U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999.


[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

Commission file number 0-13664
                       -------

                            GRANGE NATIONAL BANC CORP

          PENNSYLVANIA                                  23-2314065
-------------------------------             -----------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or organization)

                   198 E. Tioga St., Tunkhannock, Pennsylvania
                   -------------------------------------------
                    (Address of principal executive offices)

                                 (717) 836-2100
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter periods that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes  X  No
             ---    ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: 774,207
                                         -------

Transitional Small Business Disclosure Format (Check one): Yes      ;   No   X
                                                               ---     ---

<PAGE>

                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY

PART I.           FINANCIAL INFORMATION

ITEM 1.           Unaudited Financial Statements

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                             <C>
         Consolidated Statements of Financial Position as
         of September 30, 1999 and December 31, 1998..............................................................2

         Consolidated Statements of Income and Comprehensive Income For the
         Three and Nine Months Ended September 30, 1999 and 1998..................................................3

         Consolidated Statements of Changes to Stockholder's Equity For the Nine Months
         Ended September 30, 1999 and 1998........................................................................4

         Consolidated Statements of Cash Flows For the Nine Months ended
         September 30, 1999 and 1998..............................................................................5

         Notes to Consolidated Financial Statements...........................................................6 - 7

ITEM 2.           Management's Discussion and Analysis of Financial Condition................................8 - 14


PART II.          OTHER INFORMATION:

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

</TABLE>

                                        1
<PAGE>

                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
                 Consolidated Statements of Financial Position,
                    September 30, 1999 and December 31, 1998

<TABLE>
<CAPTION>
                                                                               1999            1998
                                                                           (Unaudited)       (Audited)
                                                                          -------------    -------------
<S>                                                                       <C>              <C>
ASSETS:
  Cash and due from banks .............................................   $   2,650,359    $   2,615,466
  Interest bearing deposits ...........................................       2,377,932        5,610,125
  Investment securities, available for sale (Note 3) ..................      42,154,855       30,251,442
  Investment securities, held to maturity
    (fair value 1999, $12,230,000; 1998, $16,677,000) .................      12,773,223       16,454,603
  Loans, net of unearned interest .....................................     100,337,106       90,499,161
  Less:  allowance for loan losses ....................................       1,063,360          940,150
                                                                          -------------    -------------
         Loans - net ..................................................      99,273,746       89,559,011
  Bank premises and equipment - net ...................................       2,972,236        3,135,784
  Other real estate ...................................................         231,601          107,789
  Accrued interest and other assets ...................................       3,115,893        2,080,598
  Intangible assets ...................................................         131,969          138,384
                                                                          -------------    -------------
    TOTAL ASSETS ......................................................   $ 165,681,814    $ 149,953,202
                                                                          =============    =============

LIABILITIES:
  Domestic deposits:
    Non-interest bearing deposits .....................................   $  22,791,154    $  20,710,241
    Interest bearing deposits .........................................     116,002,328      109,181,088
                                                                          -------------    -------------
      Total deposits ..................................................     138,793,482      129,891,329
  Other borrowed funds ................................................      10,562,168        4,471,214
  Accrued interest and other liabilities ..............................         918,069          823,343
                                                                          -------------    -------------
      Total liabilities ...............................................     150,273,719      135,185,886
                                                                          -------------    -------------
STOCKHOLDERS' EQUITY:
  Preferred stock authorized 1,000,000 shares of $5 par;
    None issued
  Common stock authorized 5,000,000 shares of $5 par value, 774,209
    and 751,558 shares issued and outstanding in 1999 and 1998 (Note 4)       3,871,045        3,757,790
  Additional paid-in capital ..........................................       1,184,857          731,661
  Retained earnings ...................................................      11,358,241       10,017,937
  Accumulated other comprehensive income ..............................      (1,006,000)         260,000
                                                                          -------------    -------------
 Total ................................................................      15,408,143       14,767,388

    Treasury stock, 6 shares in 1999 and 1998 at cost .................             (48)             (72)
                                                                          -------------    -------------
      Total stockholders' equity ......................................      15,408,095       14,767,316
                                                                          -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................   $ 165,681,814    $ 149,953,202
                                                                          =============    =============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                        2
<PAGE>

                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
     Consolidated Statements of Income and Comprehensive Income (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three months ended           Nine months ended
                                                                        September 30                September 30
                                                                    1999           1998          1999           1998
                                                                -----------    -----------    -----------    ----------
<S>                                                             <C>            <C>            <C>            <C>
Interest Income:
  Interest and fees on loans ................................   $ 2,077,728    $ 1,913,515    $ 5,999,788    $5,513,102
  Interest and dividends
    on investment securities ................................       825,181        612,357      2,288,795     1,749,462
  Interest on deposits in banks .............................         9,777         62,891        120,779       142,077
                                                                -----------    -----------    -----------    ----------
          Total interest income .............................     2,912,686      2,588,763      8,409,362     7,404,641
                                                                -----------    -----------    -----------    ----------
Interest Expense:
  Interest on deposits ......................................     1,144,851      1,121,849      3,408,773     3,216,155
  Interest on borrowed funds ................................       147,209         32,934        317,933        67,890
                                                                -----------    -----------    -----------    ----------
          Total interest expense ............................     1,292,060      1,154,783      3,726,706     3,284,045
                                                                -----------    -----------    -----------    ----------
        Net interest income .................................     1,620,626      1,433,980      4,682,656     4,120,596
      Provision for loan losses .............................        20,000         75,000        170,000       200,000
                                                                -----------    -----------    -----------    ----------
        Net interest income after provision for loan losses .     1,600,626      1,358,980      4,512,656     3,920,596
                                                                -----------    -----------    -----------    ----------
Other Income:
  Service charges and other income ..........................       254,837        200,792        720,536       584,477
  Gain (loss) on sale of securities .........................       (27,076)                      (18,682)
  Gain (loss) on sale of other real estate ..................          (400)                       28,584       (24,961)
                                                                -----------    -----------    -----------    ----------
          Total other income ................................       227,361        200,792        730,438       559,516
                                                                -----------    -----------    -----------    ----------
Other Expenses:
  Salaries and employee benefits ............................       507,354        468,679      1,496,184     1,346,330
  Occupancy expense .........................................       128,518        117,283        341,491       288,566
  Equipment expense .........................................        72,665         73,789        238 677       214,379
  Other operating expense ...................................       318,622        259,816        868,163       762,062
                                                                -----------    -----------    -----------    ----------
          Total other expenses ..............................     1,027,159        919,567      2,944,515     2,611,337
                                                                -----------    -----------    -----------    ----------
Income before income taxes ..................................       800,828        640,205      2,298,579     1,868,775
Provision for income taxes ..................................       186,139        177,000        599,000       561,000
                                                                -----------    -----------    -----------    ----------
Net income ..................................................   $   614,689    $   463,205    $ 1,699,579    $1,307,775
                                                                -----------    -----------    -----------    ----------
Other comprehensive income, net of tax:
  Unrealized gains on securities:
     Unrealized holding gain (loss) arising during period ...   ($  312,000)   $   279,800    ($1,266,000)   $  303,300
                                                                -----------    -----------    -----------    ----------
Comprehensive income ........................................   $   302,689    $   743,005    $   433,579    $1,611,075
                                                                ===========    ===========    ===========    ==========

Earnings per share (Note 4) .................................   $      0.73    $      0.56    $      1.98    $     1.61
                                                                ===========    ===========    ===========    ==========
Weighted average common shares ..............................       845,962        824,880        859,291       810,743

</TABLE>

                 See Notes to Consolidated Financial Statements

                                        3
<PAGE>

                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
     Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

<TABLE>
<CAPTION>

For the Nine Months Ended September 30,                              1999            1998
--------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>
STOCKHOLDERS' EQUITY, January 1 .............................   $ 14,767,316    $ 12,637,804

COMMON STOCK, $5.00 PAR VALUE
Options exercised ...........................................         76,630          18,455
Stock dividend $0.47 and $0.62 per share in 1999 and 1998,
     plus cash in lieu of fractional shares .................         36,625          16,865
Stock split .................................................                      1,841,240

ADDITIONAL PAID-IN CAPITAL
Options exercised ...........................................        145,546          48,044
Stock dividend $0.47 and $0.62 per share in 1999 and 1998,
     plus cash in lieu of fractional shares .................        307,650         192,261
Stock split .................................................                     (1,841,240)

RETAINED EARNINGS
Stock dividend $0.47 and $0.62 per share in 1999 and 1998,
     plus cash in lieu of fractional shares .................       (344,275)       (209,126)
Cash paid in lieu of fractional shares due to stock dividend         (15,000)        (17,095)
Net income ..................................................      1,699,579       1,307,775

ACCUMULATED OTHER COMPREHENSIVE INCOME
Other comprehensive income (loss), net of tax ...............     (1,266,000)        303,300

TREASURY STOCK
Reissuance of common stock
     (1 and 5 shares in 1999 and 1998, respectively, at cost)             24             120
                                                                ------------    ------------

STOCKHOLDERS' EQUITY, September 30 ..........................   $ 15,408,095    $ 14,298,403
                                                                ============    ============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                        4
<PAGE>

                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
For the Nine Months Ended September 30,                                                    1999                 1998
                                                                                           ----                 ----
<S>                                                                                   <C>                    <C>
OPERATING ACTIVITIES:
 Net income ....................................................................      $  1,699,579           $  1,307,775
 Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation and amortization ...............................................           233,750                206,550
   Provision for loan losses ...................................................           170,000                200,000
   Increase (decrease) in deferred income taxes ................................          (646,000)                69,500
 Changes in operating assets and liabilities:
  Increase (decrease) in accrued interest income and other assets ..............          (324,880)              (207,674)
  Increase (decrease) in accrued interest expense and other liabilities ........            36,726                 36,629
  NET CASH PROVIDED BY
   OPERATING ACTIVITIES ........................................................         1,169,175              1,612,780

INVESTING ACTIVITIES:
 Purchase bank premises and equipment ..........................................           (70,202)              (236,885)
 Decrease (increase) in other real estate ......................................          (123,812)                14,755
 Purchase of securities "available for sale" ...................................       (11,099,470)           (11,962,275)
 Decrease (increase) in mortgage-backed securities "available for sale" ........        (6,071,956)            (1,149,132)
 Sales of securities "available for sale" ......................................         2,903,735
 Redemptions of securities "available for sale" ................................         1,098,278              1,077,453
 Purchase of securities "held to maturity" .....................................        (2,560,779)            (1,496,875)
 Redemptions of securities "held to maturity" ..................................         5,818,382              7,928,113
 Decrease (increase) in mortgage-backed securities "held to maturity" ..........           423,776                363,616
 Increase in loans to customers ................................................        (9,884,735)            (9,751,279)
 Increase in deposits in banks .................................................         3,232,194             (2,154,232)

  NET CASH USED IN
   INVESTING ACTIVITIES ........................................................       (16,334,589)           (17,366,741)

FINANCING ACTIVITIES:
 Increase in deposits before interest credited .................................         5,768,140             11,909,459
 Increase (decrease) in borrowed funds .........................................         6,090,954                376,230
 Interest credited to deposits .................................................         3,134,013              2,997,710
 Cash dividends paid ...........................................................           (15,000)               (17,095)
 Decrease in treasury stock ....................................................                24                    120
 Issuance of common stock ......................................................           222,176                 66,499

  NET CASH PROVIDED BY
   FINANCING ACTIVITIES ........................................................        15,200,307             15,332,923
NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS ..............................................................            34,893               (421,038)
CASH AND CASH EQUIVALENTS, January 1 ...........................................         2,615,466              2,514,202
CASH AND CASH EQUIVALENTS, September 30 ........................................      $  2,650,359           $  2,093,164
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION:
 Cash paid during the year for:
  Interest .....................................................................      $    268,379           $    263,304
  Income taxes .................................................................      $    646,139           $    569,000
 Non-cash investing and financing activities:
  Unrealized gains (losses) on securities ......................................      $( 1,266,000)          $    303,300
  Stock dividend ...............................................................           344,275                209,126
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       5



<PAGE>



                    GRANGE NATIONAL BANC CORP. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  BUSINESS COMBINATION AND PRINCIPLES OF COMBINATION:

         Grange National Banc Corp. (Company) was organized and incorporated
         under the laws of the Commonwealth of Pennsylvania on October 2, 1984,
         for the purpose of becoming a bank holding company. On April 30, 1985
         the Company acquired the Grange National Bank of Wyoming County (Bank)
         pursuant to a plan of reorganization and merger. The Bank became a
         wholly owned subsidiary of the Company, and each outstanding share of
         Bank common stock was converted into one share of Company common stock.
         The accompanying consolidated financial statements include the accounts
         of the Company and its wholly owned subsidiary (Bank) with the
         reorganization accounted for as a pooling of interests.

2.  BASIS OF PRESENTATION:

         The accompanying unaudited consolidated financial statements have been
         prepared in conformity with the accounting principles and practices
         reflected in the annual financial statements, and reflect all
         adjustments which are normal and recurring and, in the opinion of
         management, necessary for a fair presentation of the results of
         operations for the interim periods. The results of operations reported
         in interim financial statements are not necessarily indicative of
         results to be expected for the year.

3.  COMPREHENSIVE INCOME:

         In 1997, the Financial Accounting Standards Board issued statement No.
         130 - "Reporting Comprehensive Income," which is effective for years
         beginning after December 15, 1997. This statement establishes standards
         for reporting and display of comprehensive income and its components in
         a full set of general-purpose financial statements. The purpose of
         reporting comprehensive income is to report a measure of all changes in
         equity that result from recognized transactions and other economic
         events of the period other than transactions with owners in their
         capacity as owners. Prior to the issuance of this statement, some of
         those changes in equity were displayed in a statement that reports the
         results of operations, while others were included directly in a
         statement of financial position. The 1997 financial statements have
         been restated where applicable to reflect the adoption of SFAS No. 130.

4.  STOCK OPTIONS:

         In January 1994, the Board adopted an Employee Stock Option Plan in
         which common stock options may be granted to all officers and key
         employees of the Company. The

                                        6
<PAGE>

         aggregate number of shares which may be issued upon exercise of the
         options under the plan is 43,271. Options are exercisable up to
         one-third in the second year after the date of grant, up to two-thirds
         in the third year after the date of grant and up to 100% in the fourth
         year after the date of grant, with options expiring at the end of ten
         years after the date of grant.

         The Board of Directors also adopted a Stock Option Plan for
         non-employee Directors which will be available to all non-employee
         members of the Board of Directors. The aggregate number of shares which
         may be issued upon exercise of the options under the Director's plan is
         43,271 shares and are exercisable in part from time to time beginning
         one year after the date of grant and expiring ten years thereafter. The
         Plan provides for adjustments to the number of options to compensate
         for stock dividends and splits. Accordingly all effected figures have
         been adjusted to reflect stock dividends. April 1, 1994 and 1997,
         options to purchase 2,163 shares of common stock were automatically
         granted to each non-employee Director under this plan expiring April 1,
         2004.

         The Board of Directors adopted an additional Stock Option Plan (the
         "Plan") in November 1995 covering the employees and directors. The Plan
         authorizes the grant of options to purchase not more than 118,996
         shares of Common Stock under the Plan. Options granted under the Plan
         are intended to be either incentive stock options or nonstatutory stock
         options. As of October 31, 1999 options for 81,360 shares of Common
         Stock having various exercise prices were outstanding, 18,777 shares
         have been exercised, and 18,859 shares were available for future option
         grants under the Plan. Of the 116,532 shares of Common Stock
         outstanding for options, 73,870 shares of Common Stock were issued as
         incentive stock options. The remaining shares outstanding for options
         were granted to each non-employee director equally as nonstatutory
         stock options. Pursuant to Section 422 of the Internal Revenue Code,
         shareholder approval is required for the incentive stock options to
         qualify for favorable tax treatment. Exercise prices of options granted
         under all plans are current prices at time of grant.

         PREFERRED STOCK:

         The Company authorized 1,000,000 of preferred stock at $5 par value. At
         December 31, 1998 and September 30, 1999, no shares were issued nor
         outstanding.

                                        7
<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:

Net income for the three months ending September 30, 1999 totaled $615,000 which
is a 33% increase over the $463,000 reported for the same period in 1998. Net
income for the nine months ending September 30, 1999 totaled $1,700,000 which is
a 30% increase over the $1,308,000 reported for the same period in 1998. Net
interest income for the three months ending September 30, 1999 increased by
$187,000 to $1,621,000 compared to $1,434,000 for the same period in 1998. This
constitutes an increase of 13% over the previous year. Net interest income for
the nine months ending September 30, 1999 increased by $562,999 to $4,683,000
compared to $4,121,000 for the same period in 1998. This constitutes an increase
of 14% over the previous year. Interest income for three months ending September
30, 1999 increased by $324,000 or 13% compared to 1998, and interest expense
increased as well by $137,000 or 12% compared to 1998. Interest income for the
nine months ending September 30, 1999 increased by $1,004,000 or 14% compared to
1998.

The increase in interest income has been principally from interest on investment
securities which increased $213,000 or 35% for the three months, and $539,000 or
31% for the nine months ending September 30, 1999, compared to the same periods
last year. Interest income from loans increased by $164,000 or 9%, and $487,000
or 9% compared to the same three and nine month periods last year. Interest
rates on loans have trended steadily down from June of 1997 until the end of
June 1999, however during the third quarter interest rates began to rise.
Although the New York prime rate had not changed from March of 1997 until July
1, 1999, competitive pressures reduced the Bank's spread to the prime on new
loans until the third quarter. New loan volume began to increase during the
third quarter of 1999. Management increased its purchases of longer term
municipal bonds and mortgage-backed bonds to increase the yield of the bond
portfolio during the first and second quarters of 1999, but has not purchased
securities during the third quarter due to loan demand and the need to build up
cash for the end of the year. The municipal bonds purchased recently, mostly
have maturities of around ten years and a few with twenty year maturities, and
are classified as "available for sale". If interest rates increase sufficiently
these bonds can be sold. During the third quarter, interest on deposits in banks
decreased by $53,000 from $63,000 to $9,000 due to lower balances, and for the
year, decreased by $21,000 from $142,000 to $121,000, also due to lower
balances.

The increase in interest expense is due to the increase in borrowed funds during
the third quarter of 1999 as compared to the third quarter of 1998. The Bank has
borrowed approximately $8,000,000 from the Federal Home Loan Bank (FHLB) as part
of a leveraging strategy and against bonds maturing next year. For the nine
months ending September 30, 1999, interest expense on borrowed funds increased
$250,000, from $68,000 last year to $318,000, due to borrowings from the FHLB.
The average total sources to fund earning assets increased by $23,021,000, from
$130,882,000 in 1998 to $153,903,000 in 1999, while the average interest rate
decreased from 3.51% to 3.34%.

                                        8
<PAGE>

The increase in deposits continues to provide funds for loans and liquidity.
Loan demand during the third quarter was strong. Loans increased by $9,838,000
or 11% from $90,499,000 in at December 31, 1998 to $100,337,000 at September 30,
1999. Loan demand remains strong and is expected to continue through the fourth
quarter. The steady decline in interest rates for the last two years appears to
have turned around and started on an upward trend. This has basically ended most
refinancing of loans due to rates. Balances of investment securities increased
by $8,222,000 or 18% since December 31, 1998. Management has borrowed $4,000,000
from the Federal Home Loan Bank (FHLB) in term advances, during 1999, and used
the funds to purchase long term municipal bonds. The bank will have a guaranteed
interest spread until the call dates on the FHLB term advances, at which time
the bank can payback the advances if the FHLB adjusts the rates or pay the new
rates. Management will plan for sufficient liquidity to pay the advances when it
expects the FHLB will change the rates. This arbitrage accounts for part of the
increase in the interest income from investment securities. The bank also
borrowed $1,000,000 from the FHLB to fund the purchase of bonds to replace other
bonds maturing in one year. Interest bearing deposits at banks decreased by
$3,232,000 to $2,378,000 from $5,610,000 due to management investing in
securities and building up cash for the year end.

The provision for loan loss during the three months ending September 30, 1999
was $20,000 compared to $75,000 for the same period in 1998. For the nine months
ending September 30, 1999, the provision was $170,000, compared to $200,000 for
1998. Management has been able to minimize loan losses during 1999, so larger
provisions to the allowance for loan losses have not been necessary to keep the
allowance in line with the size of the loan portfolio. The allowance for loan
losses was $1,063,000 and $940,000 at September 30, 1999 and December 31, 1998,
respectively. This represents 1.06% and 1.04% of total loans, 223% and 437% of
non-performing loans, and 159% and 291% of non-performing assets, respectively.
Management performs a quarterly analysis of the Bank's potential loan losses on
a "worst case" basis. A loan review process is performed by an independent loan
review officer on a continuing basis. This information is closely reviewed by
the Board of Directors and used to evaluate the adequacy of the loan loss
reserve in order to provide coverage for identifiable losses, provide coverage
for unexpected losses, and to keep the size of the reserves in proportion to the
growing size of the loan portfolio.

The following sets forth loans past due 90 days or more on which interest has
continued to be accrued for September 30, 1999 and December 31, 1998.

                                    September 1998               December 1998
                                    --------------               -------------
                                                  (In thousands)
     Real estate mortgages                                            $ 1
     Commercial
     Installment                            $3                          9
                                            --                        ---
                     Total                  $3                        $10
                                            ==                        ===

                                        9
<PAGE>

Non-accrual loans decreased from $205,000 at December 31, 1998 to $191,000 at
September 30, 1999. The overall quality remains very good, and management
expects non-performing assets to remain at substantially the same levels as a
proportion of loans. Other real estate owned increased from $108,000 at December
1998 to $232,000 at September 1999. The Bank has a signed sales agreement for
one property and expects to close on the sale during the fourth quarter. Several
of the remaining properties are unique in nature and may require a longer
holding period in order to liquidate them at a reasonable price.

Investments in securities and deposits in banks increased by $4,990,000 or 10 %
from December 31, 1998 to September 30, 1999. The average rate earned on
available for sale, held to maturity and deposits in banks were 6.63%, 6.59% and
6.50% for the three months ended September 30, 1999, as compared to 6.31%, 6.46%
and 5.67% for the three months ended September 30, 1998. For the nine months
ended September 30, 1999, average rates earned on available for sale, held for
maturity and deposits in banks were 6.19%, 6.55%, and 5.38%, compared to 6.31%,
6.50%, and 5.65% for the same period in 1998. As of September 30, 1999, the
amortized value of the Bank's investments classified as held to maturity
exceeded their fair value by $543,000, and the amortized value exceeded the fair
value of investments classified as available for sale by $1,558,000. This is
reflected as an decrease in the Bank's equity of approximately $1,006,000, net
of deferred tax effects.

Higher interest rates at September 30, 1999 account for the unrealized loss on
the available for sale securities reflected on the balance sheet. Rates are
expected to continue their slow but steady decline. This will result in moderate
increases of the fair value of securities available for sale. Because the Bank
has extended the length of the securities it purchases, interest rate changes
have a greater impact on the fair value of those securities. The amount of
increased interest rate risk is offset by higher yields on the securities. The
Bank has been purchasing slightly longer term investments, generally tax-free
bonds with ten to twenty year maturities and mortgage pools with stated final
maturities of up to 15 years.

Management continues to purchase only high quality investments to minimize
credit risk to the value of the Bank's investments. There have been no adverse
credit valuations on any of the investments. Although investment opportunities
exist which will produce higher yields, they generally contain higher credit or
interest rate risk.

The addition of employees for the Pine Mall office, Trust Department and back
office, along with annual raises contributed to the increase in salary expense.
Costs associated with the Pine Mall Office also attributed to the increased
occupancy expense. For the three months ending September 30, 1999, salaries and
employee benefits increased $38,000 or 8% from $469,000 to $507,000, and
occupancy expense increased $12,000 or 12% from $117,000 to 129,000. Equipment
expense decreased $1,000 and other other operating expense increased $59,000 or
23% from $260,000 to $319,000. For the nine months ending September 30, 1999,
salaries and employee benefits have increased by $150,000 or 11% from $1,346,000
to $1,496,000 and occupancy expense increased $53,000 or 18% from $289,000 to
$342,000. Equipment expense

                                       10

<PAGE>

increased $25,000 or 12% from $214,000 to $239,000, and other operating expenses
increased $106,000 or 14% from $762,000 to $868,000. Although these increases
are significant, management believes that they are in line with the Bank's
overall increase in assets and profitability. Management also believes that the
investment in additional personnel and the opening of the Pine Mall office will
insure continued growth and increased profitability in the future.

Management performs an interest rate and liquidity analysis on a monthly basis
to monitor the Bank's interest rate sensitivity gap and liquidity needs. These
reports are reviewed by the Board of Directors and used to formulate ways to
improve the Bank's interest rate gap. The Bank continues to place great emphasis
on adjustable rate loan products, such as variable rate home equity loans and
annually adjustable mortgage loans as well as adjustable rate and short term
investments, in order to minimize interest rate risk.

Since 1991 the Comptroller of the currency has required all national banks to
meet certain "Risk Based Capital" standards. These standards weight certain
assets based on the risk of the asset, and also includes certain off-balance
sheet items. The table below sets forth the Bank's Tier 1 and Tier 2 capital,
risk adjusted assets (including off-balance sheet items) and the Bank's
risk-based capital ratios under the guidelines, for September 30, 1999 and
December 31, 1998.

<TABLE>
<CAPTION>
         (In thousands, except ratios)                                    1999        1998
         -----------------------------------------------------------------------------------
<S>                                                                     <C>          <C>
         Tier I capital:
              Shareholders' equity....................................  $ 14,122     $14,369
         Tier II capital:
              Loan loss reserve.......................................     1,063         940
                                                                        --------     -------
         Total Qualifying Capital.....................................  $ 15,185     $15,309
                                                                        ========     =======
Risk-adjusted assets (including off balance sheet items)..............  $112,891     $95,881

Tier I Capital Ratio (4.00% required).................................     13.52%      15.41%
Total Capital Ratio (8.00% required)..................................     13.45%      15.97%

</TABLE>

Year 2000 Impact

The Bank has a Year 2000 policy addressing the "Year 2000" Issue concerning
computers and equipment using computer chips and their ability to recognize and
process information based on dates in the year 2000 and beyond. If the computer
chips do not recognize the dates in the Year 2000 accurately, certain problems
may result, particularly those concerning calculations based on dates.
Inaccuracies in interest accruals, payment and due dates or other unanticipated
results such as computer shut downs or crashes may occur if the computers or
equipment with computer chips can not properly recognize dates after December
31, 1999. The Bank's policy requires testing of all "mission critical" systems
to determine if they will operate correctly in the year 2000. The Bank's policy
also requires it to test systems (hardware and software) used to interface with
other

                                       11

<PAGE>

systems, as well as to determine the Year 2000 readiness of systems of its
partners which provide mission critical services to the Bank.

The Bank's policy addresses five major components: (1) Awareness; (2)
Assessment; (3) Renovation; (4) Validation and Testing; and (5) Implementation.
The Bank has completed all phases, and tested all mission critical systems. Test
results of all mission critical systems have been validated.

The Bank has developed a contingency plan in the event vendors of mission
critical systems fail to be Year 2000 ready in time, or unexpected problems
occur. The contingency plan has been reviewed and approved by the Board of
Directors, but it will be continually revised and updated throughout the
remainder of the year. At this time the Bank can not estimate the cost, if any,
that might be required to implement such contingency plans.

The Bank anticipates that its total Year 2000 related costs will not exceed
$30,000. This estimate is based on current information and includes costs for
review and testing by third parties. The estimate may change as the Bank
progresses with its Year 2000 program and obtains additional information with
and conducts further testing with third parties. Lost interest income may be the
Bank's largest Year 2000 expense, as it builds its cash holdings in anticipation
of customer demand. At this time, no significant problems have arisen concerning
Year 2000 issues.

The Office of the Comptroller of the Currency, which is the bank's primary
regulator, has been conducting Year 2000 compliance examinations. The failure to
implement an adequate Year 2000 program can be identified as an unsafe and
unsound banking practice. The OCC has established an examination procedure which
contains three categories of ratings: "Satisfactory", "Needs Improvement", and
"Unsatisfactory". Banks that receive a Year 2000 rating of Unsatisfactory may be
subject to formal enforcement action, supervisory agreements, cease and desist
orders, civil money penalties, or the appointment of a conservator. In addition,
the OCC will be taking into account Year 2000 compliance programs when reviewing
applications and may deny an application based on Year 2000 related issues.
Failure of the Bank to adequately prepare for Year 2000 issues could negatively
impact the Bank's operations, including the impositions of restrictions on its
operations by the OCC. The Federal Deposit Insurance Corporation (FDIC) has
reported that 99.9% of all banks in the United States are ready for Year 2000.

Although the Bank has no reason to believe that it will suffer systems
disruptions due to the Year 2000 issue, and is confident that it will not, there
can be no assurance that partial or total systems interruptions or the costs
necessary to update hardware and software would not have a material adverse
effect on the Bank's business, financial condition, results of operations, and
business prospects.

                                       12
<PAGE>

                   GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
               AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                       THREE MONTHS ENDED
                                               SEPTEMBER 30, 1999                       SEPTEMBER 30, 1998
                                     -------------------------------------      -------------------------------------
                                       (1)         Interest         Average       (1)         Interest        Average
                                     Average        Income/        Interest     Average       Income/        Interest
(Dollars in thousands)               Balance        Expense          Rate       Balance       Expense          Rate
<S>                                  <C>           <C>               <C>        <C>           <C>               <C>
INTEREST EARNING ASSETS:

 Loans:
  Mortgages ...................      $ 46,157      $    981          8.50%      $ 46,253      $    990          8.56%
  Installment .................         1,992            63         12.65          4,629           117         10.11
  Commercial ..................        49,871         1,081          8.67         33,876           828          9.78
    Total loans ...............        98,020         2,125          8.67         84,758         1,935          9.13
 Securities available for sale:
  U.S. Treasury securities ....         5,258            68          5.17          7,000           103          5.89
  U.S. government agencies ....        23,645           369          6.24          8,274           131          6.33
  Municipal bonds .............        10,674           215          8.06          5,992           105          7.01
  Other securities ............           816            18          8.82            654             7          4.28
      Total available for sale         40,393           670          6.63         21,920           346          6.31

 Securities held to maturity:

  U.S. government agencies ....         7,476           122          6.53         14,356           228          6.35
  Municipal bonds .............         2,903            48          6.61          3,083            53          6.88
  Other securities ............         4,496            75          6.67          2,317            38          6.56
    Total held to maturity ....        14,875           245          6.59         19,756           319          6.46

 Deposits in banks ............           615            10          6.50          4,448            63          5.67
      TOTAL ...................      $153,903         3,050          7.93       $130,882         2,663          8.14
INTEREST BEARING LIABILITIES:
 Deposits:
  NOW and super-NOW ...........      $ 17,421            79          1.81       $ 13,382            76          2.27
  Savings and money market ....        32,055           200          2.50         29,896           202          2.70
  Certificates of deposit .....        65,086           855          5.25         60,450           833          5.51
  Other time deposits .........           200             3          6.00            200             3          6.00
    Total deposits ............       114,762         1,137          3.96        103,928         1,114          4.29
 Other borrowed funds .........         9,086           147          6.47          2,787            33          4.74
      TOTAL ...................       123,848         1,284          4.15        106,715         1,147          4.30
Non-interest bearing
 funds, net (2) ...............        30,055                                     24,167
TOTAL SOURCES TO FUND
EARNING ASSETS ................      $153,903         1,284          3.34       $130,882         1,147          3.51
NET INTEREST/YIELD ............                    $  1,766          4.59%                    $  1,516          4.63%
</TABLE>

(1)  Average balances are daily averages.

(2)  Demand deposits, stockholders's equity and other non-interest bearing
     liabilities less non-interest earning assets.

Non-accrual loans are reflected in the loan balances, but contributing
no interest income.

NOTE - Tax exempt interest income has been converted to a tax equivalent
basis at the U.S. federal income tax rate of 34%.

                 See Notes to Consolidated Financial Statements

                                       13

<PAGE>
                                  GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
                            AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES

<TABLE>
<CAPTION>
                                                NINE MONTHS ENDED                           NINE MONTHS ENDED
                                               SEPTEMBER 30, 1999                           SEPTEMBER 30, 1998
                                        (1)         Interest        Average          (1)         Interest        Average
                                      Average       Income/         Interest       Average        Income/        Interest
(Dollars in thousands)                Balance       Expense           Rate         Balance        Expense          Rate
----------------------               --------      --------         --------      --------       --------        -------
<S>                                  <C>           <C>                <C>         <C>            <C>               <C>
INTEREST EARNING ASSETS:

 Loans:
  Mortgages ...................      $ 46,162      $  2,940           8.49%       $ 44,762       $  2,940          8.76%
  Installment .................         2,496           226          12.07           5,245            382          9.71
  Commercial ..................        45,263         2,935           8.65          31,194          2,242          9.58
    Total loans ...............        93,921         6,101           8.66          81,201          5,564          9.14
 Securities available for sale:
  U.S. Treasury securities ....         5,300           223           5.61           7,059            315          5.95
  U.S. government agencies ....        21,435           959           5.97           5,551            265          6.37
  Municipal bonds .............        10,643           555           6.95           3,867            203          7.00
  Other securities ............           883            40           6.04             619             26          5.60
      Total available for sale         38,261         1,777           6.19          17,096            809          6.31

 Securities held to maturity:

  U.S. government agencies ....         7,910           410           6.91          16,165            782          6.45
  Municipal bonds .............         3,279           151           6.14           3,529            177          6.69
  Other securities ............         4,128           191           6.17           2,242            110          6.54
    Total held to maturity ....        15,317           752           6.55          21,936          1,069          6.50

 Deposits in banks ............         2,996           121           5.38           3,351            142          5.65
      TOTAL ...................      $150,495         8,751           7.75        $123,584          7,584          8.18

INTEREST BEARING LIABILITIES:

 Deposits:
  NOW and super-NOW ...........      $ 16,449           242           1.96        $ 12,094            194          2.14
  Savings and money market ....        31,756           588           2.47          28,635            582          2.71
  Certificates of deposit .....        65,266         2,564           5.24          58,226          2,424          5.55
  Other time deposits .........           200             7           4.67             200              8          5.33
    Total deposits ............       113,671         3,401           3.99          99,155          3,208          4.31
 Other borrowed funds .........         8,880           318           4.77           1,898             68          4.78
      TOTAL ...................       122,551         3,719           4.05         101,053          3,276          4.32
Non-interest bearing
 funds, net (2) ...............        27,944                                       22,531
TOTAL SOURCES TO FUND
EARNING ASSETS ................      $150,495         3,719           3.29        $123,584          3,276          3.53
NET INTEREST/YIELD ............                    $  5,032           4.46%                      $  4,308          4.65%

</TABLE>

(1)  Average balances are daily averages.

(2)  Demand deposits, stockholders's equity and other non-interest bearing
     liabilities less non-interest earning assets.

Non-accrual loans are reflected in the loan balances, but contributing no
interest income.

NOTE - Tax exempt interest income has been converted to a tax equivalent basis
at the U.S. federal income tax rate of 34%.

                 See Notes to Consolidated Financial Statements

                                       14

<PAGE>

PART II.  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit 27 - Financial Data Schedule

         (b)      Reports on Form 8-K

         (ii)     Statement re: computation of earnings per share:

                  Primary earnings per share is computed by dividing net income
                  by the weighted average number of shares of common stock and
                  common stock equivalents outstanding during the quarter. Stock
                  options are considered common stock equivalents and are
                  included in the computation of the number of shares
                  outstanding using the treasury stock method. The number of
                  shares used to calculate earnings per share for the periods
                  presented are as indicated in each period.

During the current fiscal quarter, there have been no events of a nature
required to be filed on Form 8-K.

                                   SIGNATURES

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

                                                     GRANGE NATIONAL BANC CORP.
                                                     --------------------------
                                                            (Registrant)


Date    November 12, 1999                            /s/ Thomas A. McCullough
    --------------------------------                 ------------------------
                                                     Thomas A. McCullough
                                                     President
                                                     Chief Executive Officer
                                                     Chief Financial Officer

Date     November 12, 1999                           /s/ Philip O. Farr
    ---------------------------------                ------------------------
                                                     Philip O. Farr
                                                     Chief Accounting Officer

                                       15