<PAGE>

                                 United States
                       Securities and Exchange Commision
                            Washington, D.C.  20549

                                   FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2001
                                           ------------------
                                       or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _____________to___________

Commission File Number:  0-12724

                               Belmont Bancorp.
------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

Ohio                                           34-1376776
------------------------------------------------------------------------------
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)                 Identification No.)

325 Main St., Bridgeport, Ohio                 43912
------------------------------------------------------------------------------
(Address of principal executive offices)       (Zip Code)

                                 (740)-695-3323
------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

     Indicate by check mark whether the registrant (1) has 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 period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. X    Yes ___No
                                        ---

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.:

                         Common Stock, $0.25 par value,
                         11,101,403 shares outstanding
                             as of November 7, 2001

                                       1
<PAGE>

                                   FORM 10-Q
                                BELMONT BANCORP.
                               September 30, 2001

                                     INDEX
<TABLE>
<S>                                                                          <C>
Part I.  Financial information                                                   3

Item 1 - Financial Statements                                                    3

         Management's report on financial statements                             3

         Consolidated Balance Sheets - September 30, 2001 and
             December 31, 2000                                                   4

         Consolidated Statements of Income-Three Months Ended
             September 30, 2001 and September 30, 2000                           5

         Consolidated Statements of Income-Nine Months
             Ended September 30, 2001 and September 30, 2000                     6

         Condensed Consolidated Statement of Cash Flows-Nine Months
             Ended September 30, 2001 and September 30, 2000                     7

         Condensed Consolidated Statements of Changes in Shareholders' Equity
             Three Months Ended September 30, 2001 and 2000 and
             Nine Months Ended September 30, 2001 and 2000                       8

         Notes to the Consolidated Financial Statements                          9

Item 2 - Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                  15

Item 3 - Quantitative and Qualitative Disclosures about Market Risk             23

Part II.  Other Information                                                     23

Item 1 - Legal Proceedings                                                      23
Item 2 - Changes in Securities and Use of Proceeds                              25
Item 3 - Defaults upon Senior Securities                                        25
Item 4 - Submission of Matters to a Vote of Security Holders                    25
Item 5 - Other Information                                                      25
Item 6 - Exhibits and Reports on Form 8-K                                       25

Signatures                                                                      26
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1--FINANCIAL STATEMENTS

MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS

     The following consolidated financial statements and related notes of
Belmont Bancorp. and subsidiaries (the "Company") were prepared by management,
which has the primary responsibility for the integrity of the financial
information.  The statements are prepared in conformity with accounting
principles generally accepted in the United States of America appropriate in the
circumstances, and include amounts that are based on management's best estimates
and judgments.  Financial information elsewhere in the quarterly report is
prepared on a basis consistent with that in the financial statements.

     In meeting its responsibility for the accuracy of the financial statements,
management relies on the Company's comprehensive system of internal accounting
controls.  This system is intended to provide reasonable assurance that assets
are safeguarded and transactions are recorded to permit the preparation of
appropriate financial information.  The system of internal controls is
characterized by an effective control-oriented environment within the Company
which is augmented by written policies and procedures, internal audits and the
careful selection and training of qualified personnel.

     The functioning of the accounting system and related internal accounting
controls is under the general oversight of the Audit Committee of the Board of
Directors, which is comprised of six outside directors.  The accounting system
and related controls are reviewed by a program of internal audits and by the
Company's independent accountants.  The Audit Committee meets regularly with the
contract internal auditor and the independent public accountants to review the
work of each and ensure that each group is properly discharging its
responsibilities.  In addition, the Committee reviews and approves the scope and
timing of the internal and external audits and any findings with respect to the
system of internal controls.  Reports of examinations conducted by federal
regulatory agencies are also reviewed by the Committee.

BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of Belmont
Bancorp. and its subsidiaries, Belmont National Bank (the "Bank") and Belmont
Financial Network.

                                       3
<PAGE>

Consolidated Balance Sheets
(Unaudited) ($000s except share and per share amounts)

<TABLE>
<CAPTION>
                                                                           September 30,          December 31,
                                                                                2001                  2000
<S>                                                                        <C>                   <C>
Assets

    Cash and due from banks                                                   $ 10,111              $ 11,270
    Federal funds sold                                                          21,660                14,730
    Securities available for sale at fair value                                123,217               109,684
    Loans                                                                      114,589               129,876
    Less allowance for loan losses                                              (5,881)               (7,667)
                                                                           ---------------------------------
          Net loans                                                            108,708               122,209
    Premises and equipment, net                                                  6,619                 6,792
    Deferred federal tax assets                                                  7,508                 7,346
    Cash surrender value of life insurance                                       4,576                 4,419
    Accrued income receivable                                                    1,646                 1,658
    Other assets                                                                 3,570                 3,680
                                                                           ---------------------------------
          Total assets                                                        $287,615              $281,788
                                                                           =================================
Liabilities

    Non-interest bearing deposits:
           Demand                                                             $ 27,745              $ 25,123
     Interest-bearing deposits:
           Demand                                                               25,348                26,136
           Savings                                                              70,253                66,857
           Time                                                                112,635               113,570
                                                                           ---------------------------------
              Total deposits                                                   235,981               231,686
      Securities sold under repurchase agreements                                  841                 1,204

      Long-term borrowings                                                      20,000                20,000
      Accrued interest on deposits and other borrowings                            821                   820
      Other liabilities                                                          2,872                 2,476
                                                                           ---------------------------------
            Total liabilities                                                  260,515               256,186
                                                                           ---------------------------------

Shareholders' Equity

       Preferred stock - authorized 90,000 shares with
       no par value; no shares issued or outstanding                                 -                     -
       Common stock  - $0.25 par value, 17,800,000 shares
       authorized; 11,153,195 shares issued at 9/30/01 and
       12/31/00                                                                  2,788                 2,788
       Additional paid-in capital                                               17,496                17,414
       Treasury stock at cost (51,792 shares)                                   (1,170)               (1,170)
       Retained earnings                                                         8,393                 8,515
       Accumulated other comprehensive loss                                       (407)               (1,945)
                                                                           ---------------------------------
          Total shareholders' equity                                            27,100                25,602
                                                                           ---------------------------------
          Total liabilities and shareholders' equity                          $287,615              $281,788
                                                                           =================================
</TABLE>

See the Notes to the Consolidated Financial Statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
Consolidated Statements of Income
(Unaudited)  ($000s except per share amounts)                                    For the Three Months Ended
                                                                                        September 30,
                                                                                 2001                    2000
<S>                                                                               <C>                    <C>
Interest and Dividend Income
    Loans:
        Taxable                                                                   $ 2,474                  $3,136
        Tax-exempt                                                                     51                      61
    Securities:
        Taxable                                                                     1,179                   1,016
        Tax-exempt                                                                    460                     535
     Dividends                                                                         80                      58
     Interest on federal funds sold                                                   177                     115
                                                                                ---------------------------------
        Total interest and dividend income                                          4,421                   4,921
                                                                                ---------------------------------

Interest Expense
      Deposits                                                                      2,186                   2,282
      Other borrowings                                                                260                     278
                                                                                ---------------------------------
         Total interest expense                                                     2,446                   2,560
                                                                                ---------------------------------
         Net interest income                                                        1,975                   2,361
Provision for loan losses                                                               -                       -
                                                                                ---------------------------------
         Net interest income after provision
         for loan losses                                                            1,975                   2,361
                                                                                ---------------------------------

Noninterest Income
      Trust fees                                                                      146                      77
      Service charges on deposits                                                     248                     215
      Other operating income                                                          236                     304
      Securities losses                                                              (121)                      -
      Gains on sale of loans and loans held for sale                                  127                      16
                                                                                ---------------------------------
         Total noninterest income                                                     636                     612
                                                                                ---------------------------------
Noninterest Expense
      Salary and employee benefits                                                  1,179                   1,057
      Net occupancy expense of premises                                               219                     205
      Equipment expenses                                                              228                     210
      Legal fees                                                                      962                     325
      Other operating expenses                                                        958                     723
                                                                                ---------------------------------
         Total noninterest expense                                                  3,546                   2,520
                                                                                ---------------------------------
         Income (loss) before income taxes                                           (935)                    453
Income Tax Benefit                                                                   (473)                    (57)
                                                                                ---------------------------------
         Net income (loss)                                                          ($462)                 $  510
                                                                                =================================

Earnings (loss) per common share:
     Basic                                                                         ($0.04)                 $ 0.05
     Diluted                                                                       ($0.04)                 $ 0.05
</TABLE>

See the Notes to the Consolidated Financial Statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>
Consolidated Statements of Income
(Unaudited)  ($000s except per share amounts)                                          For the Nine Months Ended
                                                                                            September 30,
                                                                                     2001                    2000
<S>                                                                             <C>                      <C>
Interest and Dividend Income
    Loans:
        Taxable                                                                   $ 7,842                 $ 9,075
        Tax-exempt                                                                    158                     196
    Securities:
        Taxable                                                                     3,667                   3,146
        Tax-exempt                                                                  1,480                   1,604
     Dividends                                                                        197                     172
     Interest on federal funds sold                                                   510                     157
                                                                                ---------------------------------
        Total interest and dividend income                                         13,854                  14,350
                                                                                ---------------------------------

Interest Expense
      Deposits                                                                      6,910                   6,766
      Other borrowings                                                                780                   1,257
                                                                                ---------------------------------
         Total interest expense                                                     7,690                   8,023
                                                                                ---------------------------------
         Net interest income                                                        6,164                   6,327
Provision for loan losses                                                               -                     242
                                                                                ---------------------------------
         Net interest income after provision
         for loan losses                                                            6,164                   6,085
                                                                                ---------------------------------

Noninterest Income
      Trust fees                                                                      453                     291
      Service charges on deposits                                                     669                     622
      Interest on federal tax refund                                                    -                     256
      Other operating income                                                          562                     653
      Securities losses                                                              (117)                      -
      Gains (losses) on sale of loans and loans held for sale                         153                     (44)
                                                                                ---------------------------------
          Total noninterest income                                                  1,720                   1,778
                                                                                ---------------------------------

Noninterest Expense
      Salary and employee benefits                                                  3,480                   2,919
      Net occupancy expense of premises                                               673                     619
      Equipment expenses                                                              674                     640
      Legal fees                                                                    1,647                     861
      Other operating expenses                                                      2,486                   2,153
                                                                                ---------------------------------
          Total noninterest expense                                                 8,960                   7,192
                                                                                ---------------------------------
          Income (loss) before income taxes                                        (1,076)                    671
Income Tax Benefit                                                                   (954)                   (425)
                                                                                ---------------------------------
           Net income (loss)                                                        ($122)                $ 1,096
                                                                                =================================

Earnings (loss) per common share:
     Basic                                                                         ($0.01)                $  0.14
     Diluted                                                                       ($0.01)                $  0.14
</TABLE>

See the Notes to the Consolidated Financial Statements.

                                       6
<PAGE>

Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2001 and 2000 ($000's)

<TABLE>
<CAPTION>
                                                                      2001       2000
                                                                   ----------------------
<S>                                                                 <C>         <C>
Cash from Operating Activities                                      $     32     $  7,965

Investing Activities
Proceeds from:
     Maturities and calls of securities                                5,480        2,005
     Sales of securities available for sale                           10,159        3,799
     Principal collected on mortgage-backed securities                19,600        8,332
     Sales of loans                                                        0        2,178
     Sales of other real estate owned                                    551           39
     Sales of premises and equipment                                      11            9
Purchases of:
     Securities available for sale                                   (46,882)      (1,531)
     Premises and equipment                                             (347)        (105)
Changes in:
     Federal funds sold                                               (6,930)     (10,765)
     Loans, net                                                       13,235       27,588
                                                                   ----------------------
Cash from investing activities                                        (5,123)      31,549
                                                                   ----------------------
Financing Activities
Proceeds from issuance of common stock                                     0        9,327
Changes in:
     Deposits                                                          4,295      (30,916)
     Repurchase agreements                                              (363)      (4,503)
     Short-term borrowings                                                 0      (19,740)
                                                                   ----------------------
Cash from financing activities                                         3,932      (45,832)
                                                                   ----------------------

Increase (Decrease) in Cash and Cash Equivalents                      (1,159)      (6,318)
Cash and Cash Equivalents, Beginning of Year                          11,270       15,439
                                                                  -----------------------
Cash and Cash Equivalents at September 30                           $ 10,111     $  9,121
                                                                  =======================
</TABLE>

     Cash payments for interest totaled $7,689,000 and $8,015,000 for the nine
months ended September 30, 2001 and 2000, respectively.  No payments for taxes
were made during 2001 or 2000.  The Company received a federal tax refund
including interest of $5,952,000 for the nine months ended September 30, 2000.

     Transfers from loans to other real estate owned totaled $267,000 and
$561,000 for the nine months ended September 30, 2001 and 2000, respectively.

See the Notes to the Consolidated Financial Statements.

                                       7
<PAGE>

Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited) ($000s)

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                           September 30,
                                                                      2001            2000
                                                                    -------------------------
<S>                                                                 <C>              <C>
Balance at beginning of period                                      $ 26,742         $ 21,913
Comprehensive income:
   Net income (loss)                                                    (462)             510
   Change in net unrealized gain (loss) on securities
      available for sale, net of reclassification and
       tax effects                                                       809              945
                                                                    -------------------------
        Total comprehensive income                                       347            1,455
   Adjustment to net proceeds received on stock offering                   -               (2)
   Common stock options granted                                           11                -
                                                                    -------------------------
Balance at end of period                                            $ 27,100         $ 23,366
                                                                    =========================
<CAPTION>
                                                                        Nine Months Ended
                                                                           September 30,
                                                                      2001            2000
                                                                    -------------------------
<S>                                                                 <C>              <C>
Balance at the beginning of the period                              $ 25,602         $ 11,231
Comprehensive income:
   Net income (loss)                                                    (122)           1,096
   Change in net unrealized gain (loss) on securities
      available for sale, net of reclassification and
       tax effects                                                     1,538            1,712
                                                                    -------------------------
        Total comprehensive income                                     1,416            2,808
   Common stock issued                                                     -            9,327
   Common stock options granted                                           82                -
                                                                    -------------------------
Balance at end of period                                            $ 27,100         $ 23,366
                                                                    =========================
</TABLE>

See the Notes to the Consolidated Financial Statements.

                                       8
<PAGE>

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   Summary of Significant Accounting Policies

     The foregoing financial statements are unaudited and were prepared in
accordance with accounting principles generally accepted in the United States of
America; however, in the opinion of management, all adjustments consisting of
normal, recurring items necessary for a fair presentation of the financial
statements have been included. A summary of the Company's significant accounting
policies is set forth in Note 1 to the Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.

     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
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Estimates
particularly subject to change would include the allowance for loan losses,
deferred tax valuation allowance, fair value of financial instruments, and loss
contingencies.

     In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141. "Business
Combinations." SFAS No. 141 requires all business combinations within its scope
to be accounted for using the purchase method, rather than the pooling-of-
interests method. The provisions of this Statement apply to all business
combinations initiated after June 30, 2001. The adoption of this statement will
only impact the Company's financial statements if it enters into a business
combination.

     Also in June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets", which addresses the accounting for such assets arising from
prior and future business combinations. Upon the adoption of this Statement,
goodwill arising from business combinations will no longer be amortized, but
rather will be assessed regularly for impairment, with any such impairment
recognized as a reduction to earnings in the period identified. Other identified
intangible assets, such as core deposit intangible assets, will continue to be
amortized over their estimated useful lives. The adoption of this Statement will
not impact the Company's financial statements, as it has no intangible assets
related to prior business combinations.

     In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 is effective for fiscal years beginning after
June 15, 2002, and establishes an accounting standard requiring the recording of
the fair value of liabilities associated with the retirement of long-lived
assets in the period in which they are incurred. The Company is in the process
of determining the future impact that the adoption of FAS 143 may have on its
earnings and financial position.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement addresses financial
accounting and reporting for the impairment and disposal of long-lived assets.
This statement is effective for fiscal years beginning after December 15, 2001.
The Company is currently evaluating the impact the adoption of this statement
will have on its financial position and results of operations.

     Internal financial information is primarily reported and aggregated in the
banking line of business.

          Average shares outstanding used to compute basic and diluted earnings
per share differ due to stock options granted during 2001. However for 2001,
basic and diluted shares were equal as a result of the net losses reported for
these periods. The average number of shares outstanding used to compute basic
and diluted earnings per share was as follows:

                                       9
<PAGE>

<TABLE>
<CAPTION>
Average shares outstanding                          Basic           Diluted
-------------------------------------------------------------------------------
<S>                                                 <C>             <C>
For the three months ended September 30, 2001        11,101,403      11,101,403
For the three months ended September 30, 2000        11,101,403      11,101,403

For the nine months ended September 30, 2001         11,101,403      11,101,403
For the nine months ended September 30, 2000          7,998,709       7,998,709
</TABLE>

2.   Securities

          The estimated fair values of securities were as follows:

<TABLE>
<CAPTION>
                                                                    September 30, 2001
                                                       -----------------------------------------------
                                                         Gross               Gross          Estimated
                                                       Unrealized          Unrealized         Fair
(Expressed in thousands)                                 Gains               Losses           Value
------------------------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>                <C>
U.S. Treasury securities and obligations of
     U.S. Government corporations and agencies         $         66        $       59         $ 10,093
Obligations of states and political subdivisions                295             1,184           40,046
Mortgage-backed securities                                      430               139           39,256
Collateralized mortgage obligations                             432                16           21,459
Corporate debt                                                   38               552            8,177
                                                       -----------------------------------------------
   Total debt securities                                      1,261             1,950          119,031
Marketable equity securities                                    108                36            4,186
                                                       -----------------------------------------------
     Total securities available for sale               $      1,369        $    1,986         $123,217
                                                       ===============================================
</TABLE>

<TABLE>
<CAPTION>
                                                                    December 31, 2000
                                                       --------------------------------------------------
                                                         Gross               Gross            Estimated
                                                       Unrealized          Unrealized           Fair
(Expressed in thousands)                                 Gains               Losses             Value
---------------------------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>                <C>
U.S. Treasury securities and obligations of
     U.S. Government corporations and agencies         $          0        $      221         $    5,411
Obligations of states and political subdivisions                120             1,930             41,588
Mortgage-backed securities                                       51               490             34,691
Collateralized mortgage obligations                             101               166             21,101
Corporate debt                                                    -               357              2,745
                                                       -------------------------------------------------
     Total debt securities                                      272             3,164            105,536
Marketable equity securities                                     83               138              4,148
                                                       -------------------------------------------------
     Total securities available for sale               $        355        $    3,302         $  109,684
                                                       =================================================
</TABLE>

                                       10
<PAGE>

3.   Loans and Allowance for Loan Losses

     Loans outstanding are as follows:

<TABLE>
<CAPTION>
                                                              September 30,          December 31,
(Expressed in thousands)                                          2001                  2000
-------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>
Real estate-construction                                      $   2,686              $  12,856
Real estate-mortgage                                             38,182                 40,794
Real estate-secured by
   nonfarm, nonresidential property                              34,409                 22,738
Commercial, financial and agricultural                           32,479                 45,838
Obligations of political subdivisions in the U.S.                 2,864                  2,951
Installment and credit card loans to
   individuals                                                    3,705                  4,699
Leases                                                              264                      0
                                                              --------------------------------
     Loans receivable                                         $ 114,589               $129,876
                                                              ================================
</TABLE>

     Non-accruing loans amounted to $4,867,000 and $8,518,000 at September 30,
2001 and December 31, 2000, respectively. Generally, non-accruing loans are
considered impaired and are also included in the impaired loan table below.
Loans past due 90 days and still accruing interest were $24,000 and $2,000 at
September 30, 2001 and December 31, 2000, respectively.

     Impaired loans were as follows:

<TABLE>
<CAPTION>
                                                                 September 30,       December 31,       September 30,
(Expressed in thousands)                                             2001               2000                2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                 <C>                <C>
 Impaired loans with no allocated allowance for loan losses      $        124        $         2        $         60
 Impaired loans with allocated allowance for loan losses                5,352              9,020               9,731
                                                                 ---------------------------------------------------
    Total                                                        $      5,476        $     9,022        $      9,791

 Amount of the allowance for loan losses allocated               $        929        $     2,673        $      2,616
 Average impaired loans, year-to-date                                   7,799             11,545              12,176
 Interest income recognized during impairment                               0                  0                   0
 Cash-basis interest income recognized                                      0                  0                   0
</TABLE>

Activity in the allowance for loan losses is summarized as follows:

<TABLE>
<CAPTION>
                                                                  Three months ended           Nine months ended
                                                                     September 30,               September 30,
(Expressed in thousands)                                          2001          2000           2001         2000
------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>            <C>           <C>
Balance, beginning of period                                     $6,002        $7,505         $7,667        $9,702

Provision for loan losses                                             0             0              0           242

Loans charged-off                                                   241           197          2,336         3,878
Recoveries on loans previously charged-off                          120           374            550         1,616
                                                               ---------------------------------------------------
     Net charge-offs (recoveries)                                   121          (177)         1,786         2,262
                                                               ---------------------------------------------------
Balance, end of period                                           $5,881        $7,682         $5,881        $7,682
                                                               ===================================================
</TABLE>

                                       11
<PAGE>

   The loan charge-offs recorded during the nine months ended September 30, 2001
were principally for loans for which the Company had previously established
specific reserves. The entire allowance represents a valuation reserve which is
available for future charge-offs.

4. Shareholders' Equity

     On June 30, 2000, the Company completed a recapitalization plan it began in
November 1999 with the sale of $1.65 million of convertible stock to its Board
of Directors, which stock was subsequently converted into 825,000 shares of the
Company's common stock based on a common stock price of $2.00 per share. In
February 2000, the Company commenced the first of two successive public
offerings. In the initial offering, which closed in April 2000, the Company sold
2,040,869 shares of common stock at $2.00 per share and received $4.1 million in
gross offering proceeds. In the second offering, which began in May 2000 and
closed in June 2000, the Company sold 3,000,000 shares of common stock, also at
$2.00 per share. The Company received $6.0 million in gross offering proceeds in
this fully subscribed follow-on offering.

     In this recapitalization, the Company issued a total of 5,864,869 shares of
its common stock and received $11.7 million in aggregate gross offering
proceeds. After payment of aggregate offering costs of approximately $700,000,
the Company applied the net offering proceeds of $11.0 million to increase the
Bank's capital. As a result, the Bank's unaudited Tier 1 capital leverage ratio
of 6.8% at June 30, 2000, exceeded the 6.0% Tier 1 capital leverage ratio
required by the Office of the Comptroller of the Currency in the Consent Order
issued to the Bank in August 1999. The Consent Order requires the Bank to
maintain a 6.0% Tier 1 capital leverage ratio for as long as the Consent Order
continues in effect. The Bank's unaudited Tier 1 leverage ratio at September 30,
2001, was 6.7%.

5. Stock Options

     In February 2001, the Board of Directors granted to an officer of the
Company options to purchase 75,000 common shares at $2.00 per share. In April
2001, the Board of Directors granted to an officer of the Company options to
purchase 35,000 common shares at the market price of $4.05 per share on the
grant date. The options expire ten years from the date of grant. The Company
accounts for the stock options under Accounting Principles Board Opinion No. 25,
which requires expense recognition only when the exercise price is less than the
market value of the underlying stock at the measurement date. Statement of
Financial Accounting Standards (SFAS) No. 123 requires pro forma disclosures for
companies that do not adopt its fair value accounting method for stock-based
compensation. Instead, pro forma information for net income and basic and
diluted earnings per common share will be provided in the notes to the financial
statements as if the fair value method had been used. During the first nine
months of 2001, pro forma results are not considered significant.

     During 2001, 110,000 options were granted.  Of the 75,000 in option shares
granted in February 2001, 30,000 option shares vested  resulting in expense of
$82,000 for the first nine months of 2001; these options were granted at a price
below market value on the date of the grant.  In April 2001, 35,000 option
shares were granted at market value.  As options continue to vest in future
periods, additional expense may be recognized.

6. Regulatory Matters

     As described in its annual report on Form 10-K, the Company and the Bank
continue to operate under an agreement with the Federal Reserve Bank of
Cleveland, the Company's primary regulator, and a Consent Order with the Office
of the Comptroller of the Currency, the Bank's primary regulator.  Each of the
Company and the Bank has complied with or is taking steps designed to comply
with all of the requirements imposed by its regulators.  One of the provisions
of the Consent Order requires that the Bank achieve and maintain a Tier 1
capital leverage ratio of at least

                                       12
<PAGE>

6.0%. This requirement was achieved by June 30, 2000 and was maintained through
September 30, 2001. See also Note 4.

7. Comprehensive Income

The components of other comprehensive income were as follows:

<TABLE>
<CAPTION>
                                                        Nine months ended
                                                          September 30,
(Expressed in thousands)                              2001              2000
                                              -----------------------------------
<S>                                             <C>               <C>
Unrealized holding gains (losses) arising
   during the period                                     $2,213            $2,594
Reclassification adjustment                                 117                 0
                                              -----------------------------------
Net gains (losses) arising during the period              2,330             2,594
Tax effect                                                 (792)             (882)
                                              -----------------------------------
Other comprehensive income (loss)                        $1,538            $1,712
                                              ===================================

                                                       Three months ended
                                                          September 30,
(Expressed in thousands)                                   2001              2000
                                              -----------------------------------
Unrealized holding gains (losses) arising
   during the period                                     $1,105            $1,432
Reclassification adjustment                                 121                 0
                                              -----------------------------------
Net gains (losses) arising during the period              1,226             1,432
Tax effect                                                 (417)             (487)
                                              -----------------------------------
Other comprehensive income (loss)                        $  809            $  945
                                              ===================================
</TABLE>

8. Litigation

       The Company and its subsidiaries have been named as defendants in legal
actions.  Management believes, based on the advice of counsel, that no accrual
for loss is necessary.

       Since the date of the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2000, there have been no material new legal
proceedings involving the Company or any material developments to the
proceedings described in such 10-K except as described below.

       The Company is a defendant in a suit for damages brought in the Court of
Common Pleas for Belmont County, Ohio in April 1999 by George Michael Riley and
others against the Bank and certain former officers, among others, alleging
torts to have occurred in connection with the Bank's denial of a loan to a third
party to finance the sale of a business owned by plaintiffs.  It is claimed that
a former loan officer of the Bank later purchased the business at a lower price
with financial assistance from the Bank's former chief operating officer.  The
trial, originally scheduled for October 2001, has been continued to June 2002.
Based on the advice of counsel, the Company believes its exposure to liability,
if any, is minimal in this case.  Another case, filed in the same court in May
1999 by Charles J. and Rebecca McKeegan, the beneficial owners of the potential
purchaser of the business in the same transaction, was settled for nominal
consideration and dismissed with prejudice in August 2001.

       Progressive Casualty Insurance Company sold to the Company a directors
and officers liability policy providing for $3 million of coverage and a
separate financial institution fidelity bond in the face amount of $4.75
million. The Company has filed a claim under the fidelity bond policy to recover
the losses incurred in connection with the Schwartz Homes, Inc. loan
relationship. The Company has also claimed coverage under the directors and
officers liability policy in connection with the Schwartz Homes, Inc. case as
well as other cases the Company is defending.

       Progressive declined to honor these claims and, in December 1999, filed
an action in the United States District Court for the Southern District of Ohio,
Eastern Division asking the court to issue a declaratory judgment declaring that
Progressive is not liable under either the directors and officers liability
policy or the fidelity bond policy. In September 2000, the court granted the
Company's motion to dismiss the declaratory judgment action. Progressive had
also asked the court, if Progressive is found to be liable under these
policies, to determine whether the Bank or other parties who have sued the Bank
in separate actions are entitled to the insurance proceeds. Progressive has
deposited with the court bonds in the aggregate amount of $7.75 million, which
amount Progressive believes is sufficient to satisfy any liabilities under the
policies in respect of this interpleader claim. The interpleader claim remains
before the court. In May 2001, the court consolidated this action with a
separate case brought by the Company against Progressive in the Circuit Court of
Ohio County, West Virginia, which was then removed to the United States District
Court for the Northern District of West Virginia, in which the Company sought to
recover damages related to Progressive's failure to honor the Company's claims
under the fidelity bond. The parties are currently in the discovery phase. Trial
has been scheduled for July 2002 in this case. The Company intends to vigorously
seek recoveries under the insurance policies sold to it by Progressive.

       In October 1999, the Company filed suit in the Court of Common Pleas of
Tuscarawas County, Ohio, alleging that it had been the victim of an "elaborate
fraud" that has resulted in more than $15 million in losses to the Bank.
Following an extensive internal review of its loan portfolio, the Bank filed
claims against Steven D. Schwartz, President of Schwartz Homes, Inc., the now-
closed New Philadelphia retailer of manufactured homes. At the same time, the
Bank filed claims against three additional people: Linda Reese, Schwartz Homes'
Chief Financial Officer; William Wallace, the Bank's former Executive Vice-
President and Chief Operating Officer; and Christine Wallace, his wife. The
Wallaces have filed counterclaims in an indeterminate amount upon various bases,
including invasion of privacy, defamation and failure to distribute moneys
allegedly due them under a deferred and certain

                                       13
<PAGE>

other compensation plans. The case had been scheduled for trial in May 2001, but
during that month Mr. Schwartz filed for bankruptcy, which automatically stayed
the proceeding. The Bankruptcy Court subsequently granted the Company's motion
for relief from the automatic stay, and the trial before the Court of Common
Pleas of Tuscarawas County, Ohio has been rescheduled for January 2002.
Principally for strategic considerations in other related cases, the Company has
elected to dismiss the claims against William and Christine Wallace, without
prejudice. The Company is considering whether it wishes to continue to pursue
the claims against Mr. Schwartz and Ms. Reese in this case. The Company
continues to seek to recover from its indemnity bond insurance carrier,
Progressive Casualty Insurance Company, the full amount of its bond for the
alleged conduct of Mr. Wallace during the time he served as an officer and
director and Mr. Wallace continues to be a defendant in the Fleagane case,
discussed below. The Company intends to vigorously defend against the
Wallaces' counterclaims, which the Company believes are without merit.

     In October 1999, James John Fleagane, a shareholder of the Company, filed
an action against the Company, the Bank and certain of the Company's and the
Bank's current and former officers and directors in the Circuit Court of Ohio
County, West Virginia. The plaintiff alleged, among other things, that the Bank
and its directors and officers negligently transacted and administered various
loans with respect to Schwartz Homes, Inc. and customers of Schwartz. In the
complaint, the plaintiff sought damages for the loss in value of his stock and
other compensatory and punitive damages in an unspecified amount and requested
class action certification for the common shareholders of the Company. The court
denied the Company's motion to dismiss this case in July 2000. In August 2000,
the plaintiff filed an amended complaint, as to which the Company has filed an
answer, affirmative defenses and cross-claims against the Company's former
accountants, S.R. Snodgrass, A.C. and a principal thereof, and against J.
Vincent Ciroli, Jr., formerly the Company's President and Chief Executive
Officer, and William Wallace, formerly the Company's Executive Vice President
and Chief Operating Officer. In February 2001, the court granted leave to the
plaintiff to file a second amended complaint. The second amended complaint
eliminated the direct claims against the Company and the Bank and the request
for class action certification. Accordingly, as amended, this action constitutes
a derivative suit against current and former officers and directors of the
Company and the Bank as well as the former auditor of the Company and the Bank.
In September 2001, plaintiff dismissed the claims against the officers of the
Company and the Bank (except for Messrs. Ciroli and Wallace). The Company is
paying the costs of defense of certain of the directors and officers. The trial
is scheduled for December 2001.

     Separately, the plaintiff reached an agreement to settle the claims against
S.R. Snodgrass and its principal for $4 million, and the court ordered that a
notice of the proposed settlement be sent to the Company's shareholders to
afford them the opportunity to support the settlement, object to it or intervene
in the case. A committee of four of the Company's disinterested directors who
are not parties in this case has recommended that the proposed settlement be
approved.  If the proposed settlement is approved by the court, it is
anticipated that the Company will receive approximately $2 million upon
distribution of the proceeds after payment of the plaintiffs' attorneys fees and
other litigation costs.

     In June 2001, J. Vincent Ciroli, Jr. filed an action in the Common Pleas
Court of Belmont County, Ohio against the Company and the Bank seeking recovery
of his defense costs in the Fleagane case and a separate proceeding brought
against him by the Office of the Comptroller of the Currency, and a
determination of the amount of deferred compensation and other employment
benefits to which he claims to be entitled for his service to the Company and
the Bank. The Company filed an answer to the complaint in July 2001 and an
amended answer and counterclaim in August 2001.  The amended counterclaim
alleges breach of fiduciary duty on the part of Mr. Ciroli and seeks recovery of
certain funds paid to him under one of his incentive compensation plans.  The
Company intends to vigorously defend against the claims asserted by Mr. Ciroli.

     In August 1999, the Bank was named as a defendant in a lawsuit filed in the
Belmont County Common Pleas Court by Joseph C. Heinlein, Jr. against his former
secretary, the Bank, other financial institutions and individuals with whom the
secretary did business. The complaint alleges that the secretary embezzled funds
from the plaintiff's account over a period of several years by forging his
signature to checks and alleges negligence on the part of the Bank for honoring
such checks. This

                                       14
<PAGE>

secretary has entered into a plea agreement under which she has paid $500,000 in
restitution and received a prison sentence. The complaint was amended to claim
damages of $1,250,000; however, at a subsequent pre-trial conference, the
plaintiff advised the court that his net losses (after application of the
$500,000 restitution payment) were approximately $300,000. The Bank believes
that it has valid defenses against the claim and intends to defend it
vigorously. The Bank has also filed cross-claims against the secretary and a
third party it believes benefited from the misappropriation of funds. In
addition, the Company believes that any liability on the Bank's part would be
covered under its insurance policy. However, the insurance carrier, Progressive
Casualty Insurance Company, has filed a declaratory judgment and interpleader
action raising issues of coverage and indemnification on this claim, as
previously discussed above. Trial in the case has been scheduled for March 2002.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

SUMMARY

     For the nine months ended September 30, 2001, Belmont Bancorp. reports a
loss of  $122,000, or a loss of $0.01 per common share, compared to net income
of $1,096,000, or $0.14 per common share, for the first nine months of 2000.
For the quarter ended September 30, 2001, the Company recorded a loss of
$462,000, or a loss of $0.04 per common share, compared to net income of
$510,000, or $0.05 per common share for the third quarter of 2000.

     As more fully described under "Legal Proceedings" in Part II, Item 1, the
Company is involved in a number of lawsuits.  The costs of prosecuting or
defending these actions, particularly the derivative action initiated by James
John Fleagane, has adversely affected the Company's results for the three and
nine month periods.  For these periods, legal expenses were $962,000 for the
three month period ended September 30, 2001 and $1,647,000 for the nine month
period ended September 30, 2001, as compared to $325,000 and $861,000 for the
comparable prior year periods.

     Management has taken a number of steps to improve operating results, which
are masked by significant, continuing legal expenses.  Absent these significant
expenses, the Company would have had earnings, net of applicable income taxes,
of $965,000 for the nine month period ended September 30, 2001 and $106,000 for
the three month period ended September 30, 2001 rather than losses of $122,000
and $462,000, respectively.

     The Company intends to continue to regularly monitor its legal costs and
act in the manner it believes are in the best interests of the Company. In
certain cases, in management's reasonable judgment, the anticipated outcome of
prosecuting or defending cases through trial may justify incurring ongoing legal
costs; however, if the Company can advantageously settle any cases, it intends
to do so. The Company presently expects legal expenses to continue to be
significant in future periods.

     Following the end of the September 30, 2001 period, the Company learned of
a settlement between the plaintiffs in the Fleagane case and the Company's
former accountants, S.R Snodgrass, A.C. and one of its principals. If approved
by the court, the Company expects to receive approximately $2 million from the
settlement after payment of the plaintiffs' attorneys fees and costs.

NET INTEREST INCOME

     The primary source of revenue for the Company is net interest income which
is the spread between income earned on assets and interest paid on deposits and
borrowings used to fund those assets.   Net interest income is affected by
changes in interest rates, changes in the average maturities of interest earning
assets and liabilities, and changes in the mix of assets and liabilities.
Interest earning assets include total loans, investments carried at amortized
cost and federal funds sold.

                                       15
<PAGE>

Nonaccrual loans are included in average loan balances. Interest bearing
liabilities include interest bearing deposits and other borrowings.

     During the first nine months 2001, the Federal Open Market Committee cut
its targeted federal funds rate (the rate banks charge one another for overnight
loans) from 6.50% to 3.00%.  Another cut of 0.50% was announced at the beginning
of October.   Interest rates across the maturity spectrum have declined
significantly since last year particularly in maturities of ten years or less.
Similarly, the prime lending rate dropped from 9.50% to 6.00% during the first
nine months of 2001 and currently stands at 5.50%.  This dramatic change in
interest rates contributed toward tightening the net interest margins for the
third quarter and year-to-date periods.  Interest rates on assets such as prime-
related loans adjust downward more quickly in a falling interest rate
environment than interest-bearing liabilities.  In addition, refinancing
activity has accelerated substantially contributing to higher levels of
liquidity and ultimately reducing earning asset yields.

     Net interest income on a taxable equivalent basis decreased $432,000 for
the third quarter of 2001 compared to the third quarter quarter of 2000.  The
yield on earning assets decreased from 8.18% to 7.08% while the cost of interest
bearing liabilities declined from 4.56% to 4.22%. Average earning assets
increased from $251 million during the third quarter of 2000 to $260 million for
the third quarter of 2001. The taxable equivalent net interest margin was 3.35%
and 4.14% for the three months ended September 30, 2001 and 2000, respectively.

     Net interest income on a taxable equivalent basis declined $252,000 for the
first nine months of 2001 compared to the same period last year.  The yield on
earning assets declined from 7.77% to 7.49%, and the cost of interest bearing
liabilities fell from 4.50% to 4.47%.  The average earning asset base decreased
slightly from $261 million for the first nine months of 2000 to $260 million for
the first nine months of 2001.The taxable equivalent net interest margin
declined to 3.54% for the first nine months of 2001 from 3.66% for the same
period in 2000.

OTHER OPERATING INCOME

     Other operating income, excluding securities gains and losses, increased
from $1,778,000 for the first nine months of 2000 to $1,837,000 for the first
nine months of 2001.  For the quarter ended September 30, 2001, other operating
income, excluding securities gains and losses, improved from $612,000 to
$757,000 for the comparable quarter last year. Changes in various categories of
other income are depicted in the following table:

<TABLE>
<CAPTION>
                                                      Three months ended September 30,        Nine months ended September 30,
(Expressed in thousands)                          2001       2000            % Change       2001        2000           % Change
<S>                                        <C>            <C>              <C>         <C>         <C>             <C>
Trust fees                                       $ 146      $  77               89.6%     $  453      $  291              55.7%
Service charges on deposits                        248        215               15.3%        669         622               7.6%
Earnings on bank-owned life insurance               54         51                5.9%        162         154               5.2%
Interest on federal tax refund                       0          0                 na           0         256            -100.0%
Gain (loss) on sale of loans
   and loans held for sale                         127         16              693.8%        153         (44)            447.7%

Other income (individually less than                                                                                        na
   1% of total income)                             182        253              -28.1%        400         499             -19.8%
                                                  ---------------                         ------------------
     Subtotal                                      757        612               23.7%      1,837       1,778               3.3%
Securities losses                                 (121)         0                 na        (117)          0                na
                                                  ---------------                         ------------------
     Total                                       $ 636      $ 612                3.9%     $1,720      $1,778              -3.3%
                                                  ===============                         ==================
</TABLE>

                                       16
<PAGE>

     Trust fees increased principally due to an increase in the trust fee
service charge schedule effective with the quarterly fees assessed on June 30,
2001 and also due to a one time executor fee in the amount of $25,000 recorded
during the second quarter.

     During 2001, the Company's mortgage lending volume increased due to
refinancing activity related to lower mortgage interest rates and also due to
new correspondent mortgage lending relationships established with other
financial institutions.  Through these relationships the Bank provides
underwriting and documentation preparation for the correspondent, and in some
instances, purchases the mortgage loans originated by the correspondent for
subsequent sale in the secondary market.  The gain on sale of loans held for
sale during the third quarter of 2001 included $133,000 in capitalized mortgage
servicing rights for loans sold in the secondary market.

     Other income includes, among other miscellaneous items, commissions and
fees unrelated to loan origination, brokerage fees, loan documentation
preparation fees, rental income, mortgage servicing income, and check printing
charges.  Other income for the third quarter of 2000 included $135,000 to reduce
the liability associated with a nonqualified compensation plan tied to the
market value of the Company's stock price.  Excluding this item, other income
would have increased for the third quarter and nine months ended September 30,
2001 compared to the same periods last year.

     Securities losses recorded during the three months ended September 30, 2001
included a writedown in book value of a financial institution stock owned by the
Company.  The Company's basis in the stock, Progress Financial Corporation
("Progress"), was written down to Progress' book value as reported for June 30,
2001 of $8.92 per share resulting in the recognition of a loss of $113,000.
During July 2001, the Board of Directors of Progress approved a resolution with
its regulators to reduce lending to early stage technology companies, increase
its capital ratios and its valuation allowance, and implement improved credit
review programs.  Progress also ceased cash dividend payments.  Belmont's
management evaluated its holding in Progress and concluded that a writedown in
value was warranted.

OPERATING EXPENSES

  The following table shows the dollar amounts and percentage changes in various
components of operating expenses.

<TABLE>
<CAPTION>
                                                Three months ended September 30,   Nine months ended September 30,
(Expressed in thousands)                             2001    2000  % Change     2001        2000    % change
------------------------------------------------------------------------------------------------------------------
<S>                                                <C>     <C>     <C>        <C>     <C>         <C>
Salaries and wages                                 $  945  $  802      17.8%  $2,747      $2,311          18.9%
Employee benefits                                     233     255      -8.6%     733         608          20.6%
Occupancy expense                                     220     205       7.3%     674         619           8.9%
Furniture and equipment expense                       228     210       8.6%     674         640           5.3%
Telecommunication expense                              42      45      -6.7%     126         137          -8.0%
Taxes other than payroll and real estate               61       8     662.5%     170          19         794.7%
Supplies and printing                                  44      39      12.8%     147         123          19.5%
Insurance, including federal deposit insurance        148     208     -28.8%     443         573         -22.7%
Amortization of mortgage servicing rights             111       0        na      111          10        1010.0%
Legal fees                                            962     325     196.0%   1,647         861          91.3%
Consulting expense                                     44       9     388.9%     221          82         169.5%
Examinations and audits                               126     123       2.4%     322         269          19.7%
Other (individually less than 1% of total income)     382     291      26.9%     945         940          -0.5%
                                                 -----------------------------------------------------------------
   Total                                           $3,546  $2,520      40.2%  $8,960      $7,192          24.4%
                                                 =================================================================
</TABLE>

        The employee count at the end of September 2001 included 141 full time
equivalent employees ("FTEs") compared to 129 FTEs at the end of September 2000.
Compensation cost

                                       17
<PAGE>

during 2001 included $82,000 in expense associated with the grant of stock
options. Employee benefit costs increased principally due to the reinstatement
of the 401(k) plan profit sharing accrual during the first quarter of 2001 and
an increase in healthcare insurance costs. No profit sharing was accrued or paid
for the year 2000. Employee benefit costs during the third quarter of 2000
included relocation expenses for the Company's president and chief executive
officer and an accrual for unpaid compensated absenses for employees.

     State corporate franchise taxes increased for the first nine months of 2001
compared to the same period of 2000 due to a higher capital base as measured at
year end 2000 versus 1999.  These same factors impacted the quarterly results as
well.

     Federal deposit insurance premiums declined by $188,000 for the nine months
ended September 30, 2001 compared to the nine months ended September 30, 2000
principally due to  improved capital ratios for the Bank.  This savings was
partially offset by higher insurance costs associated with director and officer
liability insurance and fidelity bond insurance.

     Amortization of mortgage servicing rights totaled $111,000 for the nine
months ended September 30, 2001.  Refinancing activity has accelerated rapidly
due to the decline in home mortgage interest rates.  The volume of mortgage loan
originations have also picked up considerably, and the volume of loans serviced
in the secondary market by the Bank has increased since the end of 2000.  The
Company sells many of its new mortgage loan originations in the secondary market
with servicing retained to eliminate interest rate risk associated with fixed
rate, long term assets and to improve its non-interest income.

     Earnings continue to be negatively impacted by the cost associated with
litigation.  Legal fees increased to $962,000 for the three months ended
September 30, 2001 compared to $325,000 for the same period in 2000.  For the
first nine months of 2001, the Company incurred legal expenses of $1,647,000
compared to $861,000 for the nine months ended September 30, 2000.  The Company
expects to incur substantial legal expenses in future periods as well.  In
addition, consulting expense associated with litigation totaled $131,000 for the
nine months of 2001.

     Examination and audit expense increased for the first nine months of 2001
compared to the same period during 2000 due to higher costs associated with
examinations conducted by the Bank's regulator and a third-party risk assessment
conducted during the third quarter of 2001.

FINANCIAL CONDITION

SECURITIES

     The estimated fair value of securities available for sale at  September 30,
2001 and December 31, 2000 are detailed in Note 2 of the quarterly financial
statements.

     Lower overall interest rates at September 30, 2001 compared to September
30, 2000 and December 31, 2000 significantly decreased the estimated gross
unrealized losses in the investment portfolio.  Gross unrealized losses at
September 30, 2000 were $6.1 million compared to $3.3 million at December 31,
2000 and $2.0 million at June 30, 2001.

     Market factors and prepayment speeds impact the yield and average lives of
mortgage-backed securities.  As interest rates decline and refinancing activity
accelerates, premiums paid for mortgage-backed securities are amortized more
quickly and may cause yields to decline.  Conversely, yields may improve on
bonds purchased at discounts during times of accelerated repayment activity.

     At September 30, 2001, the Company owned various bonds of a single issuer
the amortized cost of which exceeded 10% of total shareholders' equity, or
$2,710,000.  These concentrations primarily occurred due to the decline in the
Company's capital during 1999.  The following table details the issuer,
amortized cost and estimated fair value of these bonds.

                                       18
<PAGE>

<TABLE>
<CAPTION>
     (Expressed in thousands)
                                                                                  Estimated
                             Issuer                            Amortized Cost     Fair Value
     -------------------------------------------------------------------------------------------
<S>                                                            <C>                <C>
     Privately Issued Collateralized Mortgage Obligations:
     Norwest Asset Securities Corporation                               $3,210            $3,268

     Revenue Bonds:
     Suburban Lancaster PA Sewer Authority                               2,837             2,665

     Equity Securities:
     Federal Home Loan Bank stock                                        3,254             3,254
                                                           -------------------------------------
        Total                                                           $9,301            $9,187
                                                           =====================================
</TABLE>

     PROVISION AND ALLOWANCE FOR LOAN LOSSES

               The Corporation provides as an expense an amount which reflects
     incurred loan losses. This provision is based on the growth of the loan
     portfolio and on historical loss experience. The expense is called the
     provision for loan losses in the Consolidated Statements of Income. Actual
     losses on loans and leases are charged against the allowance built up on
     the Consolidated Balance Sheets through the provision for loan losses. The
     amount of loans actually removed as assets from the Consolidated Balance
     Sheets is referred to as charge-offs and, after netting out recoveries of
     previously charged-off assets, becomes net charge-offs.

               Details of the activity in the Allowance for Loan Losses for the
     third quarter and nine months of 2001 and 2000 are included in Note 3 of
     the quarterly financial statements. During the three months ended June 30,
     2001, the Company charged-off approximately $2 million in loans that,
     during previous reporting periods, had specific reserves through an
     allocation of the allowance for loan loss. No loan loss provision was
     recorded during the third quarter or nine months ended September 30, 2001
     because the Company had unallocated reserves based on its analysis of the
     allowance for loan losses as of September 30, 2001. The following table
     depicts various loan and loan-related statistics.

<TABLE>
<CAPTION>
                                                                  Three months ended              Nine months ended
                                                                     September 30,                   September 30,
(Expressed in thousands)                                        2001              2000            2001          2000
--------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>             <C>           <C>
Loans outstanding                                                 $114,589          $132,511        $114,589      $132,511
Average loans                                                     $118,300          $136,833        $123,367      $146,835
Annualized net charge offs (recoveries) as a percent of:
   Average loans                                                      0.41%            -0.52%           1.93%         2.05%
   Allowance for loan losses                                          8.23%            -9.22%          40.49%        39.26%
Allowance for loan losses to:
   Total loans at end of period                                       5.13%             5.80%           5.13%         5.80%
   Non-performing assets                                            109.43%            75.72%         109.43%        75.72%
</TABLE>

     NON-PERFORMING ASSETS

               Non-performing assets consist of (1) non-accrual loans, leases
     and debt securities for which the ultimate collectibility of the full
     amount of interest is uncertain, (2) loans and leases past due ninety days
     or more as to principal or interest (unless management determines that
     based on specific circumstances, interest should continue to accrue on such
     loans) and (3) other real estate owned. A loan is placed on non-accrual
     status when payment of the full amount of principal and interest is not
     expected, or when principal or interest has been in default for a period of
     ninety days or more unless

                                       19
<PAGE>

the loan is well secured and in the process of collection. A summary of non-
performing assets follows:

<TABLE>
<CAPTION>
                                              September 30,      December 31,     September 30,
(Expressed in thousands)                           2001              2000              2000
------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>
Non-accrual loans                                     $4,867            $8,518           $ 9,531
Ninety days past due loans
   still accruing interest                                24                 2               102
Other real estate owned                                  483               766               512
                                           -----------------------------------------------------
     Total                                            $5,374            $9,286           $10,145
                                           =====================================================

Non-performing assets as a percent of
   total assets                                          1.9%              3.3%              3.7%
</TABLE>


     Details of impaired loans and related information are included in Note 3 of
the quarterly financial statements.

     In addition to the schedule of non-performing assets, management prepares a
watch list consisting of loans which they have determined require closer
monitoring to further protect the Company against loss.  At September 30, 2001
and 2000, the balance of loans and available credit classified by management as
substandard due to delinquency, a change in financial position, or other factors
and not included as non-performing assets totaled $15,733,000 and $17,378,000,
respectfully.  Loans classified as doubtful totaled $19,000 at September 30,
2000; no loans were classified as doubtful at September 30, 2001.


LOAN CONCENTRATIONS

     The Company uses the Standard Industry Code (SIC) system to determine
concentrations of credit risk by industry.  No aggregate loan balances based on
a single SIC classification exceeded 10% of total loans.

      The Company also measures concentrations of credit based on the
outstanding loan balances and credit facilities available to an industry as a
percentage of the Bank's Tier 1 capital. Tier 1 capital consists principally
of shareholders' equity less goodwill and deferred tax assets. Concentrations
exceeding 25% of Tier 1 capital are detailed in the following tables.

<TABLE>
<CAPTION>
                                                                      As of September 30, 2001
                                                                  Loan Balance and         % of
(Expressed in thousands)                                          Available Credit    Tier 1 Capital
----------------------------------------------------------------------------------------------------
<S>                                                              <C>                  <C>
Real Estate - Operators on Nonresidential Buildings                           $7,301            39.4%
</TABLE>

<TABLE>
<CAPTION>
                                                                     As of December 31, 2000
<S>                                                              <C>                  <C>
                                                                  Loan Balance and         % of
(Expressed in thousands)                                          Available Credit    Tier 1 Capital
----------------------------------------------------------------------------------------------------
Amusement Industry-Services and Manufacturing                                 $6,864            35.8%
Services - Hotel/Motel                                                         5,549            29.0%
</TABLE>


                                       20
<PAGE>

LONG TERM BORROWINGS

          Long term borrowings consist of two $10 million advances from the
Federal Home Loan Bank of Cincinnati (the "FHLB") with initial fixed interest
rates of 4.78% and 4.53% fixed for three years. These advances have a ten year
final maturity and are due in 2008. The FHLB has a quarterly option to convert
the advances to a floating rate based on the 3 month LIBOR rate. If this option
is exercised by the FHLB, the Bank may prepay the advance without penalty in
full or in part.

CAPITAL RESOURCES

          The table below depicts the capital ratios for the Bank and for the
Company on a consolidated basis as of September 30, 2001. In addition, the table
depicts the regulatory requirements for classification as "adequately
capitalized" under the regulatory guidelines for Prompt Corrective Action. Tier
1 capital consists principally of shareholders' equity less goodwill and a
portion of deferred tax assets, while Tier 2 capital consists of certain debt
instruments and a portion of the allowance for loan losses. Total capital
consists of Tier 1 and Tier 2 capital. Under the Consent Order with the Office
of the Comptroller of the Currency, the Bank will not be treated as "well
capitalized" even if it achieves and maintains a Tier 1 capital leverage ratio
of 5% (which would, absent the Consent Order, be the "well capitalized"
standard) unless and until the Consent Order is terminated or modified to
eliminate the capital requirement under the Consent Order. The Consent Order
requires the Bank to achieve and maintain a 6% Tier 1 leverage ratio.


<TABLE>
<CAPTION>
                                                                                  Required
                                                                                For Capital
                                                       Actual              Adequacy Purposes (1)
(Expressed in thousands)                         Amount        Ratio          Amount        Ratio
---------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>             <C>          <C>
Total risk based capital to risk weighted assets:
Consolidated                                       $22,227        12.7%           $12,830      8.0%
Bank                                                20,558        11.9%            12,696      8.0%
Tier 1 capital to risk weighted assets:
Consolidated                                        20,175        11.5%             6,415      4.0%
Bank                                                18,526        10.7%             6,348      4.0%
Tier 1 capital to average assets:
Consolidated                                        20,175         7.3%             6,415      4.0%
Bank                                                18,526         6.7%            11,051      4.0% (2)
</TABLE>


(1)  These are also the standards to be "adequately capitalized" under Prompt
     Corrective Action Provisions

(2)  The Consent Order requires a 6% Tier 1 leverage ratio. At September 30,
     2001, the amount of the Bank's Tier 1 capital requirement to meet
     compliance with the Consent Order was $16,577,000; the Bank's actual Tier 1
     capital was $18,526,000 at September 30, 2001.

LIQUIDITY

          The Company meets its liability-based needs through the operation of
the Bank's branch banking network that gathers retail deposits. The Bank also
acquires funds through repurchase agreements and overnight federal funds that
provide additional sources of liquidity. Average total deposits were $234
million for the third quarter of 2001 compared to $223 million for the third
quarter of 2000. For the nine months ended September 30, 2001, average deposits
were $233 million versus $231 million for the first nine months of 2000. The
declining trend in deposits experienced during the first nine months of 2000 was
reversed during the third quarter of 2000.

                                       21
<PAGE>

          At September 30, 2001, total loans outstanding had declined by $15.3
million since the end of 2000.  As a result, the funding needs of the Bank to
support current loan demand have declined.  Securities have increased $13.5
million since the end of 2000 as a result of the decrease in loan balances.  The
average life and/or maturities of securities purchased during 2001 have been
relatively short due to the current low interest rate environment.

          The Asset/Liability Committee generally meets bi-weekly to monitor the
funding position of the Bank and to adjust offered rates on Bank products when
appropriate.

          The Bank also has secured and unsecured lines of credit with various
correspondent banks totaling $1,200,000 which may be used as an alternative
funding source; at September 30, 2001, none of these lines were utilized.

          At September 30, 2001, the Bank had an unused credit line with the
Federal Home Loan Bank of Cincinnati (FHLB) for $20 million. Credit facilities
at the FHLB are subject to certain collateral requirements.

FORWARD-LOOKING STATEMENTS

          Various statements made in this Report concerning the manner in which
the Company intends to conduct its future operations, and potential trends that
may impact future results of operations, are forward-looking statements. One can
identify forward-looking statements by words such as "may," "will," "intend,"
"expect," "anticipate," "believe," "estimate," and "continue" or similar words.
Forward-looking statements may also use different phrases. Forward-looking
statements address, among other things, (1) the Company's expectations; (2)
projections of the Company's future results of operations or of its financial
condition; or (3) other "forward looking" information. The Company may be unable
to realize its plans and objectives due to various important factors, including,
but not limited to, the factors described below. The Company and the Bank have
entered into consent agreements with the Federal Reserve Bank of Cleveland and
the Office of the Comptroller of the Currency that require it to take various
actions and meet various requirements. If the Company or the Bank fail to
satisfy all of these requirements, the Comptroller of the Currency and Federal
Reserve Bank could potentially assume complete or significantly greater control
of the Company's operations.

     .   The Company has recognized substantial loan losses in recent years,
         principally related to loans made under the direction of prior
         management. While the Company has established what it believes are
         appropriate loan loss reserves, it could incur significant additional
         loan losses in future periods, particularly if general economic
         conditions or conditions in particular industries in which its loans
         are concentrated deteriorate.

     .   The Company is subject to increasingly vigorous and intense competition
         from other banking institutions and from various financial institutions
         and other nonbank or non-regulated companies or firms that engage in
         similar activities. Many of these institutions have significantly
         greater resources than the Company.

     .   The Company is currently engaged in certain significant lawsuits. In
         addition to making significant expenditures for legal fees, adverse
         judgments in one or more of these lawsuits could have a materially
         adverse impact on its financial condition.

                                       22
<PAGE>

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The information required by Item 3 has been disclosed in Item 7A of
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
There has been no material change in the disclosure regarding market risk.

PART II - OTHER INFORMATION

Item 1.  Legal proceedings

          Since the date of the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2000, there have been no material new legal
proceedings involving the Company or any material developments to the
proceedings described in such 10-K except as described below.

          The Company is a defendant in a suit for damages brought in the Court
of Common Pleas for Belmont County, Ohio in April 1999 by George Michael Riley
and others against the Bank and certain former officers, among others, alleging
torts to have occurred in connection with the Bank's denial of a loan to a third
party to finance the sale of a business owned by plaintiffs. It is claimed that
a former loan officer of the Bank later purchased the business at a lower price
with financial assistance from the Bank's former chief operating officer. The
trial, originally scheduled for October 2001, has been continued to June 2002.
Based on the advice of counsel, the Company believes its exposure to liability,
if any, is minimal in this case. Another case, filed in the same court in May
1999 by Charles J. and Rebecca McKeegan, the beneficial owners of the potential
purchaser of the business in the same transaction, was settled for nominal
consideration and dismissed with prejudice in August 2001.

    Progressive Casualty Insurance Company sold to the Company a directors and
officers liability policy providing for $3 million of coverage and a separate
financial institution fidelity bond in the face amount of $4.75 million. The
Company has filed a claim under the fidelity bond policy to recover the losses
incurred in connection with the Schwartz Homes, Inc. loan relationship.  The
Company has also claimed coverage under the directors and officers liability
policy in connection with the Schwartz Homes, Inc. case as well as other cases
the Company is defending.

          Progressive declined to honor these claims and, in December 1999,
filed an action in the United States District Court for the Southern District of
Ohio, Eastern Division asking the court to issue a declaratory judgment
declaring that Progressive is not liable under either the directors and officers
liability policy or the fidelity bond policy. In September 2000, the court
granted the Company's motion to dismiss the declaratory judgment action.
Progressive had also asked the court, if Progressive is found to be liable
under these policies, to determine whether the Bank or other parties who have
sued the Bank in separate actions are entitled to the insurance proceeds.
Progressive has deposited with the court bonds in the aggregate amount of $7.75
million, which amount Progressive believes is sufficient to satisfy any
liabilities under the policies in respect of this interpleader claim. The
interpleader claim remains before the court. In May 2001, the court consolidated
this action with a separate case brought by the Company against Progressive in
the Circuit Court of Ohio County, West Virginia, which was then removed to the
United States District Court for the Northern District of West Virginia, in
which the Company sought to recover damages related to Progressive's failure to
honor the Company's claims under the fidelity bond. The parties are currently in
the discovery phase. Trial has been scheduled for July 2002 in this case. The
Company intends to vigorously seek recoveries under the insurance policies sold
to it by Progressive.

          In October 1999, the Company filed suit in the Court of Common Pleas
of Tuscarawas County, Ohio, alleging that it had been the victim of an
"elaborate fraud" that has resulted in more than $15 million in losses to the
Bank. Following an extensive internal review of its loan portfolio, the Bank
filed claims against Steven D. Schwartz, President of Schwartz Homes, Inc., the
now-closed New Philadelphia retailer of manufactured homes. At the same time,
the Bank filed claims against three additional people: Linda Reese, Schwartz
Homes' Chief Financial Officer; William Wallace, the Bank's

                                       23
<PAGE>

former Executive Vice-President and Chief Operating Officer; and Christine
Wallace, his wife. The Wallaces have filed counterclaims in an indeterminate
amount upon various bases, including invasion of privacy, defamation and failure
to distribute moneys allegedly due them under a deferred and certain other
compensation plans. The case had been scheduled for trial in May 2001, but
during that month Mr. Schwartz filed for bankruptcy, which automatically stayed
the proceeding. The Bankruptcy Court subsequently granted the Company's motion
for relief from the automatic stay, and the trial before the Court of Common
Pleas of Tuscarawas County, Ohio has been rescheduled for January 2002.
Principally for strategic considerations in other related cases, the Company has
elected to dismiss the claims against William and Christine Wallace, without
prejudice. The Company is considering whether it wishes to continue to pursue
the claims against Mr. Schwartz and Ms. Reese in this case. The Company
continues to seek to recover from its indemnity bond insurance carrier,
Progressive Casualty Insurance Company, the full amount of its bond for the
alleged conduct of Mr. Wallace during the time he served as an officer and
director and Mr. Wallace continues to be a defendant in the Fleagane case,
discussed below. The Company intends to vigorously defend against the Wallaces'
counterclaims, which the Company believes are without merit.

     In October 1999, James John Fleagane, a shareholder of the Company, filed
an action against the Company, the Bank and certain of the Company's and the
Bank's current and former officers and directors in the Circuit Court of Ohio
County, West Virginia. The plaintiff alleged, among other things, that the Bank
and its directors and officers negligently transacted and administered various
loans with respect to Schwartz Homes, Inc. and customers of Schwartz. In the
complaint, the plaintiff sought damages for the loss in value of his stock and
other compensatory and punitive damages in an unspecified amount and requested
class action certification for the common shareholders of the Company. The court
denied the Company's motion to dismiss this case in July 2000. In August 2000,
the plaintiff filed an amended complaint, as to which the Company has filed an
answer, affirmative defenses and cross-claims against the Company's former
accountants, S.R. Snodgrass, A.C. and a principal thereof, and against J.
Vincent Ciroli, Jr., formerly the Company's President and Chief Executive
Officer, and William Wallace, formerly the Company's Executive Vice President
and Chief Operating Officer. In February 2001, the court granted leave to the
plaintiff to file a second amended complaint. The second amended complaint
eliminated the direct claims against the Company and the Bank and the request
for class action certification. Accordingly, as amended, this action constitutes
a derivative suit against current and former officers and directors of the
Company and the Bank as well as the former auditor of the Company and the Bank.
In September 2001, plaintiff dismissed the claims against the officers of the
Company and the Bank (except for Messrs. Ciroli and Wallace). The Company is
paying the costs of defense of certain of the directors and officers. The trial
is scheduled for December 2001.

     Separately, the plaintiff reached an agreement to settle the claims against
S.R. Snodgrass and its principal for $4 million, and the court ordered that a
notice of the proposed settlement be sent to the Company's shareholders to
afford them the opportunity to support the settlement, object to it or intervene
in the case. A committee of four of the Company's disinterested directors who
are not parties in this case has recommended that the proposed settlement be
approved.  If the proposed settlement is approved by the court, it is
anticipated that the Company will receive approximately $2 million upon
distribution of the proceeds after payment of the plaintiffs' attorneys fees and
other litigation costs.

     In June 2001, J. Vincent Ciroli, Jr. filed an action in the Common Pleas
Court of Belmont County, Ohio against the Company and the Bank seeking recovery
of his defense costs in the Fleagane case and a separate proceeding brought
against him by the Office of the Comptroller of the Currency, and a
determination of the amount of deferred compensation and other employment
benefits to which he claims to be entitled for his service to the Company and
the Bank. The Company filed an answer to the complaint in July 2001 and an
amended answer and counterclaim in August 2001.  The amended counterclaim
alleges breach of fiduciary duty on the part of Mr. Ciroli and seeks recovery of
certain funds paid to him under one of his incentive compensation plans.  The
Company intends to vigorously defend against the claims asserted by Mr. Ciroli.

     In August 1999, the Bank was named as a defendant in a lawsuit filed in the
Belmont County Common Pleas Court by Joseph C. Heinlein, Jr. against his former
secretary, the Bank, other financial

                                       24
<PAGE>

institutions and individuals with whom the secretary did business. The complaint
alleges that the secretary embezzled funds from the plaintiff's account over a
period of several years by forging his signature to checks and alleges
negligence on the part of the Bank for honoring such checks. This secretary has
entered into a plea agreement under which she has paid $500,000 in restitution
and received a prison sentence. The complaint was amended to claim damages of
$1,250,000; however, at a subsequent pre-trial conference, the plaintiff advised
the court that his net losses (after application of the $500,000 restitution
payment) were approximately $300,000. The Bank believes that it has valid
defenses against the claim and intends to defend it vigorously. The Bank has
also filed cross-claims against the secretary and a third party it believes
benefited from the misappropriation of funds. In addition, the Company believes
that any liability on the Bank's part would be covered under its insurance
policy. However, the insurance carrier, Progressive Casualty Insurance Company,
has filed a declaratory judgment and interpleader action raising issues of
coverage and indemnification on this claim, as previously discussed above. Trial
in the case has been scheduled for March 2002.

Item 2.  Changes in securities and use of proceeds

Not applicable

Item 3.  Defaults upon senior securities

Not applicable

Item 4.  Submission of matters to a vote of security shareholders

Not applicable

Item 5.  Other information

Not applicable

Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits
         None

    (b)  Reports on Form 8-K
         None

                                       25
<PAGE>

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.

                         Belmont Bancorp.
                         (Registrant)

                         /s/Wilbur Roat
                         By: Wilbur Roat
                             President & CEO


                         /s/Jane Marsh
                         By: Jane Marsh
                             Secretary
                             (Principal Financial and Accounting Officer)

November 13, 2001

                                       26