10QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB


(Mark One)

    /X/     Quarterly  report  under  Section  13 or  15(d)  of  the  Securities
            Exchange Act of 1934


                  For the quarterly period ended June 30, 2003

    / /     Transition report under Section 13 or 15(d) of the Exchange Act


            For the transition period from _________ to _____________


                          Commission file number 0-631


                            WEBFINANCIAL CORPORATION
                            ------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


         DELAWARE                                               56-2043000
- ---------------------------------                               ----------
(State or Other Jurisdiction of                               (IRS Employer
Incorporation or Organization)                               Identification No.)


                         590 Madison Avenue, 32nd Floor
                               New York, NY 10022
          ------------------------------------------------------------
          (Address of Principal Executive Offices, Including Zip Code)

                                  212-758-3232
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


   Shares of Issuer's Common Stock Outstanding at August 7, 2003: 4,366,866

   Transitional Small Business Disclosure Format:  Yes / /    No  /X/






                                      INDEX


Part I - Financial Information                                       Page Number
- ------------------------------

Item 1.  Condensed Consolidated Financial Statements:

         Condensed Consolidated Statements of Financial Condition as of
         June 30, 2003 (unaudited) and December 31, 2002..................  2

         Condensed Consolidated Statements of Operations
         Three Months Ended June 30, 2003 and 2002 (unaudited)............  4

         Condensed Consolidated Statements of Operations
         Six Months Ended June 30, 2003 and 2002 (unaudited)..............  5

         Condensed Consolidated Statements of Cash Flows
         Six Months Ended June 30, 2003 and 2002 (unaudited)..............  6

         Notes to Condensed Consolidated Financial Statements (unaudited).  8

Item 2.  Management's Discussion and Analysis or Plan of Operation........ 11

Item 3.  Controls and Procedures.......................................... 14


Part II - Other Information
- ---------------------------

Item 6.  Exhibits and Reports on Form 8-K................................  15

         Signatures......................................................  16

                                       1






PART I.    FINANCIAL INFORMATION
           ---------------------

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           -------------------------------------------

                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                  (Amounts in thousands except per share data)

                         ASSETS                           June 30, 2003    December 31, 2002
                                                           (unaudited)

 Cash and due from banks                                      $  3,343         $  2,849
 Federal funds sold                                              1,487            3,697
                                                              --------         --------
         Total cash and cash equivalents                         4,830            6,546

 Investment securities
         Held-to-maturity (estimated fair value $13 at June
                  30, 2003 and $20 at December 31, 2002)            12               19
         Available-for-sale                                      1,672            1,722
                                                              --------         --------
               Total investment securities                       1,684            1,741

Loans, net of deferred fees                                      9,953           11,826
Purchased receivables                                            7,971            5,101
Allowance for credit losses                                     (1,510)          (1,526)
                                                              --------         --------
               Total loans, net                                 16,414           15,401

Foreclosed assets                                                  220               36
Premises and equipment, net                                         23               41
Accrued interest receivable                                        392              259
Goodwill, net                                                    1,380            1,380
Other assets                                                     1,246              761
                                                              --------         --------
                                                              $ 26,189         $ 26,165
                                                              ========         ========

                                   (continued)

                                       2




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
                  (Amounts in thousands except per share data)

                                                                   June 30, 2003      December 31, 2002
                                                                    (unaudited)
      LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
     Non interest-bearing demand                                   $    300             $    668
     NOW/MMA accounts                                                   819                  680
     Certificates of deposit                                         12,290               12,272
                                                                   --------             --------
        Total deposits                                               13,409               13,620

Other liabilities                                                       187                  919
                                                                   --------             --------
Total liabilities before minority interest                           13,596               14,539

Minority interest                                                       390                  356

Commitments and contingencies                                          --                   --

Stockholders' Equity
     Preferred stock, 10,000,000 shares authorized, none issued        --                   --
     Common stock 50,000,000 shares authorized,
        $.001 par value, 4,366,866 shares issued
        and outstanding at June 30, 2003 and
        December 31, 2002                                                 4                    4
     Paid-in-capital                                                 36,606               36,606
     Accumulated  deficit                                           (24,305)             (25,083)
     Accumulated other comprehensive loss                              (102)                (257)
                                                                   --------             --------
Total stockholders' equity                                           12,203               11,270
                                                                   --------             --------
                                                                   $ 26,189             $ 26,165
                                                                   ========             ========

         The accompanying notes are an integral part of these statements

                                       3




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 (Amounts in thousands except per share amounts)

                                                                                For the Three Months
                                                                                   Ended June 30,
                                                                                 2003         2002
                                                                                 ----         ----
Interest income
    Loans and purchased receivables, including fees                        $     1,104    $       523
    Cash equivalents                                                                 3             14
    Federal funds sold                                                              16              8
    Investments                                                                     38             22
                                                                           -----------    -----------
        Total interest income                                                    1,161            567

Interest expense                                                                    94             80
                                                                           -----------    -----------

        Net interest income before credit for credit losses                      1,067            487

Credit for credit losses                                                            (3)          (185)
                                                                           -----------    -----------

        Net interest income after credit for credit losses                       1,070            672

Noninterest income
    Gain on sale of assets                                                         233           --
    Fee income                                                                     102             80
    Miscellaneous income, net                                                       64             81
                                                                           -----------    -----------
        Total noninterest income                                                   399            161

Noninterest expenses
    Salaries, wages, and benefits                                                  247            312
    Professional and legal fees                                                    118            186
    Occupancy expense                                                               42             45
    Other general and administrative                                               480            303
                                                                           -----------    -----------
        Total noninterest expenses                                                 887            846
                                                                           -----------    -----------
           Income (loss) before income taxes and minority interest                 582            (13)

Income tax expense (credit)                                                       --              (39)
                                                                           -----------    -----------

    Income before minority interest                                                582             26

Income attributable to minority interest                                            18             18
                                                                           -----------    -----------

    Net income                                                             $       564    $         8
                                                                           ===========    ===========

Net income per common share, basic and diluted                             $       .13    $       .00
Weighted average number of common shares:
    Basic                                                                    4,366,866      4,366,866
    Diluted                                                                  4,366,957      4,366,866


       The accompanying notes are an integral part of these statements

                                       4




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 (Amounts in thousands except per share amounts)

                                                                                                          For the Six Months
                                                                                                            Ended June 30,
                                                                                                          2003          2002
                                                                                                          ----          ----
  Interest income
      Loans and purchased receivables, including fees                                                 $     2,055    $       924
      Cash equivalents                                                                                          8             32
      Federal funds sold                                                                                       25             14
      Investments                                                                                              43             30
                                                                                                      -----------    -----------
          Total interest income                                                                             2,131          1,000

  Interest expense                                                                                            191            146
                                                                                                      -----------    -----------

          Net interest income before credit  for credit losses                                              1,940            854

  Credit for credit losses                                                                                     (6)          (140)
                                                                                                      -----------    -----------

          Net interest income after credit for credit losses                                                1,946            994

  Noninterest income
      Gain on sale of assets                                                                                  233           --
      Fee income                                                                                              265            216
      Miscellaneous income, net                                                                               136            144
                                                                                                      -----------    -----------
          Total noninterest income                                                                            634            360

  Noninterest expenses
      Salaries, wages, and benefits                                                                           485            568
      Professional and legal fees                                                                             278            443
      Occupancy expense                                                                                        77             95
      Other general and administrative                                                                        926            545
                                                                                                      -----------    -----------
          Total noninterest expenses                                                                        1,766          1,651
                                                                                                      -----------    -----------
              Income (loss) before income taxes and minority interest                                         814           (297)

  Income tax expense (credit)                                                                                   2            (39)
                                                                                                      -----------    -----------

      Income (loss) before minority interest                                                                  812           (258)

  Income attributable to minority interest                                                                     34             10
                                                                                                      -----------    -----------

      Net income (loss)                                                                               $       778    $      (268)
                                                                                                      ===========    ===========

  Net income (loss) per common share, basic and diluted                                               $       .18    $      (.06)
  Weighted average number of common shares:
      Basic                                                                                             4,366,866      4,366,866
      Diluted                                                                                           4,367,183      4,366,866

         The accompanying notes are an integral part of these statements

                                       5




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                             (Amounts in thousands)
                                                                      For the Six Months
                                                                        Ended June 30,
                                                                       2003       2002
                                                                       ----       ----
 Cash flows from operating activities:
 Net income (loss) from operations                                  $   778    $  (268)
 Adjustments to reconcile net income (loss) to net cash
       used in operating activities:
           Minority interest                                             34         10
           Depreciation                                                  18         22
           Credit for credit losses                                      (6)      (140)
           Gain on sale of securities available-for-sale               (274)        (4)
           Accretion of loan income and fees, net                       (82)       (68)
           Amortization of servicing assets                              38         12
           Amortization of other assets                                   4         10
           Loss on sale of foreclosed assets                             36       --
           Decrease in valuation allowance on deferred taxes           --          (39)
 Changes in operating assets and liabilities:
           Accrued interest receivable                                 (133)       (79)
           Other assets                                                (527)      (136)
           Interest payable                                             (57)      --
           Other liabilities                                           (675)        75
                                                                    -------    -------
                  Net cash used in operating activities                (846)      (605)

Cash flows from investing activities:
       Principal payments received on investment securities held-
           to-maturity                                                    7          5
       Purchase of investment securities available-for-sale          (2,425)    (1,053)
       Sale of investment securities available-for-sale                 858         64
       Principal payments received on investment securities
           available-for-sale                                         2,046         93
       Purchase of premises and equipment                              --           (1)
       Proceeds from sale of foreclosed assets                         --           19
       Loans originated, receivables purchased, and principal
           collections, net                                          (1,145)    (3,930)
                                                                    -------    -------
                Net cash used in investing activities                  (659)    (4,803)

Cash flows from financing activities:
       Net decrease in noninterest bearing deposits                    (368)       220
       Net increase in NOW/MMA deposits                                 139        389
       Net increase in certificates of deposit                           18      4,970
                                                                    -------    -------
              Net cash provided by financing activities                (211)     5,579

                                  (continued)

                                       6




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(continued)
                             (Amounts in thousands)

                                                               For the Six Months
                                                                 Ended June 30,
                                                                2003       2002
                                                                ----       ----

       Net increase (decrease) in cash and cash equivalents    (1,716)       171

       Cash and cash equivalents at beginning of period         6,546      5,095
                                                              -------    -------

       Cash and cash equivalents at end of period             $ 4,830    $ 5,266
                                                              =======    =======

Supplemental disclosure of cash flow information:
         Cash paid for interest                                   185         81
         Cash paid for income taxes                                 2       --

Supplemental disclosure of additional non-cash activities:

During the first quarter of 2003, the Company acquired foreclosed assets of $220
in lieu of loan payments.

At June 30,  2003,  the  Company  had a  balance  of net  unrealized  losses  on
securities of $102. The balance at December 31, 2002 was a net  unrealized  loss
on  securities  of $257.  Net  unrealized  losses  on  securities  are  shown as
"accumulated other comprehensive loss" on the Condensed Consolidated  Statements
of  Financial  Condition.  The  change in net  unrealized  losses on  securities
between periods resulted in a $155 reduction in accumulated other  comprehensive
loss.

         The accompanying notes are an integral part of these statements

                                       7





                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
          (All numbers except shares and per share data in thousands)

1.          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Basis   of   Presentation--The    accompanying   interim   condensed
consolidated   financial   statements  of   WebFinancial   Corporation  and  its
subsidiaries  (the "Company") are unaudited and have been prepared in conformity
with the  requirements  of  Regulation  S-X  promulgated  under  the  Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  particularly  Rule 10-01
thereof,  which  governs  the  presentation  of  interim  financial  statements.
Accordingly,  they do not include all of the information and footnotes  required
by accounting principles generally accepted in the United States of America. The
accompanying interim condensed  consolidated financial statements should be read
in conjunction with the Company's  significant  accounting policies as set forth
in Note 1 to the  consolidated  financial  statements  in the  Company's  Annual
Report on Form 10-K for the year ended December 31, 2002 (the "2002 10-K").  The
Condensed Consolidated Statement of Financial Condition at December 31, 2002 was
extracted from the Company's audited consolidated financial statements contained
in the 2002  Form  10-K,  and does  not  include  all  disclosures  required  by
accounting  principles  generally  accepted in the United  States of America for
annual consolidated financial statements.

            In the opinion of  management,  all  adjustments  are  comprised  of
normal  recurring  accruals  necessary for the fair  presentation of the interim
financial  statements.  Operating results for the six months ended June 30, 2003
are not necessarily  indicative of the results that may be expected for the year
ending December 31, 2003.

2.          ORGANIZATION AND RELATIONSHIPS

            The  consolidated   financial   statements   include  the  financial
statements  of  WebFinancial  Corporation  and  its  subsidiaries:  WebFinancial
Holdings Corporation,  a wholly owned  subsidiary  of the Company  ("Holdings"),
WebBank ("WebBank"),  Praxis Investment Advisers, Inc. ("Praxis"),  WebFinancial
Government Lending,  Inc.  ("Lending"),  and Web Film Financial,  Inc. ("Film"),
collectively referred to as the Company. WebBank is a Utah-chartered  industrial
loan corporation,  and is subject to comprehensive regulation,  examination, and
supervision by the Federal Deposit Insurance Corporation ("FDIC"), and the State
of Utah Department of Financial  Institutions.  WebBank provides  commercial and
consumer specialty finance services. All inter-company accounts and transactions
have been eliminated in consolidation.

3.          OTHER COMPREHENSIVE INCOME (LOSS)

            Other comprehensive income (loss) is defined as the change in equity
during a period from  transactions  and other  events not included in net income
(loss), excluding changes resulting from investments by owners (e.g., supplement
stock offerings) and distributions to owners (e.g., dividends).

                                       8





            As of June 30, 2003,  accumulated other comprehensive  income (loss)
consisted of the following:

            Balance at December 31, 2002                     $  (257)
            Net change during  the period related                155
                                                             -------
              to unrealized holding gains
              on securities available-for-
              sale arising during the period.
                                                             -------
            Balance at June 30, 2003                         $ (102)
                                                             =======

4.          OPERATING SEGMENT INFORMATION

            Operating segments represent components of an enterprise about which
separate financial  information is available that is evaluated  regularly by the
chief executive  officer in deciding how to allocate  resources and in assessing
performance.

            The Company evaluates segment performance  internally based on lines
of business.  The Company has  identified two operating  segments.  The first is
accounts  receivable  factoring.  The second operating segment,  termed "other,"
includes commercial lending, fee for services, and investment activities.

            The following is a summary of selected operating segment information
for the  three  months  and six  months  ended  June  30,  2003  and  2002.  The
information  represents  operating results as if the segments were operated on a
stand alone  basis.  However,  the results do not reflect a full  allocation  of
costs based on the current structure of the segments,  and therefore the results
might not be comparable to like information from other companies.

                                                                               Accounts
                                                                              Receivable                       Consolidated
                                                                               Factoring            Other        Company
                                                                               ---------            -----      ------------


Three Months Ended June 30, 2003:
Statement of Operations Information:
Net interest income after credit for credit losses                              $    716            $    354    $  1,070
Noninterest income                                                                  --                   399         399
Noninterest expense                                                                  385                 502         887
                                                                                --------            --------    --------
Income before taxes and minority interest                                            331                 251         582
Income taxes                                                                        --                  --          --
Income attributable to minority interest                                            --                    18          18
                                                                                --------            --------    --------
Net income                                                                      $    331            $    233    $    564
                                                                                ========            ========    ========

Statement of Financial Condition Information (as of June 30, 2003):
Total assets                                                                    $  7,207            $ 18,982    $ 26,189
Net loans and leases                                                            $  6,505            $  9,909    $ 16,414
Deposits                                                                        $  7,207            $  6,202    $ 13,409

Three  Months Ended June 30, 2002:
Statement of Operations Information:
Net interest income after credit for credit losses                              $    193            $    479    $    672
Noninterest income                                                                  --                   161         161
Noninterest expense                                                                  155                 691         846
                                                                                --------            --------    --------
Income (loss) before taxes and minority interest                                      38                 (51)        (13)
Income taxes (credit)                                                                 21                 (60)        (39)
Income attributable to minority interest                                            --                    18          18
                                                                                --------            --------    --------
Net income (loss)                                                               $     17            $     (9)   $      8
                                                                                ========            ========    ========
Statement of Financial Condition Information (as of June 30, 2002):

Total assets                                                                    $  3,126            $ 21,207    $ 24,333
Net loans and leases                                                            $  2,924            $ 11,821    $ 14,745
Deposits                                                                        $  3,144            $  9,749    $ 12,893




                                       9




                                                                          Accounts
                                                                         Receivable              Consolidated
                                                                          Factoring      Other     Company
                                                                          ---------      -----     --------

Six Months Ended June 30, 2003:
Statement of Operations Information:
Net interest income after credit for credit losses                         $  1,292    $    654    $  1,946
Noninterest income                                                             --           634         634
Noninterest expense                                                             690       1,076       1,766
                                                                           --------    --------    --------
Income (loss) before taxes and minority interest                                602         212         814
Income taxes                                                                   --             2           2
Income attributable to minority interest                                       --            34          34
                                                                           --------    --------    --------
Net income                                                                 $    602    $    176    $    778
                                                                           ========    ========    ========

Statement of Financial Condition Information (as of June 30, 2003):
Total assets                                                               $  7,207    $ 18,982    $ 26,189
Net loans and leases                                                       $  6,505    $  9,909    $ 16,414
Deposits                                                                   $  7,207    $  6,202    $ 13,409

Six Months Ended June 30, 2002:
Statement of Operations Information:
Net interest income after credit for credit losses                         $    245    $    749    $    994
Noninterest income                                                             --           360         360
Noninterest expense                                                             240       1,411       1,651
                                                                           --------    --------    --------
Income (loss) before taxes and minority interest                                  5        (302)       (297)
Income taxes (credit)                                                            23         (62)        (39)
Income attributable to minority interest                                       --            10          10
                                                                           --------    --------    --------
Net loss                                                                   $    (18)   $   (250)   $   (268)
                                                                           ========    ========    ========

Statement of Financial Condition Information (as of June 30, 2002):
Total assets                                                               $  3,126    $ 21,207    $ 24,333
Net loans and leases                                                       $  2,924    $ 11,821    $ 14,745
Deposits                                                                   $  3,144    $  9,749    $ 12,893

                                       10





ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
         ---------------------------------------------------------

            The  following  discussion  should be read in  conjunction  with the
consolidated  unaudited interim financial statements as of and for the six month
period  ended  June 30,  2003 of the  Company  and the notes  thereto  presented
elsewhere herein.

CHANGES IN FINANCIAL CONDITION
JUNE 30, 2003 COMPARED TO DECEMBER 31, 2002

            Total assets  increased by $24,000  during the six months ended June
30, 2003. Although the change in footings was less than 1%, the Company realized
significant  growth in purchased  receivables  related to the Company's accounts
receivable  factoring  program and a large decrease in the Company's  commercial
loan portfolio.

            The balance of the Company's purchased  receivables at June 30, 2003
was $7,971,000 versus $5,101,000 at December 31, 2002, an increase of $2,870,000
or 56%. All of the purchased  receivables generated in 2002 were the result of a
sourcing and servicing agreement with one factoring company located in Maryland.
The  Company  entered  into a  similar  agreement  in early  2003  with a second
factoring  company  located in  Georgia.  The two  factoring  companies  sourced
$6,730,000 and  $1,241,000,  respectively,  of the total  purchased  receivables
outstanding at June 30, 2003.

            Offsetting  most  of  the  growth  in  purchased  receivables  was a
decrease in the Company's  commercial  loan  portfolio.  Total gross  commercial
loans were $9,953,000 at June 30, 2003, a decrease of $1,873,000 or 16% from the
prior  year-end  total of  $11,826,000.  The  majority of the decline was due to
several  loan  payoffs and one  foreclosure.  The  foreclosed  loan  balance was
transferred  to other  foreclosed  assets at fair  market  value less  estimated
selling costs. The Company  discontinued  issuing new loans under its commercial
loan program in 2001 but still continues to service the remaining portfolio.

            Other assets increased by $485,000 during the six month period.  The
change was the result of a receivable created by the sale of  available-for-sale
securities for which the trade date and settlement date straddled June 30, 2003.
Other liabilities decreased by approximately  $730,000 during the same six month
period.  The change was  primarily  due to the  purchase  of  available-for-sale
securities for which the trade date and settlement  date straddled  December 31,
2002.

            Cash and cash  equivalents,  generally  a  balancing  factor  on the
statement of financial condition,  decreased  significantly  between periods. As
described above,  the net increase in loans and purchased  receivables was about
$1,000,000,  foreclosed  assets increased by approximately  $185,000,  and other
assets  increased  by  approximately  $485,000.  Because  total  assets  did not
fluctuate  significantly  during  this time  period,  cash and cash  equivalents
decreased by approximately $1,700,000.

            Unused commitments to fund purchased  receivables,  not shown on the
statement  of  financial  condition,  were  $9,395,000  at  June  30,  2003  and
$6,382,000  at December  31,  2002.  The  increase  was due to  additions of new
clients  and  increases  in credit  limits of  existing  clients  related to the
Company's purchased receivable program.

CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE MONTHS ENDED JUNE 30, 2002

            Net income for the three  months ended June 30, 2003 was $564,000 or
$.13 per share  compared  to net income of $8,000 or $.00 per share for the same
period in 2002. The comparison of net income for the two periods  represented an
increase of $556,000 or $.13 per share.

            The  Company's  net interest  income after credit for credit  losses
increased by $398,000.  Most of that  increase  was due to  additional  interest
income from purchased receivables.  During the second quarter of 2002, which was
also the second quarter of the Company's accounts receivable  factoring program,
net interest  income after credit for credit losses from  purchased  receivables
was  $193,000.  During the second  quarter of 2003,  that  amount  increased  to
$716,000,  an increase of $523,000.  Interest expense for the Company  increased
$14,000 when comparing the two periods.  Increases in average  deposit  balances

                                       11





were offset by decreases in interest rates paid on deposits, which kept interest
expense relatively stable.

            Noninterest  income for the Company increased by $238,000 during the
three  months  ended June 30, 2003  compared to the three  months ended June 30,
2002.   The   majority   of  the   increase   was  due  to  gains  on  sales  of
available-for-sale  securities.  Fee income increased  $22,000 and miscellaneous
income decreased $17,000.

            The   Company's   noninterest   expenses   increased   by   $41,000,
comparatively,  between the two three month periods.  Salary expense declined by
$65,000,   primarily  due  to  staff   reductions  at  WebBank.   The  Company's
professional and legal fees decreased by $68,000,  primarily because  collection
costs  related to  problem  loans  decreased  significantly  in 2003.  Occupancy
expense  decreased by $3,000 from period to period.  Offsetting  these decreases
was a $177,000 increase in other general and administrative expenses,  primarily
due to third-party  servicing and broker costs related to increased  activity in
the Company's accounts receivable factoring program.

SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO SIX MONTHS ENDED JUNE 30, 2002

            Net income for the six months  ended June 30,  2003 was  $778,000 or
$.18 per share  compared to a net loss of $(268,000) or $(.06) per share for the
same  period  in  2002.  The  comparison  of net  income  for  the  two  periods
represented an increase of $1,046,000 or $.24 per share.

            The  Company's  net interest  income after credit for credit  losses
increased by $952,000.  Most of that  increase  was due to  additional  interest
income from purchased  receivables.  During the first six months of 2002,  which
was the first six months of the Company's accounts receivable factoring program,
net interest  income after credit for credit losses from  purchased  receivables
was  $245,000.  During the first six months of 2003,  that amount  increased  to
$1,292,000,  an  increase  of  $1,047,000.  Interest  expense  for  the  Company
increased  $45,000 when comparing the two periods.  Increases in average deposit
balances were offset by decreases in interest rates paid on deposits, which kept
interest expense relatively stable.

            Noninterest  income for the Company increased by $274,000 during the
six months  ended June 30, 2003  compared to the six months ended June 30, 2002.
The  majority of the  increase  was due to gains on sales of  available-for-sale
securities. Fee income and miscellaneous income remained relatively constant.

            The   Company's   noninterest   expenses   increased   by  $115,000,
comparatively,  between the two six month periods.  Salary  expense  declined by
$83,000,   primarily  due  to  staff   reductions  at  WebBank.   The  Company's
professional  and legal  fees  decreased  by  $165,000,  mainly  because  nearly
$100,000  in costs  incurred  to defend the Company  against  legal  action by a
former employee in 2002 did not recur in 2003.  Additionally,  collection  costs
related to problem loans  decreased  significantly  in 2003.  Occupancy  expense
decreased by $18,000 from period to period,  primarily  due to the closing of an
office in Washington D.C. occupied by the former Chairman of WebBank. Offsetting
these  decreases  was a $381,000  increase in other  general and  administrative
expenses,  primarily  due to  third-party  servicing and broker costs related to
increased activity in the Company's accounts receivable factoring program.

LIQUIDITY AND CAPITAL RESOURCES

            At June 30, 2003 and December 31, 2002,  the Company's cash and cash
equivalents  totaled $4,830,000 and $6,546,000,  respectively.  The decrease was
due  primarily to an  offsetting  increase in purchased  receivables  during the
first six months of 2003 while total assets remained relatively stable. The cash
balances at December 31, 2002 and June 30,2003 were higher than operations would
generally require.  The Company maintained increased liquidity at those dates to
fund expected growth in purchased  receivables.  Funding for WebBank is obtained
primarily  from  certificates  of deposit  obtained  through  brokers and from a
$500,000 unsecured line of credit with a local  correspondent  bank.  Management
believes that the Company's current cash and cash equivalent balances,  expected
operating  cash flows,  and WebBank  borrowing  sources are adequate to meet its
liquidity needs through at least the next 12 months.

                                       12





            The Company  continues to actively  seek  acquisition  transactions.
There can be no assurance that the Company will be able to acquire an additional
business,  or that such  business  will be  profitable.  In order to  finance an
acquisition,  the Company may be  required  to incur or assume  indebtedness  or
issue securities.

NEW ACCOUNTING PRONOUNCEMENTS

            In  April  2003,  the FASB  issued  SFAS No.  149,  "Accounting  for
Derivative  Instruments  and Hedging  Activities."  SFAS No. 149 amends SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS No.
149 improves  financial  reporting by requiring that  contracts with  comparable
characteristics  be  accounted  for  similarly.  SFAS No. 149 is  effective  for
contracts  entered  into or  modified  after June 30, 2003 and should be applied
prospectively.  The company  adopted SFAS No. 149 with no material impact on its
financial  condition or results of operations  for the six months ended June 30,
2003.

            In May 2003, the FASB issued SFAS No. 150,  "Accounting  for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 improves financial reporting by establishing standards for how an issuer
classifies and measures certain financial  instruments with  characteristics  of
both liabilities and equity. SFAS No. 150 is effective for financial instruments
entered into or modified  after May 31, 2003,  and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
adopted  SFAS No. 150 with no  material  impact on its  financial  condition  or
results of operations for the six months ended June 30, 2003.


FORWARD-LOOKING STATEMENTS

            THE FOLLOWING  IMPORTANT FACTORS,  AMONG OTHERS,  COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY FORWARD-LOOKING  STATEMENTS
MADE IN THIS  QUARTERLY  REPORT  ON  FORM  10-QSB  AND  PRESENTED  ELSEWHERE  BY
MANAGEMENT.  ALL FORWARD-LOOKING  STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED
ON  INFORMATION  AVAILABLE  TO THE COMPANY ON THE DATE  HEREOF,  AND THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. A NUMBER OF
UNCERTAINTIES  EXIST THAT COULD AFFECT THE COMPANY'S FUTURE  OPERATING  RESULTS,
INCLUDING, WITHOUT LIMITATION,  GENERAL ECONOMIC CONDITIONS, CHANGES IN INTEREST
RATES, THE COMPANY'S ABILITY TO ATTRACT  DEPOSITS,  AND THE COMPANY'S ABILITY TO
CONTROL COSTS.  BECAUSE OF THESE AND OTHER FACTORS,  PAST FINANCIAL  PERFORMANCE
SHOULD NOT BE  CONSIDERED AN  INDICATION  OF FUTURE  PERFORMANCE.  THE COMPANY'S
FUTURE  OPERATING  RESULTS  MAY VARY  SIGNIFICANTLY.  INVESTORS  SHOULD  NOT USE
HISTORICAL  TRENDS TO  ANTICIPATE  FUTURE  RESULTS  AND SHOULD BE AWARE THAT THE
TRADING PRICE OF THE COMPANY'S COMMON STOCK MAY BE SUBJECT TO WIDE  FLUCTUATIONS
IN RESPONSE TO  QUARTERLY  VARIATIONS  IN OPERATING  RESULTS AND OTHER  FACTORS,
INCLUDING THOSE  DISCUSSED IN THIS QUARTERLY  REPORT ON FORM 10-QSB AND THE RISK
FACTORS IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.

                                       13




ITEM 3.  CONTROLS AND PROCEDURES
         -----------------------

(a)      Evaluation of disclosure controls and procedures

         Within  the 90 days  prior  to the  date of this  report,  the  Company
carried out an evaluation,  under the supervision and with the  participation of
the Company's  management,  including the Company's Chief Executive  Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure controls and procedures.  Based upon that evaluation,  the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating  to  the  Company  (including  its  consolidated
subsidiaries) required to be included in the Company's periodic SEC filings.

(b)      Changes in internal controls

         There were no significant changes in the Company's internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of their evaluation.

(c)      Asset-Backed issuers

         Not applicable.


                                       14





PART II.    OTHER INFORMATION
            -----------------

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K
            --------------------------------

            (a)   Exhibits
                  31.1  Certification  of Chief  Executive  Officer  pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002.

                  31.2  Certification  of Chief  Financial  Officer  pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002.

                  32.1  Certification  of Chief  Executive  Officer  pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002.

                  32.2  Certification  of Chief  Financial  Officer  pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002.

            (b)   Reports on Form 8-K during the quarter
                  None.

                                       15




                                   SIGNATURES


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


Date:  August 8, 2003         WebFinancial Corporation


                              By: /s/ Warren G. Lichtenstein
                                  ------------------------------------------
                                  Warren G. Lichtenstein
                                  President and Chief Executive Officer



                              By: /s/ Glen M. Kassan
                                  ------------------------------------------
                                  Glen M. Kassan
                                  Vice President and Chief Financial Officer

                                       16

EX-31.1

                                                                    Exhibit 31.1
                            Section 302 Certification

I, Warren G. Lichtenstein, certify that:

1)    I have  reviewed  this  quarterly  report on Form  10-QSB of  WebFinancial
      Corporation, a Delaware corporation;
2)    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;
3)    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;
4)    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:
      a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;
      b)  Evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and
      c)  Disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and
5)    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):
      a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and
      b)  Any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.

Date: August 6, 2003                     By: /s/ Warren G. Lichtenstein
                                             --------------------------
                                             Warren G. Lichtenstein
                                             President and Chief Executive Officer

EX-31.2

                                                                    Exhibit 31.2

                            Section 302 Certification

I, Glen M. Kassan, certify that:

1)    I have  reviewed  this  quarterly  report on Form  10-QSB of  WebFinancial
      Corporation, a Delaware corporation;
2)    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;
3)    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;
4)    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:
      a)  Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;
      b)  Evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and
      c)  Disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and
5)    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):
      a)  All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and
      b)  Any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.

      Date: August 8, 2003         By: /s/ Glen M. Kassan
                                       ---------------------------------------
                                       Glen M. Kassan
                                       Vice President and Chief Financial Officer

EX-32.1

                                                                    Exhibit 32.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350)


Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.  ss.1350),
the undersigned, Warren G. Lichtenstein, Chief Executive Officer of WebFinancial
Corporation,  a Delaware corporation (the "Company") does hereby certify, to his
knowledge, that:

The  Quarterly  Report on Form 10-QSB for the quarter ended June 30, 2003 of the
Company (the "Report") fully complies with the  requirements of Section 13(a) or
15(d) of the Securities  Exchange Act of 1934, and the information  contained in
the Report fairly presents,  in all material respects,  the financial  condition
and results of operations of the Company.


                                          /s/ Warren G. Lichtenstein
                                          ------------------------------------
                                          Warren G. Lichtenstein
                                          President and Chief Executive Officer
                                          August 6, 2003

EX-32.2

                                                                    Exhibit 32.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350)


Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.  ss.1350),
the  undersigned,   Glen  Kassan,   Chief  Financial   Officer  of  WebFinancial
Corporation,  a Delaware corporation (the "Company") does hereby certify, to his
knowledge, that:

The  Quarterly  Report on Form 10-QSB for the quarter ended June 30, 2003 of the
Company (the "Report") fully complies with the  requirements of Section 13(a) or
15(d) of the Securities  Exchange Act of 1934, and the information  contained in
the Report fairly presents,  in all material respects,  the financial  condition
and results of operations of the Company.


                                    /s/ Glen Kassan
                                    -------------------------------------------
                                    Glen Kassan
                                    Vice President and Chief Financial Officer
                                    August 7, 2003