $424 thousand of the decrease in net interest income can primarily be attributed to decreases in average balances of the Company's financial assets of approximately $7.0 million and financial liabilities of approximately $7.5 million when compared to the same period in 2007.

During the six months ended December 31, 2008, the Federal Open Market Committee (FOMC) reduced its targeted federal funds level from 2.00% to a range of 0.00% to 0.25%. See also "Asset and Liability Management."

Interest Income. Interest on investment securities decreased by $1.2 million or 39.9% and $2.9 million or 45.1% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The decreases for the three and six months ended December 31, 2008, were primarily attributable to a $1.4 million and $3.0 million decrease, respectively, in interest income on callable U.S. Government Agency bonds (principally due to issuer redemptions of securities prior to scheduled maturities). The changes in interest income on the various segments of the investment portfolio are primarily attributable to changes in the average balances of the respective segments.

Interest on mortgage-backed securities decreased $291 thousand or 12.7% and $249 thousand or 5.9% for the three and six months ended December 31, 2008, respectively, when compared to the same periods in 2007. The decreases for the three and six months ended December 31, 2008 were primarily attributable to decreases of 203 basis points and 230 basis points, respectively, in the weighted average yield earned on U.S. government agency floating-rate mortgage-backed securities for the three and six months, decreases of 267 basis points and 273 basis points, respectively, in the weighted-average yield earned on private label mortgage-backed securities for the three and six months, which were partially offset by $59.0 million and $75.8 million increases in the average balance outstanding of U.S. Government floating-rate agency mortgage-backed securities for the three and six months ended December 31, 2008, respectively, when compared to the same periods in 2007. The decrease in the weighted average yield earned on mortgage-backed securities was consistent with lower short-term market interest rates for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The increase in the average balances of U.S. government agency mortgage-backed securities during the three and six months ended December 31, 2008 was primarily attributable to purchases of floating rate U.S. government agency mortgage-backed securities during the period. All mortgage-backed securities purchased during the period were guaranteed by agencies of the U.S. government.

Interest on FDIC insured bank certificates of deposit increased $153 thousand or 100.0% and $239 thousand or 100.0% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The Company continued to purchase FDIC insured certificates of deposit due to favorable funding spreads and lower levels of suitable other investments due to distressed market conditions. The certificates have original maturity terms from five to twenty-four months.

Interest on net loans receivable decreased $97 thousand or 8.8% and $194 thousand or 8.7% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The decreases for the three and six months ended December 31, 2008 were primarily attributable to decreases of 50 and 43 basis points, respectively, in the weighted average yield earned on net loans receivable for the three and six months ended December 31, 2008, when compared to the same periods in 2007, and a $1.3 million and $1.9 million decrease in the average balance of net loans receivable outstanding, when compared to the same periods in 2007. The decrease in the weighted average yield earned on net loans receivable for the three and six months ended December 31, 2008, was primarily attributable to rate reductions on the adjustable rate portion of the loan portfolio due to lower market rates on which the adjustments are based. The decrease in the average loan balances outstanding for the three and six months ended December 31, 2008 were attributable to low levels of consumer confidence, rising levels of unemployment, continued and deepening weakness in the economy, an excess supply of existing homes available for sale, and lower levels of housing starts. The Company continues to offer competitively priced mortgages through its correspondent lending program, however, consumer demand has been very weak.

Dividends on FHLB stock decreased $80 thousand or 63.0% and $86 thousand or 38.6% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The decreases for the three and six months ended December 31, 2008 were attributable to 363 and 207 basis point decreases, respectively, in the average yield earned on FHLB stock when compared to the same periods in 2007, which were partially offset by increases in the average balance of FHLB stock held for the three and six months ended December 31, 2008 of $1.3 million and $441 thousand, respectively, when compared to the same periods in 2007. The increases in average balances of FHLB stock held resulted from increased levels of FHLB borrowings and associated FHLB stock purchase requirements during the periods. In December 2008, the FHLB of Pittsburgh announced that it was suspending the payment of dividends and redemptions of excess capital stock from members. The FHLB's stated purpose of these actions is to build retained earnings to ensure adequate regulatory capital. The FHLB of Pittsburgh anticipates providing further information to its members, along with its December 31, 2008 quarterly earnings, sometime in February 2009.

Interest Expense. Interest paid on other short-term borrowings decreased $705 thousand or 99.6% and $1.1 million or 79.3%, respectively, for the three and six months ended December 31, 2008 when compared to the same periods in 2007. The decrease for the three months ended December 31, 2008 was primarily attributable to a 414 basis point decrease in rates paid on other short-term borrowings and a $55.8

million decrease in average balances of other short-term borrowings during the period when compared to the same period in 2007. The decrease for the six months ended December 31, 2008, was primarily attributable to a 297 basis point decrease in rates paid on other short-term borrowings and a $28.6 million decrease in average balances of other short-term borrowings during the period when compared to the same period in 2007. The decrease in rates paid reflect lower short-term market interest rates while the decrease in average balances of other short-term borrowings is attributable to more favorable short-term borrowing rates offered by the Federal Reserve Bank.

Interest expense on deposits and escrows decreased $463 thousand or 43.8% and $895 thousand or 40.8% for the three and six months ended December 31, 2008, when compared to the same period in 2007. The decrease in interest expense on deposits for the three months ended December 31, 2008 was primarily attributable to a 164 basis point decrease in the weighted average rate paid on time deposits, a 234 basis point decrease in the weighted average rate paid on money market accounts, and an $8.0 million decrease in the average balance of time deposits, which were partially offset by a $3.3 million increase in the average balance of money market accounts, when compared to the same period in 2007. The decrease for the six months ended December 31, 2008, was primarily attributable to a 150 basis point decrease in the weighted average rate paid on time deposits, a 222 basis point decrease in the weighted average rate paid on money market accounts, and a $9.3 million decrease in the average balance of time deposits, which were partially offset by a $3.7 million increase in the average balance of money market accounts, when compared to the same period in 2007. The decrease in average yields of time deposits and money market accounts reflects lower market rates for the three and six months ended December 31, 2008 while the change in average balances for time deposits and money market accounts may be in response to increased liquidity preferences by depositors in response to unsettled financial markets.

Interest paid on FHLB advances decreased $411 thousand or 17.1% and $822 thousand or 17.3% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The decrease for the three months ended December 31, 2008 was attributable to a 390 basis point decrease in rates paid on FHLB short-term advances, which was partially offset by a $11.3 million increase in the average balance of FHLB short-term advances when compared to the same period in 2007. The decrease for the six months ended December 31, 2008, was primarily attributable to a 385 basis point decrease in rates paid on short-term FHLB advances and a $5.9 million decrease in the average balance of short-term FHLB advances, when compared to the same period in 2007. The decrease in rates paid reflect lower short-term market interest rates.

Interest paid on FRB short-term borrowings increased $65 thousand or 100% and $150 thousand or 100% for the three and six months ended December 31, 2008, when compared to the same periods in 2007. The increase for the three and six months ended December 31, 2008 was attributable to increases of $48.4 million and $31.7 million, respectively, in the average balances of FRB short-term borrowings. The increase in average balances of FRB short-term borrowings is attributable to more favorable short-term borrowing rates offered by the Federal Reserve Bank, when compared to other short-term funding sources.

Provision (Recovery) for Loan Losses. A provision (recovery) for loan losses is charged (credited) to earnings to maintain the total allowance at a level considered adequate by management to absorb potential losses in the portfolio. Management's determination of the adequacy of the allowance is based on an evaluation of the portfolio considering past experience, current economic conditions, volume, growth and composition of the loan portfolio, and other relevant factors.

The Company recorded provisions for loan losses of $27 thousand and $21 thousand for the three and six months ended December 31, 2008, respectively, compared to a provision for loan losses of $11 thousand and a recovery for loan losses of $6 thousand for the same periods in 2007. The increases for both periods in fiscal 2009 can be primarily attributable to higher average loan balances. At December 31, 2008, the Company's total allowance for loan losses amounted to $977 thousand or 1.7% of the Company's total loan portfolio, as compared to $956 thousand or 1.7% at June 30, 2008.

Non-Interest Income. Non-interest income increased by $11 thousand or 7.6% and $22 thousand or 7.3% for the three and six months ended December 31, 2008, respectively, when compared to the same

periods in 2007. The increase was primarily attributable to increased levels of ATM and debit card fee income.

Non-Interest Expense. Non-interest expense increased $7 thousand or 0.7% and $40 thousand or 2.1% for the three and six months ended December 31, 2008, respectively, when compared to the same periods in 2007. The increase for the three months ended December 31, 2008 was principally attributable to a $44 thousand increase in employee related costs, which were partially offset by a decrease in charitable contributions eligible for PA tax credits when compared to the same period in 2007. The increase for the six months ended December 31, 2008 was primarily attributable to increases in employee related costs, when compared to the same period in 2007.

Income Tax Expense. Income tax expense increased $38 thousand or 8.2% for the three months ended December 31, 2008, and decreased $182 thousand or 18.7% for the six months ended December 31, 2008, when compared to the same periods in 2007. The increase for the three months ended December 31, 2008 was primarily due to a decrease in the Company's deferred tax assets attributable to the deferred director compensation plan, while the decrease for the six months ended December 31, 2008 was attributable to lower levels of taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $969 thousand during the six months ended December 31, 2008. Net cash provided by operating activities was primarily comprised of $1.8 million of net income, a $357 thousand increase in accrued and deferred taxes, and a $269 thousand decrease in accrued interest receivable, which were partially offset by a $805 thousand decrease in deferred director compensation accounts, $262 thousand in accretion of discounts on commercial paper, $242 thousand in accretion of discounts, premiums and deferred loan fees, and a $223 thousand decrease in accrued interest payable.

Funds used for investing activities totaled $21.7 million during the six months ended December 31, 2008. Primary uses of funds during the six months ended December 31, 2008, included purchases of investments, FHLB stock and certificates of deposit totaling $109.7 million, $13.2 million and $16.3 million, respectively, and a $1.3 million increase in net loans receivable, which were partially offset by maturities and repayments of investment securities, mortgage-backed securities, FHLB stock and certificates of deposit totaling $102.5 million, $4.5 million, $9.3 million, and $2.6 million, respectively. Short-term investment grade commercial paper purchases included in investment securities purchases totaled $72.1 million; and maturities of short-term commercial paper totaled $52.9 million. Fixed rate U.S. Government agency bonds purchased during the period totaled $30.3 million, while early redemptions by issuers of fixed-rate callable U.S. Government agency bonds during the six months totaled $47.3 million.

Funds provided by financing activities totaled $20.7 million for the six months ended December 31, 2008. The primary sources included a $46.2 million increase in FRB short-term borrowings which was partially offset by a $20.0 million decrease in other short-term borrowings, a $3.2 million decrease in deposits, $1.5 million in treasury stock purchases and $697 thousand in cash dividends paid on the Company's common stock. The increase in FRB short-term borrowings reflects lower short-term rates available through the FRB compared to other short-term funding sources. The $3.2 million decrease in total deposits consisted of a $5.4 million decrease in time deposits, a $612 thousand decrease in passbook accounts, and a $297 decrease in mortgage escrow accounts, which were partially offset by a $2.2 million increase in demand deposits and a $1.3 million increase in money market deposits. The decrease in time deposits may be attributable to customer disintermediation to other financial institutions paying above market interest rates on CDs and approximately $1 million of state and political subdivision time deposits not renewed by the Bank due to rate considerations. The increase in money market balances may be attributable to lower market yields on certificates of deposits and increased liquidity preferences by depositors in response to unsettled financial markets. The decreases in passbook and escrow accounts were due primarily to the payments of local property taxes by and for customers. Management believes that it currently is maintaining adequate liquidity and continues to match funding sources with lending and investment opportunities.

The Company's primary sources of funds are deposits, amortization, repayments and maturities of existing loans, mortgage-backed securities and investment securities, funds from operations, and funds obtained through FHLB . . .