AGREEMENT AND PLAN OF REORGANIZATION

Agreement and Plan of Merger

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ADVANCE FINANCIAL BANCORP | Parkvale Financial Corporation | Parkvale Savings Bank

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Title: AGREEMENT AND PLAN OF REORGANIZATION
Governing Law: Pennsylvania Date: 9/2/2004
Industry: SandLs/Savings Banks Law Firm: Elias, Matz, Tiernan and Herrick L.L.P.; Malizia Spidi & Fisch, PC Sector: Financial

AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 1, 2004

("Agreement"), among Parkvale Financial Corporation ("Parkvale"), a Pennsylvania

corporation, Parkvale Savings Bank (the "Bank"), a Pennsylvania chartered

savings bank and a wholly-owned subsidiary of Parkvale, Advance Financial

Bancorp ("Advance"), a Delaware corporation, and Advance Financial Savings Bank

("Advance Savings"), a federally-chartered savings bank and wholly-owned

subsidiary of Advance.

WITNESSETH:

WHEREAS, the Boards of Directors of Parkvale, the Bank, Advance and

Advance Savings have determined that it is in the best interests of their

respective companies and their stockholders to consummate the business

combination transactions provided for herein; and

WHEREAS, the parties desire to provide for certain undertakings,

conditions, representations, warranties and covenants in connection with the

transactions contemplated hereby; and

WHEREAS, as a condition and inducement to the willingness of Parkvale

to enter into this Agreement, the directors and executive officers of Advance

(the "Advance Stockholders") are concurrently entering into a Stockholder

Agreement with Parkvale (the "Stockholder Agreement"), in substantially the form

attached hereto as Exhibit A, pursuant to which, among other things, such

directors agree to vote their shares of Advance Common Stock (as defined below)

in favor of this Agreement and the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the premises and the mutual

covenants, representations, warranties and agreements herein contained, the

parties hereto agree as follows:

ARTICLE I

THE MERGER

1.01 The Merger. Subject to the terms and conditions of this Agreement

and subject to and in accordance with an Agreement of Merger, a copy of which is

attached hereto as Exhibit B (the "Agreement of Merger"), between Advance and

Advance Acquisition Corp. ("Interim"), a Delaware corporation to be formed as a

wholly-owned subsidiary of Parkvale in connection with the transactions

contemplated hereby, at the Effective Time (as defined in Section 1.05 hereof),

Interim shall be merged with and into Advance in accordance with Section 251 of

the Delaware General Corporation Law ("DGCL") (the "Merger"), with Advance as

the surviving corporation (hereinafter sometimes called the "Surviving

Corporation"). Simultaneously with or immediately following consummation of the

Merger, the parties hereto will cause Advance Savings to be merged with and into

the Bank, with the Bank as the resulting institution (the "Bank Merger").

Simultaneously with

<PAGE>

or as soon as practicable after the Bank Merger, the Surviving Corporation shall

be merged with and liquidated into Parkvale (the "Liquidation") in accordance

with an Agreement and Plan of Liquidation, the form of which is attached hereto

as Exhibit C.

1.02 Effect of the Merger. As of the Effective Time (as defined in

Section 1.05 hereof), the Surviving Corporation shall be considered the same

business and corporate entity as each of Advance and Interim and thereupon and

thereafter, all the property, rights, powers and franchises of each of Advance

and Interim shall vest in the Surviving Corporation and the Surviving

Corporation shall be subject to and be deemed to have assumed all of the debts,

liabilities, obligations and duties of each of Advance and Interim and shall

have succeeded to all of each of their relationships, fiduciary or otherwise, as

fully and to the same extent as if such property rights, privileges, powers,

franchises, debts, obligations, duties and relationships had been originally

acquired, incurred or entered into by the Surviving Corporation. In addition,

any reference to either of Advance or Interim in any contract or document,

whether executed or taking effect before or after the Effective Time, shall be

considered a reference to the Surviving Corporation if not inconsistent with the

other provisions of the contract or document; and any pending action or other

judicial proceeding to which either of Advance or Interim is a party, shall not

be deemed to have abated or to have discontinued by reason of the Merger, but

may be prosecuted to final judgment, order or decree in the same manner as if

the Merger had not been made; or the Surviving Corporation may be substituted as

a party to such action or proceeding, and any judgment, order or decree may be

rendered for or against it that might have been rendered for or against either

of Advance or Interim if the Merger had not occurred. At the Effective Time, the

directors and officers of the Surviving Corporation shall be the persons

designated in Section 1.04.

1.03 Certificate of Incorporation and Bylaws. As of the Effective Time,

the Certificate of Incorporation and Bylaws of Advance shall be the Certificate

of Incorporation and Bylaws of the Surviving Corporation until otherwise amended

as provided by law.

1.04 Directors and Officers. As of the Effective Time, the directors

and officers of Interim shall become the directors and officers of the Surviving

Corporation. The directors of Advance and/or Advance Savings shall resign as of

the Effective Time.

1.05 Effective Time. The Merger shall become effective upon the

occurrence of the filing of a Certificate of Merger with the Secretary of State

of the State of Delaware pursuant to Section 251 of the DGCL, unless a later

date and time is specified as the effective time in such Certificate of Merger

("Effective Time"). A closing (the "Closing") shall take place immediately prior

to the Effective Time at 10:00 a.m., on the fifth business day following the

receipt of all necessary regulatory or governmental approvals and consents and

the expiration of all statutory waiting periods in respect thereof and the

satisfaction or waiver, to the extent permitted hereunder, of the conditions to

the consummation of the Merger specified in Article V of this Agreement (other

than the delivery of certificates and other instruments and documents to be

delivered at the Closing), at the offices of Parkvale or at such other place, at

such other time, or on such other date as the parties may mutually

<PAGE>

agree upon. At the Closing, there shall be delivered to Parkvale, the Bank,

Advance and Advance Savings the certificates and other documents required to be

delivered under Article V hereof.

1.06 Modification of Structure. Notwithstanding any provision of this

Agreement to the contrary, Parkvale, with the prior written consent of Advance,

which consent shall not be unreasonably withheld, may elect, subject to the

filing of all necessary applications and the receipt of all required regulatory

approvals, to modify the structure of the transactions contemplated hereby so

long as (i) there are no adverse federal income tax consequences to the

stockholders of Advance as a result of such modification, (ii) the Merger

Consideration (as defined below) to be paid to holders of Advance Common Stock

(as defined below) under this Agreement is not thereby changed in kind or

reduced in amount solely because of such modification and (iii) such

modification will not be likely to materially delay or jeopardize receipt of any

required regulatory approvals or impair or prevent the satisfaction of any

conditions to the Closing.

1.07 Conversion of Advance Common Stock and Options. As of the

Effective Time, each share of common stock, par value $0.0667 per share, of

Advance (the "Advance Common Stock," which shall include the rights issued by

Advance pursuant to the Rights Agreement dated July 17, 1997, as amended,

between Advance and American Securities Transfer & Trust, Incorporated, as

Rights Agent, relating to Advance's Junior Participating Preferred Stock, Series

A, par value $.10 per share (the "Advance Rights Agreement")), issued and

outstanding immediately prior to the Effective Time (other than shares (i) as to

which dissenters' rights have been asserted and duly perfected in accordance

with the DGCL ("Dissenting Shares"), (ii) under the Advance Restricted Stock

Plan ("RSP") which have not been allocated, and (iii) held by Advance (including

treasury shares) or Parkvale or the Bank other than in a fiduciary capacity,

which shares shall be cancelled) shall, by virtue of the Merger and without any

action on the part of the holder thereof, be cancelled and by operation of law

be converted into and represent the right to receive from Parkvale, $26.00 in

cash (the "Merger Consideration") in accordance with Section 1.08 hereof. At or

immediately prior to the Effective Time, each outstanding option to purchase

Advance Common Stock issued by Advance and as described on Advance Disclosure

Schedule 2.02 ("Advance Option"), shall be cancelled, and each holder of any

such Advance Option, whether or not then vested or exercisable, shall be

entitled to receive from Advance immediately prior to the Effective Time for

each Advance Option an amount determined by multiplying (i) the excess of the

Merger Consideration over the applicable exercise price per share of such

Advance Option by (ii) the number of shares of Advance Common Stock subject to

such Advance Option ("Option Consideration"). The payment of the Option

Consideration referred to in the immediately preceding sentence to holders of

Advance Options shall be subject to the execution by any such holder of such

instruments of cancellation as Advance and Parkvale may reasonably deem

appropriate. Advance may make necessary tax withholdings from the Option

Consideration as it deems appropriate. The aggregate consideration to be paid

for the conversion of all outstanding shares of Advance Common Stock is

hereinafter referred to as the "Aggregate Merger Consideration."

<PAGE>

1.08 Exchange Procedures

(a) Immediately prior to the Effective Time, Parkvale shall deposit in

trust with an exchange agent designated by Parkvale and reasonably acceptable to

Advance (the "Exchange Agent") cash in an amount equal to the Aggregate Merger

Consideration. No later than five business days following the Effective Time,

Parkvale shall cause the Exchange Agent to mail to each holder of record of a

certificate or certificates which immediately prior to the Effective Time

represented issued and outstanding shares of Advance Common Stock a notice and

letter of transmittal (which shall specify that delivery shall be effected and

risk of loss and title to the certificates theretofore representing shares of

Advance Common Stock shall pass only upon proper delivery of such certificates

to the Exchange Agent) advising such holder of the effectiveness of the Merger

and the procedure for surrendering to the Exchange Agent such certificate or

certificates which immediately prior to the Effective Time represented issued

and outstanding shares of Advance Common Stock in exchange for the consideration

set forth in Section 1.07 hereof deliverable in respect thereof pursuant to this

Agreement. Within five business days following receipt of surrendered

certificates and a properly completed letter of transmittal, the Exchange Agent

shall deliver the Merger Consideration to which such former holder is entitled

to each former Advance stockholder. The Exchange Agent shall accept such

certificates upon compliance with such reasonable terms and conditions as the

Exchange Agent reasonably may impose to effect an orderly exchange thereof in

accordance with normal exchange practices.

(b) Each outstanding certificate which prior to the Effective Time

represented Advance Common Stock (other than Dissenting Shares) and which is not

surrendered to the Exchange Agent in accordance with the procedures provided for

herein shall, except as otherwise herein provided, until duly surrendered to the

Exchange Agent, be deemed to evidence the right to receive the Merger

Consideration. After the Effective Time, there shall be no further transfer on

the records of Advance of certificates representing shares of Advance Common

Stock and if such certificates are presented to Advance for transfer, they shall

be cancelled against delivery of the Merger Consideration as hereinabove

provided.

to which a holder of Advance Common Stock would otherwise be entitled as a

result of the Merger until such holder surrenders the certificate or

certificates representing the shares of Advance Common Stock for exchange as

provided in this Section 1.08, or, in lieu thereof, an appropriate affidavit of

loss and indemnity agreement and/or a bond as may be required in each case by

Parkvale. If payment of the Merger Consideration is to be made in a name other

than that in which the certificate evidencing Advance Common Stock surrendered

in exchange therefor is registered, it shall be a condition of the issuance

thereof that the certificate so surrendered shall be properly endorsed or

accompanied by an executed form of assignment separate from the certificate and

otherwise in proper form for transfer and that the person requesting such

payment pay to the Exchange Agent in advance, any transfer or other tax required

by reason of the payment in any name other than that of the registered holder of

the certificate surrendered or otherwise establish to the satisfaction of the

Exchange Agent that such tax has been paid or is not payable.

<PAGE>

(d) Any portion of the Aggregate Merger Consideration delivered to the

Exchange Agent by Parkvale pursuant to Section 1.07 that remains unclaimed by

the stockholders of Advance for six months after the Effective Time (as well as

any proceeds from any investment thereof) shall be delivered by the Exchange

Agent to Parkvale. Any stockholders of Advance who have not exchanged their

shares of Advance Common Stock for the Merger Consideration in accordance with

this Agreement shall thereafter look only to Parkvale for the consideration

deliverable in respect of each share of Advance Common Stock such stockholder

holds as determined pursuant to this Agreement without any interest thereon. If

outstanding certificates for shares of Advance Common Stock are not surrendered

or the payment for them is not claimed prior to the date on which payment of the

Merger Consideration would otherwise escheat to or become the property of any

governmental unit or agency, the unclaimed items shall, to the extent permitted

by abandoned property and any other applicable law, become the property of

Parkvale (and to the extent not in its possession shall be delivered to it),

free and clear of all claims or interest of any person previously entitled to

such property. Neither the Exchange Agent nor any party to this Agreement shall

be liable to any holder of stock represented by any certificate for any

consideration paid to a public official pursuant to applicable abandoned

property, escheat or similar laws. Parkvale and the Exchange Agent shall be

entitled to rely upon the stock transfer books of Advance to establish the

identity of those persons entitled to receive the Merger Consideration specified

in this Agreement, which books shall be conclusive with respect thereto. In the

event of a dispute with respect to ownership of stock represented by any

certificate, Parkvale and the Exchange Agent shall be entitled to deposit any

consideration represented thereby in escrow with an independent third party and

thereafter be relieved with respect to any claims thereto.

1.09 Withholding Rights. Parkvale (through the Exchange Agent, if

applicable) shall be entitled to deduct and withhold from any amounts otherwise

payable pursuant to this Agreement to any holder of shares of Advance Common

Stock such amounts as Parkvale is required under the Internal Revenue Code of

1986, as amended ("Code"), or any provision of state, local or foreign tax law

to deduct and withhold with respect to the making of such payment. Any amounts

so withheld shall be withheld in accordance with the Code and other applicable

laws and regulations and shall be treated for all purposes of this Agreement as

having been paid to the holder of Advance Common Stock in respect of which such

deduction and withholding was made by Parkvale.

1.10 Dissenting Shares. Each outstanding share of Advance Common Stock

the holder of which has perfected his right to dissent under the DGCL and has

not effectively withdrawn or lost such rights as of the Effective Time shall not

be converted into or represent a right to receive the Merger Consideration, and

the holder thereof shall be entitled only to such rights as are granted by the

DGCL. Advance shall give Parkvale prompt notice upon receipt by Advance of any

such written demands for payment of their fair value of such shares of Advance

Common Stock and of withdrawals of such demands and any other instruments

provided pursuant to the DGCL (any stockholder duly making such demand being

hereinafter called a "Dissenting Stockholder"). Any payments made in respect of

Dissenting Shares shall be made by Parkvale. If any Dissenting Stockholder shall

effectively withdraw or lose (through failure to perfect or otherwise) his right

to such payment at or prior to the Effective Time, each such holder's shares of

Advance Common

<PAGE>

Stock shall be converted into a right to receive the Merger Consideration in

accordance with the applicable provisions of this Agreement.

1.11 Additional Actions. If at any time after the Effective Time the

Surviving Corporation shall consider that any further assignments or assurances

in law or any other acts are necessary or desirable to (i) vest, perfect or

confirm, of record or otherwise, in the Surviving Corporation its rights, title

or interest in, to or under any of the rights, properties or assets of Advance

acquired or to be acquired by the Surviving Corporation as a result of, or in

connection with, the Merger, or (ii) otherwise carry out the purposes of this

Agreement, Advance and its proper officers and directors shall be deemed to have

granted to the Surviving Corporation an irrevocable power of attorney to execute

and deliver all such proper deeds, assignments and assurances in law and to do

all acts necessary or proper to vest, perfect or confirm title to and possession

of such rights, properties or assets in the Surviving Corporation and otherwise

to carry out the purposes of this Agreement; and the proper officers and

directors of the Surviving Corporation are fully authorized in the name of

Advance or otherwise to take any and all such action.

1.12 Interim Shares. Each outstanding share of common stock of Interim,

$.01 par value per share ("Interim Common Stock"), on the Effective Time shall

be converted automatically and without any action on the part of the holder

thereof into an equal number of shares of the Surviving Corporation, which shall

constitute all of the outstanding common stock of the Surviving Corporation.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF ADVANCE

AND ADVANCE SAVINGS

References to "Advance Disclosure Schedules" shall mean all of the

disclosure schedules required by this Article II and Article IV hereof, dated as

of the date hereof and referenced to the specific sections and subsections of

this Agreement, which have been delivered by Advance to Parkvale. Advance and

Advance Savings hereby represent and warrant to Parkvale and the Bank as follows

as of the date hereof:

2.01 Corporate Organization.

(a) Advance is a corporation duly organized, validly existing and in

good standing under the laws of the State of Delaware. Advance has the corporate

power and authority to own or lease all of its properties and assets and to

carry on its business as it is now being conducted and is duly licensed or

qualified to do business and is in good standing in each jurisdiction in which

the nature of the business conducted by it or the character or location of the

properties and assets owned or leased by it makes such licensing or

qualification necessary, except where the failure to be so licensed, qualified

or in good standing would not have a Material Adverse Effect (as defined below).

<PAGE>

Advance is registered as a savings and loan holding company under the Home

Owners' Loan Act ("HOLA"). Advance Disclosure Schedule 2.01(a) sets forth true

and complete copies of the Certificate of Incorporation and Bylaws of Advance as

in effect on the date hereof.

For purposes of this Agreement, the term "Material Adverse Effect",

when applied to a party, shall mean any event, change or occurrence which,

together with any other event, change or occurrence, has a material adverse

impact on (i) the financial position, business, results of operation or

financial performance of such party and their respective subsidiaries, taken as

a whole, or (ii) the ability of such party to perform its obligations under this

Agreement or to consummate the Merger and the other transactions contemplated by

this Agreement in a timely fashion; provided, however, that a "Material Adverse

Effect" shall not be deemed to include the impact of (a) actions or omissions of

a party taken with the prior written consent of the other in contemplation of

the transactions contemplated by this Agreement, (b) changes in banking and

similar laws or regulations of general applicability or interpretations thereof

by courts or governmental authorities, (c) changes in generally accepted

accounting principles or regulatory accounting requirements applicable to banks,

savings associations and bank or thrift holding companies generally, (d) changes

attributable to or resulting from changes in general economic conditions,

including changes in the prevailing level of interest rates, or (e) the Merger

and related expenses associated with the transactions contemplated by this

Agreement.

(b) The only direct or indirect subsidiaries of Advance are Advance

Savings, Advance Financial Service Corporation of West Virginia and Advance

Statutory Trust I (together, the "Advance Subsidiaries"). Advance Disclosure

Schedule 2.01(b)(i) sets forth true and complete copies of the Charter,

Certificate of Incorporation, Bylaws or other governing documents of each of the

Advance Subsidiaries as in effect on the date hereof. Each of the Advance

Subsidiaries (i) is duly organized, validly existing and in good standing under

the laws of its respective jurisdiction of incorporation or formation, (ii) has

the corporate or trust power and authority to own or lease all of its properties

and assets, and (iii) is duly licensed or qualified to do business and is in

good standing in each jurisdiction in which the nature of the business conducted

by it or the character or location of the properties and assets owned or leased

by it makes such licensing or qualification necessary, except where the failure

to be so licensed, qualified or in good standing would not have a Material

Adverse Effect. Advance and Advance Savings have satisfied in all material

respects all commitments, financial or otherwise, as may have been agreed upon

with their state and/or federal regulatory agencies. Other than the Advance

Subsidiaries and except as set forth in Advance Disclosure Schedule 2.01(b)(ii),

Advance does not own or control, directly or indirectly, greater than a 5%

equity interest in any corporation, company, association, partnership, joint

venture or other entity. In addition, Advance Disclosure Schedule 2.01(b)(ii)

lists the primary activities engaged in by Advance Financial Service

Corporation.

2.02 Capitalization. The authorized capital stock of Advance consists

of 2,000,000 shares of Advance Common Stock, of which 1,398,373 are issued and

outstanding as of the date hereof, and 500,000 shares of preferred stock, of

which no shares are issued and outstanding. The 1,398,373 shares of Advance

Common Stock issued and outstanding as of the date hereof include 2,931

<PAGE>

unallocated shares of Advance Common Stock held in the RSP, and 12,050 shares of

Advance Common Stock held in the RSP which were surrendered in connection with

the satisfaction of tax withholding obligations by plan participants, which

shares shall be cancelled as of the Effective Time. All issued and outstanding

shares of capital stock of Advance, and all issued and outstanding shares of

capital stock of each of the Advance Subsidiaries, have been duly authorized and

validly issued and are fully paid, nonassessable and free of preemptive rights.

All of the outstanding shares of capital stock of each of the Advance

Subsidiaries are owned directly or indirectly by Advance free and clear of any

liens, encumbrances, charges, restrictions or rights of third parties of any

kind whatsoever, and, except for (i) an aggregate of 155,859 shares of Advance

Common Stock issuable upon exercise of stock options ("Advance Options") granted

pursuant to Advance's 1998 Stock Option Plan (the "Stock Option Plan") and (ii)

shares of Advance's Junior Participating Preferred Stock, Series A, par value

$.10 per share ("Advance Series A Preferred"), none of Advance or any of the

Advance Subsidiaries has or is bound by any outstanding subscriptions, options,

warrants, calls, commitments or agreements of any character calling for the

transfer, purchase or issuance of any shares of capital stock of Advance or any

of the Advance Subsidiaries or any securities representing the right to purchase

or otherwise receive any shares of such capital stock or any securities

convertible into or representing the right to purchase or subscribe for any such

stock. Advance Disclosure Schedule 2.02 lists each Advance Option outstanding as

of the date hereof under the Stock Option Plan, as well as the name of the

grantee, the date of grant, the vesting schedule and the respective exercise

price with respect thereto. No shares of Advance Series A Preferred are issued

and outstanding.

2.03 Authority; No Violation; Rights Agreement.

(a) Subject to the approval of this Agreement, the Agreement of Merger

and the transactions contemplated hereby and thereby by the stockholders of

Advance, and the receipt of all required regulatory approvals and expiration of

any related waiting periods, Advance and Advance Savings have full corporate

power and authority to execute and deliver this Agreement and to consummate the

transactions contemplated hereby in accordance with the terms hereof. The

execution and delivery of this Agreement and the consummation of the

transactions contemplated hereby have been duly and validly approved by the

boards of directors of Advance and Advance Savings. Except for the adoption by

Advance's stockholders of this Agreement and the Agreement of Merger, no other

corporate proceedings on the part of Advance or Advance Savings are necessary to

consummate the Merger. This Agreement has been duly and validly executed and

delivered by Advance and Advance Savings and constitutes the valid and binding

obligation of Advance and Advance Savings, enforceable against them in

accordance with and subject to its terms, except as limited by applicable

bankruptcy, insolvency, reorganization, moratorium or other similar laws

affecting creditors' rights generally, and except that the availability of

equitable remedies (including, without limitation, specific performance) is

within the discretion of the appropriate court.

(b) Subject to the approval this Agreement, the Agreement of Merger and

the transactions contemplated hereby and thereby by the stockholders of Advance,

and the receipt of all required regulatory approvals and expiration of any

related waiting periods, Advance has full corporate power

<PAGE>

and authority to execute and deliver the Agreement of Merger and to consummate

the transactions contemplated thereby in accordance with the terms thereof. The

execution and delivery of the Agreement of Merger by Advance and the

consummation of the transactions contemplated thereby have been duly and validly

approved by the Board of Directors of Advance. The Agreement of Merger, upon its

execution and delivery by Advance, will constitute a valid and binding

obligation of Advance, enforceable against it in accordance with and subject to

its terms, except as limited by applicable bankruptcy, insolvency,

reorganization, moratorium or other similar laws affecting creditors' rights

generally, and except that the availability of equitable remedies (including,

without limitation, specific performance) is within the discretion of the

appropriate court.

Advance Savings, the execution and delivery of the Agreement of Merger by

Advance, the consummation by Advance and Advance Savings of the transactions

contemplated hereby in accordance with the terms hereof, the consummation by

Advance of the transactions contemplated by the Agreement of Merger in

accordance with the terms thereof, compliance by Advance and Advance Savings

with any of the terms or provisions hereof or compliance by Advance with any

terms or provisions of the Agreement of Merger, will (i) violate any provision

of the Certificate of Incorporation, Charter, Bylaws or other governing

documents of Advance or any of the Advance Subsidiaries, (ii) assuming that the

consents and approvals set forth below are duly obtained and all required

waiting periods have expired, violate any statute, code, ordinance, rule,

regulation, judgment, order, writ, decree or injunction applicable to Advance or

any of the Advance Subsidiaries or any of their respective properties or assets,

or (iii) except as disclosed in Advance Disclosure Schedule 2.03(c), violate,

conflict with, result in a breach of any provisions of, constitute a default (or

an event which, with notice or lapse of time, or both, would constitute a

default) under, result in the termination of, accelerate the performance

required by, or result in the creation of any lien, security interest, charge or

other encumbrance upon any of the properties or assets of Advance or any of the

Advance Subsidiaries under any of the terms, conditions or provisions of any

note, bond, mortgage, indenture, deed of trust, license, lease, agreement or

other instrument or obligation to which Advance or any of the Advance

Subsidiaries is a party, or by which any of their respective properties or

assets may be bound or affected, except, with respect to (ii) and (iii) above,

such as individually or in the aggregate will not have a Material Adverse

Effect. Except as set forth in Advance Disclosure Schedule 2.03(c) and for any

consents and approvals of or filings or registrations with or notices to the

Securities and Exchange Commission (the "SEC"), the Secretary of State of the

Commonwealth of Pennsylvania, the Pennsylvania Department of Banking (the

"Department"), the Office of Thrift Supervision ("OTS"), the Federal Deposit

Insurance Corporation (the "FDIC"), the Commissioner of Banking of West Virginia

and the stockholders of Advance, no consents or approvals of or filings or

registrations with or notices to any federal, state, municipal or other

governmental or regulatory commission, board, agency, or non-governmental third

party are required on behalf of Advance or Advance Savings in connection with

(a) the execution and delivery of this Agreement by Advance and Advance Savings

or the execution and delivery of the Agreement of Merger by Advance, and (b) the

completion by Advance and Advance Savings of the transactions contemplated

hereby or the completion by Advance of the transactions contemplated by the

Agreement of Merger.

<PAGE>

(d) Effective prior to execution of this Agreement, Advance has taken

all action necessary to amend the Advance Rights Agreement so that execution of

this Agreement and the Agreement of Merger and consummation of the transactions

contemplated herein and therein, including without limitation consummation of

the Merger pursuant to this Agreement, shall not result in the grant of any

rights to any person under the Advance Rights Agreement or enable or require any

of the preferred share purchase rights thereunder to be exercised, distributed

or triggered. Advance Disclosure Schedule 2.03(d) contains a copy of the

amendment to the Advance Rights Agreement.

2.04 Financial Statements.

(a) Advance has previously delivered to Parkvale copies of the

consolidated balance sheet of Advance as of June 30, 2004 and 2003 and the

related consolidated statements of income, changes in stockholders' equity, and

cash flows for the years ended June 30, 2004, 2003 and 2002, in each case

accompanied by the audit report of S.R. Snodgrass, A.C., independent public

accountants. The consolidated balance sheets of Advance referred to herein, as

well as the financial statements to be delivered pursuant to Section 4.04 hereof

(including the related notes, where applicable), fairly present or will fairly

present, in all material respects, as the case may be, the consolidated

financial condition of Advance as of the respective dates set forth therein, and

the related consolidated statements of income, changes in stockholders' equity

and cash flows (including the related notes, where applicable), fairly present

or will fairly present, as the case may be, the results of the consolidated

income, changes in stockholders' equity and cash flows of Advance for the

respective periods or as of the respective dates set forth therein (it being

understood that Advance's interim financial statements are not audited and are

not prepared with all related notes and are subject to normal year end

adjustments but have been, or will be, prepared in compliance with all

applicable legal and regulatory accounting requirements and reflect all

adjustments which are, in the opinion of Advance, necessary for a fair

presentation of such financial statements).

(b) Each of the financial statements referred to in this Section 2.04

(including the related notes, where applicable) has been prepared in accordance

with generally accepted accounting principles consistently applied during the

periods involved. The books and records of Advance and each of the Advance

Subsidiaries are being maintained in material compliance with applicable legal

and accounting requirements and reflect only actual transactions.

the consolidated financial statements referred to in the first sentence of

Section 2.04(a) or the notes thereto, and except for liabilities incurred since

June 30, 2004 in the ordinary course of business and consistent with past

practice, neither Advance nor any Advance Subsidiary has any obligation or

liability, whether absolute, accrued, contingent or otherwise, material to the

business, results of operations, assets or financial condition of Advance and

the Advance Subsidiaries taken as a whole.

<PAGE>

2.05 Absence of Certain Changes or Events. (a) Except as set forth in

Advance Disclosure Schedule 2.05, since June 30, 2004, (i) Advance and the

Advance Subsidiaries have conducted their businesses in the ordinary and usual

course and (ii) no event has occurred or circumstances arisen that, individually

or in the aggregate, has had or is reasonably likely to have a Material Adverse

Effect.

(b) Except as set forth in Advance Disclosure Schedule 2.05(b), neither

Advance nor any Advance Subsidiary has taken or permitted any of the actions set

forth in Section 4.02 hereof between June 30, 2004 and the date hereof.

2.06 Legal Proceedings. Except as disclosed in Advance Disclosure

Schedule 2.06, neither Advance nor any Advance Subsidiary is a party to any, and

there are no pending or, to the best knowledge of Advance and Advance Savings,

threatened legal, administrative, arbitration or other proceedings, claims,

actions or governmental investigations of any nature against Advance or any

Advance Subsidiary, except such proceedings, claims, actions or governmental

investigations which in the good faith judgment of Advance and Advance Savings

will not have a Material Adverse Effect. Neither Advance nor any Advance

Subsidiary is a party to any order, judgment or decree which has or could

reasonably be expected to have a Material Adverse Effect.

2.07 Taxes and Tax Returns.

(a) Advance and each of the Advance Subsidiaries has (taking into

account any extension of time within which to file which has not expired) timely

filed (and until the Effective Time will so file) all returns, declarations,

reports, information-returns and statements ("Returns") required to be filed or

sent by or with respect to them in respect of any Taxes (as hereinafter

defined), and has duly paid (and until the Effective Time will so pay) all Taxes

due and payable other than Taxes or other charges which (i) are being contested

in good faith (and disclosed in writing to Parkvale) and (ii) have not finally

been determined. Advance and each of the Advance Subsidiaries has established

(and until the Effective Time will establish) on their books and records

reserves that are adequate for the payment of all Taxes not yet due and payable

for periods ending on or prior to the Effective Time, whether or not disputed or

accrued. Except as set forth in Advance Disclosure Schedule 2.07(a), (i) the

federal income tax returns of Advance and each of the Advance Subsidiaries have

been examined by the Internal Revenue Service ("IRS") (or are closed to

examination due to the expiration of the applicable statute of limitations), and

(ii) each of the state income tax returns of Advance and each of the Advance

Subsidiaries have been examined by applicable authorities (or are closed to

examination due to the expiration of the statute of limitations), and in the

case of both (i) and (ii) no deficiencies were asserted as a result of such

examinations which have not been resolved and paid in full. There are no audits

or other administrative or court proceedings presently pending nor any other

disputes pending, or claims asserted for, Taxes or assessments upon Advance or

any of the Advance Subsidiaries, nor has Advance or any of the Advance

Subsidiaries given any currently outstanding waivers or comparable consents

regarding the application of the statute of limitations with respect to any

Taxes or Returns.

<PAGE>

(b) Except as set forth in Advance Disclosure Schedule 2.07(b), neither

Advance nor any Advance Subsidiary (i) has requested any extension of time

within which to file any Return which Return has not since been filed, (ii) is a

party to any agreement providing for the allocation or sharing of Taxes, (iii)

is required to include in income any adjustment pursuant to Section 481(a) of

the Code, by reason of a voluntary change in accounting method initiated by

Advance or any Advance Subsidiary (nor does Advance have any knowledge that the

IRS has proposed any such adjustment or change of accounting method), or (iv)

has filed a consent pursuant to Section 341(f) of the Code or agreed to have

Section 341(f)(2) of the Code apply.

all taxes (as hereinafter defined) required to be paid in connection with

amounts paid to any employee, independent contractor, creditor, stockholder or

other third party.

(d) For purposes of this Agreement, "Taxes" shall mean all taxes,

charges, fees, levies or other assessments, including, without limitation, all

net income, gross income, gross receipts, sales, use, ad valorem, transfer,

franchise, profits, license, withholding, payroll, employment (including

withholding, payroll and employment taxes required to be withheld with respect

to income paid to employees), excise, estimated, severance, stamp, occupation,

property or other taxes, customs duties, fees, assessments or charges of any

kind whatsoever, together with any interest and any penalties, additions to tax

or additional amounts imposed by any taxing authority (domestic or foreign) upon

Advance or any Advance Subsidiary.

2.08 Employee Benefit Plans.

(a) Each employee benefit plan or arrangement of Advance or any of the

Advance Subsidiaries which is an "employee benefit plan" within the meaning of

Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended

("ERISA"), is listed in Advance Disclosure Schedule 2.08(a) ("Advance Plans").

Advance has previously furnished to Parkvale true and complete copies of each of

the Advance Plans together with (i) Schedule B forms and the most recent

actuarial and financial reports prepared with respect to any qualified Advance

Plans, (ii) the most recent annual reports filed with any government agency for

any qualified or non-qualified plan, and (iii) all rulings and determination

letters and any open requests for rulings or letters that pertain to any

qualified Advance Plans.

(b) Each of the Advance Plans has been operated in compliance in all

material respects with the applicable provisions of ERISA, the Code, all

regulations, rulings and announcements promulgated or issued thereunder, and all

other applicable governmental laws and regulations.

or has incurred any liability under Section 4201 of ERISA for a complete or

partial withdrawal from a multi- employer plan (as such term is defined in

ERISA).

<PAGE>

(d) Except as set forth in Advance Disclosure Schedule 2.08(d), the

present value of all accrued liabilities under each of the Advance Plans subject

to Title IV of ERISA did not, as of the latest valuation date of each such

Advance Plan, exceed the fair market value of the assets of such Advance Plan

allocable to such accrued liabilities, based upon the actuarial and accounting

assumptions currently utilized for such Advance Plans (as of the latest

valuation date).

(e) Neither Advance nor any of the Advance Subsidiaries, nor, to the

best knowledge of Advance and Advance Savings, any trustee, fiduciary or

administrator of an Advance Plan or any trust created thereunder, has engaged in

a "prohibited transaction," as such term is defined in Section 4975 of the Code,

which could subject Advance or any of the Advance Subsidiaries, or, to the best

knowledge of Advance and Advance Savings, any trustee, fiduciary or

administrator thereof, to the tax or penalty on prohibited transactions imposed

by Section 4975.

(f) No Advance Plan or any trust created thereunder has been

terminated, nor have there been any "reportable events" with respect to any

Advance Plan subject to Title IV of ERISA, as that term is defined in Section

4043(b) of ERISA.

(g) No Advance Plan or any trust created thereunder has incurred any

"accumulated funding deficiency," as such term is defined in Section 302 of

ERISA.

(h) Each of the Advance Plans which is intended to be a qualified plan

under Section 401(a) of the Code received a favorable determination letter

issued by the IRS to the effect that such plan is qualified under Section 401(a)

of the Code and the trust associated with such plan is tax exempt under Section

501 of the Code, and Advance is not aware of any fact or circumstance which

would adversely affect the qualified status of any such plan.

(i) Neither Advance nor any of the Advance Subsidiaries has any

obligations for retiree health and life benefits under any Advance Plans other

than as may be required under Section 4980B of the Code or Part 6 of Title I of

ERISA, or under the continuation of coverage provisions of the laws of any state

or locality. Advance or Advance Savings may amend or terminate any such Advance

Plan at any time without incurring any liability thereunder.

(j) Except as set forth on Advance Disclosure Schedule 2.08(j), none of

the execution of this Agreement, stockholder approval of this Agreement or

consummation of the transactions contemplated hereby will (A) entitle any

employees of Advance or any Advance Subsidiary to severance pay or any increase

in severance pay upon any termination of employment after the date hereof, (B)

accelerate the time of payment or vesting or trigger any payment or funding

(through a grantor trust or otherwise) of compensation or benefits under,

increase the amount payable or trigger any other material obligation pursuant

to, any of the Advance Plans, (C) result in any breach or violation of, or a

default under, any of the Advance Plans or (D) result in any payment that would

be a "parachute payment" to a "disqualified individual" as those terms are

defined in Section 280G of the Code, without regard to whether such payment is

reasonable compensation for personal services performed or to be performed in

the future.

<PAGE>

2.09 Securities Documents and Regulatory Reports.

(a) Advance has previously delivered or made available to Parkvale a

complete copy of, and Advance Disclosure Schedule 2.09(a) lists, each final

registration statement, prospectus, annual, quarterly or current report and

definitive proxy statement or other communication (other than general

advertising materials) filed pursuant to the Securities Act of 1933, as amended

("1933 Act"), or the Securities Exchange Act of 1934, as amended ("1934 Act"),

or mailed by Advance to its stockholders as a class since January 1, 2001. Each

such final registration statement, prospectus, annual, quarterly or current

report and definitive proxy statement or other communication, as of its date,

complied in all material respects with all applicable statutes, rules and

regulations and did not contain any untrue statement of a material fact or omit

to state any material fact required to be stated therein or necessary in order

to make the statements made therein, in light of the circumstances under which

they were made, not misleading; provided that information as of a later date

shall be deemed to modify information as of an earlier date.

(b) Since January 1, 2001, Advance and each of the Advance Subsidiaries

has duly filed with the OTS, in materially correct form the monthly, quarterly

and annual reports required to be filed under applicable laws and regulations,

and Advance has delivered or made available to Parkvale accurate and complete

copies of such reports. Advance Disclosure Schedule 2.09 lists all examinations

of Advance or of the Advance Subsidiaries conducted by the applicable regulatory

authorities since January 1, 2001 and the dates of any responses thereto

submitted by Advance or Advance Savings. In connection with the most recent

examinations of Advance or the Advance Subsidiaries by the applicable regulatory

authorities, neither Advance nor any of the Advance Subsidiaries were required

to correct or change any action, procedure or proceeding which Advance or such

Advance Subsidiaries believe has not been now corrected or changed as required.

2.10 Compliance with Applicable Law.

(a) Advance and each of the Advance Subsidiaries has all permits,

licenses, certificates of authority, orders and approvals of, and have made all

filings, applications and registrations with, federal, state, local and foreign

governmental or regulatory bodies that are required in order to permit them to

carry on their respective businesses as they are presently being conducted and

the absence of which could reasonably be expected to have a Material Adverse

Effect; all such permits, licenses, certificates of authority, orders and

approvals are in full force and effect; and to the best knowledge of Advance and

the Advance Subsidiaries, no suspension or cancellation of any of the same is

threatened.

(b) Neither Advance nor any of the Advance Subsidiaries is in violation

of its Certificate of Incorporation, Charter, Bylaws or other governing

documents, or of any applicable federal, state or local law or ordinance or any

order, rule or regulation of any federal, state, local or other governmental

agency or body (including, without limitation, all banking, securities,

municipal securities, safety, health, zoning, anti-discrimination, antitrust,

and wage and hour laws, ordinances, orders, rules and regulations), or in

default with respect to any order, writ, injunction or decree of

<PAGE>

any court, or in default under any order, license, regulation or demand of any

governmental agency, any of which violations or defaults could reasonably be

expected to have a Material Adverse Effect, and neither Advance nor any Advance

Subsidiary has received any notice or communication from any federal, state or

local governmental authority asserting that Advance or any Advance Subsidiary is

in violation of any of the foregoing which violation could reasonably be

expected to have a Material Adverse Effect. Neither Advance nor any Advance

Subsidiary is subject to any regulatory or supervisory cease and desist order,

agreement, written directive, memorandum of understanding or written commitment

(other than those of general applicability to all commercial banks or savings

associations issued by governmental authorities), and neither of them have

received any written communication requesting that it enter into any of the

foregoing.

2.11 Deposit Insurance and Other Regulatory Matters.

(a) The deposit accounts of Advance Savings are insured by the Savings

Association Insurance Fund administered by the Federal Deposit Insurance

Corporation ("FDIC") to the maximum extent permitted by the Federal Deposit

Insurance Act, as amended ("FDIA"), and Advance Savings has paid all premiums

and assessments required by the FDIA and the regulations thereunder.

(b) Advance Savings is a member in good standing of the Federal Home

Loan Bank ("FHLB") of Pittsburgh and owns the requisite amount of stock in the

FHLB of Pittsburgh.

of any reasons relating to Advance or Advance Savings why all consents and

approvals shall not be received from all regulatory agencies having jurisdiction

over the transactions contemplated by this Agreement as shall be necessary for

consummation of the transactions contemplated hereby. Furthermore, Advance

Savings' most recent Community Reinvestment Act rating is not less than

satisfactory.

2.12 Certain Contracts.

(a) Except as disclosed in Advance Disclosure Schedule 2.12(a), neither

Advance nor any Advance Subsidiary is a party to, is bound by, receives, or is

obligated to pay benefits under, (i) any agreement, arrangement or commitment,

including without limitation, any agreement, indenture or other instrument

relating to the borrowing of money by Advance or any Advance Subsidiary (other

than in the case of deposits, federal funds purchased and securities sold under

agreements to repurchase in the ordinary course of business) or the guarantee by

Advance or any Advance Subsidiary of any obligation, (ii) any agreement,

arrangement or commitment relating to the employment of a consultant or the

employment, election or retention in office of any present or former director or

officer of Advance or any of the Advance Subsidiaries, (iii) any contract,

agreement or understanding with a labor union, (iv) any agreement, arrangement

or understanding pursuant to which any payment (whether of severance pay or

otherwise) became or may become due to any director, officer or employee of

Advance or any of the Advance Subsidiaries upon execution of this Agreement and

the Agreement of Merger or upon or following consummation of the

<PAGE>

transactions contemplated by this Agreement or the Agreement of Merger (either

alone or in connection with the occurrence of any additional acts or events),

(v) any agreement, arrangement or understanding to which Advance or any of the

Advance Subsidiaries is a party or by which any of the same is bound which

limits the freedom of Advance or any of the Advance Subsidiaries to compete in

any line of business or with any person, other than any such limitations set

forth in laws or regulations of general applicability to thrift holding

companies and their subsidiaries, (vi) any assistance agreement, supervisory

agreement, memorandum of understanding, consent order, cease and desist order or

condition of any regulatory order or decree with or by the OTS, the FDIC or any

other regulatory agency, (vii) any other agreement, arrangement or understanding

which would be required to be filed as an exhibit to Advance's annual, quarterly

or current reports under the 1934 Act and which has not been so filed, or (viii)

any other agreement, arrangement or understanding to which Advance or any of the

Advance Subsidiaries is a party and which is material to the business, results

of operations, assets or financial condition of Advance and the Advance

Subsidiaries taken as a whole (excluding loan agreements or agreements relating

to deposit accounts), in each of the foregoing cases whether written or oral.

(b) Neither Advance nor any Advance Subsidiary is in default or in

non-compliance under any contract, agreement, commitment, arrangement, lease,

insurance policy or other instrument to which it is a party or by which its

assets, business or operations may be bound or affected, whether entered into in

the ordinary course of business or otherwise and whether written or oral, which

default or non-compliance would have a Material Adverse Effect, and there has

not occurred any event that with the lapse of time or the giving of notice, or

both, would constitute such a default or non-compliance by Advance or any

Advance Subsidiary.

to enter into an exchange traded or over-the-counter equity, interest rate,

foreign exchange or other swap, forward, future, option, cap, floor or collar or

any other contract that is not included in Advance's audited financial

statements at and for the year ended June 30, 2004 and is a derivatives contract

(including various combinations thereof) (each, a "Derivatives Contract") or

owns securities that are referred to generically as "structured notes," "high

risk mortgage derivatives," "capped floating rate notes" or "capped floating

rate mortgage derivatives."

2.13 Properties and Insurance.

(a) All real and personal property owned by Advance or any of the

Advance Subsidiaries or presently used by them in their respective businesses is

in adequate condition (ordinary wear and tear excepted) and is sufficient to

carry on the business of Advance and the Advance Subsidiaries in the ordinary

course of business consistent with their past practices. Advance and each of the

Advance Subsidiaries has good and, as to owned real property, marketable title

to all material assets and properties, whether real or personal, tangible or

intangible, reflected in Advance's consolidated balance sheet as of June 30,

2004, or owned and acquired subsequent thereto (except to the extent that such

assets and properties have been disposed of for fair value in the ordinary

course of business since June 30, 2004), subject to no encumbrances, liens,

mortgages, securities interests or pledges,

<PAGE>

except (i) those items that secure liabilities that are reflected in said

consolidated balance sheet or the notes thereto or have been incurred in the

ordinary course of business after the date of such consolidated balance sheet,

(ii) statutory liens for amounts not yet delinquent or which are being contested

in good faith, (iii) such encumbrances, liens, mortgages, securities interests,

pledges and title imperfections that are not in the aggregate material to the

business, results of operations, assets or financial condition of Advance and

the Advance Subsidiaries taken as a whole, and (iv) with respect to owned real

property, title imperfections noted in title reports prior to the date hereof.

Advance and the Advance Subsidiaries as lessees have the right under valid and

subsisting leases to occupy, use, possess and control all property leased by

them in all material respects as presently occupied, used, possessed and

controlled by Advance and the Advance Subsidiaries and the consummation of the

transactions contemplated hereby and by the Agreement of Merger will not affect

any such right in a way that would have a Material Adverse Effect. Advance

Disclosure Schedule 2.13(a) sets forth an accurate listing of each lease

pursuant to which Advance or any Advance Subsidiary acts as lessor or lessee,

including the expiration date and the terms of a

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