Financial Statements and
        Report of Independent Certified Public Accountants
                PSB Bancorp, Inc. and Subsidiaries
                 December 31, 2001, 2000 and 1999



                       C O N T E N T S

                                                            Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS            3

INDEPENDENT AUDITORS' REPORT                                  4

FINANCIAL STATEMENTS

     CONSOLIDATED BALANCE SHEET                               5

     CONSOLIDATED STATEMENTS OF INCOME                        7

     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
       EQUITY                                                 9

     CONSOLIDATED STATEMENTS OF CASH FLOWS                   10

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              12



          Report of Independent Certified Public Accountants



Board of Directors and Stockholders
PSB Bancorp, Inc.


     We have audited the accompanying consolidated balance sheet
of PSB Bancorp, Inc. and subsidiaries as of December 31, 2001,
and the related consolidated statement of income, changes in
stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the
Corporation's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.  We
also audited the adjustments described in notes J and N that
were applied to restate 2000 and 1999 earnings per share and
stock option plan information.  In our opinion, such adjustments
are appropriate and have been properly applied.

     We conducted our audit in accordance with auditing
standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

     In our opinion, the 2001 financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of PSB Bancorp, Inc. and subsidiaries as of
December 31, 2001, and the consolidated results of their
operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the
United States of America.


/s/Grant Thorton LLP
Philadelphia, Pennsylvania
January 31, 2002



                   INDEPENDENT AUDITORS' REPORT


To the Board of Directors
PSB Bancorp, Inc.
Philadelphia, Pennsylvania

     We have audited the accompanying consolidated statement of
financial condition of PSB Bancorp, Inc. and Subsidiaries as of
December 31, 2000 and the related consolidated statements of
income, stockholders' equity and cash flows for the years ended
December 31, 2000 and 1999.  These consolidated financial
statements are the responsibility of the Bank's management.  Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.  As discussed in Note
B, the consolidated financial statements of PSB Bancorp, Inc.
and Subsidiaries for December 31, 1998 was restated for the 1999
pooling of interest transaction with First Bank of Philadelphia.

     We conducted our audits in accordance with auditing
standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

     In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial condition of PSB Bancorp, Inc. and Subsidiaries at
December 31, 2000 and the results of their operations and their
cash flows for the years ended December 31, 2000 and 1999 in
conformity with accounting principles generally accepted in the
United States of America.


                              /s/ Stockton Bates, LLP
                                  Certified Public Accountants

Philadelphia, Pennsylvania
March 20, 2001



                        PSB BANCORP, INC.

                    Consolidated Balance Sheet

                                               December 31,
                                             2001        2000
                                          (Dollars in thousands)
ASSETS

Cash and due from banks                    $  3,825    $  2,937
Interest earning deposits with banks          3,293      14,969
Federal funds sold                           47,638           -

Total cash and cash equivalents              54,756      17,906

Loans held for sale                          17,142       9,080
Investment securities available-for-
  sale before held to maturity, at fair
  value                                      69,934      62,823
Investment securities held-to-maturity
  (fair value of $2,346 and $4,896 in
  2001 and 2000, respectively)                2,310       4,910
Federal Home Loan Bank Stock - at cost        1,093       2,271
Federal Reserve Bank Stock - at cost            320         320

Loans                                       300,051     147,205
Less allowance for possible loan losses      (2,871)     (1,349)

        Net loans                           297,180     145,856

Accrued interest receivable                   1,884       2,165
Premises and equipment, net                   2,508       1,820
Bank-owned life insurance                    11,161           -
Other assets                                  9,356       7,668

        Total assets                       $467,644    $254,819
                                           ========    ========
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Deposits
    Non-interest-bearing                   $ 25,983    $ 14,048
    Interest-bearing (including
      certificates of deposit over $100
      of approximately $45,600 and
      $25,400 in 2001 and 2000,
      respectively)                         378,577     188,888

        Total deposits                      404,560     202,936

Securities sold under repurchase
  agreements                                 13,298      13,402
Advances from borrowers for taxes and
  insurance                                   3,111       1,239
Accrued interest payable                         42         442
Goodwill, net                                 1,679           -
Other liabilities                             3,539         818

        Total liabilities                   426,229     218,837

Stockholders' equity
  Common stock, no par value;
    authorized 15,000,000 shares;
    outstanding, 4,534,611 and
    4,158,894 in 2001 and 2000,
    respectively                             40,994      40,710
  Retained earnings (accumulated
    deficit)                                  1,768        (971)
  Accumulated other comprehensive
    income (loss)                               167        (367)
  Employee stock ownership plan              (1,136)     (1,111)
  Treasury stock, at cost, 72,325 and
    448,042 in 2001 and 2000,
    respectively                               (378)     (2,279)

        Total stockholders' equity           41,415      35,982

        Total liabilities and
          stockholders' equity             $467,644    $254,819

The accompanying notes are an integral part of these statements.



                        PSB BANCORP, INC.

                Consolidated Statements of Income

                                 For the year ended December 31,
                                   2001       2000        1999
                                       (Dollars in thousands)
INTEREST INCOME
  Loans, including fees          $21,421    $16,054     $13,457
  Investment securities            5,049      4,846       4,165
  Deposits in banks                  458        239         939

    Total interest income         26,928     21,139      18,561

INTEREST EXPENSE
  Deposits                        13,450      8,042       8,270
  Borrowings                         561      2,582         949

    Total interest expense        14,011     10,624       9,219

    Net interest income           12,917     10,515       9,342

PROVISION FOR POSSIBLE LOAN
  LOSSES                             270        100         200

    Net interest income after
      provision for possible
      loan losses                 12,647     10,415       9,142

NON-INTEREST INCOME
  Service charges on deposit
    accounts                       1,074        412         479
  Loss on sale of real estate
    owned                              -          -         (20)
  Loss on sale of loans                -          -        (372)
  Loss on write down of equity
    investment                         -     (2,500)          -
  Bank-owned life insurance          310          -           -
  Other                              170        174         434

    Total non-interest income      1,554     (1,914)        521

NON-INTEREST EXPENSE
  Salaries and employee
    benefits                       5,053      4,383       3,601
  Occupancy and equipment          1,154      1,162       1,290
  Professional services              385        381       1,064
  Data processing                    594        356         237
  Directors' fees                    282        246         215
  Other                            2,926      1,798       1,399
                                 -------    -------     -------
    Total non-interest expense    10,394      8,326       7,806
                                 -------    -------     -------
    Income before income tax
      expense (benefit)            3,807        175       1,857

INCOME TAX EXPENSE (BENEFIT)         755         10        (227)

NET INCOME                       $ 3,052    $   165     $ 2,084

PER SHARE DATA
  Basic earnings per share       $  0.73    $  0.04     $  0.48

  Diluted earnings per share     $  0.72    $  0.04     $  0.47

The accompanying notes are an integral part of these statements.



                        PSB BANCORP, INC.
    Consolidated Statement of Changes in Stockholders' Equity

<table>
<caption>
                                               For the years ended December 31, 2001, 2000 and 1999
                                                 Retained      Accumulated
                                                 earnings         other       Unallocated
                                    Common    (accumulated)   comprehensive       ESOP      Treasury
                                     stock      deficit)      income (loss)      shares       stock      Total

                                <c>        <c>             <c>             <c>           <c>        <c>
Balance at January 1, 1999         $40,790      $(3,220)         $     3        $(1,443)    $     -    $36,130
Allocation of ESOP shares               83            -                -             84           -        167
Comprehensive loss
  Net Income                             -        2,084                -              -           -      2,084
  Change in net unrealized gain
    on securities available-for-
    sale, net of tax effect              -            -           (2,334)             -           -     (2,334)

      Total comprehensive loss                                                                            (250)

Balance at December 31, 1999        40,873       (1,136)          (2,331)        (1,359)          -     36,047
Allocation of ESOP shares             (163)           -                -            248           -         85
Purchases of treasury stock              -            -                -              -      (2,279)    (2,279)
Comprehensive income
  Net Income                             -          165                -              -           -        165
  Change in net unrealized loss
    on securities available-for-
    sale, net of tax effect              -            -            1,964              -           -      1,964

      Total comprehensive income                                                                         2,129

Balance at December 31, 2000        40,710         (971)            (367)        (1,111)     (2,279)    35,982
Allocation of ESOP shares                3            -                -            (25)          -        (22)
Allocation of MRP shares               322            -                -              -           -        322
Treasury shares issued in Jade
  acquisition                          (41)        (313)               -              -       1,901      1,547
Comprehensive income
  Net Income                             -        3,052                -              -           -      3,052
  Change in net unrealized loss
    on securities available-for-
    sale, net of tax effect              -            -              534              -           -        534

      Total comprehensive income                                                                         3,586

Balance at December 31, 2001       $40,994      $ 1,768          $   167        $(1,136)    $  (378)
$41,415
</table>

The accompanying notes are an integral part of these statements.



                        PSB BANCORP, INC.

              Consolidated Statements of Cash Flows

<table>
<caption>
                                                           For the year ended December 31,
                                                             2001        2000        1999
                                                                (Dollars in thousands)

                                                       <c>         <c>         <c>
Cash flows from operating activities
  Net income                                              $  3,052    $    165    $  2,084
  Adjustments to reconcile net income to net cash
  provided by operating activities
    Provision for possible loan losses                         270         100         200
    Depreciation and amortization                              350         195         277
    Amortization of discounts and accretion of premiums
      on investment securities                                  47          63          51
    Amortization of negative goodwill                          (73)          -           -
    Write-down of real estate owned                             18         224         234
    Write down of equity investments                           154       2,601           -
    Loss on sale of real estate                                  -           -          20
    Loss on sale of loans                                        -           -         372
    Proceeds from sale of loans                             28,303       9,376      20,377
    Origination of loans held-for-sale                     (36,365)    (10,235)    (21,660)
    Deferred income taxes                                        -         (90)       (687)
    ESOP (credit) expense                                      (22)         86          84
    Decrease (increase) in accrued interest receivable         956         281        (744)
    (Increase) decrease in other assets                     (1,380)        191        (976)
    (Decrease) increase in accrued interest payable           (400)        (73)         14
    Increase (decrease) change in accrued expenses           3,468         667        (660)

      Net cash (used in) provided by operating activities   (1,622)      3,551      (1,014)

Cash flows from investing activities
  Payment to acquire Jade, net of cash acquired and
    debt assumed                                            16,998           -           -
  Purchase of investment securities, available-for-sale    (10,375)       (500)    (39,407)
  Proceeds from maturities and calls of investment
    securities                                              35,116       4,394       4,677
  Purchase of Federal Home Loan Bank Stock                   1,157        (550)       (878)
  Net (increase) decrease in loans                         (23,276)     21,201     (47,445)
  Proceeds from sale of real estate owned                      982         407         674
  Purchase of premises and equipment                        (1,038)       (319)       (227)

      Net cash provided by (used in) investing
        activities                                          19,564      24,633     (82,606)

Cash flows from financing activities
  Net increase in deposits                                  17,691      10,877       6,402
  Increase (decrease) in securities sold under
    agreements to repurchase                                   104      (2,239)     13,145
  Payment of employee stock option plan loan                     -           -        (234)
  Treasury stock acquired                                        -      (2,279)          -
  Net increase (decrease) in borrowed funds                      -     (34,000)     34,000
  Increase in advances for borrowers' taxes and
    insurance                                                1,113          88          55

      Net cash provided by (used by) financing
        activities                                          18,908     (27,553)     53,368

      Net increase (decrease) in cash and cash
        equivalents                                         36,850         631     (30,252)

Cash and cash equivalents at beginning of year              17,906      17,275      47,527

Cash and cash equivalents at end of year                  $ 54,756    $ 17,906    $ 17,275
</table>

The accompanying notes are an integral part of these statements.



                        PSB BANCORP, INC.

            Notes to Consolidated Financial Statements

                 December 31, 2001, 2000 and 1999

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PSB Bancorp, Inc. (the Corporation), primarily through its
     subsidiary, First Penn Bank (the Bank) operates twelve
     branch offices, makes residential, construction,
     commercial, student and consumer loans to customers and
     provides community-banking services  to individuals and
     corporate customers principally within Southeastern
     Pennsylvania and Southern New Jersey.   The Corporation is
     subject to regulation by the Securities and Exchange
     Commission (the SEC) and the Federal Reserve.  The
     Corporation's principal business is the ownership of
     the Bank.

     The Bank also conducts activities through its
     subsidiaries; Transnational Mortgage Corporation (TNMC), a
     wholly owned subsidiary, which originates residential
     loans.  PSA Financial Corporation (PSA), a wholly owned
     subsidiary, which originates residential and consumer
     loans.  PSA Consumer Discount (PCD), a wholly owned
     subsidiary of PSA Financial, which originates consumer
     loans.  All loan originations are to customers principally
     within, but not limited to, the County of Philadelphia,
     Pennsylvania.  PSA Service Corporation (PSC), a wholly
     owned subsidiary, processes all loans for the Bank and the
     other subsidiaries.  Jade Abstract Company, a wholly owned
     subsidiary, issuing title insurance for residential
     properties, and Jade Insurance Company, a wholly owned
     subsidiary, which sells insurance products in an agency
     status.

     The Bank competes with other banking and financial
     institutions in its primary market communities, including
     financial institutions with resources substantially greater
     than its own.  Commercial banks, savings banks, savings and
     loan associations, and credit unions actively compete for
     savings and time deposits, and for types of loans.  Such
     institutions, as well as consumer finance, insurance, and
     brokerage firms, may be considered competitors of the Bank
     with respect to one or more of the services it provides.

     The Bank is subject to regulations of certain state and
     federal agencies and, accordingly, is periodically examined
     by those regulatory authorities.  As a consequence of the
     extensive regulation of commercial banking activities, the
     Bank's business is particularly susceptible to being
     affected by state and federal legislation and regulations.

     1.   Basis of Financial Statement Presentation

          The accounting and reporting policies of the
          Corporation conform to accounting principles generally
          accepted in the United States of America (US GAAP) and
          predominant practices within the banking industry.
          The accompanying consolidated financial statements
          include the accounts of the Corporation, and all its
          wholly owned subsidiaries.  All intercompany balances
          and transactions have been  eliminated.

          In preparing the consolidated financial statements,
          management is required to make estimates and
          assumptions that affect the reported amounts of assets
          and liabilities and disclosure of contingent assets
          and liabilities at the date of the balance sheets and
          the reported amounts of revenues and expenses during
          the reporting periods.  Therefore, actual results
          could differ significantly from those estimates.

          The principal estimate that is particularly
          susceptible to significant change in the near term
          relates to the allowance for possible loan losses.
          The evaluation of the adequacy of the allowance for
          loan losses includes an analysis of the individual
          loans and overall risk characteristics and size of the
          different loan portfolios, and takes into
          consideration current economic and market conditions,
          the capability of specific borrowers to pay specific
          loan obligations, as well as current loan collateral
          values.  However, actual losses on specific loans,
          which also are encompassed in the analysis, may vary
          from estimated losses.

          Statement of Financial Accounting Standards (SFAS) No.
          131, "Disclosures about Segments of an Enterprise and
          Related Information," establishes standards for the
          way public business enterprises report information
          about operating segments in annual financial
          statements and requires that those enterprises report
          selected information about operating segments in
          subsequent interim financial reports issued to
          shareholders.  It also establishes standards for
          related disclosures about products and services,
          geographic areas, and major customers.  The statement
          requires that a public business enterprise report
          financial and descriptive information about its
          reportable operating segments.  Operating segments are
          components of an enterprise about which separate
          financial information is available that is elevated
          regularly by the chief operating decision maker in
          deciding how to allocate resources and assess
          performance.  The statement also requires that public
          enterprises report a measure of segment profit or
          loss, certain specific revenue and expense items and
          segment assets.  It also requires that information be
          reported about revenues derived from the enterprises'
          products or services, or about the countries in which
          the enterprises earn revenues and hold assets, and
          about major customers, regardless of whether that
          information is used in making operating decisions.

          The Corporation has one reportable segment, Community
          Banking.  All of the Corporation's activities are
          interrelated, and each activity is dependent and
          assessed based on how each of the activities of the
          Company supports the others.  For example, commercial
          lending is dependent upon the ability of the Bank to
          fund itself with retail deposits and other borrowings
          and to manage interest rate and credit risk.  This
          situation is also similar for consumer and residential
          mortgage lending.  Accordingly, all significant
          operating decisions are based upon analysis of the
          Corporation as one operating segment or unit.

     2.   Financial Instruments

          The Corporation discloses the estimated fair value of
          their assets and liabilities considered to be
          financial instruments.  Financial instruments
          requiring disclosure consist primarily of investment
          securities, loans, and deposits.

     3.   Cash and Cash Equivalents

          Cash and cash equivalents include cash on hand, demand
          deposits maintained in depository institutions, and
          federal funds sold.  Generally, federal funds are
          purchased and sold for one-day periods.

          At December 31, 2001, the Corporation maintained a
          required reserve with the Federal Reserve Bank of
          approximately $320,000.

          Cash paid during the year for interest and income
          taxes are as follows (in thousands):

                                        2001      2000     1999
                                      -------   -------   ------
          Interest                    $13,970   $10,697   $8,405
          Income taxes                    755       700      700

     4.   Investment and Mortgage-Backed Securities

          Investment and mortgage-backed securities in
          securities are classified in one of three categories:
          held-to-maturity, trading, or available-for-sale.
          Debt securities that the Corporation has the positive
          intent and ability to hold to maturity are classified
          as held-to-maturity and are reported at amortized
          cost.  As the Corporation does not engage in security
          trading, the balance of its debt securities and any
          equity securities are classified as available-for-
          sale.  Net unrealized gains and losses for such
          securities, net of tax, are required to be recognized
          as a separate component of shareholders' equity and
          excluded from the determination of net income.  Gains
          or losses on the sales of securities available-for-
          sale are recognized upon realization utilizing the
          specific identification method.

          SFAS No. 133, "Accounting for Derivative Instruments
          and Hedging Activities," was amended in June 1999 by
          SFAS No. 137, "Accounting for Derivative Instruments
          and Hedging Activities - Deferral of the Effective
          Date of FASB Statement No. 133," and in June 2000, by
          SFAS No. 138, "Accounting for Certain Derivative
          Instruments and Certain Hedging Activities,"
          (collectively SFAS No. 133). SFAS No. 133 requires
          that entities recognize all derivatives as either
          assets or liabilities in the statement of financial
          condition and measure those instruments at fair value.
          Under SFAS No. 133 an entity may designate a
          derivative as a hedge of exposure to either changes
          in: (a) fair value of a recognized asset or liability
          or firm commitment, (b) cash flows of a recognized or
          forecasted transaction, or (c) foreign currencies of a
          net investment in foreign operations, firm
          commitments, available-for-sale securities or a
          forecasted transaction.  Depending upon the
          effectiveness of the hedge and/or the transaction
          being hedged, any changes in the fair value of the
          derivative instrument is either recognized in earnings
          in the current year, deferred to future periods, or
          recognized in other comprehensive income.  Changes in
          the fair value of all derivative instruments not
          recognized as hedge accounting are recognized in
          current year earnings.  The Corporation adopted SFAS
          No. 133 effective July 1, 2000 and no adjustments were
          required as a result of this adoption.

          Derivative financial are defined as futures, forwards,
          swap and option contracts and other financial
          instruments with similar characteristics.  On balance
          sheet receivables and payables are excluded from this
          definition.  The Corporation did not hold any
          derivative financial instruments, as defined by SFAS
          No. 119, at December 31, 2001 or December 31, 2000.

     5.   Loans and Allowance for Possible Loan Losses

          Loans receivable that management has the intent and
          ability to hold for the foreseeable future or until
          maturity or payoff are reported at their outstanding
          principal adjusted for any charge-offs, the allowance
          for possible loans losses, and any deferred fees or
          costs on originated loans.  Interest on loans is
          accrued and credited to operations based upon the
          principal amounts outstanding.

          Loan fees and certain direct loan origination costs
          are deferred and the net fee or cost is recognized as
          an adjustment of the loan yield over the contractual
          life of the loan using the interest method.  When a
          loan is sold, unamortized net fees are recognized as
          income.  Other loan fees and charges representing
          service costs for the prepayment of loans, for
          delinquent payments or for miscellaneous loan services
          are recognized when collected.  Commitment fees and
          costs relating to commitments whose likelihood of
          exercise is remote are recognized over the commitment
          period on a straight-line basis.  If the commitment is
          subsequently exercised during the commitment period,
          the remaining unamortized commitment fee at the time
          of exercise is recognized over the life of the loan as
          an adjustment of yield.

          SFAS No. 140 "Accounting for Transfers and Servicing
          of Financial Assets and Extinguishments of
          Liabilities," replacing SFAS No. 125.  This new
          statement revises the standard for accounting and
          reporting for transfers and servicing of financial
          assets and extinguishments of liabilities.  The new
          standard is based on consistent application of a
          financial-components approach that recognizes the
          financial and servicing assets it controls and the
          liabilities it has incurred, derecognizes financial
          assets when control has been surrendered and
          derecognizes liabilities when extinguished.  The
          standard provides consistent guidelines for
          distinguishing transfers of financial assets from
          transfers that are secured borrowings.  The
          Corporation adopted this new standard on March 31,
          2001 and it did not have a material impact upon the
          Corporation's consolidated financial statements.

          The allowance for possible loan losses is established
          through a provision for possible loan losses charged
          to expenses.  Loans are charged against the allowance
          for possible loan losses when management believes that
          the collectibility of the principal is unlikely.  The
          allowance is an amount that management believes will
          be adequate to absorb loan losses on existing loans
          that may become uncollectible based on evaluations of
          the collectibility of loans and prior loan loss
          experience.  The evaluations take into consideration
          such factors as changes in the nature and volume of
          the loan portfolio, overall portfolio quality, review
          of specific problem loans, and current economic
          conditions that may affect the borrower's ability to
          pay.

          Accrual of interest is discontinued on a loan when
          principal and interest become 90 days or more past due
          and when management believes, after considering
          economic and business conditions and collection
          efforts, that the borrower's financial condition is
          such that collection of interest is doubtful.  Once a
          loan is placed on non-accrual status, interest
          previously accrued and uncollected is charged to
          operations and interest is included in income
          thereafter only to the extent actually received in
          cash.

          The Corporation measures impairment based on the
          present value of expected future cash flows discounted
          at the loan's effective interest rate, except that as
          a practical expedient, a creditor may measure
          impairment based on a loan's observable market price,
          or the fair value of the collateral if the loan is
          collateral dependent.  Regardless of the measurement
          method, a creditor must measure impairment based on
          the fair value of the collateral when the creditor
          determines that foreclosure is probable.

          On July 6, 2001, the Securities and Exchange
          Commission (SEC) issued Staff Accounting Bulletin
          (SAB) No. 102, Selected Loan Loss Allowance
          Methodology and Documentation Issues.  SAB No. 102
          provides guidance on the development, documentation,
          and application of a systematic methodology for
          determining the allowance for loan loses in accordance
          with US GAAP and was effective upon issuance.  The
          adoption of SAB No. 102 did not have a material impact
          on the Corporation's financial position or results of
          operations.

     6.   Loans Held for Sale

          Loans held for sale are carried at the lower of costs
          or fair value. Management has determined, using an
          aggregate asset basis, that the costs of loans held
          for sale approximate fair value at December 31, 2001
          and 2000. Accordingly, no loss has been recognized on
          loans held for sale.

          Mortgage loans originated and intended for sale in the
          secondary market are carried at the lower of aggregate
          cost or estimated fair value.  Gains and losses on the
          sales of loans are also accounted for in accordance
          with SFAS No. 134, "Accounting for Mortgage Securities
          Retained after the Securitizations of Mortgage Loans
          Held-for-Sale by a Mortgage Banking Enterprise".  This
          new statement requires that an entity engaged in
          mortgage banking activities classify the retained
          mortgage-backed security or other interest, which
          resulted from the securitizations of a mortgage loan
          held-for-sale based upon its ability and intent to
          sell or hold these investments.

     7.   Bank Owned Life Insurance (BOLI)

          BOLI involves the purchasing of life insurance by the
          corporation on a chosen group of employees.  The
          Corporation is the owner and beneficiary of the
          policies.  This pool of insurance, due to tax
          advantages to the Banks, is profitable to the
          Corporation.  This profitability is used to offset a
          portion of future benefit cost increases.  Bank
          deposits fund BOLI and the earnings from BOLI are
          recognized as non-interest income.  In 1999, Jade, the
          predecessor company entered into this bank owned life
          insurance investment.

     8.   Premises and Equipment

          Premises and equipment are stated at cost less
          accumulated depreciation.  Depreciation is charged to
          operations on a straight-line basis over the estimated
          useful lives of the assets.

          In August 2001, the FASB issued SFAS No. 144,
          "Accounting for the Impairment or Disposal of Long-
          Lived Assets."  SFAS No. 144 retains the existing
          requirements to recognize and measure the impairment
          of long-lived assets to be held and used or to be
          disposed of by sale. However, SFAS 144 makes changes
          to the scope and certain measurement requirements of
          existing accounting guidance. SFAS No. 144 also
          changes the requirements relating to reporting the
          effects of a disposal or discontinuation of a segment
          of a business. SFAS No. 144 is effective for financial
          statements issued for fiscal years beginning after
          December 15, 2001 and interim periods within those
          fiscal years.  The adoption of this statement is not
          expected to have a significant impact on the financial
          condition or results of operations of the Corporation.

     9.   Income Taxes

          Under the liability method deferred tax assets and
          liabilities are determined based on the difference
          between the financial statement and tax bases of
          assets and liabilities as measured by the enacted tax
          rates which will be in effect when these differences
          reverse.  Deferred tax expense is the result of
          changes in deferred tax assets and liabilities.

          The Corporation and its subsidiaries file a
          consolidated federal income tax return and the amount
          of income tax expense or benefit is computed and
          allocated on a separate return basis.

     10.  Earnings Per Share

          Basic EPS excludes uncommitted ESOP shares and is
          computed by dividing income available to common
          shareholders by the weighted average common shares
          outstanding during the period.  Diluted EPS takes into
          account the potential dilution that could occur if
          securities or other contracts to issue common stock
          were exercised and converted into common stock.

     11.  Advertising Costs

          The Corporation expenses advertising costs as
          incurred.

     12.  Stock Options

          The Corporation accounts for its stock options under
          SFAS No. 123, "Accounting for Stock-Based
          Compensation."  The standard contains a fair value-
          based method for valuing stock-based compensation that
          entities may use, and measures compensation cost at
          the grant date based on the fair value of the award.
          Compensation is then recognized over the service
          period, which is usually the vesting period.
          Alternatively, the standard permits entities to
          continue accounting for employee stock options and
          similar equity instruments under Accounting Principles
          Board (APB) Opinion No. 25, "Accounting for Stock
          Issued to Employees."  Entities that continue to
          account for stock options using APB Opinion No. 25 are
          required to make pro forma disclosures of net income
          and earnings per share, as if the fair value-based
          method of accounting defined in SFAS No. 123 had been
          applied.  The Corporation's stock option plans are
          accounted for under APB Opinion No. 25.

     13.  Comprehensive Income

          The Corporation reports comprehensive income, which
          includes net income as well as certain other items,
          which result in a change to equity during the period.

          The income tax effects allocated to comprehensive
          income (loss) is as follows for the following periods
          ended:

                                       December 31, 2001
                               Before tax     Tax     Net of tax
                                 amount     expense     amount
                                         (in thousands)
Unrealized gains on securities
  Unrealized holding gains
    arising during period        $ 1,276    $  (742)     $  534

Other comprehensive income, net  $ 1,276    $  (742)     $  534

                                       December 31, 2000
                               Before tax     Tax     Net of tax
                                 amount     expense     amount
                                         (in thousands)
Unrealized gains on securities
  Unrealized holding gains
  arising during period          $ 5,776    $(3,812)     $ 1,964

Other comprehensive income, net  $ 5,776    $(3,812)     $ 1,964

                                       December 31, 1999
                               Before tax     Tax     Net of tax
                                 amount     expense     amount
                                         (in thousands)
Unrealized losses on securities
  Unrealized holding losses
    arising during period        $(6,864)   $ 4,530     $(2,334)

  Other comprehensive loss, net  $(6,864)   $ 4,530     $(2,334)

     14.  Business Combinations

          On July 20, 2001, SFAS No. 141, "Business
          Combinations," and SFAS No. 142, "Goodwill and
          Intangible Assets" were issued.  SFAS No. 141 is
          effective for all business combinations completed
          after June 30, 2001.  SFAS No. 142 is effective for
          fiscal years beginning after December 15, 2001;
          however, certain provisions of this Statement apply to
          goodwill and other intangible assets acquired between
          July 1, 2001 and the effective date of SFAS No. 142.
          The Corporation has elected to adopt the provisions of
          SFAS 142 as of January 1, 2002.

          The Corporation will continue to amortize negative
          goodwill recognized prior to July 1, 2001, under its
          current method until January 1, 2002, at which time
          annual and quarterly goodwill amortization will no
          longer be recognized.  The negative goodwill of
          approximately $1,679,000 should be recognized as
          extraordinary income in the first quarter of 2002.
          This extraordinary income may be effected by the
          revaluation of certain deferred assets related
          to the acquisition of Jade.

     15.  Reclassifications

          Certain 2000 and 1999 amounts have been reclassified
          to conform to the 2001 presentation.

NOTE B - ACQUISITION

     On June 29, 2001, the Corporation acquired Jade Financial
     Corp. (Jade) and its wholly owned subsidiary, IGA in a cash
     transaction valued at approximately $25 million.  The
     acquisition was accounted for using the purchase method.
     Each outstanding share of Jade common stock, other than
     those shares held by the Jade Employee Stock Ownership Plan
     (the Jade ESOP), were automatically converted into the
     right to receive a cash payment equal to $13.55 per share
     of Corporation common stock, equal to an exchange ratio of
     2.667 shares of Corporation common stock for each share of
     Jade common Stock held by the Jade ESOP and the Jade ESOP
     Participants.  The conversion of the Jade ESOP resulted in
     the issuance of 375,717 shares of Corporation common stock
     held in treasury and the redemption of 8,127 shares for
     approximately $110,000 in cash.

     The acquisition of Jade resulted in the Corporation
     recording negative goodwill of approximately $1,752,000.
     The negative goodwill was being amortized over ten years on
     a straight line basis during the year ended December 31,
     2001, and resulted in income of approximately $73,000.  On
     January 1, 2002, in accordance with SFAS No. 142, the
     remaining negative goodwill of approximately $1,679,000
     will be recognized by the Corporation as extraordinary
     income in the first quarter of 2002.  This amount may be
     effected by the revaluation of the deferred tax asset
     associated with the acquisition of Jade.


     Results of operations of Jade, subsequent to June 29, 2001,
     are included in the Corporation's results of operations for
     the year ended December 31, 2001.

     The unaudited proforma combined historical results, as if
     Jade had been acquired at the beginning of fiscal 2001,
     2000, and 1999, respectively, are estimated to be:

                                    2001       2000       1999

     Interest income              $33,854    $35,254    $31,077
     Interest expense              17,690     17,584     14,715
     Net income (loss)              3,788       (969)     2,377
     Basic earnings (loss) per
       share                         0.90      (0.24)      0.54
     Diluted earnings (loss) per
       share                         0.89      (0.24)      0.53

     The proforma results are not necessarily indicative of what
     actually would have occurred if the acquisition had been
     completed as of the beginning of each fiscal period
     presented, nor are they necessarily indicative of future
     consolidated results.

     On October 12, 1999, the Corporation acquired First Bank of
     Philadelphia (First Bank). In connection with the
     acquisition, each outstanding share of First Bank was
     exchanged for 0.857 shares of the Corporation's common
     stock.  In addition, options to acquire 1,676,875 shares of
     First Bank have been converted into options to acquire
     1,437,062 shares of the Corporation's common stock.
     Subsequent to this acquisition, management has determined
     that 1,371,200 of these options are invalid.  As part of
     the transaction with First Bank, the Corporation merged
     PSB, which held a state savings bank charter, with and into
     First Bank, which holds a state commercial bank charter.
     The transaction was accounted for as a pooling of interests
     and accordingly, the historical consolidated financial
     statements of the Corporation have been restated to include
     the financial position, results of operations, and cash
     flows of First Bank.

NOTE C - INVESTMENT SECURITIES

     The following tables present the amortized cost, gross
     unrealized gains and losses and fair values of the
     Company's investment securities available-for-sale and
     held-to-maturity as of December 31, 2001 and 2000 (in
     thousands):

<table>
<caption>
                                                                 December 31, 2001
                                                                 Gross        Gross
                                                   Amortized   unrealized   unrealized    Fair
                                                      cost        gains        losses     value

                                                <c>         <c>          <c>          <c>
Investment securities available-for-sale
  Mutual funds                                      $ 2,354            -        -        $ 2,354
  State and municipal obligations                     3,449            -         (54)      3,395

                                                      5,803            -         (54)      5,749

Mortgage-backed securities available-for-sale
  FNMA certificates                                  46,095          213           -      46,308
  GNMA certificates                                  17,778           99           -      17,877

                                                     63,873          312           -      64,185

                                                    $69,676      $   312     $   (54)    $69,934

Mortgage-backed-securities held-to-maturity
  GNMA Certificates                                 $ 1,892      $    28     $     -     $ 1,920
  FHLMC Certificates                                    139            4           -         143
  Other mortgage-backed securities                      279            4           -         283

                                                    $ 2,310      $    36     $     -     $ 2,346
<caption>
                                                                 December 31, 2000
                                                                 Gross        Gross
                                                   Amortized   unrealized   unrealized    Fair
                                                      cost        gains        losses     value

                                                <c>         <c>          <c>          <c>
Investment securities available-for-sale
  Mutual funds                                      $ 2,354           -          (14)    $ 2,340
  U.S Government and federal agencies                14,999           -         (172)     14,827
  State and municipal obligations                     3,480           -          (51)      3,429

                                                     20,833           -         (237)     20,596
Mortgage-backed securities available-for-sale
  FNMA certificates                                  34,789           -         (620)     34,169
  GNMA certificates                                   8,219           -         (161)      8,058

                                                     43,008           -          781      42,227

                                                    $63,841      $    -      $(1,018)    $62,823
<caption>
                                                                  December 31, 2000
                                                                 Gross        Gross
                                                   Amortized   unrealized   unrealized    Fair
                                                      cost        gains        losses     value

                                                <c>         <c>          <c>          <c>
Investment securities held-to-maturity
  U.S. Government and agency securities             $ 4,000      $    -      $   (50)    $ 3,950

                                                      4,000           -          (50)      3,950

Mortgage-backed-securities held-to-maturity
  GNMA Certificates                                     883          34            -         917
  FHLMC Certificates                                     27           2            -          29

                                                        910          36            -         946

                                                    $ 4,910      $   36      $   (50)    $ 4,896
</table>

     There were no sales of investment securities in 2001, 2000
     and 1999.

     The amortized cost and fair value of the Company's
     investment securities at December 31, 2001, by contractual
     maturity, are shown below.  Expected maturities will differ
     from contractual maturities because borrowers may have the
     right to call or prepay obligations with or without call or
     prepayment penalties (in thousands).

<table>
<caption>
                                         Available-for-Sale     Held-to-Maturity
                                         Amortized    Fair     Amortized    Fair
                                            Cost      Value       Cost      Value

                                      <c>         <c>       <c>         <c>
Due in one year or less                   $     -    $     -     $    -    $    -
Due after one year through five years         354        354          -         -
Due after five years through ten years          -          -          -         -
Due after ten years                         5,449      5,395          -         -
                                            5,803      5,749          -         -
Mortgage-backed securities                 63,873     64,185      2,310     2,346

                                          $69,676    $69,934     $2,310    $2,346
</table>

     Investment securities having a carrying value of
     approximately $16,200,000 and $14,400,000 million were
     pledged to secure public funds at December 31, 2001 and
     2000, respectively.

NOTE D - LOANS

     Loans are as follows:
                                           2001       2000
                                           (in thousands)
     Real estate loans
       One-to-four family                $126,484    $ 54,477
       Multifamily                          2,201       2,552
       Construction loans                  24,501      23,328
       Nonresidential                      58,601      28,805
     Student loans                         33,800      11,288
     Consumer loans                        21,174       2,099
     SBA loans                              9,934      11,029
     Commercial loans                      23,908      13,902
                                          300,603     147,480
     Unearned fees and discounts             (552)       (275)
     Allowance for loan losses             (2,871)     (1,349)

       Loans                             $297,180    $145,856

     In the ordinary course of business, the Corporation has
     granted loans to shareholders, officers, directors, and
     their affiliates.  All loan transactions entered into
     between the Corporation and such related parties were made
     on the same terms and conditions as transactions with all
     other parties.  In management's opinion, such loans are
     consistent with sound banking practices and are within
     applicable regulatory lending limitations.  The aggregate
     approximate amount of these loans outstanding at
     December 31, 2001 and 2000 was $2,400,000 and $2,500,000
     respectively.  New loans and repayments amounted to
     approximately $-0- and $100,000 during the year ended
     December 31, 2001.

     Non-performing assets include loans past due 90 days or
     more, impaired loans and other real estate owned.  The
     aggregate amount of these assets at December 31, 2001 and
     December 31, 2000 was approximately $4,700,000 and
     $4,100,000, respectively.

     At December 31, 2001, the Corporation's impaired loans
     consisted of 39 commercial real estate loans with a total
     recorded balance of approximately $3,500,000 for which
     specific allowances of approximately $825,000 have been
     established.  At December 31, 2000, the Corporation's
     impaired loans consisted of one commercial real estate loan
     with a total recorded balance of approximately $295,000 for
     which specific allowances of approximately $15,000 have
     been established.  The average investment in impaired loans
     for the years ended December 31, 2001 and 2000 was
     approximately $3,500,000 and $295,000, respectively.

     Changes in the allowance for possible loan losses were as
     follows:

                                         2001     2000     1999
                                             (in thousands)
Balance at the beginning of the
  year                                  $1,349   $1,231   $1,031
Acquisition of Jade's allowance
  for possible loan losses               1,874        -        -
Provision for loan loss                    270      100      200
Recoveries of loans previously
  charged off                              166       18        -
Charged off                               (788)       -        -
Ending balance                          $2,871   $1,349   $1,231

NOTE E - PREMISES AND EQUIPMENT

     Premises and equipment are as follows:

                                    Estimated     December 31,
                                  useful lives    2001     2000
                                          (in thousands)
Land                                             $   10   $   10
Buildings and improvements            25-50       2,300    2,237
Furniture, fixtures and equipment      3-10       4,413    3,437

                                                  6,723    5,684
Less accumulated depreciation                     4,215    3,864

                                                 $2,508   $1,820

     Depreciation and amortization charged to operations
     amounted to approximately $350,000, $195,000 and $277,000
     for the years ended December 31, 2001, 2000 and 1999,
     respectively.

NOTE F - EQUITY INVESTMENTS

     In November 1999, the Corporation purchased a convertible
     debenture in the amount of $2,500,000 from
     ZipFinancial.Com.Inc. (BankZip.com), a start up Internet
     company. BankZip.com was unable to raise sufficient capital
     and ceased operations in 2000.  The Corporation includes
     its investment in BankZip.com on the consolidated balance
     sheet in other assets.  The Corporation recognized an
     impairment loss related to this investment during 2000 in
     the amount of $2,500,000.

     In January 1999, the Corporation purchased 1,600,000 shares
     of Series A convertible preferred stock, $0.01 par value
     per share (preferred stock) of McGuire Performance
     Solutions, Inc. (MPS) in the amount of $1,250,000.  In
     February 2000, the Corporation purchased another 500,000
     additional shares of the preferred stock in the amount of
     $500,000.  In 2001, the Corporation purchased 375,000
     additional shares in the amount of $375,000.  In 2001, MPS
     changed its name to Iron Bridge Holdings, Inc. ("Iron
     Bridge")  The Corporation does have the ability to exercise
     influence, but not control, over Iron Bridge. Accordingly,
     the investment in Iron Bridge is accounted for using the
     equity method of accounting.  The Corporation includes its
     investment in Iron Bridge on the consolidated balance sheet
     in other assets.  At December 31, 2001 and 2000, the
     investment in MPS was $1,869,000 and $1,649,000,
     respectively.  The Corporation records its share of Iron
     Bridge' earnings or losses in investment security gain
     (losses) on the consolidated statement of income.  The
     Corporation recognized its share of losses of approximately
     $154,000, $101,000 and $-0- for the years ended December
     31, 2001, 2000, and 1999, respectively


NOTE G - DEPOSITS

     Deposits are summarized as follows:

                                               December 31,
                                             2001       2000
                                              (in thousands)

     Demand                                $ 25,983   $ 14,048
     NOW                                     18,675     12,801
     Money Market and Statement Savings      99,693     12,844
     Passbook savings                        29,995     26,721
     Certificates of deposit                230,214    136,522

                                           $404,560   $202,936

     At December 31, 2001, scheduled maturities of certificates
     of deposit are as follows (in thousands):

                      2002          $174,462
                      2003            37,583
                      2004             4,080
                      2005            10,945
                      2006             2,393
                      Thereafter         751
                                    $230,214

NOTE H - BORROWING

     1.   Federal Home Loan Corporation Advances Borrowing

          Under an agreement with the Federal Home Loan Bank of
          Pittsburgh (FHLB), the Corporation has a line of
          credit available in the amount of approximately
          $208,548,000.  As of December 31, 2001 and 2000,
          there was no amount outstanding on this line of
          credit, respectively.  All FHLB advances are
          collateralized by a security agreement covering
          qualifying mortgage loans and unpledged treasury,
          agency and mortgage-backed securities which at
          December 31, 2001, had a combined carrying value of
          approximately $154,528,000.  In addition, all FHLB
          advances are secured by the FHLB stock owned by the
          Corporation

     2.   Securities sold under agreements to repurchase

          Securities sold under repurchase agreements are as
          follows:
                                                December 31,
                                              2001       2000
                                                (in thousands)

      Balance at year-end                   $13,298    $13,402
      Average during the year                13,314     14,063
      Maximum month-end balance              13,695     14,500
      Weighted average rate during the year    4.22%      5.95%
      Rate at December 31                      3.74%      6.13%

NOTE I - INCOME TAXES

     The components of the provision for income taxes (benefit)
     are as follows (in thousands):

                                        2001     2000     1999
          Current
             Federal                  $  204   $  100    $ 450
             City                         25       -        10
                                         229      100      460
          Deferred
             Federal                     503      (90)    (687)
             City                         23        -        -
                                         526      (10)    (687)

                                      $  755    $  10     (227)

     A reconciliation between the reported income tax expense
     and the amount computed by multiplying income before
     income tax by the Federal statutory income tax rate is as
     follows (in thousands):

                                       2001      2000      1999
Expected statutory income tax
  expense                            $1,294    $   60    $  631
Increase (decrease) in taxes
  resulting from:
    State and local taxes on
      income                             32         -         6
    Non-taxable income                 (197)      (39)        -
    Non-capitalized expenses           (340)        -         -
    Other                               (34)      (11)     (864)

Total income tax provision
  (benefit)                          $  755    $   10    $ (227)

     Net deferred tax assets consist of the following
     (in thousands)

                                       2001      2000      1999
Deferred tax assets
  Allowance for possible loan
    losses                           $  158    $    -    $    -
  Unrealized loss on investment
    securities available-for-
    sale                                  -       189     1,554
  Non-accrual interest                  179        93        60
  Foundation charitable carry
    over                                207         -         -
  Depreciation                        1,000         -         -
  Net operating loss
    carryforwards                       921       889     1,497
  Other                                   -       328        81
  Acquired deferred tax asset         1,187
  Valuation allowance                     -         -      (379)
                                      3,652     1,499     2,813
Deferred tax liabilities
  Unrealized gains on
    investment securities
    available-for-sale                  (86)        -         -
  Allowance for possible
    loan losses                           -      (183)     (223)
  Other                                 (74)      (28)      (27)
                                       (160)     (211)     (250)
    Net deferred tax asset,
      included in other assets       $3,492    $1,288    $2,563

     The final determination of the deferred tax asset portion
     associated with the acquisition of Jade may be revalued
     in the first quarter of 2002.

     The Bank is not required to recapture approximately $2.5
     million of its tax bad debt reserve, attributable to bad
     debt deductions taken by it prior to 1988, as long as the
     Bank continues to operate as a bank under federal tax law
     and does not use the reserve for any other purpose.  In
     accordance with SFAS No. 109, the Bank has not recorded any
     deferred tax liability on this portion of its tax bad debt
     reserve.  The tax that would be paid were the Bank
     ultimately required to recapture that portion of the
     reserve, would amount to approximately $0.8 million.  At
     December 31, 2001, the Bank has a net operating loss
     carryover of about $2.6 million expiring in 2020.

NOTE J - EARNINGS PER SHARE

     The following table illustrates the required disclosure of
     the reconciliation of the numerators and denominators of
     the basic and diluted EPS computation.  The computation of
     diluted earnings per share for all periods excludes
     1,371,200 options issued in connection with the 1999 First
     Bank acquisition, which have been deemed invalid by
     management.

<table>
<caption>
                                              Year ended December 31, 2001
                                                         Weighted
                                           Income     average shares   Per share
                                        (numerator)    (denominator)     amount
                                          (in thousands, except per share data)

                                     <c>           <c>              <c>
     Basic earnings per share
       Income available to common
         stockholders                      $3,052          4,203        $ 0.73
     Effect of dilutive securities
       Stock options                            -             12         (0.01)

     Diluted earnings per share
       Income available to common
         stockholders plus effect of
         dilutive securities               $3,052          4,215        $0.72
</table>

     7,048 options to purchase shares of common stock with
     exercise prices ranging from $5.35 to $5.375 per share were
     not included in the computation of diluted EPS for the year
     ended December 31, 2001 because the exercise price was
     greater than the average market price of the common stock.

<table>
<caption>
                                              Year ended December 31, 2000
                                                         Weighted
                                           Income     average shares   Per share
                                        (numerator)    (denominator)     amount
                                          (in thousands, except per share data)

                                     <c>           <c>              <c>
Basic earnings per share
       Income available to common
         stockholders                       $165           3,962         $0.04
     Effect of dilutive securities
       Stock options                           -               2             -

     Diluted earnings per share
       Income available to common
         stockholders plus
         effect of dilutive securities      $165           3,964         $0.04
</table>

     176,469 options to purchase shares of common stock with
     exercise prices ranging from $5.35 to $5.375 per share were
     not included in the computation of diluted EPS for the year
     ended December 31, 2000 because the exercise price was
     greater than the average market price of the common stock.

<table>
<caption>
                                              Year ended December 31, 1999
                                                         Weighted
                                           Income     average shares   Per share
                                        (numerator)    (denominator)     amount
                                          (in thousands, except per share data)

                                     <c>           <c>              <c>
Basic earnings per share
       Income available to
         common stockholders               $2,084          4,365        $ 0.48
     Effect of dilutive securities
       Stock options                            -             31         (0.01)

     Diluted earnings per share
       Income available to common
         stockholders plus
         effect of dilutive
         securities                        $2,084          4,396        $0.47
</table>

     No options were anti-dilutive at December 31, 1999.

NOTE K -   FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND
           CONCENTRATIONS OF CREDIT RISK

     The Corporation is a party to financial instruments with
     off-balance-sheet risk in the normal course of business to
     meet the financing needs of its customers.  These financial
     instruments include commitments to extend credit and
     standby letters of credit.  Those instruments involve, to
     varying degrees, elements of credit and interest rate risk
     in excess of the amount recognized in the consolidated
     balance sheets.  The Corporation's exposure to credit loss
     in the event of non-performance by the other party to the
     financial instrument for commitments to extend credit and
     standby letters of credit is represented by the contractual
     amount of those instruments.  The Corporation uses the same
     credit policies in making commitments and conditional
     obligations as it does for on-balance-sheet instruments.

     The Corporation had the following approximate off-balance
     sheet financial instruments whose contract amounts
     represent credit risk at the dates indicated:

                                            December 31,
                                           2001      2000
                                           (in thousands)

     Commitments to extend credit        $31,700   $10,500
     Unused lines of credit               61,800    28,600
     Standby letters of credit             2,600       650
                                         $96,100   $39,750

     Commitments to extend credit are agreements to lend to a
     customer as long as there is no violation of any condition
     established in the contract.  Commitments generally have
     fixed expiration dates or other termination clauses and may
     require payment of a fee.  Since many of the commitments
     are expected to expire without being drawn upon, the total
     commitment amounts do not necessarily represent future cash
     requirements.  The Corporation evaluates each customer's
     creditworthiness on a case-by-case basis.  The amount of
     collateral obtained, if deemed necessary by the Corporation
     upon extension of credit, is based on management's credit
     evaluation of the customer.  Collateral held varies but may
     include Small Business Administration guarantees, deposit
     accounts at the Corporation, marketable securities,
     personal or commercial real estate, accounts receivable,
     inventory, and equipment.

     Standby letters of credit are conditional commitments
     issued by the Corporation to guarantee the performance of a
     customer to a third party. Those guarantees are primarily
     issued to support contracts entered into by customers.

     Most guarantees extend for one year.  The credit risk
     involved in issuing letters of credit is essentially the
     same as that involved in extending loan facilities to
     customers.  The Corporation holds collateral to support
     these commitments.

     The Bank grants mortgage, consumer and construction loans
     primarily to customers in Southeastern Pennsylvania and
     Southern New Jersey.  Although the Bank has a diversified
     loan portfolio, a substantial portion of its customers'
     ability to honor their contracts is dependent upon the
     local economy.  The Bank's net investment in loans is
     subject to a significant concentration of credit risk given
     that the investment is primarily within a specific
     geographic area.

     The Bank's loans possess an inherent credit risk given the
     uncertainty regarding the borrower's compliance with the
     terms of the loan agreement.  To reduce credit risk, the
     loans are secured by varying forms of collateral, including
     first mortgages on real estate, liens on personal property,
     savings accounts, etc.  It is generally Bank policy to file
     liens on titled property taken as collateral on loans.  In
     the event of default, the Bank's policy is to foreclose or
     repossess collateral on which it has filed liens.  In the
     event that any borrower completely failed to comply with
     the terms of the loan agreement and the related collateral
     proved worthless, the Bank would incur a loss equal to the
     loan balance.

NOTE L - LEASE COMMITMENTS

     The Corporation has entered into several non-cancelable
     operating lease agreements for its facilities.
     Additionally, the Corporation is responsible for pro rata
     operating expense escalations.  The approximate minimum
     annual rental payments at December 31, 2001, under these
     leases are as follows:

                   2002             $  661,000
                   2003                581,000
                   2004                501,000
                   2005                501,000
                   2006                264,000
                   Thereafter          306,000
                                    $2,814,000

     Lease expense was approximately $520,000, $468,000 and
     $424,000 for the years ended December 31, 2001, 2000 and
     1999, respectively.

NOTE M - FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No. 107 requires disclosure of the estimated fair
     value of an entity's assets and liabilities considered to
     be financial instruments.  For the Corporation, as for most
     financial institutions, the majority of its assets and
     liabilities are considered financial instruments as defined
     in SFAS No. 107.  However, many such instruments lack an
     available trading market, as characterized by a willing
     buyer and seller engaging in an exchange transaction.
     Therefore, the Corporation had to use significant
     estimations and present value calculations to prepare this
     disclosure, as required by SFAS No. 107.  Accordingly, the
     information presented below does not purport to represent
     the aggregate net fair value of the Corporation.

     Changes in the assumptions or methodologies used to
     estimate fair values may materially affect the estimated
     amounts.  Also, management is concerned that there may not
     be reasonable comparability between institutions due to the
     wide range of permitted assumptions and methodologies in
     the absence of active markets.  This lack of uniformity
     gives rise to a high degree of subjectivity in estimating
     financial instrument fair values.

     Estimated fair values have been determined by the
     Corporation using the best available data and an estimation
     methodology suitable for each category of financial
     institutions.  The estimation methodologies used, the
     estimated fair values, and recorded book balances at
     December 31, 2001 and 2000, respectively, are outlined
     below

     For cash and due from banks, federal funds sold, and
     interest earning deposits with banks, the recorded book
     value of $54,756,000 and $17,906,000 approximates fair
     value at December 31, 2001 and 2000, respectively.  The
     estimated fair values of investment securities are based on
     quoted market prices, if available.  Estimated fair values
     are based on quoted market prices of comparable instruments
     if quoted market prices are not available.

     The fair value of loans held for sale with recorded book
     values of approximately $17,142,000 and $9,080,000 at
     December 31, 2001 and 2000 are determined using an
     aggregate asset basis method and are carried at fair value.

     The fair values of loans that management intends to hold
     for the foreseeable future are estimated based on a
     discounted cash flow analysis using interest rates
     currently offered for loans with similar terms to borrowers
     of similar credit quality.  The carrying value of accrued
     interest approximates fair value.

     The estimated fair values of demand deposits (i.e.,
     interest and non-interest bearing checking accounts,
     passbook savings, and certain types of money market
     accounts) are, by definition, equal to the amount payable
     on demand at the reporting date (i.e., their carrying
     amounts).  The carrying amounts of variable rate, fixed
     term money market accounts, and certificates of deposit
     approximate their fair values at the reporting date.  The
     fair values of fixed-rate certificates of deposit are
     estimated using a discounted cash flow calculation that
     applies interest rates currently being offered to a
     schedule of aggregated expected monthly time deposit
     maturities.  The carrying amount of accrued interest
     payable approximates its fair value.

<table>
<caption>
                                                     2001                 2000
                                               Fair     Carrying     Fair     Carrying
                                               Value     Amount      Value     Amount
                                                            (in thousands)

                                          <c>        <c>        <c>        <c>
Financial assets
  Investment securities held-to-maturity     $  2,346   $  2,310   $  4,896   $  4,910
  Investment securities available-for sale     69,934     69,934     62,823     62,823
  Loans                                       295,931    300,051    147,205    147,205

Financial liabilities
  Deposits with no stated maturities          174,346    174,346     67,653     67,653
  Deposits with stated maturities             226,804    230,214    136,522    136,522
</table>

     The fair values securities under agreements to repurchase
     totaling approximately $13,298,000 and $13,402,000 are
     estimated to approximate their recorded book balances at
     December 31, 2001 and 2000, respectively.

     The fair value of commitments to extend credit is estimated
     based on the amount of unamortized deferred loan commitment
     fees.  The fair value of letters of credit is based on the
     amount of unearned fees plus the estimated costs to
     terminate the letters of credit.  Fair values of
     unrecognized financial instruments including commitments to
     extend credit and the fair value of letters of credit are
     considered immaterial.

NOTE N - STOCK OPTION PLAN

     The Corporation's only Option Plan provides for the grants
     of (i) options to purchase Common Stock intended to qualify
     as incentive stock options ("Incentive Stock Option") under
     Section 422 of the Code, and (ii) options that do not so
     qualify ("Nonqualified Stock Options").  Pursuant to the
     Option Plan, up to 259,743 shares of Common Stock (subject
     to adjustment) will be reserved for issuance by the Bank
     upon exercise of stock options to be granted to certain
     officers and employees of the Bank from time to time under
     the Option Plan.  The purpose of the Option Plan is to give
     certain officers and employees an opportunity to acquire
     Common Stock and thereby help the Bank attract, retain and
     motivate key employees and officers.

     The Corporation has adopted only the disclosure provisions
     of SFAS No. 123, "Accounting for Stock-Based Compensation."
     It applies Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees," and related
     interpretations in accounting for its plans and does not
     recognize compensation expense for its stock-based
     compensation plans.  Had compensation cost for the plans
     been based on the fair value of the options on the grant
     date consistent with SFAS No. 123, the Corporation's net
     earnings and earnings per common share would have been
     reduced to the pro forma amounts indicated below:

                                         2001     2000     1999
     Net income
       As reported                      $3,052    $ 165   $2,084
         Pro forma                       2,971       69    2,042

      Basic earnings per share
         As reported                    $ 0.73    $0.04   $ 0.48
         Pro forma                        0.71     0.02     0.47

      Diluted earnings per share
         As reported                    $ 0.72    $0.04   $ 0.47
         Pro forma                        0.70     0.02     0.47

     No options were granted in 2001 or 2000. The fair value of
     options granted in 1999 is estimated on the date of grant
     using the Black-Scholes option-pricing model with the
     following weighted average assumptions:  risk-free interest
     rate of 6.0%; volatility of 30.0% and expected life of
     five years.

     A summary of the status of the Corporation's fixed stock
     option plan for the years ended December 31, 2001, 2000 and
     1999, and changes during the years ending on those dates is
     presented below:

     The summary of stock options for all periods presented
     excludes 1,371,200 options issued in connection with the
     1999 First Bank acquisition, which have been deemed invalid
     by management.

<table>
<caption>                                     2001               2000               1999
                                       ----------------- ----------------- -----------------
                                                 Weighted          Weighted            Weighted
                                                  average           average            average
                                        Number   exercise  Number  exercise   Number   exercise
                                          of     price per   of    price per    of     price per
                                        shares     share   shares    share    shares     share

                                    <c>       <c>       <c>     <c>        <c>      <c>
Outstanding at beginning of year       284,742    $4.96    284,742   $4.96     98,670    $4.33
Options granted                              -        -          -       -    186,072     5.30
Options exercised                            -        -          -       -          -        -
Options forfeited                            -        -          -       -          -        -

Outstanding at end of year             284,742    $4.96    284,742   $4.96    284,742    $4.96

Weighted average fair value of
  options granted during year                     $   -              $   -               $3.08
</table>

     The following table summarizes information concerning
     options outstanding at December 31, 2001:

<table>
<caption>
                                  Options outstanding                 Options exercisable
                                         Weighted
                          Number          average       Weighted      Number        Weighted
                       outstanding at    remaining      average    exercisable at   average
  Range of exercise     December 31,    contractual     exercise    December 31,    exercise
       prices               2001        life (years)    price           2001          price

                    <c>              <c>             <c>        <c>              <c>
   $3.36 to $5.04          123,669        5.20 years      $4.41       123,669        $4.41
            $5.38          161,073        7.88 years      $5.38        64,429        $5.38
                           284,742        6.71 years      $4.96       188,098        $4.74
</table>

NOTE O - EMPLOYEE BENEFIT PLANS

     1.   Defined Benefit Pension Plan

          The Corporation maintains a non-contributory defined
          benefit plan (the "Pension Plan") covering all
          employees, as defined under the pension plan document.
          The Pension Plan calls for benefits to be paid to
          eligible employees at retirement based upon years of
          service with the Bank and compensation rates near
          retirement. Contributions to the Pension Plan reflect
          benefits attributed to employees' service.  Pension
          Plan assets consist of common stock, investment grade
          corporate bonds and U.S. Government obligations.  The
          Pension Plan was "frozen" in 1994 and benefits no
          longer accrue. No Pension Plan contributions were made
          in 2001, 2000, and 1999. No new employees will be
          eligible for participation.

          The following table sets forth the plans' required
          disclosures:

                                         2001          2000
Change in benefit obligation
  Benefit obligation at
    beginning of year                 $  743,179    $  705,348
  Interest cost                           51,364        48,568
  Actual gain                              3,563         1,307
  Benefits paid                          (12,096)      (12,044)

  Benefits obligation at end of year  $  786,010    $  743,179

Change in plan assets
  Fair value of plan assets at
    beginning of year                 $1,204,520    $  905,992
  Actual return on plan assets          (382,868)      310,572
  Benefits paid                          (12,096)      (12,044)

  Fair value of plan assets
    at end of year                    $  809,556    $1,204,520

                                          2001          2000
Funded status                         $   23,546    $  461,341
Unrecognized actuarial gain             (106,523)     (606,423)
Unrecognized transition
  obligation                              80,251        86,425

                                      $   (2,726)   $  (58,657)

<table>
<caption>
                                                             2001        2000        1999

                                                       <c>         <c>         <c>
     Weighted-average assumptions as of December 31,
       Discount rate                                          7.00%       7.00%       7.00%
       Expected return on plan assets                         7.00        7.00        7.00
<caption>
                                                             2001        2000        1999

                                                       <c>         <c>          <c>
     Components of net periodic benefit cost (benefit)
       Interest cost                                      $ 51,364    $ 48,568    $ 46,051
       Expected return on plan assets                      (83,440)    (62,547)    (52,493)
       Amortization of transition amount                     6,174       6,174       6,174
       Amortization of gain                                (30,029)    (15,324)    (11,631)

       Net periodic benefit (benefit)                     $(55,931)   $(23,129)   $(11,899)
</table>

     2.   Cash (Deferred) Profit-Sharing Plan

          The Corporation has a profit-sharing plan (the 401(k)
          Plan) covering all employees, as defined under the
          plan document.  Employees may contribute up to 15% of
          compensation, as defined under the plan document.  The
          Corporation can make discretionary contributions.  The
          Corporation made no contributions to the 401(k) Plan
          in 2001, 2000 and 1999.

     3.   Profit-sharing Plan

          The Corporation has a profit-sharing plan (the Profit
          Sharing Plan) covering all employees, as defined under
          the plan document.  Discretionary contributions to the
          profit sharing plan are determined annually by the
          Board of Trustees based upon net income, as defined
          under the plan document. Allocation of the
          contributions to employees is based upon annual
          compensation.  The Corporation contributed
          approximately $45,000 to the Profit Sharing
          Plan in 2001 and made no contribution in 2000
          and 1999.

     4.   Employee Stock Ownership Plan

          The Corporation has an Employee Stock Ownership Plan
          (ESOP) covering all employees, as defined under the
          plan document.  The ESOP is a tax-qualified plan
          subject to the requirements of ERISA and the Code. The
          ESOP borrowed funds from an unrelated third party
          lender and used the funds to purchase 42,780 shares of
          PSB common stock. which was later converted into
          110,046 shares of Corporation common stock.  The ESOP
          borrowed $1,288,540 from the Corporation to purchase
          an additional 128,854 shares of Corporation common
          stock.  The Corporation also lent sufficient funds to
          the ESOP to enable the ESOP to repay the loan received
          from a third party lender. The Corporation purchased
          4,719 ESOP Shares from employees and transferred them
          to treasury stock and 1,560 of ESOP shares were
          transferred to common stock.

     Benefits under the ESOP generally become 100% vested after
     the third year of service or upon normal retirement (as
     defined in the ESOP), disability or death of the
     participant.  If a participant terminates employment for
     any other reason prior to full vesting, his nonvested
     account balance will be forfeited.  Forfeitures will be
     reallocated among remaining participating employees in the
     same proportion as contributions.  Benefits may be payable
     upon death, retirement, early retirement disability or
     separation from service.  The Corporation's contributions
     to the ESOP will not be fixed, so benefits payable under
     the ESOP cannot be estimated.  The Bank's contributions to
     the ESOP recorded as compensation expense for the years
     ended December 31, 2001, 2000 and 1999 were approximately
     ($22,000), $86,000 and $147,000, respectively.  The
     negative compensation expense in 2001, represents a
     correction made to ESOP shares allocated during prior
     periods.

     Information with respect to the ESOP at December 31, 2001
     is as follows:

           Allocated shares                     138,139
           Unreleased shares                    390,595

           Total ESOP shares                    528,734

           Fair value of unreleased shares   $2,018,458

     5.   Management Recognition Plan

          The Management Recognition Plan (the MRP) provides
          certain senior executive officers of the Corporation
          with a propriety interest in the Corporation. Benefits
          may be granted at the sole discretion of the
          Compensation Committee of the Corporation's Board of
          Trustees.  The MRP is managed by trustees who are
          directors of the Corporation and who have
          responsibility to invest all funds contributed by the
          Corporation to the trust created for the MRP.  The
          Corporation contributed approximately $254,000 to the
          MRP trust, which enabled the MRP to purchase 21,390
          shares of PSB common stock in 1996 which were later
          converted into 55,023 shares of Corporation common
          stock.  Unless the Compensation Committee of the Board
          specifies otherwise, shares granted to MRP
          participants will be in the form of restricted stock
          that vest over a five-year period at the rate of 20%
          of such shares per year.  Compensation expense in the
          amount of the fair market value of the common stock at
          the date of grant to the employee will be recognized
          pro rata over the five years during which the shares
          vest.  As of December 31, 2001, 115,023 shares have
          been allocated to individual employees.  The
          Corporation recorded compensation expense of
          approximately $172,000, $51,000 and $58,000 for the
          years ended December 31, 2001, 2000 and 1999,
          respectively, for the MRP.

NOTE P - REGULATORY MATTERS

     State banking statutes restrict the amount of dividends on
     capital stock.  Accordingly, no dividends shall be paid by
     the Corporation on its capital stock unless following the
     payment of such dividends, the capital stock of the
     Corporation will be unimpaired, and (1) the Corporation
     will have a surplus of not less than 50% of its capital,
     or, if not, (2) the payment of such dividend will not
     reduce the surplus of the Corporation.

     The Corporation is subject to various regulatory capital
     requirements administered by the federal banking agencies.
     Failure to meet minimum capital requirements can initiate
     certain mandatory - and possibly additional discretionary -
     actions by regulators that, if undertaken, could have a
     direct material effect on the Corporation's financial
     statements.  Under capital adequacy guidelines and the
     regulatory framework for prompt corrective action, the
     Corporation must meet specific capital guidelines that
     involve quantitative measures of the Corporation's assets,
     liabilities, and certain off-balance-sheet items as
     calculated under regulatory accounting practices.  The
     Corporation's capital amounts and classification are also
     subject to qualitative judgments by the regulators about
     components, risk weightings, and other factors.

     Quantitative measures established by regulation to ensure
     capital adequacy require the Corporation to maintain
     minimum amounts and ratios (set forth in the table below)
     of total and Tier I capital (as defined in the regulations)
     to risk-weighted assets (as defined), and of Tier I capital
     (as defined) to average assets (as defined).  As of
     December 31, 2001, management believes that the Corporation
     meets all capital adequacy requirements to which it is
     subject.

     As of December 31, 2001, the most recent notification from
     the Reserve Bank of Philadelphia categorized the Bank
     adequately capitalized under the regulatory framework for
     prompt corrective action.  To be categorized as adequately
     capitalized, the Bank must maintain minimum total risk
     based, Tier I risk-based, and Tier I leverage ratios as set
     forth in the table.  There are no conditions or events
     since that notification that management believes have
     changed the institution's category.

     The Corporation's and Bank's actual capital amounts and
     ratios are as follows:

<table>
<caption>
                                                                                              To be well
                                                                                              capitalized under
                                                                          For capital         prompt corrective
                                                      Actual           adequacy purposes      action provisions
                                                  Amount    Ratio      Amount     Ratio        Amount   Ratio
                                                                     (Dollars in thousands)

                                             <c>        <c>        <c>        <c>          <c>      <c>
     As of December 31, 2001:
       Total capital (to risk weighted assets)
       Corporation                               $44,083   14.45%      $24,398   ? 8.00%          N/A     N/A
       Bank                                      $35,445   11.68%      $24,282   ? 8.00%       $30,353  ?10.00%

       Tier I capital (to risk weighted assets)
       Corporation                               $41,212   13.51%      $12,199   ? 4.00%          N/A     N/A
       Bank                                      $32,574   10.73%      $12,141   ? 4.00%       $18,212  ? 6.00%

       Tier I capital (to average assets)
       Corporation                               $41,212    8.86%      $18,603   ? 4.00%          N/A     N/A
       Bank                                      $32,574    7.03%      $18,539   ? 4.00%       $23,173  ? 5.00%

As of December 31, 2000:
       Total capital (to risk weighted assets)
       Corporation                               $40,079  26.79%       $11,966   ? 8.00%          N/A      N/A
       Bank                                      $35,532  24.21%       $11,743   ? 8.00%       $14,679  ?10.00%

       Tier I Capital (to Risk Weighted Assets)
       Corporation                               $38,730  25.86%        $5,983   ? 4.00%          N/A      N/A
       Bank                                      $34,183  23.29%        $5,872   ? 4.00%       $ 8,808  ? 6.00%

       Tier I Capital (to Average Assets)
       Corporation                               $38,730  14.75%        $10,501  ? 4.00%          N/A      N/A
       Bank                                      $34,183  13.21%        $10,348  ? 4.00%       $12,935  ? 5.00%
</table>

NOTE Q - SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATE
         (UNAUDITED)

<table>
<caption>
                                                                    Three months ended

                                                 Dec. 31,         Sept. 30,         June 30,         March 31,
                                                   2001              2001             2001              2001
                                                            (in thousands, except per share data)

                                              <c>              <c>              <c>               <c>
   Interest income                               $8,211            $8,683           $4,945             $5,089
   Interest expense                               3,959             4,509            2,779              2,764

   Net interest income                            4,252             4,174            2,166              2,325

   Provision for possible loan losses               135               135                -                  -

   Other income                                     624               350              309                271
   Other expenses                                 3,154             3,295            1,977              1,968

   Income before income tax expense               1,587             1,094              498                628

   Income tax expense                               474               145               61                 75

   Net income                                    $1,113            $  949           $  437             $  553

   Earnings per basic share                      $ 0.26            $ 0.22           $ 0.11             $ 0.14
   Earnings per diluted share                    $ 0.25            $ 0.22           $ 0.11             $ 0.14
<caption>
                                                                       Three months ended
                                                 Dec. 31,         Sept. 30,         June 30,         March 31,
                                                   2000             2000              2000              2000
                                                            (in thousands, except per share data)

                                              <c>              <c>               <c>              <c>
   Interest income                               $ 5,340            $5,126           $5,253            $5,420
   Interest expense                                2,848             2,702            2,493             2,581

   Net interest income                             2,492             2,424            2,760             2,839

   Provision for possible loan losses                  -                 -                -               100

   Other income                                   (2,359)              121              167               157
   Other expenses                                  2,280             2,043            2,096             1,907

   Income before income tax expense (benefit)    (2,147)              502              831               989

   Income tax expense (benefit)                     (640)              175              240               235

   Net income (loss)                             $(1,507)           $  327           $  591            $  754

   Earnings (loss) per basic share               $ (0.35)           $ 0.08           $ 0.14            $ 0.17
   Earnings (loss) per diluted share             $ (0.35)           $ 0.08           $ 0.14            $ 0.17
</table>

NOTE R - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY

     Condensed financial information for PSB Bancorp, Inc.
     (parent company only) follows:

BALANCE SHEET

<table>
<caption>
                                                             December 31,
                                                           2001       2000
          ASSETS                                              (in thousands)

                                                      <c>        <c>
     Cash                                                $ 3,030    $    36
     Investment in subsidiaries                           32,776     33,565
     Equity investments in unconsolidated subsidiaries     2,128      3,006
     Other assets                                          6,844          -
          Total assets                                   $44,778    $36,607

         LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
      Loan payable to subsidiary                         $ 2,150    $   450
      Other liabilities                                    1,213        175

Total liabilities                                          3,363        625
Stockholders' equity                                      41,415     35,982
         Total liabilities and stockholders' equity      $44,778    $36,607
</table>

                    STATEMENT OF EARNINGS

<table>
<caption>
                                                  Year ended December 31,
                                                2001        2000       1999
     INCOME                                             (in thousands)

                                            <c>         <c>        <c>
       Dividend income from subsidiaries       $  146     $   129     $    -
       Interest income                            108         105        136
       Other income (loss)                        186      (2,500)        84

            Total income                          440      (2,266)       220

     EXPENSES
       Interest                                   138           -          -
       Other                                        1         137        226

            Total expenses                        139         137        226

            Income (loss) before undistributed
              earnings of subsidiaries            301      (2,403)        (6)

      Undistributed earnings of subsidiaries    2,751       2,568      2,090

            NET INCOME                         $3,052      $  165     $2,084
</table>

STATEMENT OF CASH FLOWS

<table>
<caption>                                                              Year ended
                                                                      December 31,
                                                                2001       2000      1999
                                                                     (in thousands)

                                                           <c>        <c>       <c>
     Cash flows from operating activities
       Net income                                             $ 3,052    $   165   $ 2,084
       Adjustments to reconcile net income to net cash
         provided by (used in) operating activities
           Undistributed earnings from subsidiaries            (2,751)    (2,568)   (2,090)
           Net change in other assets and liabilities             624        (52)      161

           Net cash provided by (used in) operating
             activities                                           925     (2,455)      155

     Cash flows from investing activities
       Purchase of investment securities available-for-sale       707       (500)   (4,652)
       Other, net                                                 (88)     2,500         -

         Net cash provided by (used in) investing
           activities                                             619      2,000    (4,652)

     Cash flows from financing activities
       Repayment of long-term debt                                  -        450      (221)
       Treasury stock acquired                                      -     (2,279)        -
       Advance from subsidiary                                  1,450          -         -

           Net cash provided by (used in) financing
             activities                                         1,450     (1,829)     (221)

           NET INCREASE (DECREASE) IN CASH                      2,994     (2,284)   (4,718)

     Cash at beginning of year                                     36      2,320     7,038

     Cash at end of year                                      $ 3,030    $    36   $ 2,320
</table>