REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
 of BT Financial Corporation


  We have audited the accompanying consolidated balance sheet of BT
Financial Corporation and affiliates (Corporation) as of December 31,
1996 and 1995 and the related consolidated statements of income,
changes in shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996.  These
consolidated financial statements are the responsibility of the
Corporation's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.  We did not audit the consolidated financial statements
of Moxham Bank Corporation for periods prior to 1996 which reflect
total assets of approximately $240,895,000 as of December 31, 1995,
and net interest income of approximately $8,786,000 and $8,873,000
for each of the two years in the period ended December 31, 1995.
Those consolidated statements were audited by other auditors whose
report has been furnished to us and, our opinion, insofar as it relates
to amounts included for Moxham Bank Corporation, is based solely on the
report of other auditors.

  We conducted our audits in accordance with generally
accepted auditing standards.  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
consolidated financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

  In our opinion, based on our audits and the aforementioned
reports of other auditors, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of BT Financial Corporation and
affiliates as of December 31, 1996 and 1995 and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles.

  As discussed in Notes 1 and 5 to the consolidated financial
statements, in 1995, the Corporation changed its method of
accounting for loan impairment for certain loans by adopting
Financial Accounting Standards Board (FASB) Statement No. 114,
Accounting by Creditors for Impairment of a Loan.
------------------------------------------------

                                   /s/ Coopers & Lybrand LLP

                                                 COOPERS
                                                 & LYBRAND
Pittsburgh, Pennsylvania
January 21, 1997

                          12







                  BT Financial Corporation and Affiliates
                        CONSOLIDATED BALANCE SHEET
                     (In thousands, except share data)

                                          December 31,
                                        1996            1995
                                   -----------------------------
ASSETS
Cash and cash equivalents (Note 1)  $  65,305          $ 59,043
                                   -----------------------------
Money market investments:
 Interest-bearing deposits with
 banks                                    334             1,484
 Federal funds sold                    10,100            10,165
                                   -----------------------------
     Total money market invest-
     ments                             10,434            11,649
                                   -----------------------------
Securities available-for-sale,
at market value                       204,707           268,194

Securities held-to-maturity
(market value of $98,238 at
December 31, 1996, and $35,924 at
December 31, 1995)                     97,685            35,161
                                   -----------------------------
  Total securities (Note 3)           302,392           303,355
                                   -----------------------------
Loans (Note 4)                      1,082,674         1,060,871
 Less:
  Unearned interest                    56,909            49,631
  Reserve for loan losses (Note 5)      9,681            10,033
                                   -----------------------------
     Net loans                      1,016,084         1,001,207
                                   -----------------------------
Premises and equipment (Note 6)        31,634            31,724
Accrued interest receivable             8,706             9,555
Other assets                           31,753            26,027
                                   -----------------------------
     Total assets                  $1,466,308        $1,442,560
                                   =============================
LIABILITIES
Deposits:
 Non-interest-bearing              $  161,981        $  161,355
 Interest-bearing                   1,101,747         1,091,897
                                   -----------------------------
     Total deposits                 1,263,728         1,253,252

Federal funds purchased and
  securities sold under
  agreements to repurchase             36,678            35,313
Short-term borrowings                   4,010             2,366
Accrued interest payable                5,098             6,788
Other liabilities                       3,097             2,659
Long-Term debt (Note 14)               17,210            20,083
                                   -----------------------------
     Total liabilities              1,329,821         1,320,461

SHAREHOLDERS' EQUITY
Preferred stock:
  No par value; Authorized shares,
  2,000,000; Shares issued; 14,000
  at December 31, 1995                     --             1,378
Common stock:
  Par value, $5.00; Authorized
  shares, 10,000,000; Shares
  issued:  5,682,215 at December 31,
  1996 and 4,865,100 at December 31,
  1995                                 28,411            24,326
Capital surplus                        55,729            33,675
Retained earnings                      51,577            61,116
Net unrealized holding gains on
  securities available-for-sale           770             1,604
                                   -----------------------------
     Total shareholders' equity       136,487           122,099
                                   -----------------------------
     Total liabilities and share-
     holders' equity               $1,466,308        $1,442,560
                                   =============================
  The accompanying notes are an integral part of the
consolidated financial statements.

                                    13

                  BT Financial Corporation and Affiliates
                     CONSOLIDATED STATEMENT OF INCOME
             (In thousands, except shares and per share data)

                                      Years Ended December 31,
                                      1996      1995      1994
                                   -------------------------------
INTEREST INCOME
Loans, including fees              $87,749   $79,342   $68,292
Securities:
 Taxable                            18,793    19,162    18,457
 Tax-exempt                            592       693       934
Deposits with banks                     34       325       782
Federal funds sold                   1,188       306       564
                                   -------------------------------
 Total interest income             108,356    99,828    89,029
                                   -------------------------------
INTEREST EXPENSE
Deposits                            42,208    40,099    31,506
Federal funds purchased and
 securities sold under agreements
 to repurchase                       1,098     1,597       740
Short-term borrowings                  158       269       254
Long-term debt                       1,268       714       629
                                   -------------------------------
 Total interest expense             44,732    42,679    33,129
                                   -------------------------------
NET INTEREST INCOME                 63,624    57,149    55,900
Provision for loan losses (Note 5)   2,441     1,566     1,168
                                   -------------------------------
 Net interest income after
 provision for loan losses          61,183    55,583    54,732
                                   -------------------------------
OTHER INCOME
Trust income                         2,919     2,398     2,313
Fees for other services              6,585     5,589     5,161
Net securities gains                   406       108       347
Other income                         1,362       619       586
                                   -------------------------------
 Total other income                 11,272     8,714     8,407
                                   -------------------------------
OTHER EXPENSES
Salaries and wages                  20,517    19,707    18,818
Pension and other employee benefits  3,854     4,116     4,125
Net occupancy expense                4,637     4,175     4,035
Equipment expense                    4,254     3,545     3,198
F.D.I.C. insurance                   1,784     1,594     2,478
Amortization of intangible assets    1,991     1,161     1,291
Reorganization expense (Note 2)      1,309      ---       ---
Other operating expense             13,335    11,261    11,652
                                   -------------------------------
 Total other expense                51,681    45,559    45,597
                                   -------------------------------

INCOME BEFORE INCOME TAXES          20,774    18,738    17,542
Provision for income taxes (Note 7)  7,000     5,689     4,883
                                   -------------------------------
 NET INCOME                        $13,774   $13,049   $12,659
                                   ===============================
EARNINGS PER SHARE
Primary:
Net income per share               $  2.48   $  2.42    $ 2.35
Weighted average shares
 outstanding                     5,529,978 5,342,426 5,328,343

Fully diluted:
Net income per share               $  2.47   $  2.40     $ 2.33
Weighted average shares
 outstanding                     5,577,084 5,443,310  5,432,705

DIVIDENDS PAID PER COMMON SHARE    $  1.12   $   .98     $  .89

     The accompanying notes are an integral part of the
consolidated financial statements.

                                    14

                  BT Financial Corporation and Affiliates
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                              (In Thousands)

                                         Years Ended December 31,
                                           1996     1995    1994
                                       -----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                              $ 13,774 $ 13,049 $ 12,659
Adjustments to reconcile net
 income to net cash provided
 by operating activities:
   Provision for loan losses               2,441    1,566    1,168
   Provision for depreciation and
     amortization                          3,966    3,462    3,098
   Amortization of intangible
     assets                                1,991    1,161    1,291
   Amortization of premium, net
     of accretion of discount on
     loans and investments                  (428)     787    1,294
   Deferred income taxes                  (1,073)    (348)    (963)
   Realized securities gains                (406)    (108)    (347)
   Decrease (increase) in interest
     receivable                            1,413      605     (725)
   Increase (decrease) in interest
     payable                              (2,018)   1,054      759
   Equity in loss of limited partnerships    182      172       99
   Other assets and liabilities, net       3,306      790     (524)
                                      -----------------------------
     Net cash provided by
     operating activities                 23,148   22,190   17,809
                                      -----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities          5,378   46,146   16,571
Repayments and maturities of
   securities available-for-sale         107,150   60,472   54,524
Repayments and maturities of
   securities held-to-maturity            11,987   21,000      --
Purchase of securities available-
   for-sale                              (20,652) (27,084)(106,781)
Purchase of securities held-to-
   maturity                              (72,466) (33,219) (22,905)
Net decrease (increase) in money
   market investments                      1,814   (2,874)  76,236
Proceeds from sales of loans               7,965    7,157    6,828
Net increase in loans                    (13,352) (57,696) (67,540)
Purchases of premises and
   equipment and other                    (3,654)  (4,125)  (3,719)
Investment in limited partnership           (131)    (144)    (163)
Purchase of Bank, net of cash
   acquired                              (3,407)  (23,674)     --
                                       -----------------------------
   Net cash provided by (used in)
    investing activities                 20,632  (14,041)  (46,949)
                                       -----------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net increase (decrease) in
   deposits                             (31,391)  30,009    (8,657)
Net increase (decrease) in federal
   funds purchased and securities
   sold under agreements to
   repurchase                             1,365  (30,523)   45,844
Net increase (decrease) in
   short-term borrowings                  1,644   (9,515)    5,762
Proceeds from sale of common stock           --      200       185
Preferred dividends paid                    (54)    (116)     (120)
Common dividends paid                    (6,212)  (5,242)   (4,727)
Proceeds from long-term debt                 --   12,520        --
Payment on long-term debt                (2,873)  (2,458)   (2,440)
Other                                         3       --        --
                                       -----------------------------
   Net cash provided by (used in)
    financing activities                (37,518)  (5,125)   35,847
                                       -----------------------------
Increase (decrease) in cash and
   cash equivalents                       6,262    3,024     6,707
Cash and cash equivalents at
   beginning of year                     59,043   56,019    49,312
                                       -----------------------------
   Cash and cash equivalents
   at end of year                      $ 65,305 $ 59,043  $ 56,019
                                       =============================

Supplemental disclosures of cash
   flow information:
Cash paid during the year for:
   Interest on deposits and
     other borrowings                  $ 46,422 $ 39,573  $ 32,437
   Federal income taxes, net of
     refunds                              6,761    7,761     8,013

Non-cash financing activities:
   Issuance of common stock;
    Armstrong acquisition              $  7,712  $   --   $   --
   Conversion of preferred stock to
     common stock                         1,378       98      --

Details of the acquisitions of
   Huntington during 1995 and
   Armstrong County Trust Company
   during 1996, follows:
    Fair value of assets acquired      $ 54,285 $111,200  $   --
    Fair value of liabilities
      assumed                            42,307   85,700      --
                                       -----------------------------
   Net assets acquired                 $ 11,978 $ 25,500 $    --
                                       =============================

   The accompanying notes are an integral part of the
consolidated financial statements.

                                    15

         CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
           for the years ended December 31, 1996, 1995, and 1994
             (In thousands, except shares and per share data)
                                                              NET
                      COMMON                                  UNREAL-
                       STOCK                                  IZED
                    --------    PRE-                          HOLDING
                   NUMBER OF  FERRED  COMMON CAPITAL RETAINED GAINS
                      SHARES   STOCK   STOCK SURPLUS EARNINGS LOSSES   TOTAL
                   --------- ---------------------------------------------------


Balance, December 31,
 1993              4,563,850  $1,476 $22,819 $27,538 $52,774  $4,749  $109,356
Net income, 1994                                      12,659            12,659
Common dividends paid
  ($.89 per share)                                    (4,727)           (4,727)
Preferred dividends
  paid Moxham
  ($8.00 per share)                                     (120)             (120)
Stock dividends      274,931           1,375   5,786  (7,161)               --
Common stock issued:
  Moxham,Dividend
  Reinvestment Plan
  and Employee Stock
  Ownership Plan       8,987              45     140                       185
Change in unrealized
  market value adjustment
  on securities available-
  for-sale, net of tax                                       (13,085)  (13,085)
                   --------- --------------------------------------------------
Balance, December 31,
  1994             4,847,768   1,476  24,239  33,464  53,425  (8,336)  104,268

Net income, 1995                                      13,049            13,049
Common dividends paid
  ($.98 per share)                                    (5,242)           (5,242)
Preferred dividends
  paid-Moxham,
  ($8.00 per share)                                     (116)             (116)
Common stock issued:
  Moxham, Dividend
  Reinvestment Plan
  and Employee Stock
  Ownership Plan      11,007              55     145                       200
Conversion of Moxham
  preferred stock into
  common stock         6,325     (98)     32      66                        --
Change in unrealized
  market value adjustment
  on securities available
  -for-sale, net of tax                                        9,940     9,940
                   --------- --------------------------------------------------
Balance, December 31,
  1995             4,865,100   1,378  24,326  33,675  61,116   1,604   122,099

Net income, 1996                                      13,774            13,774
Common dividends paid
  ($1.12 per share)                                   (6,212)           (6,212)
Preferred dividends
 paid-Moxham,
 ($8.00 per share)                                       (54)              (54)
Acquisition of
 Armstrong County
 Trust Company       212,000           1,060   6,652                     7,712
Conversion of Moxham
 preferred stock into
 common stock         88,550  (1,378)    442     936                        --
Stock dividend       516,565           2,583  14,464 (17,047)               --
Other                                              2                         2
Change in unrealized
  market value adjustment
  on securities available-
  for-sale, net of tax                                          (834)     (834)
                   --------- --------------------------------------------------
BALANCE, December 31,
  1996             5,682,215    ---  $28,411 $55,729 $51,577    $770  $136,487
                   =========  ================================================



                                    16


                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (In thousands, except shares and per share data)

1.        ACCOUNTING AND FINANCIAL REPORTING POLICIES
  The following is a summary of the significant accounting and
financial reporting policies of BT Financial Corporation (BT or
the Corporation) and its affiliates.

BASIS OF PRESENTATION
  The consolidated financial statements of BT, a bank holding
company incorporated under the laws of the Commonwealth of
Pennsylvania, include the accounts of BT and its wholly owned
affiliates, Johnstown Bank and Trust Company (Bank and Trust),
Laurel Bank (Laurel), Fayette Bank (Fayette), BT Management Trust
Company (the Trust Company) Bedford Associates, Inc., and Moxham
Community Development Corporation.  All significant intercompany
transactions have been eliminated in consolidation.
  Bedford Associates, Inc., was organized by BT primarily to
hold and operate real property and equipment used by banking
affiliates in their operations.  Moxham Community Development
Corporation was organized in 1992 to conduct community
development activities.
  The preparation of financial statements in conformity with
generally accepted accounting principles requires management 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 financial statements and the
reported amounts of income and expenses during the reporting
period.  Actual results could differ from those estimates.  BT's
financial statements have been restated for periods prior to June
30, 1996, giving effect to the merger between BT and Moxham Bank
Corporation which occurred on June 25, 1996 and was accounted for
as a pooling-of-interests.  Results of operations from business
combinations accounted for as purchases are included in the
consolidated financial statements from their respective
acquisition dates.

CASH EQUIVALENTS
  BT considers all non-interest-bearing amounts due from banks
to be cash equivalents.  At December 31, 1996 and 1995, the
Corporation maintained cash balances of approximately $34 million
and $26 million respectively, with one large financial
institution located in southwestern Pennsylvania.

SECURITIES
  The securities portfolio consists of securities and short-term
investments, which are purchased by the Corporation to enhance
the overall yield on earning assets and to contribute to the
management of interest rate risk and liquidity.
  Effective December 31, 1993, BT adopted Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments
in Debt and Equity Securities".  This statement requires
classification of securities into three categories; held-to-
maturity, trading securities, and available-for-sale.  BT
categorized all of its securities as available-for-sale at
December 31, 1993.  Beginning in the second quarter of 1994,
certain securities purchased were classified as held-to-maturity.
The Corporation may classify securities as held-to-maturity when
it has both the ability and positive intent to hold the
securities to maturity.  Securities designated as available for
sale, may be sold in response to changes in market interest rates
and in prepayment risk, income tax considerations, and liquidity
needs.  Pursuant to Statement 115, securities available-for-sale
are recorded at market value, with aggregate unrealized holding
gains and losses reported net of income tax as a separate
component of shareholders' equity.  Securities held-to-maturity
are stated at cost adjusted for amortization of premium and
accretion of discount, computed primarily under the interest
method.  The Corporation's investment policy specifically
prohibits the existence of a trading account portfolio.  The
former Moxham Bank Corporation maintained a trading portfolio
prior to the merger with BT.  The volume of transactions within
the portfolio and the related impact on BT's financial statements
were not significant.  No trading securities were held at
December 31, 1995.
  Gains and losses are computed principally under the specific
identification method.  On a periodic basis, management evaluates
each security where amortized cost exceeds market value.  If the
decline is judged to be other than temporary, the cost basis of
the security is written down to its estimated net realizable
value with the write down included in net securities gains
(losses).

INTEREST INCOME
  Interest income is recognized in a manner that results in a
level yield on principal amounts outstanding.  The accrual of
interest is discontinued when, in management's judgement, it is
determined that the collectibility of interest, but not
necessarily principal, is doubtful.  Payments on nonaccrual loans
are generally applied to both principal and interest, depending
upon management's evaluation of collectibility.  Loan origination
fees, net of certain direct origination costs, are deferred and
recognized over the life of the related loan as a yield
adjustment.

UNEARNED INTEREST
  Unearned interest represents interest deducted from the
proceeds of consumer loans and direct finance leases.  Income is
recognized over the life of the loan or lease as payments become
due.

RESERVE FOR LOAN LOSSES
  The reserve for loan losses is based on management's
evaluation of probable losses in the current loan portfolio,
which includes an assessment of current economic conditions,
changes in the nature of the loan portfolio, loan loss
experience, and other relevant factors.  The Corporation adopted
FASB Statement No. 114, "Accounting by Creditors for Impairment
of a Loan", and FASB Statement No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures," on
January 1, 1995.  Under these guidelines, a loan is considered
impaired, based on current information and events, if it is
probable that the Corporation will be unable to collect the
scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement.  When conducting
loan

                                    17

evaluations, management considers various factors such as
historical loan performance, the financial condition of the
debtor and collateral adequacy to determine when a loan is
impaired.  Recurring shortfalls or delays in payments and/or
extended delinquency periods may provide evidence that a delay or
shortfall is significant enough to warrant a review of the loan
for impairment.  Generally, the minimum period without payment
that typically can occur before a loan is considered for
impairment is 90 days.  The measurement of impaired loans is
generally based on the present value of expected future cash
flows discounted at the historical effective interest rate,
except that collateral-dependent loans are generally measured for
impairment based on the fair value of the collateral.  When the
measurement of an impaired loan is less than the recorded
investment in the loan, the impairment is recorded in a specific
valuation reserve through a charge to provision for loan losses.
The specific valuation reserve is periodically adjusted for
significant changes in the amount or timing of expected future
cash flows, observable market price or fair value of the
collateral.  The valuation reserve, or reserve for impaired loan
losses, is part of the total reserve for loan losses.  Upon
disposition of an impaired loan, any related reserve is reversed
through a charge to the impaired reserve for loan losses.  FASB
114 does not apply the provisions of FAS 114 on individual
smaller balance loans but the Corporation collectively evaluates
these types of loans for impairment.  In addition, the
Corporation collectively reviews for impairment, commercial real
estate and commercial loans under $250.  The aggregation of these
loans is based upon common risk characteristics such as, among
other factors, loan type; geographic or industry risk
concentrations; whether the loans have similar terms, such as
interest and principal repayment terms; levels and types of
collateral; and external credit ratings or internal risk ratings
for the particular loans.

PREMISES AND EQUIPMENT
  Premises and equipment, including leasehold improvements, are
stated at cost less accumulated depreciation and amortization.
Depreciation is computed by both straight-line and accelerated
methods over the estimated useful lives of the assets.  Leasehold
improvements are amortized over the terms of leases or estimated
useful lives of improvements, whichever is shorter.
  Maintenance, repairs, and minor renewals are charged to
expense as incurred.  Expenditures for betterments and major
renewals are capitalized and depreciated over their estimated
useful lives.
  When premises and equipment are removed or otherwise disposed
of, the cost and related accumulated depreciation or amortization
are removed from the accounts and any resulting gain or loss is
credited or charged to income.

INTANGIBLE ASSETS
  The purchase method of accounting for business combinations
results in the adjustment of net assets to their estimated fair
value at the acquisition date.  The excess of purchase price over
such fair value is recorded in other assets and amortized on a
straight-line basis over periods ranging from 10 to 15 years.
Premiums paid by bank affiliates for branch offices are allocated
to core deposit and going concern intangibles and are recorded in
other assets and amortized on a straight-line basis over their
estimated lives, generally ranging from 5 to 15 years.  Core
deposit premiums amounted to $0 and $260 and going concern and
goodwill intangibles amounted to $20,440 and $16,874 at December
31, 1996 and 1995, respectively.  Management evaluates annually
the carrying value and remaining amortization periods of
intangible assets for possible impairment.  Adjustments are
recorded when the benefit of the intangible asset decreases due
to asset dispositions or reduced earnings from acquisitions with
anticipated earning levels projected below the cost to recover
such intangibles.


OTHER REAL ESTATE
  Other real estate is carried at the lower of estimated market
value, less selling costs, or the value of the outstanding loan
balance.  Costs to maintain the assets and subsequent gains and
losses attributable to their disposal are included in other
expense.

INCOME TAXES
  The Corporation follows Statement of Financial Accounting
Standard No. 109 "Accounting for Income Taxes."  This statement
requires a liability approach for measuring deferred taxes based
on temporary differences between the financial statement and tax
basis of assets and liabilities existing at each balance sheet
date using enacted tax rates.

PER SHARE DATA
  Net income per share amounts are computed by dividing net
income, after deducting preferred stock dividends, by the
weighted average number of shares of common stock outstanding
during each year, after giving retroactive effect to the 5% stock
dividend distributed by BT on October 14, 1994 and the 10% stock
dividend distributed on October 22, 1996.  Additionally, per
share data has been adjusted for the 10% stock dividend paid on
December 30, 1994 by the former Moxham Bank Corporation.  Fully
diluted earnings per share amounts are calculated assuming all
outstanding preferred stock was converted into common stock at
the beginning of each year and that no preferred dividends were
paid.
  Cash dividends per share are based on the number of shares
outstanding at the respective declaration dates, after giving
retroactive effect to the stock dividends.

RECENT ACCOUNTING PRONOUNCEMENTS
  In March 1995, FASB issued Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets to Be Disposed Of."  This
standard requires long-lived assets and certain identifiable
intangible assets, such as goodwill, be reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  BT adopted
this statement on January 1, 1996, and the effect on BT's
financial statements as a result of the adoption was not
material.
  In May 1995, FASB issued Statement No. 122, "Accounting for
Mortgage Servicing Rights."  On January 1, 1996, BT adopted
Statement 122.  The new standard requires capitalization of
mortgage servicing rights on mortgage loans originated for sale
and measurement of impairment of all capitalized mortgage
servicing rights based on their fair values.  Adoption of
Statement No. 122 did not have any material impact on BT's
financial condition or results of operations.

                                    18

  In June of 1996, the FASB issued SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities."  SFAS No. 125 provides accounting and reporting
standards based on a control-oriented "financial-components"
approach.  Under this approach, after a transfer of financial
assets, an entity recognizes the financial and servicing assets
it controls and liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and
derecognizes liabilities when extinguished.  The statement
provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings.  This statement supersedes FASB No. 122 "Accounting
for Mortgage Servicing Rights."  This statement is effective for
transfers and servicing of financial assets transactions
occurring after December 31, 1996.
  In December of 1996, the FASB issued SFAS No. 127, "Deferral
of the Effective Date of Certain Provisions of FASB Statement No.
125."  This statement defers the effective date of FAS 125 by one
year to January 1, 1998, for certain transfer transactions
including repurchase agreements, dollar rolls, securities lending
and similar arrangements.  SFAS No. 127 also delays by one year
the provisions of SFAS No. 125 for recognition of collateral by
secured parties in conjunction with secured borrowings.
  The Corporation is currently evaluating the effect that
implementation of SFAS No. 125 and SFAS No. 127 will have on its
results of operations and financial position.

2.        ACQUISITIONS
  On December 14, 1995, BT acquired Huntington National Bank of
Pennsylvania, (Huntington), Uniontown, Pennsylvania, and merged
it into Fayette Bank.  Huntington had total assets of
approximately $102 million and operated five branches in Fayette
and Greene Counties.  On January 8, 1996, Huntington's former
Uniontown branch was closed and merged into Fayette Bank's
Uniontown office.  The acquisition was accounted for as a
purchase, with a purchase price of $25.5 million in cash.
Goodwill and other intangibles of approximately $10.2 million
were recorded in connection with the transaction.  Goodwill is
being amortized over a 15 year period.  Huntington was merged
into Fayette effective December 14, 1995, and the 1995
Consolidated Statement of Income reflects the operations of
Huntington from the date of acquisition.
  On June 13, 1996, BT acquired The Armstrong County Trust
Company (Armstrong) of Kittanning, Pennsylvania by merging
Armstrong into Bank and Trust.  The acquisition was accounted for
as a purchase.  Armstrong had assets of approximately $50 million
and operated one office in Armstrong County.  Each Armstrong
common share was exchanged for 26.50 shares of BT common stock
and $533.21 in cash.  A total of 212,000 BT common shares were
issued in the merger.  The total consideration for the Armstrong
acquisition was approximately $12 million in the aggregate for
all 8,000 Armstrong shares outstanding.  The cash portion of
approximately $4.3 million was financed through short-term
borrowing from a commercial bank.  In connection with the
acquisition, goodwill and other intangibles of approximately $5.2
million were recorded.  Goodwill is being amortized over 15
years.  Armstrong's results of operations after June 13, 1996 are
included in BT's 1996 Consolidated Statement of Income.
Unaudited pro forma results of operations for the years ended
December 31, 1996, 1995 and 1994 are presented below.  The pro
forma results include the impact of purchase adjustments as
though the acquisitions of Huntington and Armstrong had been
effective January 1, 1994 and January 1, 1995, respectively.  The
pro forma results are not necessarily indicative of what actually
would have occurred if the acquisitions had been in effect for
the entire periods presented.  In addition, they are not intended
to be a projection of future results and do not reflect any
synergies that might be achieved from the combined operations of
the companies.

                             Pro Forma Results
                                (Unaudited)

                                        Years Ended December 31,
                                       1995      1994      1993
                                   --------    --------   -------
NET INTEREST INCOME                $ 64,629   $62,236    $59,507

NET INCOME                           13,585    13,543     12,730

EARNINGS PER SHARE:*
 Primary                               2.40      2.41       2.37
 Fully diluted                         2.39      2.39       2.34

   *1996 and 1995 data reflects the issuance of 26.5 shares of
 BT common stock (212,000 shares in total ) for each share of
 Armstrong common stock.

   On June 25, 1996, BT completed a merger with Moxham Bank
Corporation (Moxham) whereby Moxham was merged directly into BT.
In connection with the merger, each share of Moxham common stock
(other than shares held by the Corporation) was converted into
1.15 shares of BT common stock, resulting in the issuance of
1,038,519 BT common shares.  In addition, 88,550 shares of BT
common stock were exchanged for all 14,000 outstanding shares of
Moxham Series A $8.00 cumulative convertible non-voting preferred
stock.  The merger has been accounted for as a pooling-of-
interests and accordingly BT's accompanying consolidated
financial statements have been restated retroactively to include
the accounts and operations of Moxham for all periods prior to
the merger.  Moxham's banking subsidiaries included the Moxham
National Bank and The First National Bank of Garrett.  Moxham
also held a nonbank subsidiary known as the Moxham Community
Development Corporation.  Upon consummation of the merger,
Moxham's banking subsidiaries were merged into Bank and Trust on
June 25, 1996.  At the time of the merger, Moxham had assets of
approximately $235 million and operated 12 branches in Cambria,
Somerset, and Westmoreland counties.  In conjunction with the
merger, four of these branches closed during the third quarter of
1996 along with two branches of Bank and Trust and one branch of
Laurel as a result of duplicate service areas.

                                    19

   Separate results of the combining entities are presented for
the periods shown below.  All significant intercompany
transactions have been eliminated.

                                 SIX MONTHS ENDED JUNE 30, 1996
                                        (UNAUDITED)

                                 BT       Moxham       Combined
                                ----      ------       --------
NET INTEREST INCOME           $26,470    $ 4,692        $31,162

NET INCOME                      5,960        783          6,743

EARNINGS PER SHARE:
  Primary                           -          -           1.24
  Fully Diluted                     -          -           1.23



                                   YEAR ENDED DECEMBER 31, 1995

                                 BT        Moxham      Combined
                                ----       ------      --------
NET INTEREST INCOME           $48,364     $ 8,785       $57,149

NET INCOME                     11,574       1,475        13,049

EARNINGS PER SHARE:
  Primary                        2.75         -            2.42
  Fully Diluted                  2.75         -            2.40



                                   YEAR ENDED DECEMBER 31, 1994

                                BT         Moxham      Combined
                                ----       ------      --------
NET INTEREST INCOME           $47,027     $ 8,873       $55,900

NET INCOME                     10,906       1,753        12,659

EARNINGS PER SHARE:
  Primary                        2.59         -            2.35
  Fully Diluted                  2.59         -            2.33


   Certain reclassifications have been made to Moxham's
financial information to conform to BT's classification.
   In connection with the Moxham merger, $1.3 million of
reorganization costs ($959,000 after-tax or $.17 per fully
diluted share) were incurred and charged to expense in 1996.  The
reorganization costs consisted primarily of severance pay to
furloughed employees and various legal, accounting and investment
banking fees associated with the transaction.
   On January 30, 1997, Bank and Trust, BT's largest banking
affiliate, entered into an agreement in principle to acquire
three branch offices of National City Bank of Pennsylvania a
subsidiary of National City Corporation of Cleveland, Ohio.  The
locations of the three branches are Meyersdale and Salisbury in
Somerset County, Pennsylvania and Everett in Bedford County,
Pennsylvania.  The sale will include the deposits, loans and
fixed assets of all three branches which will be merged into Bank
and Trust.  The combined deposit total for the three offices is
approximately $69 million.  The acquisition price of the
deposits, loans and offices is anticipated to be approximately
$4.8 million.  The agreement is subject to completion of due
diligence and regulatory approvals.  The sale is expected to be
completed during the second quarter of 1997.


                                    20

3.   SECURITIES

     The amortized cost and estimated market values of securities
at December 31, 1996 and 1995 were as follows:
                                                  1996
                             --------------------------------------------
                                            Gross       Gross
                                       Unrealized  Unrealized
                             Amortized    Holding     Holding     Market
                                  Cost      Gains      Losses      Value
                             --------------------------------------------

Securities available
 for sale:
US Treasury
 and obligations of
 US government agencies
 and corporations             $186,172     $  984       $(170)  $186,986
Obligations of states and
 political subdivisions          9,656        214          (7)     9,863
Debt securities issued
 by foreign governments            590         --          (2)       588
Corporate securities             7,105        181         (16)     7,270
                             --------------------------------------------
Totals                        $203,523     $1,379       $(195)  $204,707
                             ============================================

Securities held-to-maturity:
US Treasury
 and obligations of
 US government agencies
 and corporations              $97,685     $ 712        $(159)   $98,238
                             ============================================



                                             1995
                             -------------------------------------------
                                           Gross        Gross
                                      Unrealized   Unrealized
                            Amortized    Holding      Holding     Market
                                 Cost      Gains       Losses      Value
                             -------------------------------------------
Securities available for sale:
US Treasury
 and obligations of
 US government agencies
 and corporations            $248,605     $2,365       $(724)  $250,246
Obligations of state and
 political subdivisions        10,291        321         (15)    10,597
Debt securities issued
 by foreign governments           300        ---          (2)       298
Corporate securities            6,524        557         (28)     7,053
                             -------------------------------------------
Totals                       $265,720     $3,243       $(769)  $268,194
                             ===========================================
Securities held-to-maturity:
US Treasury
 and obligations of
 US government agencies
 and corporations            $ 35,161       $763         $--    $35,924
                             ===========================================


     The market value of securities was based on quoted market
prices or bid quotations received from securities dealers.

     The amortized cost and estimated market value of securities
at December 31, 1996 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.

                                          Available-For-Sale
                                                 1996
                                        -----------------------
                                          Amortized      Market
                                          Cost            Value
                                        -----------------------

Due in one year or less                    $ 46,090     $46,344
Due after one year through
 five years                                 117,331     117,602
Due after five years through
 ten years                                   27,096      27,474
Due after ten years                          13,006      13,287
                                           --------    --------
 Total                                     $203,523    $204,707
                                           ========    ========


                                             Held-To-Maturity
                                                  1996
                                          ---------------------
                                          Amortized      Market
                                          Cost           Value
                                          ---------------------


Due in one year or less                   $   ---        $  ---
Due after one year through
 five years                                84,185        84,751
Due after five years through
 ten years                                 13,500        13,487
Due after ten years                           ---           ---
                                          ---------------------
 Total                                    $97,685       $98,238
                                          =====================

 Proceeds from sales of securities during 1996 were $5,378.
Gross gains of $445 and gross losses of $8 were realized on those
sales.  In addition, various securities were called during 1996,
which resulted in gross gains of $19.  In 1996, BT realized a
gross loss of $50 in connection with a valuation adjustment on an
equity security.  During 1995, proceeds from sales of securities
were $46,146, with gross gains of $246 and gross losses of $157
realized on those sales.  In addition, various securities were
called during 1995, which resulted in gross gains of $19.  In
1994, proceeds from sales of securities were $16,571, with gross
gains of $370 and gross losses of $39 realized on those sales.
Also, various securities were called in 1994 resulting in gross
gains of $38 and gross losses of $22.  At December 31, 1996,
securities carried at $120,659 were pledged as collateral for
public and trust deposits and securities sold under agreements to
repurchase.  In addition, at December 31, 1996, BT held
available-for-sale investments in government agency step-up
securities of approximately $18.2 million with call options that
allow the issuer to redeem the investment prior to maturity.

                                    21


4.   LOANS
     The composition of the loan portfolio at December 31, 1996
and 1995 was as follows:
                                                1996      1995
                                             --------------------
Commercial, financial and agricultural       $170,107  $167,144
Real estate:
 Residential                                  317,459   324,210
 Commercial                                   217,861   193,868
Consumer                                      377,247   375,649
                                             --------------------
 Total                                      $1,082,674 $1,060,871
                                             ====================

     Commercial real estate, residential real estate and other
loans held by the Corporation are primarily located in western
and central Pennsylvania.  The Corporation evaluates each
customer's credit worthiness on a case-by-case basis.  Collateral
held includes mortgages on residential and income-producing
properties.  Included in consumer loans are education loans held-
for-sale which totaled $13,364 and $14,881 at December 31, 1996,
and 1995, respectively.  Such loans are carried at cost and
historically have been sold at carrying amount.

     A summary of loans to executive officers and directors,
including associates of such persons, is as follows:

                                           1996           1995
                                   -------------------------------
     Loans at beginning of year         $25,285        $21,436
     New loans                            9,792         10,972
     Loan payments                      (11,037)        (8,084)
     Other                                 (522)           961
                                   -------------------------------
     Loans at end of year               $23,518        $25,285
                                   ===============================

     Other represents the net change in loan balances resulting
from changes in related parties during the year.

     See Note 15 "Financial Instruments with Off-Balance Sheet
Risk" for credit risk disclosures and "Management's Discussion
and Analysis" regarding concentrations in the loan portfolio.

5.   RESERVE FOR LOAN LOSSES
     Transactions in the reserve for loan losses were as follows:

                                           1996
                              -----------------------------------
                                        Total
                                        Reserve for    Reserve
                              General   Impaired       for Loan
                              Reserve   Loan Losses    Losses
                              -----------------------------------
Balance at beginning of
 year                         $9,102    $    931     $10,033
Transfer upon adoption
 of FASB 114                     ---         ---         ---
Reserve of acquisitions         159          ---         159
 Additions:
  Provisions for loan losses  1,111        1,330       2,441
  Recoveries of loans
   charged off                  566          ---         566
 Deductions:
  Loans charged off          (2,768)       (750)      (3,518)
                              -----------------------------------
Balance at end of year      $ 8,170     $ 1,511      $ 9,681
                              ===================================

                                           1995                       1994
                              -----------------------------------  -----------
                                        Total
                                        Reserve for    Reserve
                              General   Impaired       for Loan      General
                              Reserve   Loan Losses    Losses        Reserve
                              -----------------------------------  -----------
Balance at beginning of
 year                         $9,053    $    ---      $ 9,053       $ 8,815
Transfer upon adoption
 of FASB 114                    (285)        285          ---           ---
Reserve of acquisitions          849         ---          849           ---
 Additions:
  Provisions for loan losses     740         826        1,566         1,168
  Recoveries of loans
   charged off                   347         ---          347           400
 Deductions:
  Loans charged off           (1,602)       (180)      (1,782)       (1,330)
                              -----------------------------------  -----------
Balance at end of year       $ 9,102      $  931    $  10,033        $9,053
                              ===================================  ===========


     The recorded investment in loans for which impairment has
been recognized in accordance with FASB 114 totalled $3,865 and
1,965 at December 31, 1996 and 1995, respectively.  A corre-
sponding valuation allowance of $1,511 and $931 was established
for the years ended 1996 and 1995, respectively.  The year-over-
year increases are primarily due to the addition of various
impaired commercial loans associated with two borrowers.  The
average recorded investment in impaired loans for 1996 and 1995
did not differ materially from the amounts outstanding at
December 31, 1996 and December 31, 1995.  BT recognized
approximately $93 of interest revenue on impaired loans during
1996, of which approximately $63 and $30 was recognized using the
accrual and cash basis methods of income recognition,
respectively.

                                    22

6.   PREMISES AND EQUIPMENT
     Major classes of premises and equipment at December 31, 1996
and 1995 were as follows:

                                           1996           1995
                                        -------------------------
     Land                               $ 4,538        $ 4,526
     Buildings                           28,603         28,792
     Leasehold improvements               1,326          1,295
     Equipment                           26,200         22,631
                                        -------------------------
                                         60,667         57,244
     Less accumulated depreciation
      and amortization                   29,033         25,520
                                        -------------------------
     Premises and equipment, net        $31,634        $31,724
                                        =========================


7.   FEDERAL INCOME TAXES

     The components of the provision (benefit) for income taxes
from operations are as follows:

                                     1996      1995      1994
                              ------------------------------------
     Current                       $8,073    $6,037    $5,846
     Deferred                      (1,073)     (348)     (963)
                              ------------------------------------
      TOTAL                        $7,000    $5,689    $4,883
                              ====================================

     A reconciliation of the federal statutory tax rate to the
effective tax rate applicable to income before income taxes
follows:


                                   1996      1995      1994
                                   -----------------------------
Federal statutory tax rate         35.0%     35.0%     35.0%
Add (deduct) the tax effect of:
 Tax-exempt interest               (4.7)     (5.1)     (5.5)
 Interest expense limitation         .8        .7        .7
 Other, net                         2.6       (.2)     (2.4)
                                   -----------------------------
  Effective tax rate               33.7%     30.4%      27.8%
                                   =============================

     The deferred tax assets and deferred tax liabilities
recorded on the balance sheet are as follows:

                                        December 31, 1996
                                   Deferred Tax   Deferred Tax
                                      Assets      Liabilities
                                   ------------------------------
Provision for loan losses               $3,225        $   ---
Net unrealized holding gains
 (losses) on securities                    ---            415
Depreciation                               742            ---
Deferred loan fees, net                    123            ---
Adjustment due to acquisition              275            815
Deferred compensation                      541            ---
Low-income housing credits                  17            ---
Other                                    1,588            489
                                   ------------------------------
 Total                                  $6,511         $1,719
                                   ==============================


                                        December 31, 1995
                                   Deferred Tax   Deferred Tax
                                      Assets      Liabilities
                                   ------------------------------
Provision for loan losses               $3,373       $   ---
Net unrealized holding gains
 (losses) on securities                    ---           875
Depreciation                                11           ---
Deferred loan fees, net                    119           ---
Adjustment due to acquisition              ---         1,003
Deferred compensation                      122           ---
Low-income housing credits                 103           ---
Other                                    1,636           429
                                   ------------------------------
 Total                                  $5,364        $2,307
                                   ==============================

     No valuation allowance was established at December 31, 1996
and 1995 in view of the Corporation's ability to carry back net
deferred tax assets to taxes paid in previous years.

8.   PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
     BT maintains noncontributory defined benefit pension plans
covering substantially all employees meeting minimum age and
service requirements.  The plans generally provide benefits based
on years of credited service and final average earnings.  BT's
current funding policy is to contribute annually the maximum
amount that can be deducted for federal income tax purposes.
Pension plan assets are primarily US Government obligations,
corporate obligations, and equity securities whose values are
subject to fluctuations of the securities market.  Plan assets
include common stock of BT with values of $1,412 and $1,126 at
December 31, 1996 and 1995 respectively.  Changes in plan asset
values attributable to differences between actual and expected
returns on plan assets are deferred as unrecognized gains or
losses and included in the determination of net pension cost over
time.

                                    23

     Net pension expense for 1996, 1995, and 1994 consisted of
the following:

                                          1996     1995    1994
                                        -------------------------
Service cost-benefits earned
 during the year                        $  654   $  597  $  571
Interest accrued on projected
 benefit obligation                      1,236    1,254   1,066
Actual return on plan assets            (3,010)  (2,699)   (287)
Net amortization and deferral            1,238    1,097  (1,192)
                                        -------------------------
Net pension expense                     $  118    $ 249  $  158
                                        =========================

     The following table sets forth the plans' funded status and
amounts recognized in BT's consolidated balance sheet at December
31, 1996 and 1995:

                                                1996         1995
                                             --------------------
Actuarial present value of benefit
obligations:
 Accumulated benefit obligation, including
 vested benefits (based upon retirement
 date) of $15,589 and $13,759 for 1996
 and 1995, respectively                      $(15,761)   $(13,888)
                                             =====================

Projected benefit obligation                 $(19,179)   $(18,374)
Plan assets at fair value                      23,268      20,139
                                             ---------------------
Plan assets in excess of projected benefit
 obligation                                     4,089       1,765
Unrecognized actuarial gain                    (1,454)        213
Unrecognized prior service costs                 (337)       (365)
Unrecognized transition credit                 (1,576)     (1,667)
                                             ---------------------
Prepaid (accrued) pension cost included in the
 consolidated balance sheet                  $    722     $   (54)
                                             =====================

     Pension expense is determined at the beginning of the year
using the funded status assumptions for the previous year end.
The funded status is determined using assumptions as of the end
of the year, which for 1996, 1995, and 1994 are as follows:

                                   1996      1995      1994
                                 ----------------------------
Discount Rate                       7%        7%        8%
Long-Term Rate of Return            8%        8%        8%
Compensation Rate                   3%        3%        4%

     The change in assumptions in 1995 resulted in an increase of
approximately $1,298 for the projected benefit obligation.
     The Corporation follows Statement of Financial Accounting
Standard No. 106 "Employers' Accounting for Post-Retirement
Benefits Other Than Pensions".  This statement requires that the
expected cost of providing post-retirement benefits be recognized
in the financial statements during the employees active period of
employment.  The Corporation presently provides health and life
insurance benefits to selected retirees.  The transition
obligation is being amortized over a 20-year period.

     The Corporation intends to maintain benefits for those
currently eligible retirees but restricted future participation
in 1991.  Expense under the provisions of Statement No. 106 for
1996, 1995 and 1994 consisted of the following:
                                         1996   1995   1994
                                         ---------------------
Interest cost                            $104   $122   $133
Amortization of transition
     obligation and other                  94     92     89
                                         ---------------------
          Net post-retirement expense    $198   $214   $222
                                         =====================


 The Corporation used a discount rate of 7% for 1996 and 1995
and 8% for 1994.
                                                1996      1995
                                             --------------------
Accumulated post-retirement benefit
 obligation                                  $(1,509)  $(1,585)
Plan assets at fair value                          0         0
                                             --------------------
Excess of benefit obligation over plan
 assets                                       (1,509)   (1,585)
Transition obligation                          1,611     1,712
Unrecognized net gain (loss)                    (248)     (255)
                                             --------------------
Accrued benefit obligation                    $ (146)   $ (128)
                                             ====================

     An annual rate of health care cost increase was assumed to
be 10% in 1996 decreasing to 5% by the year 2010.  Increasing the
assumed health care trend rate by 1% in each year would increase
the obligation by $112 at December 31, 1996 and annual expense by
$15.
     The Corporation adopted a defined contribution plan with
401(k) features during 1995.  The plan permits each employee to
contribute a portion of their salary to the plan on a pre-tax
basis with employer matching up to stipulated amounts as
determined by the Corporation.  Total expense was $143 and $60
for 1996 and 1995, respectively.

                                    24

     Moxham Bank Corporation maintained a noncontributory target
benefit pension plan (target plan) covering all employees who met
the eligibility requirements.  Prior to BT's acquisition of
Moxham, a resolution was passed to terminate the target plan
subject to IRS approval.  These employees were admitted to the BT
401(k) plan upon acquisition and will vest 100% in the plan upon
completion of six years of service with either BT or previously
with Moxham.  To be eligible for the target benefit pension plan
prior to the merger, an employee must have been 21 years of age
and have completed one year of continuous service.  Contributions
to the target plan were determined by a formula based on the
participant's annual compensation and years of service.
Contributions to the target plan included in the consolidated
statement of income were $107 for 1996, $200 for 1995 and $177
for 1994.
     Moxham also maintained a non-qualified deferred compensation
plan (plan) for certain employees.  This plan was frozen upon the
acquisition of Moxham by BT.  To participate in this plan,
selected employees must have completed at least twelve
consecutive months of service with Moxham.  The plan provides
payments from a participant's "account" payable at age sixty-two,
or upon the participant's retirement from the Corporation,
whichever is later, or upon the participant's death or
disablement.  Payments are made from the participant's account in
equal quarterly installments over a period of ten years, or the
participant may elect to receive the payment in a lump sum.
Contributions to this plan included in the consolidated statement
of income were $445 in 1996 and $62 in 1995 and 1994.

9.   LITIGATION
     In late January, 1997 a purported class action complaint was
served on Bank and Trust and Security of America Life Insurance
Company (Security) alleging various irregularities in connection
with a residential mortgage loan to the plaintiff in the
principal amount of approximately thirteen thousand dollars
including, among other things, overcharges on credit life and
disability insurance coverage and on other items.  Security is
not affiliated with BT or any of its subsidiaries.
     The plaintiff purports to represent a class of persons who
made a mortgage payment to Bank and Trust within six years before
November 21, 1996 and/or had credit life and/or disability
insurance coverage with Security within six years before November
21, 1996.  The complaint was filed in the Court of Common Pleas
of Cambria County, Pennsylvania and seeks unspecified damages.
Management is currently evaluating the complaint with legal
counsel.  Management intends to deny the material allegation in
the complaint, oppose certification of the case as a class
action, pursue its affirmative defenses and vigorously defend the
lawsuit.  The impact of this litigation on BT Financial, however,
cannot be fully assessed at this early stage of the proceedings.
     Due to the nature of its activities, BT is at all times
engaged in other various legal proceedings which arise in the
normal course of business.  While it is difficult to predict or
determine the outcome of these proceedings, it is the opinion of
management that the ultimate liability, if any, will not
materially affect BT's consolidated financial position or results
of operations.

10.  CAPITAL STOCK
     On August 24, 1994, BT's Board of Directors declared a 5%
stock dividend.  The dividend was distributed October 14, 1994 to
shareholders of record as of September 16, 1994.  The dividend
was charged to retained earnings in the aggregate amount of
$5,103 which is based on the closing price of $28 per share on
the declaration date.  On December 30, 1994, the former Moxham
Bank Corporation paid a 10% stock dividend.  The dividend was
charged to retained earnings in the aggregate amount of $2,058.
On August 28, 1996, BT's Board of Directors declared a 10% stock
dividend.  The dividend was distributed on October 22, 1996 to
shareholders of record as of September 20, 1996.  The dividend
was charged to retained earnings in the aggregate amount of
$17,047 which is based on the closing price of $33 per share on
the declaration date.  Average shares outstanding and all per
share amounts included in the accompanying consolidated financial
statements and notes are based on the increased number of shares
giving retroactive effect to the aforementioned stock dividends.
     In July 1992, the former Moxham Bank Corporation issued
15,000 shares of Series A $8.00 cumulative convertible non-voting
preferred stock (Series A Preferred Stock).  An annual dividend
of $8.00 per share, payable quarterly on the last day of March,
June, September and December, commenced September 30, 1992.  Cash
dividends on the Series A preferred stock were cumulative from
date of issue.  At December 31, 1995, 14,000 preferred shares
were outstanding.  These shares were exchanged for 88,550 shares
of BT common stock in connection with the merger on June 25,
1996.  Approximately $54, $116 and $120 in preferred stock
dividends were paid in 1996, 1995 and 1994, respectively.
     In 1991, the Board of Directors of BT declared and paid a
dividend distribution of one right for each outstanding share of
BT common stock.  Each right entitles the holder to purchase from
the Corporation, units of Series A Preferred Stock at a set
price, exercisable on the distribution date as defined in the
agreement.  At December 31, 1996 no rights have been exercised.
     BT is subject to various regulatory capital requirements
administered by the Federal Reserve Bank.  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 BT's financial
statements.  Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, BT and its subsidiary
banks must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-
balance-sheet items as calculated under regulatory accounting
practices.  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 BT and its subsidiary banks 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, and of Tier I capital to average assets.  As of
December 31, 1996, the Corporation meets all capital adequacy
requirements to which it is subject.

                                    25

     As of December 31, 1996, the most recent notification from
the Federal Reserve Bank categorized BT and its subsidiary banks
as "well capitalized" under the regulatory framework for prompt
corrective action.  To be categorized as "well capitalized", each
entity 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 each institution's categorization.

     BT's consolidated and subsidiary banks actual capital
amounts and ratios are also presented in the table.
                                                              To Be Well
                                                            Capitalized Under
                                            For Capital     Prompt Corrective
                             Actual       Adequacy Purposes Action Provisions
                       ----------------  -----------------  -----------------
(Dollars in thousands   Amount  Ratio     Amount    Ratio      Amount   Ratio
                       ----------------  -----------------  -----------------
As of December 31, 1996:
 TOTAL CAPITAL (TO RISK
   WEIGHTED ASSETS):
  BT (Consolidated)   $124,992  11.76%   >$84,994  >8.00%      N/A
                                         -         -
  Bank and Trust        80,157  12.89    > 49,672  >8.00     >$62,203  >10.00%
                                         -         -         -         -
  Fayette               29,708  11.35    > 20,932  >8.00     > 26,164  >10.00
                                         -         -         -         -
  Laurel                25,132  14.59    > 13,784  >8.00     > 17,230  >10.00
                                         -         -         -         -
 TIER 1 CAPITAL (TO RISK
   WEIGHTED ASSETS):
  BT (Consolidated)   $115,311  10.85%   >$42,497  >4.00%      N/A
                                         -          -
  Bank and Trust        74,655  12.00    > 24,881  >4.00     >$37,322  >6.00%
                                         -          -        -         -
  Fayette               27,286  10.43    > 10,466  >4.00     > 15,699  >6.00
                                         -          -        -         -
  Laurel                23,375  13.57    >  6,892  >4.00     > 10,338  >6.00
                                         -          -        -         -
 TIER 1 CAPITAL
   (TO AVERAGE ASSETS):
  BT (Consolidated)   $115,311  7.99%    >$57,719  >4.00%      N/A
                                         -         -
  Bank and Trust        74,655  8.68     > 34,400  >4.00    >$43,000   >5.00%
                                         -         -        -          -
  Fayette               27,286  7.84     > 13,929  >4.00    > 17,411   >5.00
                                         -         -        -          -
  Laurel                23,375 10.22     >  9,152  >4.00    > 11,440   >5.00
                                         -         -        -          -


                                                              To Be Well
                                                            Capitalized Under
                                            For Capital     Prompt Corrective
                             Actual       Adequacy Purposes Action Provisions
                       ---------------- ------------------- -----------------
(Dollars in thousands)  Amount  Ratio     Amount    Ratio      Amount   Ratio
                       ---------------- ------------------- -----------------
As of December 31, 1995:
 TOTAL CAPITAL (TO RISK
   WEIGHTED ASSETS):
  BT (Consolidated)   $113,732  11.00%   >$82,678  >8.00%      N/A
                                         -         -
  Bank and Trust        75,364  12.62    > 47,780  >8.00     >$59,725  >10.00%
                                         -         -         -         -
  Fayette               28,820  11.05    > 20,868  >8.00     > 26,085  >10.00
                                         -         -         -         -
  Laurel                24,288  14.24    > 13,647  >8.00     > 17,058  >10.00
                                         -         -         -         -
 TIER 1 CAPITAL (TO RISK
   WEIGHTED ASSETS):
  BT (Consolidated)   $102,321   9.90%   >$41,339  >4.00%     N/A
                                         -         -
  Bank and Trust        69,589  11.65    > 23,890  >4.00     >$35,835  >6.00%
                                         -         -         -         -
  Fayette               26,356  10.10    > 10,434  >4.00     > 15,651  >6.00
                                         -         -         -         -
  Laurel                22,494  13.19    >  6,824  >4.00     > 10,235  >6.00
                                         -         -         -         -
 TIER 1 CAPITAL
   (TO AVERAGE ASSETS):
  BT (Consolidated)   $102,321  7.60%    >$53,838  >4.00%      N/A
                                         -         -
  Bank and Trust        69,589  8.37     > 33,245  >4.00     >$41,556  >5.00%
                                         -         -         -         -
  Fayette               26,356  9.29     > 11,354  >4.00     > 14,192  >5.00
                                         -         -         -         -
  Laurel                22,494  9.86     >  9,122  >4.00     > 11,402  >5.00
                                         -         -         -         -


11.  REGULATORY REQUIREMENTS
     Reserve balances of $13,056 were required to be maintained
at the Federal Reserve Bank by affiliate banks at December 31,
1996.
     Dividends and loans to BT from banking affiliates are
subject to regulatory limitations.  Dividends are limited to the
retained earnings of banking affiliates.  Loans must be collater-
alized and loans to a single nonbank affiliate cannot exceed 10%
of any banking affiliates capital and surplus, and the aggregate
to all nonbank affiliates cannot exceed 20%.  The maximum amount
available to BT at December 31, 1996 from affiliate banks in the
form of dividends and loans was $80,140 and $5,561 respectively.

12.  SAIF ASSESSMENT
     On September 30, 1996, President Clinton signed legislation
which required financial institutions with Savings Association
Insurance Fund (SAIF) deposits to pay a one-time special
assessment to facilitate the recapitalization of the SAIF.  The
assessment was based on 65.7 cents per $100 of deposits at March
31, 1995.  This assessment resulted in a charge of approximately
$1.4 million ($899,000 net of tax or $.16 per share) to other
expense during the year ended 1996.  The legislation also
included provisions whereby at such time as the SAIF is
adequately recapitalized, BT's future SAIF deposit premiums will
decrease from the $.23 per $100 of deposits paid in 1996 to
approximately $.065 through the year 2000 and approximately $.025
through the year 2017.

                                    26


13.  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
     The condensed balance sheets and statements of income and
cash flows of BT as of December 31, 1996, 1995, and 1994 and for
the years then ended are presented below.

              BT Financial Corporation (Parent Company Only)
                               Balance Sheet

                                       1996      1995      1994
                                   --------------------------------
Assets:
 Cash                              $  1,208  $    372  $    330
 Investment in bank affiliates      146,519   137,370   110,931
 Investment in nonbank affiliates     1,907     1,465     1,309
 Other                                6,137     5,955     4,524
                                   --------------------------------
   Total Assets                    $155,771  $145,162  $117,094
                                   ================================
Liabilities and Shareholders' Equity:
 Long-term debt                    $ 17,143  $ 20,715   $10,765
 Other liabilities                    2,141     2,348     2,061
 Shareholders' equity               136,487   122,099   104,268
                                   --------------------------------
   Total liabilities and share-
    holders' equity                $155,771  $145,162  $117,094
                                   ================================

                            Statement of Income

Cash dividends from bank
 affiliates                        $ 16,037  $  9,438  $  8,313
Cash dividends from nonbank
 affiliates                             100       100       ---
Management fees from affiliates      14,030    10,552     8,409
Other income                            418       33         57
Interest expense                      1,257       773       683
Operating expense                    15,077    12,170     9,932
                                   --------------------------------
Income before income taxes
 and equity in undistributed
 income of affiliates                14,251     7,180     6,164
Income tax benefit                      394       692       525
                                   --------------------------------
                                     14,645     7,872     6,689
Equity in undistributed income
 of affiliates:
 Banks                               (1,247)    5,021     5,612
 Nonbanks                               376       156       358
                                   --------------------------------
   Net income                      $ 13,774  $ 13,049  $ 12,659
                                   ================================


                          Statement of Cash Flows

Cash Flows from operating activities:
 Net income                        $ 13,774  $ 13,049  $ 12,659
 Equity in undistributed income
   of affiliates                        871    (5,177)   (5,970)
 Amortization                         1,184     1,112     1,078
 Other assets and liabilities, net   (1,640)   (1,411)     (762)
                                   --------------------------------
   Net cash provided by operating
   activities                        14,189     7,573     7,005
                                   --------------------------------
Cash Flows from Investing Activities:
 Investment in affiliate             (4,266)  (12,500)      ---
 Sale of investment securities          726       ---       ---
 Other                                   22       176        34
                                   --------------------------------
   Net cash used in investing
   activities                        (3,518)  (12,324)       34
                                   --------------------------------
Cash Flows from Financing Activities:
 Preferred dividends paid               (54)     (116)     (120)
 Common dividends paid               (6,212)   (5,242)   (4,727)
 Payment on long-term debt           (3,572)   (2,570)   (2,570)
 Proceeds from long-term debt           ---    12,520       ---
 Other                                   3        201       184
                                   --------------------------------
   Net cash provided by (used in)
     financing activities            (9,835)    4,793    (7,233)
                                   --------------------------------
Increase (decrease) in cash             836        42      (194)
Cash at beginning of year               372       330       524
                                   --------------------------------
Cash at end of year                $  1,208  $    372   $   330
                                   ================================

Supplemental disclosures of cash flow information:
 Cash paid during the year for:
   Interest on capital notes       $  1,122  $    764   $   666
   Federal income taxes,
     net of refunds                   6,761     7,761     8,013
Non-cash financing activities:
 Issuance of common stock;
  Armstrong acquisition               7,712       ---       ---
 Conversion of preferred stock
  to common stock                     1,378       98        ---



                                    27


14.  LONG-TERM DEBT
     Long-term debt outstanding amounted to $17.2 million and
$20.1 million at December 31, 1996 and 1995, respectively.  In
December of 1995, BT had $7.5 million in notes outstanding that
were used for the cash portion of the consideration paid to
former Laurel, Fayette and FirstSouth shareholders in 1985, 1986
and 1993 respectively.  The Corporation incurred a new note on
December 14, 1995 for $20.0 million and the proceeds were applied
to repay the $7.5 million in outstanding debt and to finance a
portion of the cash purchase of Huntington.  The note contains a
variable interest rate option as defined in the agreement, and
the interest rate at December 31, 1996 was 6.625%.  The note
agreement has certain restrictive covenants relative to
dividends, nonperforming assets, and equity requirements.  As of
December 31, 1996 the Corporation was in compliance with these
covenants.  Principal payments began in March of 1996 and are due
in 28 equal quarterly installments of $714.  The balance of the
note was $17.1 million at year-end 1996.
     A mortgage note is included in long-term debt and amounted
to $67 and $83 at December 31, 1996 and 1995, respectively.  The
mortgage note has a fixed rate of 9.5% and matures in the year
2000.

15.  RECLASSIFICATIONS
     For comparative purposes, reclassifications have been made
to certain amounts previously reported in the consolidated
financial statements.

16.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET 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 consist of loan commitments and standby letters of
credit.
     The Corporation's exposure to loss in the event of
nonperformance by the other party to the financial instrument for
loan commitments and standby letters of credit is represented by
the contractual amount of these instruments.  The Corporation
uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet
instruments.

     The face amounts of financial instruments with off-balance-
sheet risk at December 31, 1996 were as follows:

               Loan commitments                   $199,239
               Standby letters of credit             9,123

     Since many of the loan commitments may expire without being
drawn upon, the total commitment amount does not necessarily
represent future cash requirements or loss exposures.  The
Corporation evaluates each customer's credit worthiness 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.  Standby
letters of credit are conditional commitments issued by the
Corporation to support the financial obligations of a customer to
a third party.  These guarantees are primarily issued to support
public and private borrowing arrangements.  The credit risk
involved in issuing letters of credit is essentially the same as
that involved in extending loans.  The collateral varies but may
include accounts receivable, inventory and property, plant and
equipment for those commitments for which collateral is deemed
necessary.

17.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
     The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practicable to estimate that value:

CASH AND SHORT-TERM INVESTMENTS
     For these short-term instruments, the carrying amount is a
reasonable estimate of fair value.

SECURITIES
     For securities, estimated fair values are based on quoted
market prices or dealer quotes.  If a quoted market price is not
available, fair value is estimated using quoted market prices for
similar securities.

LOANS
     Fair values were estimated for loan portfolios with similar
financial characteristics by discounting estimated future
contractual cash flows using the current rates at which similar
loans would be made to borrowers with the same remaining
maturities.

DEPOSITS
     The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at
the reporting date.  The fair value of fixed-maturity certifi-
cates of deposit is estimated using the rates currently offered
for deposits of similar remaining maturities.

SHORT-TERM LIABILITIES
     The carrying value of short-term borrowings and securities
sold under agreements to repurchase approximates fair value.

LONG-TERM DEBT
     The estimated fair value of fixed rate debt was established
based on rates currently available to the Corporation for debt
with similar terms and remaining maturities. The carrying value
of variable rate debt approximated fair value.

                                    28


COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT, AND
FINANCIAL GUARANTEES WRITTEN
     The fair value of commitments is estimated using the fees
currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the present
creditworthiness of the counterparties.  For fixed-rate loan
commitments, fair value also considers the difference between
current levels of interest rates and the committed rates.  The
fair value of guarantees and letters of credit is based on fees
currently charged for similar agreements or on the estimated cost
to terminate them or otherwise settle the obligations with the
counterparties at the reporting date.
     The fair value of commitments, guarantees and letters of
credit are insignificant after considering the aforementioned
factors.

     The estimated fair values of BT's financial instruments at
December 31, 1996 and 1995 are as follows:

                                                  1996
                                        Carrying         Fair
                                        Amount           Value
                                        -------------------------
Financial assets:
 Cash and short-term investments       $   75,739      $  75,739
 Securities                               302,392        302,945
 Loans                                  1,025,765      1,026,685
  Less:  Reserve for
   loan losses                             (9,681)           ---
                                        -------------------------
 Total Financial Assets                $1,394,215     $1,405,369
                                        =========================
Financial liabilities:
 Deposits                               $1,263,728    $1,269,372
 Federal funds purchased and
  securities sold under
  agreements to repurchase                  36,678        36,678
 Short-term borrowings                       4,010         4,010
 Long-term debt                             17,210        17,210
                                        -------------------------
  Total Financial Liabilities           $1,321,626    $1,327,270
                                        =========================


                                                  1995
                                        Carrying         Fair
                                        Amount           Value
                                        -------------------------
Financial assets:
 Cash and short-term
   investments                          $   70,692     $ 70,692
 Securities                                303,355      304,118
 Loans                                   1,011,240    1,025,993
  Less:  Reserve for
   loan losses                             (10,033)         ---
                                        -------------------------
 Total Financial Assets                 $1,375,254   $1,400,803
                                        =========================
Financial liabilities:
 Deposits                               $1,253,252   $1,251,497
 Federal funds purchased and
  securities sold under
  agreements to repurchase                  35,313       35,313
 Short-term borrowings                       2,366        2,366
 Long-term debt                             20,083       20,083
                                        -------------------------
  Total Financial Liabilities           $1,311,014   $1,309,259
                                        =========================


                        SUPPLEMENTAL FINANCIAL DATA

                         Quarterly Financial Data*
                                (Unaudited)

A summary of financial data for the four quarters of the years
1996 and 1995 is presented below.

                                         1996
                                      Quarter Ended
                         -------------------------------------------
                         March 31  Jun. 30   Sept. 30  Dec. 31
                         -------------------------------------------
                            (In thousands, except per share data)

Net interest income       $15,418  $15,744    $16,293  $16,169
Provision for loan
 losses                       412      396        618    1,015
Other income                2,616    2,841      2,703    3,113
Other expenses(1)          11,978   13,682     13,682   12,340
Provision for income
 taxes                      1,879    1,529      1,581    2,011
                         -------------------------------------------
Net income                $ 3,765  $ 2,978    $ 3,115  $ 3,916
                         ===========================================
Common dividends          $ 1,369  $ 1,263    $ 1,705  $ 1,875

Earnings per share:(2)
 Primary                      .70      .55        .55      .69
 Fully diluted                .69      .54        .55      .69



                                         1995
                                      Quarter Ended
                         -------------------------------------------
                         March 31  Jun. 30   Sept. 30  Dec. 31
                         -------------------------------------------
                            (In thousands, except per share data)

Net interest income       $13,678  $14,086    $14,617  $14,768
Provision for loan
 losses                       246      377        767      177
Other income                2,053    2,257      2,253    2,152
Other expenses(1)          11,345   11,426     11,024   11,764
Provision for income
 taxes                      1,160    1,369      1,614    1,548
                         -------------------------------------------
Net income                $ 2,980  $ 3,171    $ 3,465  $ 3,431
                         ===========================================
Common dividends          $ 1,290  $ 1,291    $ 1,292   $1,369

Earnings per share:(2)
 Primary                      .55      .59        .64      .64
 Fully diluted                .55      .58        .64      .63

*Data for periods prior to June 30, 1996 has been restated due to
the Moxham pooling-of-interests acquisition on June 25, 1996.
Quarterly figures may not total to the full-year amount due to
rounding.

(1) The quarter ended September 30, 1995 includes a $590 refund
of F.D.I.C. deposit insurance premiums.  The quarters ended March
31, 1996 and June 30, 1996 included $77 and $1,232, respectively,
associated with nonrecurring reorganization costs in connection
with the Moxham merger.  The quarter ended September 30, 1996
included a special one-time SAIF deposit insurance assessment of
$1,383 related to deposits acquired from savings and loan
institutions.

(2) Per share data has been adjusted to reflect the 10% stock
dividend distributed on October 22, 1996.

                                    29

                                 SELECTED CONSOLIDATED FINANCIAL DATA*

Years Ended December 31,     1996(9)    1995(8)    1994     1993(7)    1992(6)
--------------------------   -------------------------------------------------
               (Dollar in thousands, except per share data)
RESULTS OF OPERATIONS
Interest income           $ 108,356   $ 99,828  $ 89,029   $ 81,012   $ 85,293
Interest expense             44,732     42,679    33,129     29,134     36,308
                            --------------------------------------------------
Net interest income          63,624     57,149    55,900     51,878     48,985
Provision for loan
 losses                       2,441      1,566     1,168      2,168      3,179
                            --------------------------------------------------
Net interest income after
 provision for loan losses   61,183     55,583    54,732     49,710     45,806
Other income                 11,272      8,714     8,407      8,205      7,026
Other expense                51,681     45,559    45,597     41,562     38,492
                            --------------------------------------------------
Income before income
 taxes                       20,774     18,738    17,542     16,353     14,340
Provision for income
 taxes                        7,000      5,689     4,883      5,081      3,988
                            --------------------------------------------------
Income before cumu-
 lative effect of
  accounting principle
  changes                    13,774     13,049    12,659     11,272     10,352
Cumulative effect of
 change in accounting
 for income taxes               ---       ---        ---         86        ---
                            --------------------------------------------------
Net income                 $ 13,774   $ 13,049  $  12,659   $11,358    $10,352
                            ==================================================

BALANCE SHEET DATA (Period end)
Total assets             $1,466,308 $1,442,560 $1,338,074 $1,306,406 $1,102,187
Loans, net of unearned
 interest                 1,025,765  1,011,240    892,010    832,421    684,209
Investment securities           ---        ---        ---     64,155     50,921
Securities available-
 for-sale                   204,707    268,194    310,288    231,486    219,790
Securities held-to-
 maturity                    97,685     35,161     22,911        ---        ---
Total deposits            1,263,728  1,253,252  1,147,993  1,156,650    985,894
Total long-term debt         17,210     20,083     10,021     12,482      8,147
Total shareholders'equity   136,487    122,099    104,268    109,356     86,584

PER SHARE DATA (1)
Net income per fully
 diluted share               $ 2.47     $ 2.40     $ 2.33     $ 2.25     $ 2.09
Common dividends
 declared per share            1.12        .98        .89        .80        .70
Period end book value(2)      24.02      22.56      19.28      20.27      17.36
Average shares outstanding
 fully diluted            5,577,084  5,443,310  5,432,705  5,038,868  4,942,460

FINANCIAL RATIOS
Return on average assets        .94%       .97%       .98%      1.03%      .96%
Return on average
 shareholders' equity         10.66      11.43      11.90      12.48     12.63
Net yield on earning
 assets (3)                    4.82       4.67       4.74       5.22      5.14
Common stock dividend
 payout                       45.10      40.17      37.34      34.65     32.90
Average shareholders'
 equity to average assets      8.85       8.49       8.20       8.23      7.60
Primary capital ratio
 at period end (4)             9.90       9.10       8.41       8.98      8.49
Net charge-offs to average
 loans, net of unearned
 interest                       .29        .16        .11        .24       .32
Nonperforming loans to
 total loans, net of
 unearned interest (5)         1.22        .73        .72        .65       .90
Reserve for loan losses
 to period end loans, net
 of unearned interest           .94        .99       1.01       1.06      1.11



*Data for periods prior to 1996 has been restated due to the
Moxham pooling-of-interests acquisition on June 25, 1996.

(1)       Per share data has been adjusted to reflect the 5%
          stock dividends distributed by BT on September 11,
          1992, July 26, 1993 and October 14, 1994 and the 10%
          stock dividend distributed on October 22, 1996.
          Additionally, per share data has been adjusted to
          reflect the 10% stock dividend paid on December 30,
          1994 and the two-for-one stock split paid in February
          1993 by the former Moxham Bank Corporation.
(2)       Book value per share excluding the effect of net
          unrealized holding gains (losses) on securities
          available-for-sale was 23.88, 22.52, 21.12 and 19.66 at
          December 31, 1996, 1995, 1994 and 1993, respectively.
(3)       Net interest income stated on a fully taxable
          equivalent basis divided by average earning assets.
(4)       The sum of shareholders' equity and the reserve for
          loan losses divided by the sum of total assets and the
          reserve for loan losses.
(5)       Nonperforming loans include nonaccrual, restructured
          and loans 90 days or more past-due.
(6)       Reflects the purchase acquisition of Bank One on August
          14, 1992.
(7)       Reflects the purchase acquisition of FirstSouth on
          December 10, 1993.
(8)       Reflects the purchase acquisition of Huntington on
          December 14, 1995.
(9)       Reflects the purchase acquisition of Armstrong on June
          13, 1996.

                                    30

MARKET PRICE AND CASH DIVIDENDS

     BT's common stock is traded in the NASDAQ stock market under
the NASDAQ symbol "BTFC."

     The following table sets forth cash dividends declared and
the range of high and low sale prices, as reported on the NASDAQ
Stock Market for the Common Stock for the quarters indicated.

                    1996
--------------------------------------------
Quarter   High      Low       Dividend
-------   ----------------------------------
1st       $32.95    $30.45     $ .256
2nd        34.32     29.20       .234
3rd        34.25     28.86       .300
4th        39.88     33.50       .330
                              --------
                               $1.120
                              ========
                    1995
--------------------------------------------
Quarter   High      Low       Dividend
-------   ----------------------------------
1st       $27.05    $23.64      $ .242
2nd        28.64     26.36        .242
3rd        33.86     27.50        .242
4th        34.09     30.45        .256
                              --------
                                $ .982
                              ========

 Note:    Data has been adjusted to reflect the 10%
          stock dividend distributed on October 22,
          1996.

     On February 7, 1997, there were 4,525 record holders of BT
Common Stock.


     An Automatic Dividend Reinvestment Plan was established
December 1, 1987 to provide a prompt, simple and expense-free way
for shareholders to invest cash dividends from BT into additional
shares of BT common stock.  BT Management Trust Company performs
certain bookkeeping and administrative functions in connection
with the Plan.  As participants, the shareholders may add to
their investment in BT common stock through voluntary additional
cash deposits with the Administrator.


                   MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

     1996 was a record breaking year for BT Financial
Corporation.  The assimilation of three mergers, one closing in
December, 1995 and two closing in June of 1996, was the largest
number of acquisitions for BT in one year.  Moxham Bank
Corporation was the largest single institution acquired in BT
history.  During 1996, BT achieved record earnings and asset
totals despite significant nonrecurring expenses associated with
restructuring from the Moxham merger ($959,000 after tax or $.17
per share) and a one-time assessment from the Savings Association
Insurance Fund (SAIF) on deposits BT acquired in savings and loan
acquisitions ($899,000 after tax or $.16 per share).  Please see
a more in-depth discussion of the one-time SAIF assessment on
page thirt-four under the title "Other Expenses".  The reorganization
costs associated with the Moxham merger consisted primarily of
severance pay to furloughed employees and various legal,
accounting and investment banking fees.  Excluding the one-time
reorganization charges, the acquisitions had a positive effect on
BT's 1996 financial results.  The implementation of synergies as
a result of combined operations should have a favorable impact on
future periods.
     The acquisitions created opportunities to consolidate
various functions, both administratively and operational.  This
resulted in the closing of seven branch offices with overlapping
market areas.  At the same time, BT continued to consolidate
various internal functions, resulting in lower full-time
equivalent employees and the expectation of improved efficiency
in future periods.  Full-time equivalent employees declined to
764 at December 31, 1996 compared to 828 at December 31, 1995.
     On February 26, 1997, BT's Board of Directors approved a
plan to adopt a single bank charter for the Corporation's three
affiliate banks.  Pending regulatory approval, all banking
branches of BT will take on the designation of Laurel Bank under
the single charter in the third quarter of 1997.  The
consolidation of the bank charters will enhance BT's ability to
provide customers with added convenience, products and services.
The costs associated with the adoption of the single bank charter
will not have any material impact on BT's 1997 results of
operations.
     Equipment expense increased 20% in 1996 over 1995 primarily
due to additional depreciation associated with BT's continued
investment in technology.  The automation of branch offices
continued in 1996 and all branches acquired as a result of
acquisitions were converted to our automated systems.  The
implementation of various technologies throughout consolidated
back-office functions was clearly an important aspect of BT's
internal restructuring to improve effectiveness and efficiency.
Other technologies, such as automated telephone systems and a
call center were implemented to enhance customer service and
provide additional marketing capabilities.  During 1997, BT
expects to implement a personal computer-based home banking
service which will complement our current corporate PC-based
service.  In 1996, BT formed a special task force to assess the
impact of the year 2000 issue as it relates to the Corporation's
information systems and vendor supplied application software.
Management does not currently anticipate any significant or
material impact on the Corporation as a result of implications
associated with this issue.
     During 1996, consumer loan delinquencies increased
throughout the industry.  BT was not immune to this increase.
The increase at BT was due primarily to loans acquired from the
mergers, the centralization of the collection function,
restructuring, and the loss of various senior loan collection
officers.  As a result, BT's nonperforming and past-due loans
were at higher levels during 1996.  While BT's ratio of
nonperforming assets to total assets was similar to peer levels
throughout 1996, it increased over historical BT ratios.
Management has put high priority on efforts to reduce this ratio
to historical levels and has implemented several strategies to
address higher nonperforming totals.  Please see a more in-depth
discussion on page thirty-six under the title "Nonperforming Assets and
Risk Elements".

                                    31

     A strong net interest margin and growth in assets produced
greater net interest income in 1996.  Effective asset/liability
management provided a net interest margin of 4.82% in 1996, which
compared very favorably with other financial institutions.  Most
of BT's growth in assets during 1996 was due to the acquisitions.
There was run-off of approximately 9% in the core deposit bases
of the acquired banks, while traditional markets produced minimal
growth.  During 1997, BT will concentrate on increasing assets
through increased sales, marketing, and service efforts to
current markets while continuing bank and branch acquisition
activities.  The pending acquisition of three branch offices from
National City Bank of Pennsylvania will add approximately $69
million to deposits in 1997.
     Other income growth was also quite positive in 1996.  Trust
income increased by 22% due to increased market penetration and
growth in assets under management.  Service fee income increased
18% primarily due to increased volumes of deposit accounts.  BT
recognizes the importance of fee-based income as competition for
commercial bank deposits increases and net interest margins
compress.  In 1996, BT management created an "Emerging Products
Task Force" to investigate and develop nontraditional banking
products and services.  As banking regulations change, BT will
also continue to pursue other lines of business not previously
available to bank holding companies and banks.
     On June 25, 1996, BT completed the merger with Moxham
whereby Moxham was merged directly into BT.  Approximately 1.1
million shares of BT common stock were exchanged for all of the
outstanding preferred and common stock of Moxham.  The merger has
been accounted for as a pooling-of-interests and accordingly,
BT's consolidated financial statements have been restated to
include the accounts and operations of Moxham for all periods
prior to the merger.  Additionally, a ten percent stock dividend
was distributed on October 22, 1996 and all per-share data in the
following discussion has been restated to reflect the stock
dividend.
     Net income for 1996 was $13.8 million, a 5.6% increase over
1995's $13.0 million which was a 3.1% increase over 1994.  Income
per fully diluted share was $2.47 in 1996, a 2.9% increase over
$2.40 earned in 1995, which reflected a 3.0% increase over $2.33
earned in 1994.  BT would have earned $2.80 per share in 1996 if
the nonrecurring expenses discussed earlier were excluded.
     Return on average assets was .94% in 1996, .97% in 1995, and
 .98% in 1994.  Return on average shareholders' equity was 10.66%,
11.43%, and 11.90% in 1996, 1995, and 1994, respectively.
Excluding the nonrecurring expenses, the return on average assets
would have been 1.07% and the return on average shareholders'
equity would have been 12.10% in 1996.
     The following is a more detailed discussion of certain
significant factors that affected the Corporation's consolidated
operating results, financial position, capital resources,
liquidity, and interest rate sensitivity for the years ended
December 31, 1996, 1995, and 1994.  Reference should be made to
the consolidated financial statements and notes thereto as well
as the selected financial data presented herein for a complete
understanding of the following discussion and analysis.
     Certain information in this discussion and other statements
contained in this report which are not historical facts may be
forward-looking statements that involve risks and uncertainties.
Such statements are subject to important factors that could cause
actual results to differ materially from those contemplated by
such statements, including without limitation, the effect of
changing regional and national economic conditions; changes in
interest rates; credit risks of commercial, real estate, consumer
and other lending activities; changes in federal and state
regulations; the presence in BT's market area of competitors with
greater financial resources than BT; or other unanticipated
external developments materially impacting BT's operational and
financial performance.

RESULTS OF OPERATIONS

NET INTEREST INCOME

     Net interest income is BT's primary source of revenue.  In
1996, fully taxable equivalent net interest income increased $6.5
million, or 11.1%, compared to 1995.  Average interest earning
assets rose $95.6 million, or 7.6%, in 1996 compared to 1995.
The increase in earning assets was primarily due to the full-year
impact of assets acquired in the Huntington acquisition in
December 1995 and the Armstrong acquisition in June 1996.  The
net interest margin, on a fully taxable equivalent basis,
improved 15 basis points to 4.82% in 1996 compared to 4.67% in
1995.  The net interest margin increase was due to a higher
yielding asset mix along with lower overall rates paid on
interest bearing liabilities.  Fully taxable equivalent net
interest income rose $1.2 million, or 2.2%, while average
interest earning assets increased $46.7 million, or 3.9%, in 1995
compared to 1994.  The net interest margin, on a fully taxable
equivalent basis, declined 7 basis points in 1995 from the 1994
level of 4.74% primarily due to funding costs of liabilities
increasing more rapidly than income on earning assets.  Internal
modeling suggests a gradual upward movement in BT's net interest
margin level in 1997 based on current market rates and the
repricing characteristics of BT's current balance sheet
composition.  BT's Asset/Liability Committee (ALCO) strives to
minimize the impact of interest rate fluctuations through
effective management of its interest rate sensitivity position.
     In 1996, utilization of technological enhancements afforded
ALCO more sophisticated modeling techniques enabling the
committee to achieve its goal of maintaining the proper balance
between the repricing traits of the Corporation's asset/liability
mix.  Loans generally provide higher yields than investment
securities; therefore, BT continues to focus its efforts on
generating quality loan growth to minimize any decrease in the
net interest margin.  Average loans increased to 75.9% of average
interest earning assets in 1996 from 73.3% in 1995 and 70.4% in
1994.

                                    32


     The following table presents the major categories of assets
and liabilities and shareholders' equity with their
corresponding average balances, related interest income earned on
interest earning assets or interest expense paid on interest
bearing liabilities, and resulting yields and rates on a fully
taxable equivalent basis for the years indicated.

                                             1996
                              -------------------------------------
                                         INTEREST RATE
                              AVERAGE     INCOME/      EARNED/
                              BALANCE     EXPENSE(1)   PAID(1)
                              ------------------------------------
                                     (Dollars in thousands)
ASSETS
Interest-earning assets:
 Loans, net of unearned
  interest (2)                $1,026,536  $88,936      8.66%
 Taxable securities              292,141   18,792      6.43
 Nontaxable securities            10,212      910      8.91
 Trading account assets             ---       ---       ---
 Federal funds sold               22,172    1,188      5.36
 Time deposits in other banks       692        34      4.91
                              -----------------------------------
  Total interest-earning
  assets                       1,351,753  109,860      8.13

Non-interest-earning assets:
 Cash and cash equivalents        46,388
 Premises and equipment, net      32,527
 Other assets                     39,012
 Less:  Reserve for
  loan losses                     (9,665)
                               ---------
    Total assets              $1,460,015
                              ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
 Demand and savings deposits     445,931       6,388   1.43
 Other time deposits             664,742      35,820   5.39
 Federal funds purchased and
  securities sold under
  agreements to repurchase        28,638       1,098   3.83
 Short-term borrowings             2,845         158   5.55
 Long-term debt                   19,020       1,268   6.67
                              -----------------------------------
  Total interest-bearing
    liabilities                1,161,176      44,732   3.85
                                              ------

Noninterest-bearing liabilities:
 Demand deposits                 159,074
 Other liabilities                10,542
                              ----------
  Total liabilities            1,330,792

Shareholders' equity             129,223
                              ----------
 Total liabilities and
 shareholders' equity         $1,460,015
                              ==========
Net interest income                       $65,128
                                          =======
Net interest spread(3)                                 4.28%
                                                       =====
Net yield on earning assets(4)                         4.82%
                                                       =====


                                             1995
                              -------------------------------------
                                         Interest rate
                              Average     Income/      Earned/
                              Balance     Expense(1)   Paid(1)
                              -------------------------------------
                                     (Dollars in thousands)
ASSETS
Interest-earning assets:
 Loans, net of unearned
  interest (2)                $  920,586  $80,458      8.74%
 Taxable securities              313,469   19,162      6.11
 Nontaxable securities            12,083    1,052      8.71
 Trading account assets                5      ---      6.14
 Federal funds sold                5,177      306      5.91
 Time deposits in other banks      4,773      325      6.81
                              -----------------------------------
  Total interest-earning
  assets                       1,256,093  101,303      8.06

Non-interest-earning assets:
 Cash and cash equivalents        43,587
 Premises and equipment, net      30,481
 Other assets                     23,501
 Less:  Reserve for
  loan losses                     (9,175)
                               ---------
    Total assets              $1,344,487
                              ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
 Demand and savings deposits     447,93      8,238     1.84
 Other time deposits            589,586     31,862     5.40
 Federal funds purchased and
  securities sold under
  agreements to repurchase       30,985      1,597     5.15
 Short-term borrowings            4,625        269     5.82
 Long-term debt                   9,344        714     7.64
                              -----------------------------------
  Total interest-bearing
    liabilities               1,082,471     42,680     3.94
                                            ------

Noninterest-bearing liabilities:
 Demand deposits                138,868
 Other liabilities                9,003
                              ----------
  Total liabilities           1,230,342

Shareholders' equity            114,145
                              ----------
 Total liabilities and
 shareholders' equity        $1,344,487
                              ==========
Net interest income                       $58,623
                                          =======
Net interest spread(3)                                 4.12%
                                                       =====
Net yield on earning assets(4)                         4.67%
                                                       =====

                                             1994
                              -------------------------------------
                                         Interest rate
                              Average     Income/      Earned/
                              Balance     Expense(1)   Paid(1)
                              -------------------------------------
                                     (Dollars in thousands)
ASSETS
Interest-earning assets:
 Loans, net of unearned
  interest (2)                $  851,590  $69,291      8.14%
 Taxable securities              314,382   18,457      5.87
 Nontaxable securities            17,442    1,419      8.14
 Trading account assets               5       ---      4.05
 Federal funds sold               14,009      564      4.03
 Time deposits in other banks     11,954      782      6.54
                              -----------------------------------
  Total interest-earning
  assets                       1,209,382   90,513      7.48

Non-interest-earning assets:
 Cash and cash equivalents        46,588
 Premises and equipment, net      28,897
 Other assets                     22,251
 Less:  Reserve for
  loan losses                     (8,919)
                               ---------
    Total assets              $1,298,199
                              ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
 Demand and savings deposits     492,022    8,971      1.82
 Other time deposits             520,092   22,536      4.33
 Federal funds purchased and
  securities sold under
  agreements to repurchase        19,803      740      3.74
 Short-term borrowings             5,928      255      4.30
 Long-term debt                   10,911      629      5.76
                              -----------------------------------
  Total interest-bearing
    liabilities                1,048,756   33,131      3.16
                                           ------

Noninterest-bearing liabilities:
 Demand deposits                 133,356
 Other liabilities                 9,667
                              ----------
  Total liabilities            1,191,779

Shareholders' equity             106,420
                              ----------
 Total liabilities and
 shareholders' equity         $1,298,199
                              ==========
Net interest income                       $57,382
                                          =======
Net interest spread(3)                                 4.32%
                                                       =====
Net yield on earning assets(4)                         4.74%
                                                       =====

(1)  Tax-exempt income on loans and investments and related yield
     are shown on a fully taxable equivalent basis computed using
     the federal statutory tax rate of 35%.
(2)  For purposes of calculating loan yields, average loan
     balances include nonaccrual loans.
(3)  The difference between rate earned on total interest-earning
     assets and rate paid on total interest bearing liabilities.
(4)  Net interest income stated on a fully taxable equivalent
     basis divided by average earning assets.


                                    33


  The following table provides an analysis of the changes in
interest income and expense attributable to changes in volume and
rate.

                                        1996 vs 1995
                              ------------------------------------
                              Net
                              Increase       Due to changes in
                              (Decrease)       Volume    Rate
                              ------------------------------------
                                     (In thousands)

Interest income:
 Loans, net of unearned
  interest(1)(2)               $8,478         $9,260    $(782)
 Taxable securities              (370)        (1,304)     934
 Nontaxable securities(1)        (142)          (163)      21
 Federal funds sold               882          1,005     (123)
 Time deposits in other
  banks                          (291)          (278)     (13)
                              ------------------------------------
    Total interest income       8,557          8,520       37
                              ------------------------------------
Interest expense:
 Inteest-bearing demand and
  savings deposits             (1,850)           (37)  (1,813)
 Other time deposits            3,958          4,063     (105)
 Federal funds purchased
  and securities sold under
  agreements to repurchase       (499)          (121)    (378)
 Short-term borrowings           (111)          (104)      (7)
 Long-term debt                   554            739     (185)
                              ------------------------------------
  Total interest expense        2,052          4,540   (2,488)
                              ------------------------------------

 Change in net interest
 income(1)                     $6,505         $3,980   $2,525
                              ====================================



                                        1995 vs 1994
                              -------------------------------------
                              Net
                              Increase        Due to changes in
                              (Decrease)        Volume  Rate
                              -------------------------------------
                                     (In thousands)


Interest income:
 Loans, net of unearned
  interest(1)(2)               $11,167        $5,615    $5,552
 Taxable securities                705           (54)      759
 Nontaxable securities(1)         (367)         (436)       69
 Federal funds sold               (258)         (356)       98
 Time deposits in other
  banks                           (457)         (470)       13
                              -------------------------------------
    Total interest income       10,790         4,299     6,491
                              -------------------------------------
Interest expense:
 Interest-bearing demand and
  savings deposits                (733)         (804)       71
 Other time deposits             9,326         3,011     6,315
 Federal funds purchased
  and securities sold under
  agreements to repurchase         857           418       439
 Short-term borrowings              14           (56)       70
 Long-term debt                     85           (90)      175
                              -------------------------------------
  Total interest expense         9,549         2,479     7,070
                              -------------------------------------
 Change in net interest
 income(1)                      $1,241        $1,820    $(579)

                              =====================================


(1)       Tax-exempt income on loans and investments and related
          yield are shown on a fully taxable equivalent basis
          computed using the federal statutory tax rate of 35%.
(2)       Nonaccrual loans are included in the average
          outstanding balances.


OTHER INCOME

   Total other income, excluding security gains, increased 26%
in 1996, compared to 1995.  Strong growth in trust income and
fees for other services provided improved core fee income.
Increased market penetration and an 8.7 percent growth in assets
under management to $556 million were important factors in the
growth associated with trust fees.  Particularly due to the
addition of deposit accounts from the Huntington National Bank of
Pennsylvania (Huntington) and Armstrong County Trust Company
(Armstrong) mergers, fees for other services increased 18%.
Other income experienced some one-time additions from the
elimination of an acquired liability for certain state taxes and
funds received in a new contractual agreement with a loan
servicing company, which contributed $222,000 and $200,000,
respectively.  Additionally, the sale of real estate at Laurel
and the sale of the Salem 22 office of the former Moxham Bank
Corporation added approximately $270,000 to other income.
   Total other income, excluding security gains, increased 6.8%
in 1995 over 1994.  Trust income increased 1.3% due to a greater
volume of managed assets.  Trust assets under management did not
grow until later in the year during 1995, and trust income was
somewhat below expectations.  Fees for other bank services
increased 8% in 1995, due to somewhat higher fee schedules and
some growth in deposit accounts.  Other income increased 6% in
1995 over 1994 due to a higher level of gains on loans sold in
the secondary marketplace.
   Security gains increased $298,000 in 1996 over 1995,
primarily due to the sale of certain stocks of other financial
institutions.  These stocks were acquired through BT's mergers
and acquisitions of the past few years.  Management decided to
sell these stocks due to their minimal contribution to recurring
income and some favorable market values.  Security gains had
declined in 1995 compared to 1994 due to market prices even
though the level of security sales and calls increased in 1995.
Generally, securities are acquired to provide interest income to
the Corporation and are not bought and sold for taking profits.
Sales do occur periodically when funding is required for loans or
deposits outflows.

OTHER EXPENSES

   On September 30, 1996, President Clinton signed legislation
which required financial institutions with Savings Association
Insurance Fund (SAIF) deposits to pay a one time special
assessment to facilitate the recapitalization of the SAIF.  The
assessment was based on 65.7 cents per $100 of deposits at March
31, 1995.  This assessment resulted in a charge of approximately
$1.4 million ($899,000 net of tax or $.16 per share) to other
expense during the year ended 1996.  The legislation also
included provisions whereby at such time as the SAIF is
adequately recapitalized, BT's future SAIF deposit premiums will
decrease from the $.23 per $100 of deposits paid in 1996 to
approximately $.065 through the year 2000 and approximately $.025
through the year 2017.

                                    34

   Total other expenses increased $6.1 million or 13% in 1996
compared to 1995, with approximately 44% of the increase due to
the recording of nonrecurring costs associated with the Moxham
merger and the one-time deposit insurance assessment from SAIF.
The majority of the remaining increase is due to a full year of
expenses related to the Huntington acquisition and the second
quarter 1996 acquisition of Armstrong, along with conversion and
marketing expenses from all the acquisitions.  While salaries
increased 4% due to periodic merit increases, full-time
equivalent employees fell to 764 from 828 at December 31, 1996
and 1995, respectively.  Employee benefit costs declined
primarily due to a change in BT's health care insurance provider
in the fourth quarter of 1994 and the lowering of reserves
associated with the previous provider.  The recent implementation
of managed health care is currently expected to reduce ongoing
expenses by approximately $200,000 in 1997.  Deposit insurance
premiums increased 12% due to the one-time charge from the SAIF
fund, however, the increase was mitigated by reduced deposit
premiums in effect for 1996.  Based upon deposit levels at
December 31, 1996 and rates currently in effect, Federal Deposit
Insurance Corporation (FDIC) insurance expense in 1997 is
expected to decline approximately 85% compared to 1996.  BT
continues to invest in technology, as evidenced by increasing
equipment expenses.  These investments and related internal
restructurings, the centralization of various operational
functions, and the closing of seven branch offices as a result of
the Moxham merger are a means to curtail unit costs, increase
efficiency and ultimately increase profitability.  BT's
efficiency ratio, excluding nonrecurring costs, improved to 64.46%
in 1996 from 67.77% in 1995 and 69.68% in 1994.
   Total other expenses decreased 0.1% in 1995 compared to 1994.
Salaries and wages increased 5% due to merit increases.  Employee
benefit costs decreased by 0.2% due to a change in BT's health
care insurance provider and reduced health insurance premiums.
The number of full-time equivalent employees at December 31, 1995
and 1994 was 828 and 805, respectively.  The Huntington
acquisition added 39 full-time equivalent employees at year-end
1995 of which 19 were furloughed in January of 1996.  Occupancy
and equipment expense increased 3% and 11%, respectively.  During
1995, BT committed significant resources to technological
expenditures, including teller platform automation and corporate-
wide microcomputer network enhancements.  FDIC insurance expense
decreased 36%, comparing 1995 to 1994, due to lower premiums and
a retroactive deposit insurance rate adjustment which resulted in
the receipt of a refund for $590,000.  Other operating expenses
declined 3% in 1995 due to reduced advertising expense and
nonrecurring acquisition related costs that occurred during the
first quarter of 1994.


PROVISION FOR INCOME TAXES

   Pre-tax income rose $2.0 million or 10.9% in 1996, to $20.8
million after a $1.2 million, or 6.8%, increase in 1995 over
1994.  The effective tax rate was 33.7% in 1996, 30.4% in 1995,
and 27.8% in 1994.
   The rise in the effective tax rate in 1996 is mainly due to
an increase in nondeductible amortization of acquisition goodwill
and organization costs as well as a decline in tax-exempt
interest.  The increase in the effective tax rate in 1995 was
primarily due to a relatively lower rate in 1994 resulting from
the retroactive deduction of goodwill amortization associated
with acquisitions in prior years.  Prior to 1994, certain
amortization associated with these acquisitions was previously
nondeductible for federal income tax purposes.  As a result of
changes in the federal income tax laws, BT elected to amortize
certain goodwill over a 15-year period for federal income tax
purposes in 1994, thereby allowing deductibility for both
financial statement and federal income tax purposes.  This
election was primarily responsible for the lower effective tax
rate in 1994.

FINANCIAL CONDITION

LOAN PORTFOLIO

   Total loans outstanding, net of unearned interest, increased
$14.5 million or 1.4% at December 31, 1996 compared to December
31, 1995.  The growth was due to the acquisition of Armstrong in
June of 1996 and the inclusion of $12 million Armstrong loans
outstanding at the merger date.  BT experienced growth in both
consumer and commercial loans during 1996, however commercial
loan growth was mitigated by the pay-off of various commercial
loans approximating $26 million.  In 1996, average total loans,
net of unearned interest grew 11.5% over 1995 to an average of
$1.03 billion.  Prior to the mergers, BT was approaching an 85%
loan to deposit ratio; whereas, at December 31, 1996 the loan to
deposit ratio was 81% due to much lower ratios at both Armstrong
and Moxham.  Management sees this as an opportunity to increase
lending and ultimately improve the yield on interest-earning
assets as effort is placed on restoring the loan to deposit ratio
to pre-merger levels.  Average loans, net of unearned interest,
grew $69.0 million in 1995 compared to 1994, with much of the
growth occurring in the commercial and indirect auto portfolios.
A moderately expanding economy and low rates helped to fuel loan
growth in 1995.  Approximately $70.1 million in loans was
acquired in the Huntington acquisition in December 1995.
   Aggressive loan pricing policies and a healthy automotive
market helped propel increases in the consumer indirect lending
area in both 1996 and 1995.  Management continues to focus loan
growth in the commercial and direct consumer areas while selling
most longer term fixed-rate residential mortgage loans to the
secondary market.  This permits BT to meet the needs of its
communities and reduce the interest rate risk associated with
long-term fixed-rate instruments while garnering additional
income related to the sale of residential mortgage loans.  During
1996, many aspects of mortgage origination were centralized, and
a dealer center was created to process the indirect auto loans
more efficiently and effectively.  Management expects these
centers to not only provide efficiency, but also provide improved
service to both dealers and customers.
   At December 31, 1996,  BT's entire loan portfolio consisted
of loans made to individuals and businesses located within BT's
marketing region with the vast majority of these loans located in
the Commonwealth of Pennsylvania.  BT does not have any foreign
loans.   At December 31, 1996, the most significant industry
concentrations were the real estate and educational services
sectors, which were 7.4% and 1.0% of the total loan portfolio,
respectively.
   Real estate industry loans were primarily loans to operators
of nonresidential buildings and apartment buildings.  Educational
service loans were mainly loans to school districts.

                                    35



   The following table summarizes the composition of BT's loan
portfolio by types of loans at December 31, for each of the years
indicated.

                            1996       1995      1994     1993    1992
                        -----------------------------------------------
                                      (In thousands)
Commercial, financial
 and agricultural       $170,107   $167,144  $142,188 $146,467 $143,390
Real estate              535,320    518,078   469,724  446,112  357,832
Consumer                 377,247    375,649   321,006  274,501  211,156
Lease financing               --         --        --      190    1,069
                        -----------------------------------------------
 Total                $1,082,674 $1,060,871  $932,918 $867,270 $713,447
                        ===============================================


     The following table shows BT's loan maturities by types of
loans indicated, exclusive of residential and commercial real
estate, consumer and lease financing loans, as of December 31,
1996.



                                          Maturing
                       ----------------------------------------------
                                   After One
                         Within    But Within  After
                         One Year  Five Years  Five Years    Total
                       ----------------------------------------------
                                        (In thousands)

Commercial, financial
 and agricultural        $69,083     $81,184    $19,840   $170,107
Real estate construction  10,583         --        --       10,583
                       ----------------------------------------------
 Total                   $79,666     $81,184    $19,840   $180,690
                       ==============================================

Commercial, financial, and agricultural loans due after one year
and having floating or adjustable rates approximated $61 million.

    BT's highly leveraged financings were not significant at
December 31, 1996.  Highly leveraged financings are defined as
those credits that are extended for the acquisition or
restructuring of an organization and are characterized by
unusually high debt-to-total asset ratios.  While it is
recognized that these transactions carry a higher level of risk
in some cases, affiliate banks may originate or participate in
this type of financing from time to time.


NONPERFORMING ASSETS AND RISK ELEMENTS

    BT's nonperforming assets increased during 1996 due to the
inclusion of three mergers, some temporary interruption in
collection processes during the restructuring and centralization
of the collection function, and a general industry-wide
deterioration in consumer credit quality.  Nonperforming loans as
a percent of outstanding loans, net of unearned interest,
increased to 1.22% in 1996, compared to 0.73% in 1995 and 0.72%
in 1994.  While the 1996 ratio is similar to peer levels
throughout 1996, it is higher than BT historical levels.
    BT management has implemented several strategies to address
the increased levels of nonperforming assets.  Increased
collection efforts, debt rewriting where appropriate, and credit
counseling activities are among the measures currently in place.
In addition, an outside collection agency has been retained to
supplement BT's activities in regard to recovery of charged-off
loans.  Collection of past due loans and improvement in
nonperforming ratios will continue to be of the highest priority
to BT management, in an effort to gradually restore asset quality
ratios to historically strong levels.
    Various loans acquired in the Huntington acquisition
accounted for approximately $3.4 million of total nonperforming
loans at year-end 1996.  Commercial loans accounted for 52% and
56% of total nonperforming loans at December 31, 1996, and 1995,
respectively.  Residential mortgages accounted for 27% and 23%
for the same respective time periods while consumer loans
accounted for 21% of total nonperforming loans for both periods.
Repossessed assets consist primarily of automobiles.  Huntington
loans represent 18% of the repossessed assets total at year-end
1996.  Other real estate owned increased 12% in 1996 over 1995;
however, $550,000 of the 1996 total was sold in the first quarter
of 1997 with a gain on the sale of the property of approximately
$121,000.

                                    36

    The following table provides information with respect to the
BT's past due loans and the components of its nonperforming
assets at December 31 of each of the years indicated.



                       1996     1995    1994     1993     1992
                    -------------------------------------------
                               (Dollars in thousands)

Loans 90-days or
 more past due        $ 961  $ 2,077  $ 1,323  $ 1,722  $1,771
Restructured loans      317      318      675      107     320
Nonaccrual loans     11,276    5,013    4,445    3,579   4,076
                    -------------------------------------------
 Total non-
 performing loans    12,554    7,408    6,443    5,408   6,167
Other real estate
 owned                1,023      912      116      631     678
Repossessed assets      851      318      177      167     248
                    -------------------------------------------
  Total nonperform-
   ing assets      $ 14,428  $ 8,638  $ 6,736  $ 6,206 $ 7,093
                    ===========================================
Non-performing
 loans as a percent
 of total loans,
 net of unearned
 interest              1.22%    0.73%    0.72%    0.65%   0.90%


    Reviews of the commercial loan and commercial mortgage
portfolios are conducted by Credit Department personnel to
systematically evaluate the quality of the portfolio, to detect
problems, and to provide an early warning system for loan
deterioration.  Commercial loans and residential mortgages are
placed on a nonaccrual status when they become 90 days past due
as to principal or interest.  In previous years, no specific
period of delinquency triggered nonaccrual status for consumer
loans, however; in 1996 management instituted a policy of placing
consumer loans on nonaccrual status when they become 120-days
past due.  Consumer loans normally are charged-off within 150
days of delinquency, when they are determined to be uncollectible
and all collateral securing the loans has been liquidated.
    Interest income of $1,470,000 and $567,000 would have been
recorded in 1996 and 1995, respectively, if nonaccrual and
restructured loans were on a current basis in accordance with
their original terms.  Interest income of $562,000 and $281,000
on nonaccrual and restructed loans was recorded in each of the
years of 1996 and 1995, respectively.
    A loan generally remains on nonaccrual status until it
becomes current as to principal and interest, except for consumer
loans, which are returned to accrual status when they become less
than 120 days past due.  Loans determined to be uncollectible are
charged off against the reserve for loan losses.  A loan is
classified as restructured when the terms have been modified
because of deterioration in the financial position of the
borrowers to provide for a reduction of either interest or
principal.
    The Corporation's Credit Department analyzes the financial
stability of all large borrowers and pays particular attention to
resolving certain problem or classified loans.  A loan is
generally considered classified due to a deterioration in the
financial performance of the borrower.  The Corporation had
internally classified loans (other than non-performing loans)
totaling $11.2 million at December 31, 1996 compared to $19.3
million at December 31, 1995.  However, these loans are currently
performing and based on a loan-by-loan review, historical
performance, and current economic conditions, management does not
expect any significant amount of classified loans to deteriorate
to nonaccrual status.  Classified loans are reviewed monthly by
BT's and the affiliate banks' Board of Directors.

RESERVE FOR LOAN LOSSES

    The reserve for loan losses totaled $9.7 million at December
31, 1996 compared to $10.0 million and $9.1 million at December
31, 1995 and 1994, respectively.  The Huntington acquisition
added $849,000 to the reserve in December of 1995 and the
Armstrong acquisition added $159,000 in June of 1996.  The
reserve for loan losses, as a percent of loans, net of unearned
interest was 0.94% at December 31, 1996, compared to 0.99% and
1.01% at year-end 1995 and 1994, respectively.  Net charge-offs
increased to $3.0 million in 1996 compared to $1.4 million in
1995.  Of the $1.6 million increase, approximately $1.0 million
in net charge-offs was from the Huntington loan portfolio.  Net
charge-offs increased 54.3% in 1995 over 1994 primarily due to
higher levels of consumer and commercial loan charge-offs.  The
provision for loan losses increased to $2.4 million in 1996
compared to $1.6 million in 1995 and $1.2 million in 1994 due to
increased charge-offs.  Due to the current level of nonperforming
loans, the coverage ratio (reserve for loan losses to
nonperforming loans) has declined to .8x in 1996 compared to 1.4x
in 1995 and 1994; however, management believes the reserve is
adequate to cover losses inherent in the portfolio as of such
date.  There can be no assurance that the Corporation will not
incur losses in future periods which could be substantial in
relation to the size of the reserve or in relation to the
estimates set forth herein.
    Based on management's loan-by-loan review, the past
performance of the borrowers and current economic conditions,
management does not anticipate any current losses related to
nonaccrual, nonperforming or classified loans above what has
already been considered in its overall judgment of the adequacy
of the reserve.  In determining the amount to be provided in the
reserve for loan losses, management considers the volume of loans
by type and prevailing economic conditions.  BT's Credit
Department also employs a loan-by-loan review of a substantial
portion of the banks' business loan portfolios.  In addition,
BT's historical experience with respect to charge-offs,
delinquencies, and the level of the reserve are considered.  BT's
Credit Department utilizes a quantitative model to formally
ascertain reserve levels at quarterly intervals.  The model
employs a disciplined methodology approach factoring in the
various loan types and credit ratings within the commercial
portfolio.  Management's final assessment of the adequacy of the
reserve involves considerations which are essentially judgmental
and are not subject to mathematical formulation.

                                    37

     The following table summarizes the activity in BT's reserve
for loan losses for each of the years indicated.


                                         Years ended December 31,
                           ---------------------------------------------------
                                 1996       1995      1994      1993      1992
                           ----------------------------------------------------
                                   (Dollars in thousands)

Total loans outstanding
 at period end (net of
 unearned interest)        $1,025,765 $1,011,240  $892,010  $832,421  $684,209
                           ====================================================
Reserve for loan losses at
 beginning of year           $ 10,033   $  9,053   $ 8,815   $ 7,585   $ 6,420
Reserve of acquired banks         159        849       ---       784        69
Loans charged off:
 Commercial, financial, and
  agricultural                   (663)      (523)     (284)   (1,116)   (1,293)
 Real estate                     (261)      (170)     (248)     (193)     (108)
 Consumer                      (2,594)    (1,089)     (798)     (753)   (1,031)
                           ----------------------------------------------------
  Total loans charged off      (3,518)    (1,782)   (1,330)   (2,062)   (2,432)
                           ----------------------------------------------------
Recoveries of loans previously
 charged off:
  Commercial, Financial, and
   agricultural                   143         29       170        96       132
  Real estate                      57         80        36        13        19
  Consumer                        366        238       194       231       198
                           ----------------------------------------------------
     Total recoveries             566        347       400       340       349
                           ----------------------------------------------------
Net loans charged off          (2,952)    (1,435)     (930)   (1,722)   (2,083)
Additions to reserve charged
 to operations                  2,441      1,566     1,168     2,168     3,179
                           ----------------------------------------------------
Reserve for loan losses at
 year end                     $ 9,681   $ 10,033   $ 9,053   $ 8,815   $ 7,585
                           ====================================================
Ratio of net charge-offs during
 year to average loans, net of
 unearned interest               0.29%      0.16%     0.11%     0.24%     0.32%
Reserve for loan losses as a
 percent of loans, net of
 unearned interest               0.94%      0.99%     1.01%     1.06%     1.11%
Reserve for loan losses to non-
 performing loans                 0.8x       1.4x      1.4x      1.6x      1.2x



     The following table summarizes the allocation of the reserve
for loan losses at December 31 for the years indicated.



                      1996              1995                1994
                 -----------------------------------------------------
                          % of               % of                % of
                         Loans              Loans               Loans
                       to Total            to Total           to Total
                Amount   Loans      Amount   Loans     Amount   Loans
                 -----------------------------------------------------
                              (Dollars in thousands)

Commercial,
 financial, and
 agricultural   $2,449   15.7%     $2,936    15.8%     $3,492    15.2%
Real estate      3,176   49.5       2,705    48.8       2,298    50.4
Consumer         1,831   34.8       1,687    35.4       2,147    34.4
Lease financing    ---   ---          ---     ---         ---     ---
Unallocated      2,225   ---        2,705     ---       1,116     ---
                -----------------------------------------------------
 Total Reserve  $9,681  100.0%    $10,033   100.0%     $9,053   100.0%
                 =====================================================


                       1993                1992
                 ------------------------------------
                           % of                 % of
                           Loans                Loans
                          to Total            to Total
                 Amount    Loans      Amount    Loans
                 ------------------------------------
                         (Dollars in thousands)
Commercial,
 financial, and
 agricultural    $3,293    16.9%     $3,351    20.1%
Real estate       2,398    51.4       1,749    50.2
Consumer          2,005    31.7       1,413    29.6
Lease financing     ---     ---         ---     0.1
Unallocated       1,119     ---       1,072     ---
                 ------------------------------------
 Total Reserve   $8,815  100.0%      $7,585   100.0%
                 ====================================


     Not withstanding the foregoing allocations, the entire
reserve for loan losses is available to absorb charge-offs in any
category of loans.


                                    38

SECURITIES PORTFOLIO

     At December 31, 1996, securities totaled $302.4 million
compared to $303.4 million at year-end 1995.  Various securities
totalling approximately $36 million were acquired in the
Armstrong acquisition in June of 1996.  Exclusive of the acquired
Armstrong securities, the aggregate year-over-year decrease in
securities was approximately $33 million.  The decrease was
primarily due to proceeds from maturing securities being used to
fund anticipated acquisition-related deposit run-off.  Net
unrealized holding gains on securities available-for-sale totaled
$770,000 at year-end 1996 compared to $1.6 million at year-end
1995.  Securities decreased $29.8 million, or 9.0%, at December
31, 1995 compared to December 31, 1994.  The decrease in the
securities portfolio was due essentially to the maturing and
sales of various securities throughout 1995 and the use of these
funds to support loan growth.  It has been BT's policy to buy
securities with a maturity of five years or less in order to
provide liquidity and the ability to take advantage of a changing
rate environment.  Banking affiliates' securities portfolios have
relatively similar portfolio characteristics, with short-term
U.S. Treasury instruments providing strong primary liquidity.
     The following table summarizes the carrying value of BT's
securities portfolio at December 31 for each of the years
indicated.

                                       1996        1995        1994
                                   --------------------------------
                                             (In thousands)
U.S. Treasury and other U.S.
 Government agencies:
    Available-for-sale            $ 186,986   $ 250,246   $ 287,516
    Held-to-maturity                 97,685      35,161      22,911
States and political subdivisions
 available-for-sale                   9,863      10,597      15,449
Other securities available-for-sale   7,858       7,351       7,323
                                   --------------------------------
 Total                            $ 302,392   $ 303,355   $ 333,199
                                   ================================

     The following table summarizes amortized cost and weighted
average yields of BT's securities portfolio at December 31, 1996
by maturities of investments.

                                                After One But
                           Within One Year    Within Five Years
                         -------------------------------------
                          Amount  Yield(1)    Amount  Yield(1)
                         -------------------------------------
                                   (Dollars in thousands)
SECURITIES HELD TO
 MATURITY:
U.S. Treasury and
 other U.S. Government
 agencies                $   ---    ---%    $ 84,185    6.88%
SECURITIES AVAILABLE
 FOR SALE:
U.S. Treasury and
 other U.S. Government
 agencies                 45,588   6.27      115,094    6.01
States and political
 subdivisions(2)             325   7.96        2,029    7.68
Other securities             176   8.79          211    8.66
                         ------------------------------------
  Total                 $ 46,089   6.29%   $ 201,519    6.39%
                         ====================================


                            After Five But
                           Within Ten Years   After Ten Years
                         ------------------------------------
                          Amount  Yield(1)    Amount  Yield(1)
                         ------------------------------------
                                   (Dollars in thousands)
SECURITIES HELD TO
  MATURITY:
U.S. Treasury and
  other U.S. Government
  agencies              $ 13,500     6.76%      $ --       -- %
SECURITIES AVAILABLE
  FOR SALE:
U.S. Treasury and
  other U.S. Government
  agencies                24,990     7.30        500      7.75
States and political
  subdivisions(2)          1,469     9.33      5,833      9.41
Other securities             636     7.32      6,672      6.07
                         -------------------------------------
  Total                  $40,595     7.20%  $ 13,005      7.63%
                         =====================================

(1)  Weighted average yield is based on yield to maturity, which
     is the discount or premium rate that makes the present value
     of a bond's cash flow to maturity equal to the bond's market
     price.
(2)  Yields on tax-exempt securities were computed on a fully
     taxable equivalent basis using the federal statutory tax
     rate of 35%.

DEPOSITS

     At December 31, 1996, total deposits were $1.26 billion
compared to $1.25 billion at December 31, 1995, an increase of
$10.5 million.  The deposit levels at year-end 1995 included
approximately $7.9 million which were subsequently sold in 1996
in connection with the sale of the Salem 22 office of the former
Moxham Bank Corporation.  The year-over-year increase in total
deposits, exclusive of the Salem 22 office deposits, was
approximately $18.4 million.  Various deposits acquired in the
Armstrong acquisition totaled approximately $42 million at the
June 13, 1996 merger date.  Due to two in-market acquisitions of
Huntington in December 1995 and Moxham in June 1996, run-off of
approximately 11% and 8% occurred in those core deposit bases,
respectively.  Deposit run-off is a common occurrence in such in-
market acquisitions and was not unexpected by BT.  Average
deposits increased $30.9 million or 2.7% in 1995 over 1994, with
much of the growth in certificates of deposits; however, BT was
also successful in increasing average demand deposits by $5.5
million or 4.1%.  Financial institutions continue to experience
the shifting of lower cost funds to higher rate certificates of
deposits, and BT is no exception.  BT competes with banks,
savings and loans, credit unions and other financial companies
for deposit accounts.  In 1997, BT will continue concentrated
marketing efforts focusing on specific customer profiles to
facilitate deposit growth in existing markets.  The pending
acquisition of three bank branch locations from National City
Bank of Pennsylvania will add approximately $69 million to
deposits in 1997.


                                    39

     The daily average amount of BT's deposits and the average
rate paid on such deposits are summarized in the following table.

                                       Years Ended December 31,
                              1996                1995               1994
                     --------------------  -----------------  ----------------
                         Amount    Rate      Amount    Rate    Amount     Rate
                     --------------------  -----------------  ----------------
                                   (Dollars in thousands)
Non interest-bearing
     demand deposits   $159,074     --%    $138,868     --%   $133,356     --%
Interest-bearing demand
     deposits           187,534    1.5      169,731    1.7     188,125    1.7
Savings deposits        258,397    1.4      278,200    2.0     303,897    1.9
Time deposits           664,742    5.4      589,586    5.4     520,092    4.4
                     --------------------  -----------------  -----------------
     Total           $1,269,747          $1,176,385         $1,145,470
                     ==========           =========          =========


     The maturity schedule of BT's time certificates of deposit
of $100,000 or more at December 31, 1996 is summarized below.

Time Certificates of Deposit (In thousands)

3 months or less                  $ 42,948
Over 3 through 6 months             20,402
Over 6 through 12 months            23,815
Over 12 months                      14,683
                                   -------
     Total                       $ 101,848
                                   =======

SHORT-TERM BORROWINGS

     The following table summarizes the distribution of BT's
short-term borrowings, which are comprised of federal funds
purchased, securities sold under agreements to repurchase, and
other short-term borrowings.  Repurchase agreements consist of
retail repurchase agreements with terms of overnight to 29 days
and repurchase agreements with the Federal Home Loan Bank (FHLB).
Also shown are the maximum amount of borrowings, the average
amounts of borrowings, and the weighted average interest rates
paid on such borrowings for the last three years.


                                                  1996       1995      1994
                                              --------------------------------
                                                  (Dollars in thousands)

Amount outstanding at year end                 $ 40,688   $ 37,679  $ 70,032
Weighted average interest rate at year end         3.27%      4.58%     5.41%
Maximum amount outstanding at any month end    $ 42,526   $ 57,500  $ 70,032
Average amount outstanding during the year     $ 31,483   $ 35,610  $ 25,731
Weighted average interest rate during the year     3.99%      5.24%     3.87%


CAPITAL RESOURCES

 BT's primary source of capital has historically been retained
earnings.  Other sources are the sale of common stock, long-term
debt, and issuances of stock in connection with acquisitions.  BT
has developed a capital planning policy to ensure current capital
adequacy and to plan for future needs.  The general objective of
the policy is to manage the capital position, not only to ensure
compliance with regulations, but also to ensure capital adequacy
for future expansion.
 The Corporation and its predecessor, Bank and Trust, have
increased dividends for 29 consecutive years.  Common dividends
paid per share were $1.12 in 1996 and $.98 in 1995.  A common
dividend of $0.33 was declared for the first quarter of 1997.
 BT common stock attained a 217% total cumulative return during
the five-year period from December 31, 1991 to December 31, 1996,
assuming reinvestment of all dividends.  This compares favorably
to a 105% total return for the overall NASDAQ stock market over
the same time period.  BT's historical stock price performance is
not necessarily indicative of future price performance.  The
market price of BT common stock at December 31, 1996 was $39.63,
compared to $31.59 (adjusted for the 1996 10% stock dividend) at
December 31, 1995.

LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT

 BT's liquid assets consist of cash and due from banks, federal
funds sold, interest-bearing deposits with banks, bankers
acceptances, and marketable securities.  In addition, BT's core
deposits and shareholders' equity supplement the liquid position
of BT by supporting a significant portion of the loan and
securities portfolio.  The monetary nature of BT's assets and
liabilities ensures that sufficient funds are available to meet
the operational cash needs of the Corporation.  Operating
activities have traditionally been a significant source of cash.
The securities portfolio is a readily available source of
liquidity, and BT currently has $46.3 million of securities due
to mature within one year.  Financing activities can be a source
of cash, primarily from low cost short-term borrowings and
through the acquisition and growth of deposits.  The Corporation
expects to have sufficient funding sources available from
financial institutions and the financial markets should the need
for additional funding develop.

                                    40

 To further enhance the liquidity position of the Corporation,
BT's affiliate banks are members of the FHLB.  The FHLB
membership provides affiliate banks with an additional source of
both short- and long-term funding, special funding for low-income
housing lending, and various other correspondent bank services.

 The following table sets forth, in summary form, BT's repricing
analysis at December 31, 1996.
                                                         Non-rate
                                                        sensitive
                             0-90    91-365   Over 1-5   and over
                             days      days      years    5 years       Total
                         -----------------------------------------------------
                                        (In thousands)

Loans                   $ 290,427  $ 180,108  $ 396,969  $ 158,261 $ 1,025,765
Securities                 18,719     34,499    196,497     52,677     302,392
Other interest-earning
 assets                    10,434       ---         ---        ---      10,434
                         -----------------------------------------------------
 Total interest-earning
 assets                   319,580    214,607    593,466    210,938   1,338,591
                         -----------------------------------------------------
Other assets                  ---        ---        ---    127,717     127,717
                         -----------------------------------------------------
 Total assets           $ 319,580  $ 214,607  $ 593,466  $ 338,655 $ 1,466,308
                         =====================================================

Demand deposits         $ 181,606  $     ---  $     ---  $ 161,981   $ 343,587
Savings deposits          252,408        ---        ---        ---     252,408
Interest-bearing time
 deposits                 171,770    320,044    171,248      4,671     667,733
Borrowed funds             40,688        ---        ---        ---      40,688
Long-term debt                  4     17,156         50        ---      17,210
Other liabilities             ---        ---        ---      8,195       8,195
Shareholders' equity          ---        ---        ---    136,487     136,487
                        ------------------------------------------------------
 Total liabilities and
  shareholders' equity  $ 646,476  $ 337,200  $ 171,298  $ 311,334 $ 1,466,308
                        ======================================================
Net interest
 sensitivity gap        $(326,896) $(122,593) $ 422,168  $  27,321         ---
                        ------------------------------------------------------
Net cumulative
 interest gap           $(326,896) $(449,489) $ (27,321)       ---         ---
                        ------------------------------------------------------


     The previous table  has been prepared in accordance with
regulatory requirements, presenting interest-bearing demand
deposits and savings deposits as repricing within the earliest
period presented.  As a result, the table reflects a negative
cumulative interest gap position of $449 million in the first
one-year gap at year-end 1996.  This compares to negative
cumulative one-year interest gaps of $355 million at year-end
1995 and $330 million at year-end 1994.  While important, the
information presented in the table represents only a static view
of BT.  Management believes, however, that this is not reflective
of anticipated results, based on the fact that BT has
historically not experienced the kind of earnings volatility
indicated from the negative cumulative gap.  Certain core
deposits, such as interest-bearing demand deposits and savings
deposits have not repriced in changing rate environments as
rapidly as other liabilities despite similar repricing
characteristics.  Therefore, the gap is not necessarily
indicative of the change in net interest income that would occur
due to changing market interest rates.  Management does not use
static gap measurement to manage interest rate sensitivity but
rather uses simulation models and other historical data which
they believe are more reflective of anticipated results.
     The two major interest sensitive components of the static
gap table shown above are loans and interest-bearing deposits,
which are primarily certificates of deposit.  The first category,
0-90 days maturity, is of great significance due to the ability
of market-rate loans to reprice immediately, while certificates
of deposit will reprice at maturity throughout the period.
During periods of rising rates, management would seek to lengthen
the maturities of interest-bearing deposits to delay the increase
in interest expense while market-rate loans would provide
increased income.  Likewise, during periods of falling rates,
management would seek to shorten the maturities of certificates
to help compensate for the lower rates on market-rate loans.
BT's interest rate risk management objectives are to minimize
risks associated with interest rate changes due to the maturity
imbalance of various assets and liability categories, to maintain
a profitable interest rate differential between the overall cost
of funds and rate of return on loans, and to assure adequate
liquidity.
     At December 31, 1996, simulation analysis reveals a 200
basis point increase in interest rates would increase projected
net interest income by approximately $2.3 million over the next
year.  Conversely, a 200 basis point decrease would reduce
projected net interest income by approximately $4.0 million over
the same period.  These results assume interest-earning asset and
interest-paying liability levels at year-end 1996 remain
constant.  The results reflect the impact of rate floors imposed
on certain deposit accounts under the changing rate scenarios.
In contrast to the rising rate scenario, the decreasing rate
scenario limits BT's ability to reprice certain deposit
liabilities lower than current levels.  This is the primary
reason for the greater aggregate reduction in net interest income
in the decreasing rate scenario.

INFLATION

     Assets and liabilities of a financial institution are
monetary in nature.  Accordingly, interest rates, which generally
move with the rate of inflation, have potentially the most
significant effect on BT's net interest income.  BT attempts to
limit inflation's impact on net interest spread through effective
asset/liability management.

                                    41