UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         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 MARCH 31, 1999
                               --------------

                                       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          0-17455   
                              ------------

                                  COMM BANCORP, INC.             
----------------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)

              PENNSYLVANIA                                   23-2242292 
-------------------------------------------   ------------------------------
(State or other jurisdiction of               (I.R.S. Employer Identification
 incorporation or organization)                Number)    
         

      521 MAIN STREET, FOREST CITY, PA                      18421
-------------------------------------------   -------------------------------
(Address of principal executive offices)                 (Zip Code)


                                    (717) 785-3181 
-----------------------------------------------------------------------------
             (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 twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes [X] No [ ]

                  APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 2,210,403 at May 12,
1999.

                              Page 1 of 65
                        Exhibit Index on Page 45

                           COMM BANCORP, INC.
                                FORM 10-Q

                             MARCH 31, 1999

                                  INDEX


CONTENTS                                                         PAGE NO.
--------------------------------------------------------------------------

PART I.  FINANCIAL INFORMATION:

 Item 1: Financial Statements.

     Consolidated Statements of Income and Comprehensive Income -
      for the Three Months Ended March 31, 1999 and 1998.........      3
     Consolidated Balance Sheets - March 31, 1999, and December
      31, 1998...................................................      4
     Consolidated Statement of Changes in Stockholders' Equity
      for the Three Months Ended March 31, 1999..................      5
     Consolidated Statements of Cash Flows for the Three Months
      Ended March 31, 1999 and 1998..............................      6
     Notes to Consolidated Financial Statements..................      7

  Item 2: Management's Discussion and Analysis of Financial 
           Condition and Results of Operations...................      9

  Item 3: Quantitative and Qualitative Disclosures About Market
           Risk..................................................      *

PART II.  OTHER INFORMATION:

  Item 1: Legal Proceedings......................................     43

  Item 2: Changes in Securities and Use of Proceeds..............     43  

  Item 3: Defaults Upon Senior Securities........................     43  

  Item 4: Submission of Matters to a Vote of Security Holders....     43  

  Item 5: Other Information......................................     43

  Item 6: Exhibits and Reports on Form 8-K.......................     43

  SIGNATURES.....................................................     44

  Exhibit Index..................................................     45

* Not Applicable


<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME               
                                                          ----------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
           
FOR THE THREE MONTHS ENDED MARCH 31                                                        1999         1998
------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>          <C>
INTEREST INCOME:
Interest and fees on loans:
  Taxable............................................................................    $5,000       $5,094 
  Tax-exempt.........................................................................        93           98 
Interest and dividends on investment securities available-for-sale:               
  Taxable............................................................................     1,009          838  
  Tax-exempt.........................................................................       504          517
  Dividends..........................................................................        30           29 
Interest on federal funds sold.......................................................        48           82  
                                                                                         ------       ------
    Total interest income............................................................     6,684        6,658
                                                                                         ------       ------  

INTEREST EXPENSE:
Interest on deposits.................................................................     3,377        3,422
Interest on short-term borrowings....................................................         1            7
Interest on long-term debt...........................................................         1            1  
                                                                                         ------       ------
    Total interest expense...........................................................     3,379        3,430
                                                                                         ------       ------  
    Net interest income..............................................................     3,305        3,228 
Provision for loan losses............................................................        30          105
                                                                                         ------       ------
    Net interest income after provision for loan losses..............................     3,275        3,123
                                                                                         ------       ------

NONINTEREST INCOME:
Service charges, fees and commissions................................................       380          353
Net gains on sale of loans...........................................................        32             
                                                                                         ------       ------
    Total noninterest income.........................................................       412          353
                                                                                         ------       ------

NONINTEREST EXPENSE:
Salaries and employee benefits expense...............................................     1,164        1,094
Net occupancy and equipment expense..................................................       348          352
Other expenses.......................................................................       716          684
                                                                                         ------       ------
    Total noninterest expense........................................................     2,228        2,130
                                                                                         ------       ------
Income before income taxes...........................................................     1,459        1,346 
Provision for income tax expense.....................................................       319          276
                                                                                         ------       ------
    Net income.......................................................................     1,140        1,070
                                                                                         ------       ------

OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on investment securities available-for-sale................      (427)         315 
Income tax expense (benefit) related to other comprehensive income...................      (146)         107 
                                                                                         ------       ------
    Other comprehensive income (loss), net of income taxes...........................      (281)         208  
                                                                                         ------       ------
    Comprehensive income.............................................................    $  859       $1,278
                                                                                         ======       ======

PER SHARE DATA:
Net income...........................................................................    $ 0.52       $ 0.49 
Cash dividends declared..............................................................    $ 0.13       $ 0.07 
Average common shares................................................................ 2,208,634    2,204,169


See notes to consolidated financial statements.
</TABLE>


<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED BALANCE SHEETS                  
                           -------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                      MARCH 31,  DECEMBER 31,
                                                                                        1999         1998    
                                                                                      ---------  ------------
<S>                                                                                   <C>        <C>
ASSETS:
Cash and due from banks............................................................... $  7,242      $ 11,464
Federal funds sold....................................................................    2,050         7,700
Investment securities available-for-sale..............................................  115,293       109,626
Loans held for sale, net..............................................................      422           503
Loans, net of unearned income.........................................................  248,674       248,140
  Less: allowance for loan losses.....................................................    4,071         4,050
                                                                                       --------      --------
Net loans.............................................................................  244,603       244,090
Premises and equipment, net...........................................................    8,245         7,016
Accrued interest receivable...........................................................    2,266         2,297
Other assets..........................................................................    6,009         5,555
                                                                                       --------      --------
    Total assets...................................................................... $386,130      $388,251
                                                                                       ========      ========
 
LIABILITIES:
Deposits:
  Noninterest-bearing................................................................. $ 33,868      $ 36,024
  Interest-bearing....................................................................  307,358       308,229
                                                                                       --------      --------
    Total deposits....................................................................  341,226       344,253
                                                                                       --------      --------
Long-term debt........................................................................       41            41
Accrued interest payable..............................................................    1,799         1,740
Other liabilities.....................................................................    2,714         2,483
                                                                                       --------      --------
    Total liabilities..,..............................................................  345,780       348,517
                                                                                       --------      --------
                              

STOCKHOLDERS' EQUITY:
Common stock, par value $0.33, authorized 12,000,000 shares, issued and outstanding: 
 March 31, 1999, 2,208,634 shares; December 31, 1998, 2,207,022 shares................      729           729
Capital surplus.......................................................................    6,582         6,537
Retained earnings.....................................................................   31,926        31,074
Accumulated other comprehensive income................................................    1,113         1,394
                                                                                       --------      -------- 
    Total stockholders' equity........................................................   40,350        39,734
                                                                                       --------      --------
    Total liabilities and stockholders' equity........................................ $386,130      $388,251
                                                                                       ========      ========
                                                                                       























See notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY              
                                                          ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                                                  ACCUMULATED
                                                                                        OTHER          TOTAL 
                                                 COMMON   CAPITAL   RETAINED    COMPREHENSIVE   STOCKHOLDERS'
                                                  STOCK   SURPLUS   EARNINGS    ON SECURITIES         EQUITY
------------------------------------------------------------------------------------------------------------
<S>                                              <C>      <C>       <C>         <C>             <C>  
BALANCE, DECEMBER 31, 1998.......................  $729    $6,537    $31,074           $1,394        $39,734
Net income........................................                     1,140                           1,140
Dividends declared: $0.13 per share...............                      (288)                           (288)
Dividend reinvestment plan: 1,612 shares issued...             45                                         45
Net change in unrealized gain on securities.......                                       (281)          (281)
                                                   ----    ------    -------           ------        -------
BALANCE, MARCH 31, 1999........................... $729    $6,582    $31,926           $1,113        $40,350
                                                   ====    ======    =======           ======        =======












































See notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>
COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
                                     ---------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

FOR THE THREE MONTHS ENDED MARCH 31                                                           1999      1998
------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................ $ 1,140   $ 1,070
Adjustments:                                                                            
  Provision for loan losses...............................................................      30       105
  Depreciation, amortization and accretion................................................     431       295
  Amortization of loan fees...............................................................     (36)      (54)
  Deferred income tax (benefit)...........................................................     (55)      (30)
  Gains on sale of other real estate......................................................      (2)           
  Changes in:
    Loans held for sale, net..............................................................      81
    Accrued interest receivable...........................................................      31       337 
    Other assets..........................................................................    (415)     (195)
    Accrued interest payable..............................................................      59        91  
    Other liabilities.....................................................................     231       294  
                                                                                           -------   -------
      Net cash provided by operating activities...........................................   1,495     1,913 
                                                                                           -------   -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from repayments of available-for-sale securities.................................  10,744    13,358
Purchases of available-for-sale securities................................................ (16,984)   (2,676)
Proceeds from sale of other real estate...................................................      90           
Net decreases (increases) in lending activities...........................................    (555)    8,334 
Purchases of premises and equipment.......................................................  (1,392)   (1,267)
                                                                                           -------   -------
      Net cash provided by (used in) investing activities.................................  (8,097)   17,749  
                                                                                           -------   -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in:
  Money market, NOW, savings and noninterest-bearing accounts.............................  (1,422)   (4,954)
  Time deposits...........................................................................  (1,605)    1,622 
  Short-term borrowings...................................................................            (9,575) 
Payments on long-term debt................................................................                (1)
Proceeds from the issuance of common shares...............................................      45        61
Cash dividends paid.......................................................................    (288)     (264)
                                                                                           -------   -------
      Net cash used in financing activities...............................................  (3,270)  (13,111)
                                                                                           -------   -------
      Net increase (decrease) in cash and cash equivalents................................  (9,872)    6,551  
      Cash and cash equivalents at beginning of year......................................  19,164    17,265 
                                                                                           -------   -------
      Cash and cash equivalents at end of period.......................................... $ 9,292   $23,816
                                                                                           =======   =======
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for interest.................................................. $ 3,320   $ 3,339
Income taxes..............................................................................     129
Noncash items:
  Transfers of loans to other real estate.................................................      48        63  
  Change in net unrealized losses (gains) on available-for-sale securities................ $   281   $  (208)













See notes to consolidated financial statements.

</TABLE>

COMM BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                
                                          --------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. BASIS OF PRESENTATION:                          

The accompanying unaudited consolidated financial statements of Comm
Bancorp, Inc. and subsidiary, Community Bank & Trust Company (collectively,
the "Company") have been prepared in accordance with generally accepted
accounting principles ("GAAP") for interim financial information and with
the instructions to form 10-Q and Article 10-01 of Regulation S-X.  In the
opinion of management, all normal recurring adjustments necessary for a
fair presentation of the financial position and results of operations for
the periods have been included.  All significant intercompany balances and
transactions have been eliminated in the consolidation.  Prior-period
amounts are reclassified when necessary to conform with the current year's
presentation.

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported periods.  Actual
results could differ from those estimates.  For additional information and
disclosures required under GAAP, reference is made to the Company's Annual
Report on Form 10-K for the period ended December 31, 1998.

2. SEGMENT DISCLOSURE:

The Company adopted Statement of Financial Accounting Standards ("SFAS")No.
131, "Disclosures About Segments of an Enterprise and Related Information"
on January 1, 1998.  This Statement established standards for the way
public companies report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
stockholders after the initial year of application.  

According to this Statement, a public business must report financial and
descriptive information about its reportable operating segments.  Operating
segments are defined as components of an enterprise about which separate
financial and nonfinancial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.  It also establishes standards for
related disclosures about products and services, geographic areas and major
customers.

SFAS No. 131 states that two or more operating segments may be aggregated 
into a single segment if the segments have similar: (i) economic
characteristics; (ii) products and services; (iii) operating processes;
(iv) customer bases; (v) delivery systems; and (vi) regulatory environment. 
The Company' thirteen branch banking offices, all similar with respect to
these characteristics, have exhibited similar long-term financial
performance.  Therefore, they were aggregated into a single operating
segment.  The Company had no other reportable operating segment during the
quarters ended March 31, 1999 and 1998.




COMM BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS                                     
                                    ----------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

FORWARD-LOOKING DISCUSSION:

Certain statements in this Form 10-Q are forward-looking statements that
involve numerous risks and uncertainties.  The following factors, among
others, may cause actual results to differ materially from projected
results:

Local, domestic and international economic and political conditions, and
government monetary and fiscal policies affect banking both directly and
indirectly.  Inflation, recession, unemployment, volatile interest rates,
tight money supply, real estate values, international conflicts, and other
factors beyond the control of Comm Bancorp, Inc. and its subsidiary,
Community Bank and Trust Company (collectively, the "Company") may also
adversely affect its future results of operations.  Management, consisting
of the Board of Directors and executive officers, expects that no
particular factor will affect the Company's results of operations. 
Downward trends in areas such as real estate, construction and consumer
spending, may adversely impact the Company's ability to maintain or
increase profitability.  Therefore, the Company cannot assure that it will
continue its current rates of income and growth.

The Company's earnings depend largely upon net interest income.  The
relationship between the Company's cost of funds, deposits and borrowings,
and the yield on its interest-earning assets, loans and investments all
influence net interest income levels.  This relationship, defined as the
net interest spread, fluctuates and is affected by regulatory, economic and
competitive factors that influence:  (I) interest rates; (ii) the volume,
rate and mix of interest-earning assets and interest-bearing liabilities;
and (iii) the level of nonperforming assets.  As part of its interest rate
risk ("IRR") management strategy, management monitors the maturity and
repricing characteristics of interest-earning assets and interest-bearing
liabilities to control its exposure to interest rate changes.

In originating loans, some credit losses are likely to occur.  This risk of
loss varies with, among other things:  (I) general economic conditions;
(ii) loan type; (iii) creditworthiness and debt servicing capacity of the
borrower over the term of the loan; and (iv) in the case of a
collateralized loan, the value and marketability of the collateral securing
the loan.  Management maintains an allowance for loan losses based on,
among other things:  (I) historical loan loss experience; (ii) known
inherent risks in the loan portfolio; (iii) adverse situations that may
affect a borrower's ability to repay; (iv) the estimated value of any
underlying collateral; and (v) an evaluation of current economic
conditions. Management currently believes that the allowance for loan
losses is adequate, but there can be no assurance that nonperforming loans
will not increase in the future.

To a certain extent, the Company's success depends upon the general
economic conditions in the geographic market that it serves.  Although the
Company expects economic conditions in its market area to remain favorable,
assurance cannot be given that such conditions will continue.  Adverse
changes to economic conditions in the Company's geographic market area
would likely impair its loan collections and may have a materially adverse
effect on the consolidated results of operations and financial position.

The banking industry is highly competitive, with rapid changes in product
delivery systems and in consolidation of service providers.  The Company
competes with many larger institutions in terms of asset size.  These
competitors also have substantially greater technical, marketing and
financial resources.  The larger size of these companies affords them the
opportunity to offer products and services not offered by the Company.  The
Company is constantly striving to meet the convenience and needs of its
customers and to enlarge its customer base.  The Company cannot assure that
these efforts will be successful in maintaining and expanding its customer
base. 

OVERVIEW:

The national economy remained strong during the first quarter of 1999.  The
nation's gross domestic product, the value of all goods and services
produced in the United States, grew at a surprising annual rate of 4.5
percent.   While the economy soared, inflation remained low. For the first
quarter of 1999, the core consumer price index showed an annualized
increase of only 0.9 percent and a rate of 2.1 percent over the past twelve
months.  Both consumer and business spending surged during the first
quarter.  Consumer spending, which accounts for two-thirds of the nation's
economic output, rose at a 6.7 percent rate in the first quarter, the
largest rise experienced in eleven years. In addition, new equipment and
computer purchases fueled an annualized first quarter business spending
rate of 10.5 percent, as companies continued to address their year 2000
("Y2K") issues.

The Company's first quarter 1999 earnings increased 6.5 percent over the
same period last year.  Net income for the first quarter of 1999 totaled
$1,140 or $0.52 per share compared to $1,070 or $0.49 per share for the
first quarter of 1998.  The Company's return on average assets for the
first three months of 1999 equaled 1.21 percent compared to 1.18 percent
for the same period of 1998.  Additionally, the Company's return on average
equity for the three months ended March 31, 1999, was 11.47 percent as
compared to 11.83 percent experienced one year earlier. A reduction in the
provision for loan losses and increases in net interest income and
noninterest income were the primary factors influencing the improved
earnings. This improvement was partially offset by an increase in
noninterest expense.  The Company's other comprehensive income for the
first quarter of 1999 equaled $859 compared to $1,278 for the same period
of 1998. 

In addition to these financial accomplishments, the Company's corporate
center and thirteenth branch office located in Clarks Summit, Lackawanna
County, Pennsylvania, opened for business during the first quarter of 1999. 
The 24,000 square foot facility centralizes eight administrative divisions
while offering full-service banking to the public. Also during the first
quarter, the Company broke ground on what will be its fourteenth branch
office located in Dickson City, Pennsylvania. This branch office, also
located in Lackawanna County, is scheduled to open for business in August
of 1999.

REVIEW OF FINANCIAL POSITION:

The Company's total assets amounted to $386.1 million at March 31, 1999, a
$2.1 million decline compared to the $388.2 million recorded at December
31, 1998. Cyclical changes in deposit volumes offset by declines in cash
and due from banks were primarily responsible for the reduction in total
assets.  In addition, the asset composition changed during the first
quarter of 1999 as federal funds sold were redirected into the investment
portfolio.  Cash and cash equivalents totaled $9.3 million at March 31,
1999, a $9.9 million decline compared to $19.2 million at December 31,
1998.  Investment securities grew $5.7 million to $115.3 million at March
31, 1999, from $109.6 million at December 31, 1998.  The Company's deposits
amounted to $341.2 million at March 31, 1999, a decrease of $3.0 million
from the $344.2 reported at December 31, 1998.  The Company's capital
position strengthened during the first quarter. This was evidenced by an
increase in the Leverage ratio to 9.6 percent at March 31, 1999, as
compared to 9.5 percent at year-end 1998.  Stockholders' equity grew $0.6
million from $39.7 million at December 31, 1998, to $40.3 million at the
end of the first quarter of 1999.  Contributing to the growth was net
income of $1,140 offset by a net unrealized loss on investment securities
of $281 and cash dividends distributed to stockholders of $243.  

INVESTMENT PORTFOLIO:

As a percentage of earning assets,  the investment portfolio increased to
31.4 percent at March 31, 1999, from 29.1 percent at December 31, 1998.  In
addition, the composition of the Company's investment portfolio continued
to change as funds from maturing U.S. Treasury securities were reinvested
into short-term U.S. Government agency mortgage-backed securities. At March
31, 1999, U.S. Government agency mortgage-backed securities represented the
largest portion of the Company's investment portfolio.  These securities
amounted to $65.1 million or 56.5 percent of the portfolio.  State and
municipal obligations represent another significant portion of the
investment portfolio, totaling $39.4 million or 34.2 percent at the end of
the first quarter of 1999.  The Company utilizes cash flows from repayments
on mortgage-backed securities to fund future loan demand.  The tax-exempt
state and municipal obligations provide the Company with a lower effective
tax rate.   

The carrying values of the major classifications of securities as they
relate to the total investment portfolio at March 31, 1999, and December
31, 1998, are summarized as follows:

<TABLE>
<CAPTION>

DISTRIBUTION OF INVESTMENT SECURITIES

                                                         MARCH 31,          DECEMBER 31,
                                                           1999                 1998  
                                                       AMOUNT    %         AMOUNT    %    
-----------------------------------------------------------------------------------------
<S>                                                   <C>       <C>      <C>       <C>
U.S. Treasury securities............................ $  8,028   6.96%    $ 11,060  10.09%
U.S. Government agencies............................      639   0.55          637   0.58
State and municipals................................   39,439  34.21       40,007  36.49
Mortgage-backed securities..........................   65,112  56.48       55,834  50.93
Equity securities...................................    2,075   1.80        2,088   1.91
                                                     -------- ------     -------- ------
  Total............................................. $115,293 100.00%    $109,626 100.00% 
                                                     ======== ======     ======== ======

</TABLE>

The Company reported a net unrealized gain on available-for-sale securities
of $1,113, net of income taxes of $573, at March 31, 1999.  Recent
improvements in foreign markets allowed investors to take on some additional
risk by shifting their preferences from safe U.S. Treasury securities to
other higher yielding instruments.  This caused a rebound in short-term and
long-term interest rates and resulted in a drop in bond prices during the
first quarter of 1999.  The two-year U.S. Treasury yield increased 54 basis
points from 4.51 percent at December 31, 1998, to 5.05 percent at March 31,
1999.  Similarly, the thirty-year U.S. Treasury security increased 52 basis
points from 5.06 percent to 5.58 percent, respectively, for the same time
periods.  The rise in interest rates coupled with an increase in the
portfolio's effective duration led to a $281 change in the net unrealized
gain during the first three months of 1999. 

The Company utilizes a total return approach, as defined by a national
investment performance ranking company, to analyze the investment portfolio's
performance with respect to risk and reward.  Risk it assessed by quantifying
the average life of the investment portfolio as compared to U.S. Treasury
securities.  Average life is derived from the standard deviation or
volatility of the Company's total return to that of U.S. Treasury securities
over a one-year time horizon.  This risk measure for the Company weakened
slightly from 0.67 years at the end of the fourth quarter of 1998 to 1.0
years at March 31, 1999. Another risk measurement is effective duration, 
which measures the investment portfolio's exposure to market volatility as a
result of interest rate fluctuations.  The Company's effective duration at
March 31, 1999, was 2.1 years as compared to 1.4 years at December 31, 1998. 
Total return is defined as the cumulative dollar return from an investment in
a given period.  The investment portfolio's total return is the sum of all
interest income, reinvestment income on all proceed from repayments and
capital gains and losses, whether realized or unrealized. Total return for
the Company's investment portfolio for the twelve months ended March 31,
1999, was 6.4 percent compared to 7.2 percent for the twelve months ended
December 31, 1998.
 
As aforementioned, the economy grew at a strong pace of 4.5 percent for the
first quarter.  Economic growth is expected to level off in the near future,
however, if it continues at this strong pace interest rates could continue to
rise throughout the year.  The Company's Investment Committee continually
monitors interest rate changes and their effects on the value of the
investment portfolio. 

For the quarter ended March 31, 1999, the Company's tax-equivalent yield on
its investment portfolio declined to 6.7 percent compared to 6.8 percent for
the same period one year ago.  For the first quarter of 1999, the Company
received $10.7 million in securities repayments.  The Company used these
repayments along with excess federal funds sold to purchase $1.0 million and
$15.7 million in short-term, U.S. Treasury securities and mortgage-backed
securities, respectively, and $0.2 million in intermediate-term state and
municipal obligations.  For the near term, management will continue to invest
the majority of excess funds not utilized in lending in short-term U.S.
Government agency mortgage-backed products.  

The maturity distribution of the amortized cost, fair value and weighted-
average, tax-equivalent yield of the available-for-sale portfolio at March
31, 1999, is summarized in the table that follows.  The weighted-average
yield, based on amortized cost, has been computed for state and municipals on
a tax-equivalent basis using the statutory tax rate of 34.0 percent.  The
distributions are based on contractual maturity with the exception of
mortgage-backed securities, collateralized mortgage obligations ("CMOs") and
equity securities.  Mortgage-backed securities and CMOs have been presented
based upon estimated cash flows, assuming no change in the current interest
rate environment.  Equity securities with no stated contractual maturities
are included in the after ten year maturity distribution.  Expected
maturities may differ from contracted maturities because borrowers have the
right to call or prepay obligations with or without call or prepayment
penalties.  

<TABLE>
<CAPTION>
MATURITY DISTRIBUTION OF AVAILABLE-FOR-SALE PORTFOLIO 
 
                                                 AFTER ONE       AFTER FIVE
                                   WITHIN        BUT WITHIN      BUT WITHIN        AFTER
                                  ONE YEAR       FIVE YEARS      TEN YEARS       TEN YEARS          TOTAL    
                              ------------------------------------------------------------------------------- 
MARCH 31, 1999                 AMOUNT  YIELD   AMOUNT  YIELD   AMOUNT  YIELD   AMOUNT  YIELD    AMOUNT  YIELD
-------------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>       <C>
Amortized cost:
U.S. Treasury securities..... $ 7,008   5.70% $ 1,013   4.51%                                 $  8,021  5.55%
U.S. Government agencies.....     649   2.82                                                       649  2.82
State and municipals.........   1,800   6.08    5,583   6.88  $ 9,668   8.54% $20,796   8.18%   37,847  7.98
Mortgage-backed securities...  20,909   6.02   41,502   5.93    2,873   5.99                    65,284  5.96
Equity securities............                                                   1,806   6.59     1,806  6.59
                              -------         -------         -------         -------         --------
  Total...................... $30,366   5.88% $48,098   6.01% $12,541   7.96% $22,602   8.05% $113,607  6.60%
                              =======         =======         =======         =======         ========

Fair value:
U.S. Treasury securities..... $ 7,024         $ 1,004                                         $  8,028
U.S. Government agencies.....     639                                                              639
State and municipals.........   1,804           5,683         $10,164         $21,788           39,439
Mortgage-backed securities...  20,897          41,373           2,842                           65,112
Equity securities............                                                   2,075            2,075
                              -------         -------         -------         -------         --------
  Total...................... $30,364         $48,060         $13,006         $23,863         $115,293
                              =======         =======         =======         =======         ========

</TABLE>

LOAN PORTFOLIO:

Similar to the overall economy, the housing sector continued to exceed
expectations during the first quarter of 1999. Low interest rates and mild
inflation along with high consumer wealth fueled by a raging stock market all
continue to drive the housing market.  The major housing indicators all
posted gains during the first quarter of 1999 as compared to the same period
last year. Annual sales of existing homes increased 11.9 percent to 4.87
million from 4.35 million posted last year. Similarly, new home sales equaled
901 thousand, up 10.4 percent compared to 816 thousand last year. In
addition, the seasonally adjusted annual rate of housing starts for March of
1999, was 1.77 million an increase of 11.6 percent over last year's rate of
1.58 million.

The composition of the Company's loan portfolio at March 31, 1999, and
December 31, 1998, is summarized as follows:

<TABLE>
<CAPTION>
DISTRIBUTION OF LOAN PORTFOLIO

                                                   MARCH 31,             DECEMBER 31,
                                                     1999                    1998
                                               AMOUNT       %         AMOUNT       %    
---------------------------------------------------------------------------------------
<S>                                          <C>          <C>       <C>          <C>
Commercial, financial and others............ $ 31,818     12.79%    $ 31,044     12.51%
Real estate:
  Construction..............................    1,455      0.59        2,108      0.85
  Mortgage..................................  186,659     75.06      186,004     74.96
Consumer, net...............................   28,742     11.56       28,984     11.68
                                             --------    ------     --------    ------
  Loans, net of unearned income.............  248,674    100.00%     248,140    100.00%
                                                         ======                 ======
Less: allowance for loan losses.............    4,071                  4,050  
                                             --------               -------- 
    Net loans............................... $244,603               $244,090
                                             ========               ========

</TABLE>

During the first quarter of 1999, the Company experienced a slight increase
in loans of $0.6 million.   Growth in commercial loans of $0.8 million
partially offset by a decrease in consumer loans of $0.2 million caused the
increase.  The composition of the Company's loan portfolio remained
relatively constant from December 31, 1998 to the end of the first quarter. 
For the first quarter of 1999, the Company's loan volumes averaged $248.4
million as compared to $245.7 million for the same period of 1998.  However,
the tax equivalent yield on the loan portfolio declined to 8.4 percent for
the first three months of 1999 from 8.7 percent for the same period of 1998. 
The decrease was a direct reflection of increased competition for loans.
Management expects no significant fluctuations in loan yields for the
remainder of 1999 if market rates do not decline and if competition does not
intensify.  The Company facilitates loan demand with increases in core
deposits and repayments on loans and investment securities.

Management continually examines the maturity distribution and interest rate
sensitivity of the loan portfolio in an attempt to limit IRR and liquidity
strains.  Approximately 31.3 percent of the lending portfolio is expected to
reprice within the next twelve months.  Management will price loan products
in the near term in order to reduce the average term of fixed-rate loans and
increase its holdings of variable-rate loans in attempting to reduce IRR in
the loan portfolio.

The maturity and repricing information of the loan portfolio by major
classification at March 31, 1999, is summarized as follows:

<TABLE>
<CAPTION>
MATURITY DISTRIBUTION AND INTEREST SENSITIVITY OF LOAN PORTFOLIO

                                                  AFTER ONE
                                      WITHIN      BUT WITHIN       AFTER     
MARCH 31, 1999                       ONE YEAR     FIVE YEARS     FIVE YEARS       TOTAL
---------------------------------------------------------------------------------------
<S>                                  <C>          <C>            <C>           <C>
Maturity schedule:
Commercial, financial and others..... $16,505        $ 8,823       $  6,490    $ 31,818
Real estate:
  Construction.......................   1,455                                     1,455
  Mortgage...........................  24,217         53,395        109,047     186,659 
Consumer, net........................   9,641         14,751          4,350      28,742 
                                      -------        -------       --------    --------
    Total............................ $51,818        $76,969       $119,887    $248,674
                                      =======        =======       ========    ========

Repricing schedule:
Predetermined interest rates......... $30,038        $67,689       $103,183    $200,910
Floating or adjustable interest rates  47,764                                    47,764
                                      -------        -------       --------    --------
    Total............................ $77,802        $67,689       $103,183    $248,674
                                      =======        =======       ========    ========

</TABLE>

ASSET QUALITY:

Nonperforming assets were $5,867 or 2.36 percent of loans, net of unearned
income, at March 31, 1999, compared to $4,275 or 1.72 percent at December 31,
1998.  Increased levels of accruing loans past due 90 days or more, and to a
lessor extent, nonaccrual loans were the major factors causing the downturn. 

Accruing loans past due 90 days or more increased $1,343 to $2,896 at March
31, 1999, from $1,553 at December 31, 1998. Commercial and mortgage loans
accounted equally for the increased level. The Company also experienced an
increase in its nonaccrual loans from $2,308 at December 31, 1998, to $2,601
at March 31, 1999. Management expects nonperforming loans to improve during
1999, as a result of the continued improvement in local economic conditions. 
Should the economic conditions weaken in the Company's market area,
borrowers' ability to make timely loan payments could be limited. The
possibility exists that these levels may further deteriorate should this
occur.
 
Information concerning nonperforming assets at March 31, 1999, and December
31, 1998, is summarized as follows.  The table includes loans or other
extensions of credit classified for regulatory purposes and all material
loans or other extensions of credit that cause management to have serious
doubts as to the borrowers' ability to comply with present loan repayment
terms.

<TABLE>
<CAPTION>

DISTRIBUTION OF NONPERFORMING ASSETS

                                                             MARCH 31,    DECEMBER 31,
                                                               1999           1998     
--------------------------------------------------------------------------------------
<S>                                                          <C>          <C>
NONACCRUAL LOANS:
Commercial, financial and others............................... $  151         $    78
Real estate:
  Construction.................................................
  Mortgage.....................................................  2,375           2,223
Consumer, net..................................................     75               7
                                                                ------         -------
    Total nonaccrual loans.....................................  2,601           2,308
                                                                ------         -------
Restructured loans.............................................    170             174
                                                                ------         -------
    Total impaired loans.......................................  2,771           2,482
                                                                ------         -------

ACCRUING LOANS PAST DUE 90 DAYS OR MORE:
Commercial, financial and others...............................    736             131
Real estate:
  Construction.................................................
  Mortgage.....................................................  1,692           1,035
Consumer, net..................................................    468             387
                                                                ------         -------
    Total accruing loans past due 90 days or more..............  2,896           1,553
                                                                ------         -------
    Total nonperforming loans..................................  5,667           4,035
                                                                ------         -------
Foreclosed assets..............................................    200             240
                                                                ------         -------
    Total nonperforming assets................................. $5,867          $4,275
                                                                ======         =======

Ratios:
Impaired loans as a percentage of loans, net...................   1.11%           1.00%
Nonperforming loans as a percentage of loans, net..............   2.28            1.63 
Nonperforming assets as a percentage of loans, net.............   2.36%           1.72%

</TABLE>

Information relating to the Company's recorded investment in impaired loans
at March 31, 1999 and December 31, 1998, is summarized as follows:

<TABLE>
<CAPTION>

                                                             MARCH 31,     DECEMBER 31,
                                                               1999            1998    
---------------------------------------------------------------------------------------
<S>                                                          <C>           <C>
Impaired loans:
With a related allowance....................................... $2,601           $2,308
With no related allowance......................................    170              174
                                                                ------           ------
  Total........................................................ $2,771           $2,482
                                                                ======           ======
</TABLE>

Impaired loans include a $170 restructured loan to one commercial customer. 
This loan continued to perform in accordance with its modified terms during
the first quarter of 1999.

The analysis of changes affecting the allowance for loan losses related to
impaired loans at March 31, 1999 is summarized as follows:

<TABLE>
<CAPTION>
                                                                              MARCH 31, 
                                                                                1999   
---------------------------------------------------------------------------------------
<S>                                                                           <C>
Balance at January 1.............................................................. $642
Provision for loan losses.........................................................   13
Loans charged-off.................................................................   11
Loans recovered...................................................................    7
                                                                                   ----
Balance at period-end............................................................. $651
                                                                                   ====
</TABLE>

Interest income on impaired loans that would have been recognized had the
loans been current and the terms of the loan not been modified, the aggregate
amount of interest income recognized and the amount recognized using the
cash-basis method and the average recorded investment in impaired loans for
the three months ended March 31, 1999 and 1998, are summarized as follows:

<TABLE>
<CAPTION>

THREE MONTHS ENDED MARCH 31                                       1999             1998
---------------------------------------------------------------------------------------
<S>                                                             <C>              <C>
Gross interest due under terms................................. $   58           $   34
Interest income recognized.....................................      8               20
                                                                ------           ------ 
Interest income not recognized................................. $   50           $   14
                                                                ======           ======

Interest income recognized (cash-basis)........................ $    8           $   20

Average recorded investment in impaired loans.................. $2,549           $2,348

</TABLE>

Cash received on impaired loans applied as a reduction of principal totaled
$81 for the quarter ended March 31, 1999, and $43 for the same period of
1998.  There were no commitments to extend additional funds to such parties
at March 31, 1999. 

The allowance for loan losses account is established through charges to
earnings as a provision for loan losses.  Loans, or portions of loans,
determined to be uncollectible are charged against the allowance account with
any subsequent recoveries being credited to the account.  Nonaccrual,
restructured and large delinquent commercial and real estate loans are
reviewed monthly to determine if carrying value reductions are warranted. 
Consumer loans are considered losses when they are 120 days past due, except
those expected to be recovered through insurance or collateral disposition
proceeds.  Under GAAP, the allowance for loan losses related to impaired
loans is based on discounted cash flows using the loan's initial effective
interest rate or the fair value of the collateral for certain collateral-
dependent loans.  Management uses historical loss experience as a starting
point for evaluating the adequacy of the Company's allowance account. 
However, it also considers a number of relevant factors that would likely
cause estimated credit losses associated with the Company's current portfolio
to differ from historical loss experience.  These factors include, among
others, changes in lending policies and procedures, economic conditions,
nature and volume of the portfolio, loan review system, volumes of past due
and classified loans, concentrations, borrowers' financial status and 
collateral value.  

In addition to management's assessment, various regulatory agencies, as an
integral part of their routine annual examination process, review the
Company's allowance for loan losses.  These agencies may require the Company
to recognize additions to the allowance, beyond normal monthly provisions, 
based on their judgments concerning information available to them at the time
of their examination.  No such charge was deemed necessary upon conclusion of
the latest examination, conducted during the third quarter of 1998, as
regulators considered the Company's allowance for loan losses account
adequate based on risk characteristics and size of the loan portfolio.  Upon
reviewing the 1998 report, management was unaware of any significant
recommendation with respect to the loan portfolio that would materially
affect future liquidity or capital resources.

Management utilizes the federal banking regulatory agencies' Interagency
Policy Statement on the Allowance for Loan and Lease Losses in assessing the
adequacy of its allowance for loan losses account.  The policy statement
provides guidance on the nature and purpose of the allowance, related
responsibilities of management and examiners, loan review systems and
international transfer risk matters.  The analytical tool for assessing the
reasonableness of the allowance for loan losses account included in this
policy statement has been used on a consistent basis by the Company.  The
tool involves a comparison of the reported loss allowance against the sum of
specified percentages, based on industry averages, applied to certain loan
classifications.  Management considered the Company adequately reserved at
March 31, 1999, based on the results of this regulatory calculation. 
Management, however, will continue to perform a thorough analysis of the
Company's loan portfolio since the calculation does not take into account
differences between institutions, their portfolios, and their underwriting,
collection and credit-rating policies.

The allowance for loan losses can generally absorb losses throughout the loan
portfolio, although in some instances allocation is made for specific loans
or groups of loans.  Accordingly, the following table attempts to allocate
this reserve among the major categories. However, it should not be
interpreted as an indication that charge-offs in future periods will occur in
these amounts or proportions, or that the allocation indicates future charge-
off trends.

<TABLE>
<CAPTION>

DISTRIBUTION OF ALLOWANCE FOR LOAN LOSSES
                                                       MARCH 31,          DECEMBER 31,
                                                         1999                 1998    
                                                    ---------------     --------------
                                                           CATEGORY           CATEGORY
                                                               AS A               AS A
                                                               % OF               % OF
                                                    AMOUNT    LOANS     AMOUNT   LOANS 
--------------------------------------------------------------------------------------
<S>                                                 <C>    <C>          <C>   <C>      
Commercial, financial and others................... $1,479    12.79%    $1,465   12.51% 
Real estate:
  Construction.....................................            0.59               0.85    
Mortgage...........................................  1,294    75.06      1,308   74.96  
Consumer, net......................................  1,298    11.56      1,277   11.68
                                                    ------   ------     ------  ------
    Total.......................................... $4,071   100.00%    $4,050  100.00%   
                                                    ======   ======     ======  ======
</TABLE>


A reconciliation of the allowance for loan losses and illustration of charge-
offs and recoveries by major loan category for the quarter ended March 31,
1999, is summarized as follows:

<TABLE>
<CAPTION>

RECONCILIATION OF ALLOWANCE FOR LOAN LOSSES                                 
                                                                              MARCH 31,
                                                                                 1999   
---------------------------------------------------------------------------------------
<S>                                                                           <C>
Allowance for loan losses at beginning of period............................... $4,050
Loans charged-off: 
Commercial, financial and others...............................................      9
Real estate:
  Construction.................................................................
  Mortgage.....................................................................     18
Consumer, net..................................................................     30
                                                                                ------
    Total......................................................................     57
                                                                                ------

Loans recovered:                                  
Commercial, financial and others...............................................      3
Real estate:                                                                              
Construction...................................................................
  Mortgage.....................................................................     24 
Consumer, net..................................................................     21
                                                                                ------
    Total......................................................................     48
                                                                                ------
Net loans charged-off..........................................................      9 
                                                                                ------
Provision charged to operating expense.........................................     30
                                                                                ------
Allowance for loan losses at end of period..................................... $4,071
                                                                                ======

Ratios:
Net loans charged-off as a percentage of average loans outstanding.............   0.01% 
Allowance for loan losses as a percentage of period end loans..................   1.64%

</TABLE>

The allowance for loan losses was $4,071 and equaled 1.64 percent of loans,
net of unearned income, at March 31, 1999, as compared to $4,050 and 1.63
percent of loans, net of unearned income,  at December 31, 1998.  The slight
increase resulted from the first quarter provision for loan losses exceeding
the Company's net charge-offs.  As a percentage of nonperforming loans, the
allowance account covered 71.8 percent at March 31, 1999, and 100.4 percent
at December 31, 1998.  Relative to all nonperforming assets, the allowance
covered 69.4 percent at March 31, 1999, and 94.7 percent at December 31,
1998.  

The Company evaluates past due loans that have not been satisfied through
repossession, foreclosure or related actions, individually to determine if
all or part of the outstanding balance should be charged against the
allowance for loan losses account.  Any subsequent recoveries are credited to
the allowance account.  Net charge-offs were $9 or 0.01 percent of average
loans outstanding for the quarter ended March 31, 1999, compared to $18 or
0.01 percent for the quarter ended March 31, 1998.

DEPOSITS:

The average amount of, and the rate paid on, the major classifications of
deposits for the quarters ended March 31, 1999 and 1998, are summarized as
follows:

<TABLE>
<CAPTION>

DEPOSIT DISTRIBUTION

                                                   MARCH 31,              MARCH 31,  
                                                     1999                   1998      
                                             ------------------     ------------------
                                              AVERAGE   AVERAGE      AVERAGE   AVERAGE
                                              BALANCE      RATE      BALANCE      RATE  
--------------------------------------------------------------------------------------
<S>                                          <C>        <C>         <C>        <C>
Interest-bearing:          
Money market accounts....................... $ 16,696      2.94%    $ 16,833      2.99%
NOW accounts................................   23,359      2.47       20,534      2.21
Savings accounts............................   63,041      2.36       64,012      2.69
Time deposits less than $100................  179,366      5.48      174,431      5.64
Time deposits $100 or more..................   22,520      5.85       23,233      5.90
                                             --------               --------
  Total interest-bearing....................  304,982      4.49%     299,043      4.64%
Noninterest-bearing.........................   34,372                 29,763
                                             --------               --------  
  Total deposits............................ $339,354               $328,806   
                                             ========               ========
</TABLE>

Total deposit volumes decreased $3.0 million from $344.2 million at December
31, 1998, to $341.2 million at March 31, 1999.  The decline was attributable
to cyclical reductions in time deposits $100 or more held by local school
districts.  For the first quarter of 1999, the Company's deposits averaged
$339.4 million, a $10.6 million increase compared to the $328.8 million
recorded for the same period of 1998.  The average cost of deposits declined
15 basis points from 4.64 percent in the first quarter of 1998 to 4.49
percent in the first quarter of 1999.  The Company lowered its interest rates
paid on deposits in response to the Federal Open Market Committee lowering
short-term interest rates 75 basis points in the final half of 1999.  The
Company also concentrated on building its noninterest-bearing deposit base to
reduce its cost of funds. As a result, the Company experienced significant
growth in its noninterest-bearing deposits.  Average volumes of noninterest-
bearing deposits rose $4.6 million or 15.5 percent from $29.8 million for the
first quarter of 1998 to $34.4 million for the first quarter of 1999. 
Average noninterest-bearing deposits as a percentage as a percentage of
average total deposits equaled 10.1 percent for the first quarter of 1999,
compared to 9.1 percent for the same period last year.  The Company's cost of
funds for the first quarter of 1999 declined 9 basis points as compared to
the cost of funds for the fourth quarter of 1998. The low interest rate and
inflationary environment is expected to continue through 1999, however,
should conditions change and interest rates rise, the Company may experience
an increase in its cost of funds.

Volatile deposits, time deposits in denominations of $100 or more, decreased
$6.5 million from $27.1 million at December 31, 1998, to $20.6 million at
March 31, 1999.  As aforementioned, this decrease resulted from reductions in 
deposits of local school districts.  The average cost of these deposit
increased 4 basis points from 5.81 percent for the fourth quarter of 1998 to
5.85 for the first quarter of 1999.

Maturities of time deposits of $100 or more at March 31, 1999, and December
31, 1998, are summarized as follows:

<TABLE>
<CAPTION>

MATURITY DISTRIBUTION OF TIME DEPOSITS OF $100 OR MORE

                                                                 MARCH 31,    DECEMBER 31,
                                                                    1999           1998   
------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>
Within three months............................................    $ 5,054         $ 7,956
After three months but within six months.......................      1,953           4,939
After six months but within twelve months......................      8,367           8,802
After twelve months............................................      5,201           5,391
                                                                   -------         -------
  Total........................................................    $20,575         $27,088
                                                                   =======         =======
</TABLE>


MARKET RISK SENSITIVITY:

Market risk is the risk to a company's financial position resulting from
changes in market rates or prices, such as, interest rates, foreign exchange
rates or commodity prices.  The Company has no exposures to foreign currency
exchange risk nor does it have any specific exposure to the commodity price
risk.  The major area of market risk exposure to the Company is IRR.  The
Company's exposure to IRR can be explained as the potential for change in its
reported earnings and/or the market value of its net worth.  Variations in
interest rates affect the Company's earnings by changing its net interest
income and its level of other interest-sensitive income and operating
expenses.  Interest rate changes also affect the underlying value of the
Company's assets, liabilities and off-balance sheet items.  These changes
arise because the present value of future cash flows, and often the cash
flows themselves, change with interest rates.  The effects of the changes in
these present values reflect the change in the Company's underlying economic
value and provide a basis for the expected change in future earnings related
to interest rates. IRR is inherent in the role of banks as financial
intermediaries, however a bank with a high exposure to IRR may experience
lower earnings, impaired liquidity and capital positions and, most likely, a
greater risk of insolvency.  Therefore, banks must carefully evaluate
interest rate risk to promote safety and soundness in their activities.

Interest rate sensitivity management attempts to limit and, to the extent
possible, control the effects interest rate fluctuations have on net interest
income and the market value of financial instruments.  The responsibility of
this management has been delegated to the Asset/Liability Management
Committee ("ALCO").  Specifically, ALCO utilizes a number of computerized
modeling techniques to monitor and attempt to control influences that market
changes have on the Company's rate-sensitive assets and liabilities.  One
such technique utilizes a static gap report, which attempts to measure the
Company's interest rate exposure by calculating the net amount of rate-
sensitive assets ("RSA") and rate-sensitive liabilities ("RSL") that reprice
within specific time intervals.  A positive gap, indicated by a RSA/RSL ratio
greater than 1.0, implies that earnings will be impacted favorably if
interest rates rise and adversely if interest rates fall during the period. 
A negative gap, a RSA/RSL ratio less than 1.0, tends to indicate that
earnings will be affected inversely to interest rate changes.

The Company's interest rate sensitivity gap position, illustrating RSA and
RSL at their related carrying values, is summarized as follows.  The
distributions in the table are based on a combination of maturities, call
provisions, repricing frequencies and prepayment patterns. Variable-rate
assets and liabilities are distributed based on the repricing frequency of
the instrument.  Mortgage instruments are distributed in accordance with
estimated cash flows, assuming there is no change in the current interest
rate environment.

<TABLE>
<CAPTION>

INTEREST RATE SENSITIVITY
                                                  DUE AFTER           DUE AFTER
                                                  THREE MONTHS        ONE YEAR
                                 DUE WITHIN       BUT WITHIN          BUT WITHIN       DUE AFTER
MARCH 31, 1999                  THREE MONTHS      TWELVE MONTHS       FIVE YEARS       FIVE YEARS       TOTAL
-------------------------------------------------------------------------------------------------------------
<S>                             <C>               <C>                 <C>              <C>           <C>
Rate sensitive assets:
Investment securities............... $ 8,021           $ 22,344         $ 48,059         $ 36,869    $115,293
Loans held for sale, net............     422                                                              422
Loans, net of unearned income.......  57,954             19,848           67,689          103,183     248,674
Federal funds sold..................   2,050                                                            2,050
                                     -------           --------         --------         --------    --------
  Total............................. $68,447           $ 42,192         $115,748         $140,052    $366,439
                                     =======           ========         ========         ========    ========

Rate sensitive liabilities:
Money market accounts...............                   $ 15,881                                      $ 15,881
NOW accounts........................                     23,350                                        23,350
Savings accounts....................                                    $ 64,602                       64,602
Time deposits less than $100........ $42,292             73,676           66,239         $    743     182,950
Time deposits $100 or more..........   5,054             10,320            5,201                       20,575
Long-term debt......................       1                  2               12               26          41
                                     -------           --------         --------         --------    --------
  Total............................. $47,347           $123,229         $136,054         $    769    $307,399
                                     =======           ========         ========         ========    ========

Rate sensitivity gap:
  Period............................ $21,100           $(81,037)        $(20,306)        $139,283     
  Cumulative........................ $21,100           $(59,937)        $(80,243)        $ 59,040    $ 59,040

RSA/RSL ratio:
  Period............................    1.45               0.34             0.85           182.12        
  Cumulative........................    1.45               0.65             0.74             1.19        1.19 

</TABLE>

The Company's one year RSA/RSL ratio weakened from 0.82 at March 31, 1998,
to 0.65 at March 31, 1999.  The predominant cause for the reduction in this
ratio was an increase in the amount of time deposits less than $100
maturing or repricing within one year.  The volume of time deposits less
than $100 maturing or repricing within one year rose $34.3 million compared
to March 31, 1998. This is primarily due to the significant amount of
longer-term certificates of deposit relating to previously offered special
promotions that are now scheduled to renew within the next twelve months.
In addition, customers are opting to invest in shorter-term certificates
due to the low interest rate environment. This ratio falls below the
Company's asset/liability policy guidelines of 0.70 and 1.30. Management
plans to initiate strategies to bring the Company's RSA/RSL ratio back to
within the established guidelines.  Such strategies could include, among
others, deposit pricing strategies to extend the maturities of time
deposits and retaining a greater volume of federal funds sold.

The Company also experienced a reduction in its three-month ratio at March
31, 1999, as compared to one year earlier.  At March 31, 1999, the three-
month ratio equaled 1.45 as compared to 1.81 at March 31, 1998.  This
decline is primarily due to the same reasons given for the cumulative one-
year increase.  However, a reduction in federal funds sold also contributed
to the weakened ratio.  Federal funds sold decreased $14.8 million compared
to March 31, 1998.

According to the results of the static gap report, the Company was
liability rate-sensitive for the cumulative one-year period.  This
indicates that should general market rates increase, the likelihood exists
that net interest income would be adversely affected.   Conversely, a
decline in market rates would likely have a favorable effect on net
interest income.  However, these forward-looking statements are qualified
in the aforementioned section entitled "Forward-Looking Discussion" in this
Management's Discussion and Analysis.

Static gap analysis, although a credible measuring tool,  does not fully
illustrate the impact of interest rate changes on future earnings.  First,
market rate changes normally do not equally or simultaneously affect all
categories of assets and liabilities.  Second, assets and liabilities that
can contractually reprice within the same period may not do so at the same
time or to the same magnitude.  Third, the interest rate sensitivity table
presents a one-day position.  Variations occur daily as the Company adjusts
its rate sensitivity throughout the year.  Finally, assumptions must be
made in constructing such a table.  For example, the conservative nature of
the Company's Asset/Liability Management Policy assigns money market and
NOW accounts to the due after three but within twelve months repricing
interval.  In reality, these items may reprice less frequently and in
different magnitudes than changes in general interest rate levels.

As the static gap report fails to address the dynamic changes in the
balance sheet composition or prevailing interest rates, the Company
enhances its asset/liability management by using a simulation model.  This
model is used to create pro forma net interest income scenarios under
various interest rate shocks.  Model results at March 31, 1999, produced
results similar to those indicated by the one-year static gap position. 
Given a parallel and instantaneous rise in interest rates of 100 basis
points, net interest income should decrease 0.8 percent.  Conversely, a
similar decline in interest rates would result in a 0.8 percent increase in
net interest income.

Financial institutions are affected differently by inflation than are
commercial and industrial companies that have significant investments in
fixed assets and inventories.  Most of the Company's assets are monetary in
nature and change correspondingly with variations in the inflation rate. 
It is difficult to precisely measure the impact of inflation on the
Company, however management believes that its exposure to inflation can be
mitigated through asset/liability management.

LIQUIDITY:

Liquidity is defined as a company's ability to generate cash at a
reasonable cost in order to satisfy commitments to borrowers as well as to
meet the demands of depositors and debtholders.  The Company's principal
sources of liquidity are its core deposits and loan and investment payments
and prepayments.  Providing a secondary source of liquidity is the
Company's available-for-sale portfolio.  As a final source of liquidity,
the Company can exercise existing credit arrangements.  As specified in the
Company's Asset/Liability Management Policy, such borrowings will only be
used on a contingency basis.  The reliance on these borrowings to fund
temporary deficiencies is limited to a maximum of five consecutive business
days before management is required to take appropriate action to remedy the
shortfall through normal operations.  The Company manages liquidity daily,
thus enabling management to effectively monitor fluctuations in the
Company's liquidity position and to adapt its position according to market
changes.  Management believes the Company's liquidity is adequate to meet
both present and future financial obligations and commitments on a timely
basis.  There are presently no known trends, demands, commitments, events
or uncertainties that have resulted or are reasonably likely to result in
material changes with respect to the Company's liquidity.

The Company's liquidity position weakened slightly in comparison to March
31, 1998.  The net noncore funding dependence ratio and net short-term
noncore funding dependence ratio best illustrate the change in the
Company's liquidity position.  The net noncore funding dependence ratio,
defined as the difference between noncore funds, time deposits $100 or more
and brokered time deposits less than $100, and short-term investments to
long-term assets, was negative 3.5 percent at March 31, 1999, compared to 
negative 5.2 percent one year earlier.  The net short-term noncore funding
dependence ratio, defined as the difference between noncore funds maturing
within one year, including borrowed funds, less short-term investments to
long-term assets, equaled negative 5.2 percent and negative 8.3 percent at 
March 31, 1999 and 1998, respectively.  Management believes that by
maintaining adequate volumes of short-term investments and remaining
competitive in pricing its deposits, it can ensure that the Company has
sufficient liquidity to support future growth.

The consolidated statements of cash flows present the changes in cash and
cash equivalents from operating, investing and financing activities.  Cash
and cash equivalents, consisting of cash on hand, cash items in the process
of collection, noninterest-bearing deposits with other banks, balances with
the Federal Reserve Bank of Philadelphia ("FRB") and the Federal Home Loan
Bank of Pittsburgh ("FHLB-Pgh"), and federal funds sold, decreased $9.9
million in the first quarter of 1999.  Net cash provided by operating
activities totaled $1.5 million, primarily due to the Company's net income
of $1,140 earned in the first three months of 1999.

Net cash used in investing activities equaled $8.1 million and was the
primary reason for the first quarter net cash outflow.  Purchases of
available-for-sale securities of $17.0 million partially offset by
repayments from such securities of $10.7 million was the predominant cause
for the cash outflow.

Also contributing to the first quarter decrease in cash and cash
equivalents was a $3.3 million net cash outflow from financing activities
due almost entirely to a net decrease in deposits.

CAPITAL ADEQUACY:

Stockholders' equity improved $616 for the first quarter of 1999.  Net
income of $1,140, partially offset by cash dividends distributed to
stockholders of $243 and a $281 change in the unrealized gain on available-
for-sale securities were the primary factors for such improvement.

Dividends declared as a percentage of net income equaled 25.3 percent for
the first quarter of 1999 compared to 14.4 percent for the same period last
year.  It is the intention of the Company's Board of Directors to continue
to pay cash dividends in the future.  However, these decisions are affected
by operating results, financial and economic decisions, capital and growth
objectives, appropriate dividend restrictions related to the Company and
other relevant factors.

The Company's dividend reinvestment plan allows stockholders to
automatically reinvest their dividends in shares of the Company's common
stock.  During the first quarter of 1999, 1,612 shares were issued under
this plan.

Management attempts to assure capital adequacy by monitoring the current
and projected positions of the Company to support future growth, while
providing stockholders with an attractive long-term appreciation of their
investments.  According to bank regulation, at a minimum, banks must
maintain a Tier I capital to risk-adjusted assets ratio of 4.0 percent and
a total capital to risk-adjusted assets ratio of 8.0 percent. 
Additionally, banks must maintain a Leverage ratio, defined as Tier I
capital to total average assets less intangibles, of 3.0 percent.  The
minimum Leverage ratio of 3.0 percent only applies to institutions with a
composite rating of one under the Uniform Interagency Bank Rating System,
that are not anticipating or experiencing significant growth and have well-
diversified risk.  An additional 100 to 200 basis points are required for
all but these most highly-rated institutions.  The Company's minimum
Leverage ratio was 4.0 percent at March 31, 1999 and 1998.  If an
institution is deemed to be undercapitalized under these standards, banking
law prescribes an increasing amount of regulatory intervention, including
the required institution of a capital restoration plan and restrictions on
the growth of assets, branches or lines of business.  Further restrictions
are applied to significantly or critically undercapitalized institutions,
including restrictions on interest payable on accounts, dismissal of
management and appointment of a receiver.  For well capitalized
institutions, banking law provides authority for regulatory intervention
where the institution is deemed to be engaging in unsafe and unsound
practices or receives a less than satisfactory examination report rating.

The Board of Governors of the Federal Reserve Board, ("Federal Reserve
Board")in conjunction with the other federal banking agencies recently
amended their respective risk-based capital standards for banks, bank
holding companies and thrifts with regard to the regulatory treatment of
unrealized holding gains on certain available-for-sale equity securities. 
Currently under GAAP, unrealized gains are reported as a component of
equity capital, however, unrealized gains have been excluded from
regulatory capital under the capital standards of the federal banking
agencies. Under the amended rule, institutions that legally hold equity
securities are permitted, but not required, to include up to 45.0 percent
of the pretax net unrealized holding gains on certain available-for-sale
equity securities in Tier II capital.  The Company has elected not to
include such unrealized gains in its Tier II capital.

The Company's capital ratios at March 31, 1999 and 1998, as well as the
required minimum ratios for capital adequacy purposes and to be well
capitalized under the prompt corrective action provisions as defined by the
Federal Deposit Insurance Corporation Act of 1991 ("FDICIA") are summarized
as follows:  

<TABLE>
<CAPTION>

RISK-ADJUSTED CAPITAL

                                                                                          MINIMUM TO BE WELL 
                                                                                          CAPITALIZED UNDER
                                                                 MINIMUM FOR CAPITAL      PROMPT CORRECTIVE
                                                  ACTUAL          ADEQUACY PURPOSES       ACTION PROVISIONS  
                                              --------------------------------------------------------------
MARCH 31                                      1999      1998       1999         1998         1999       1998
------------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>         <C>          <C>          <C>        <C>
Basis for ratios:
Tier I capital to risk-adjusted assets... $ 36,461  $ 32,219    $ 8,507      $ 7,578      $12,760    $11,366
Total capital to risk-adjusted assets....   39,137    34,606     17,013       15,155       21,267     18,944
Tier I capital to total average assets
 less goodwill...........................   36,461    32,219    $15,226      $14,617      $19,033    $18,271

Risk-adjusted assets.....................  202,921   182,388
Risk-adjusted off-balance sheet items....    9,745     7,050
Average assets for Leverage ratio........ $380,659  $365,424

Ratios:
Tier I capital as a percentage of risk-
 adjusted assets and off-balance sheet 
 items...................................    17.1%     17.0%       4.0%         4.0%         6.0%       6.0%

Total of Tier I and Tier II capital as a
 percentage of risk-adjusted assets and 
 off-balance sheet items.................    18.4      18.3        8.0          8.0         10.0       10.0 

Tier I capital as a percentage of total 
 average assets less goodwill............     9.6%      8.8%       4.0%         4.0%         5.0%       5.0%

</TABLE>

The Company exceeded all relevant regulatory capital measurements at March
31, 1999, and was considered well capitalized.  Regulatory agencies define
institutions not under a written directive to maintain certain capital
levels as well capitalized if they exceed the following:  (i) a Tier I
risk-based ratio of at least 6.0 percent; (ii) a total risk-based ratio of
at least 10.0 percent;  and (iii) a Leverage ratio of at least 5.0 percent. 
The Company has shown continued improvement in its capital level as
evidenced by the positive change in its Leverage ratio.  At March 31, 1999,
this ratio was 9.6 percent as compared to 9.5 percent at December 31, 1998,
and 8.8 percent at March 31, 1998.

REVIEW OF FINANCIAL PERFORMANCE:

The Company's net income totaled $1,140 or $0.52 per share for the first
quarter of 1999 compared to $1,070 or $0.49 per share for the same quarter
of 1998.  Improvements in net interest income after provision for loan
losses and noninterest income partially offset by increases in other
expenses. 

The most significant factor that can have a material effect on the
financial performance of all industries is the Y2K.  The Y2K issue arose
because many existing computer programs use the last two digits rather than
four to define the applicable year.  These programs may interpret a date
ending in "00" as the year 1900 instead of the year 2000.  Although the Y2K
problem affects all industries, its impact on the banking industry is
extensive.  Banks depend on computers to perform virtually every function
from item processing to operating automated teller machines.  If not
corrected, the consequences could be far-reaching.  For banks in
particular, failure could result in system malfunction or miscalculation
causing a disruption of operations, including, among other things, a
temporary inability to process transactions or engage in normal business
activities.

The Company is very dependent upon information technology ("IT") systems to
perform its daily operations.  Early in 1997, management initiated an
enterprise-wide program to address the Y2K issue and the effects it will
have on the Company.  A formal Century Date Change Preparedness ("CDC")
Policy was devised and approved by the Board of Directors.  This CDC Policy
called for a Y2K project plan to coordinate and oversee the various phases,
assessment, renovation, testing and implementation of the Company's Y2K
preparedness.  The Chief Operating Officer of the Company was appointed
coordinator of the Y2K project plan and the Data Processing Steering
Committee serve as oversight for the project.  The progress of the Y2K
project plan including: (i) an overview of the plan's progress; (ii) the
status of compliance for mission-critical hardware and software; (iii) the
results of hardware and software testing and implementation; (iv) the
evaluation of significant customers in addressing Y2K issues in their
business; and (v) the assessment of the need for implementation of any
contingency plan for those areas that will not be compliant, is reported to
the Board of Directors on a quarterly basis or more frequently as
significant events occur.

It has always been the Company's pro-active position to remain current in
its IT systems.  In doing so, the Company's exposure to risk related to Y2K
compliance of its IT systems has been greatly reduced.  The following
operations of the Company have been identified as mission-critical, vital
to the successful continuance of a core business activity: (i) system
hardware; (ii) account processing; (iii) items processing; (iv) image
statement rendering; (v) teller transaction; (vi) trust accounting; and
(vii) loan document preparation software.  In addition, there are IT
systems and non-IT systems that are not considered mission-critical.  The
following table provides a description of the Company's systems, how the
assessment, renovation and testing for each system is being addressed,
whether or not the system is compliant, target dates for completion and
contingency plans for non-compliant systems:

<TABLE>
<CAPTION>

                                                                              Y2K        ESTIMATED
                                                                              COMPLIANT  COMPLETION  CONTINGENCY
DESCRIPTION OF SYSTEM       ASSESSMENT          RENOVATION           TESTING  (YES/NO)     DATE      PLAN        
--------------------------------------------------------------------------------------------------------------
<S>                        <C>                  <C>                <C>        <C>        <C>         <C>
MISSION-CRITICAL IT
SYSTEMS:

Hardware:
  System 4300 processor    Certification from   None               Complete    Yes
                           responsible vendor

Operating:          
  Unix operating system    Non-compliant        Upgrade to         Complete    Yes        
                                                Version 3.0.2   

Account processing:
  Software, Release 3.0    Certification from   None               Complete    Yes
                           responsible vendor

Item processing:
  Software Version 3.22    Certification from   None               Incomplete  No         6/30/99       (1)
                           responsible vendor

Image statement rendering:
  Software Version 1.2     Certification from   None               Incomplete  No         6/30/99       (1)
                           responsible vendor

Teller transaction:
  Software                 No certification     Perform internal   Complete    Yes
                           available            testing

Trust accounting:
  Software Version 5.0     Certification from   None               Complete    Yes
                           responsible vendor

Loan document preparation: 
  Software                 Certification from   None               Complete    Yes        
                           responsible vendor

------------------------------------------------------------------------------------------------------------
NONMISSION-CRITICAL IT
SYSTEMS:

Communications
Software/Data              Certification        None                Complete   Yes                      (2)
                           requested and will 
                           be reviewed for
                           compliance

Hardware                   No certification     Perform internal    Complete   Yes                      (3)
                           available            testing on all
                                                hardware

------------------------------------------------------------------------------------------------------------
NONMISSION-CRITICAL 
NON-IT SYSTEMS:

Imbedded technology        Certification        Non-compliant       Complete   Yes                      (4)
                           requested and will   systems will be 
                           be reviewed for      upgraded or
                           compliance           converted to new
                                                products

Other items-date stamps,   Review items for     Internal testing    Complete   Yes                      (4)
forms, checks,             date sensitivity     will be performed 
calculators, etc.                               if needed

                                                Items will be
                                                replaced as   
                                                needed

------------------------------------------------------------------------------------------------------------

(a)  Responsible vendor is developing testing plan.
(b)  Options are determined on an individual product basis.  A cost/benefit analysis is performed to 
     determine if an upgrade to a new version or a conversion to a new product would be appropriate.
(c)  Hardware that is not able to handle the Y2K will be replaced.
(d)  Contingency options as to alternate products and suppliers are being compiled.

</TABLE>

The Company believes that through completion of its Y2K project plan it
will successfully mitigate any Y2K problems associated with its mission-
critical IT systems.  All mission-critical IT systems are currently either
Y2K compliant or will be by the end of the second quarter of 1999. 
Significant testing has been performed on all software and hardware that is
currently Y2K compliant to ensure compliance.  Future testing will be
performed during the first six months of 1999, as other applications become
compliant.  The Company expects to be fully compliant relative to its IT
systems and non-IT systems at June 30, 1999.  Based on estimates from third
party vendors and an assessment of the Data Processing Steering Committee,
the Company expects to spend approximately $200 to become fully compliant. 
Costs have already been expended in the previous year relative to
disposition of non-compliant hardware and software were $78 and $9,
respectively.  There were no Y2K remediation costs expended during the
first three months of 1999.  Any future costs relative to the Company's Y2K
efforts will be expensed as incurred.  Management does not expect these
costs to have a material effect on the operating results or financial
position of the Company.

The effects of the Y2K on the Company depend not only on its efforts to
address those issues, but also on the way the issues are addressed by third
parties with whom the Company has a significant relationship.  These third
parties include, but are not limited to, major loan and deposit customers,
businesses that provide products and services to the Company and
governmental agencies.  Management is taking various steps to assess the
risks and mitigate the potential problems that may arise in the event a
significant third party is not Y2K compliant.

The Company recognizes that a commercial customer's profitability and
liquidity positions could be adversely affected if their systems fail to
properly handle the date change.  This could lead to delinquencies on
loans, possible defaults and bankruptcy filings, in extreme cases.  The
Company reviewed its commercial loan files and enumerated: (i) all
commercial customers with loan balances in excess of $125 whose business is
somewhat dependent on technology; and (ii) any commercial loan customer
whose business is totally dependent on technology. The Company contacted
these customers and informed them of the Y2K and the possible effects it
could have on their business and inquired about any efforts the customer is
taking to mitigate those effects.  In addition, a questionnaire regarding
the Y2K is incorporated into the commercial loan application process and
requires all potential loan customers to attest to their compliance.

The Company also realizes that education is a key element in trying to
mitigate potential Y2K problems.  During the second quarter of 1998, the
Company used several mediums to convey Y2K readiness to its current and
prospective individual and business customers.  With the ever-growing
popularity of the Internet, the Company chose to discuss the Y2K in its
home page on the World Wide Web.  The Company also conducted a series of
breakfast seminars for its customers.  The purpose of these seminars was to
aid the customers in identifying their potential exposure to any problems
associated with the Y2K.  Brochures discussing Y2K awareness were included
in customers' deposit statements in the fourth quarter of 1998.  The
brochures were in a question and answer format and addressed the following
issues: (i) the effect of the Y2K date change on federal deposit insurance
coverage; (ii) steps financial institutions and regulatory agencies are
taking to minimize the effect of the Y2K date change; and (iii) steps
customers should take to prepare for the Y2K.

Regardless of the Company's efforts, there can be no assurance that
significant third parties will be successful in adequately addressing their
own Y2K issues.  The Company is preparing contingency plans to address the
possibility that significant third parties will not be successful.  This
involves: (i) identifying alternate vendors and sources for products and
services; (ii) determining means of internal corrective action; and (iii)
allocating a portion of the allowance for loan losses to specifically cover
any potential credit losses related to the Y2K.  However, no assurance can
be made, that these plans will alleviate any risks to the Company.  There
may also be certain significant third parties, such as utility and
telecommunication companies, where alternative arrangements or sources are
limited or unavailable.  Y2K issues, if not adequately addressed by the
Company and third parties, could have a material effect on the Company's
business, consolidated results of operations and financial position.

The preceding Y2K discussion contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.  These
statements include, but are not limited to: (i) whether or not testing will
be accurate; (ii) the estimated costs associated with becoming Y2K
compliant; (iii) the date by which the Company expects to be fully
compliant; and (iv) the successfulness of any contingency plans.  These
statements are made using current estimates and assumptions about future
events.  There can be no assurance that these estimates will be achieved
and actual results could differ materially from those anticipated.  The
factors that might lead to material differences include, among others: (i)
the ability to accurately identify all mission-critical systems; (ii)
accuracy of the testing performed; (iii) whether or not third party
certifications are accurate; (iv) whether or not material customers,
suppliers, governmental agencies and other significant third parties are
successful in their Y2K efforts; (v) the adequacy of contingency plans; and
(vi) the ability to implement contingency plans.

NET INTEREST INCOME:

The major source of operating income for the Company is derived from net
interest income.  Net interest income is defined as the excess amount of 
income, interest and fees, from earning assets over the cost of interest-
bearing liabilities supporting those assets.  The primary sources of
earning assets are loans and investment securities, while deposits, short-
term borrowings and long-term debt comprise interest-bearing liabilities. 
Net interest margin is the percentage of net interest income on a tax-
equivalent basis to average earning assets.  Variations in volumes and
rates of earning assets and liabilities, in response to changes in general
market rates, are the primary factors affecting net interest income.  The
composition of earning assets and interest-bearing liabilities and the
volume of nonperforming assets also influence the levels of interest
income.

Management analyzes interest income and interest expense by segregating
rate and volume components of earning assets and interest-bearing 
liabilities.  The impact changes in the  interest rates earned and paid on
assets and liabilities, along with changes in the volume of earning assets
and interest-bearing liabilities have on net interest income are summarized
in the following table.  The net change attributable to the combined impact
of rate and volume has been allocated proportionately to the change due to
rate and the change due to volume.

<TABLE>
<CAPTION>

NET INTEREST INCOME CHANGES DUE TO RATE AND VOLUME

                                                                       MARCH 31,
                                                                     1999 VS. 1998     
                                                                 --------------------
                                                                  INCREASE (DECREASE)
                                                                    ATTRIBUTABLE TO    
                                                                 --------------------
                                                                 TOTAL
                                                                 CHANGE   RATE  VOLUME
                                                                 ------   ----  ------
<S>                                                              <C>     <C>    <C>    
INTEREST INCOME:
Loans:
  Taxable......................................................... $(94) $(153)   $ 59
  Tax-exempt......................................................   (7)    (6)     (1)
Investments:
  Taxable.........................................................  172     (3)    175  
  Tax-exempt......................................................  (20)    (4)    (16)
Federal funds sold................................................  (34)   (14)    (20)
                                                                   ----  -----    ---- 
    Total interest income.........................................   17   (180)    197 
                                                                   ----  -----    ----

INTEREST EXPENSE:
Money market accounts.............................................   (3)    (2)     (1)
NOW accounts......................................................   30     14      16 
Savings accounts..................................................  (57)   (51)     (6)
Time deposits less than $100......................................   (1)  (279)    278
Time deposits $100 or more........................................  (14)    (4)    (10)
Short-term borrowings.............................................   (6)    (1)     (5)
                                                                   ----  -----    ----
Long-term debt....................................................    0      1      (1)
    Total interest expense........................................  (51)  (322)    271 
                                                                   ----  -----    ----
    Net interest income........................................... $ 68  $ 142    $(74)
                                                                   ====  =====    ====
</TABLE>


For the first quarter of 1999, the Company showed a slight improvement of
$68 in its tax-equivalent net interest income as compared to the same
period last year.  For the three months ended March 31, 1999, net interest
income on a tax-equivalent basis totaled $3,613 compared to $3,545 for the
same three months of last year.   This improvement was primarily due to a
reduction in the average rate paid on interest-bearing liabilities
partially offset by an increase in the average volume of these liabilities.
The Company's average rate paid on interest-bearing liabilities declined 15
basis points from 4.64 percent for the first quarter of 1998 to 4.49
percent for the same period of 1999.  The Company lowered its rates paid on
deposits in response to the 75 basis point reduction in short-term interest
rates in the latter part of 1998. Average rate reductions on savings
accounts and time deposits less than $100 were the significant influences
for the improved cost of funds and accounted for a $330 positive effect on
net interest income.  Average volumes of time deposits less than $100 grew
$4.9 million or 2.8 percent and accounted for a $278 reduction in net
interest income due to the changes in volumes.  Average taxable investment
volumes increased $11.9 million or 20.1 percent as management shifted
excess funds into short-term U.S. Government agency mortgage-backed
securities.  This volume change accounted for a $175 favorable impact on
net interest income.  The low interest rate environment, which helped to
lower deposit rates, heightened competition for loans.  The Company's tax-
equivalent yield on its loan portfolio declined 26 basis points from 8.65
percent for the first quarter of 1998, to 8.39 percent for the first
quarter of 1999, caused a $153 reduction in net interest income.

Maintenance of an adequate net interest margin is a primary concern for
management.  The Company's net interest margin weakened to 4.05 percent for
the first quarter of 1999 from 4.11 percent for the same period of 1998. A
low interest rate environment is expected to continue for the remainder of
1999, which could cause interest margins to tighten even further.
Management believes following prudent pricing practices coupled with
careful investing, will keep the Company's net interest margin in check. 
However, no assurance can be given that general market conditions will
continue.  Changes in general market rates or further intensified
competition could adversely affect net interest income.

The average balances of assets and liabilities, corresponding interest
income and expense and resulting average yields or rates paid for the
quarters ended March 31, 1999 and 1998, are summarized as follows.  Earning
assets averages include nonaccrual loans.  Investment averages include
available-for-sale securities at amortized cost.  Income on investment
securities and loans are adjusted to a tax-equivalent basis using a
statutory tax rate of 34.0 percent.

<TABLE>
<CAPTION>
SUMMARY OF NET INTEREST INCOME

                                                       MARCH 31, 1999                  MARCH 31, 1998         
                                               ----------------------------    ----------------------------
                                                         INTEREST  AVERAGE               INTEREST  AVERAGE
                                                AVERAGE  INCOME/   INTEREST     AVERAGE  INCOME/   INTEREST
                                                BALANCE  EXPENSE     RATE       BALANCE  EXPENSE     RATE  
                                                -------  --------  --------     -------  --------  --------
<S>                                            <C>       <C>       <C>         <C>       <C>       <C>
ASSETS:                                         
Earning assets:
Loans:
  Taxable..................................... $241,389    $5,000      8.40%   $238,624    $5,094      8.66%
  Tax-exempt..................................    7,049       141      8.11       7,114       148      8.44
Investments:
  Taxable.....................................   71,142     1,039      5.92      59,227       867      5.94
  Tax-exempt..................................   38,098       764      8.13      38,914       784      8.17
Federal funds sold............................    4,258        48      4.57       5,855        82      5.68   
                                               --------    ------              --------    ------
    Total earning assets......................  361,936     6,992      7.83%    349,734     6,975      8.09%
Less: allowance for loan losses...............    4,069                           3,908
Other assets..................................   25,568                          22,858  
                                               --------                        --------
    Total assets.............................. $383,435                        $368,684
                                               ========                        ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Money market accounts......................... $ 16,696       121      2.94%   $ 16,833       124      2.99%
NOW accounts..................................   23,359       142      2.47      20,534       112      2.21
Savings accounts..............................   63,041       367      2.36      64,012       424      2.69
Time deposits less than $100..................  179,366     2,423      5.48     174,431     2,424      5.64
Time deposits $100 or more....................   22,520       324      5.83      23,233       338      5.90
Short-term borrowings.........................      101         1      4.02         425         7      6.68 
Long-term debt................................       41         1      9.89          43         1      9.43
                                               --------    ------              --------    ------
    Total interest-bearing liabilities........  305,124     3,379      4.49%    299,511     3,430      4.64% 
Noninterest-bearing deposits..................   34,372                          29,763
Other liabilities.............................    3,644                           2,743
Stockholders' equity..........................   40,295                          36,667    
                                               --------                        -------- 
    Total liabilities and stockholders' equity $383,435                        $368,684          
                                               ========    ------              ========    ------
    Net interest/income spread................             $3,613      3.34%               $3,545      3.45%
                                                           ======                          ======
    Net interest margin.......................                         4.05%                           4.11%
Tax equivalent adjustments:
Loans.........................................             $   48                          $   50
Investments...................................                260                             267
                                                           ------                          ------
    Total adjustments.........................             $  308                          $  317
                                                           ======                          ======


Note:   Average balances were calculated using average daily balances.  Average balances for loans include
        nonaccrual loans.  Available-for-sale securities, included in investment securities, are stated at
        amortized cost with the related average unrealized holding gain of $2,040 for the first quarter of
        1999 and $2,633 for the first quarter of 1998 included in other assets.  Tax-equivalent adjustments
        were calculated using the prevailing statutory tax rate of 34.0 percent.

</TABLE>

PROVISION FOR LOAN LOSSES:

The Company makes provisions for loan losses based on  evaluations of its
allowance for loan losses account.  Factors such as previous loan
experience, overall loan portfolio characteristics, prevailing economic
conditions and other relevant factors are considered when determining the 
provision.  Based on its most recent evaluation, management believes that
the allowance is adequate to absorb any known and inherent losses in the
portfolio.  

The Company decreased its provision for loan losses from $105 for the three
months ended March 31, 1998, to $30 for the same period of 1999. Despite
the decline in the provision, the allowance for loan losses as a percentage
of loans, net of unearned income, increased to 1.64 percent at March 31,
1999, compared to 1.61 percent at the same time last year.  Management
believes that maintaining a standard monthly charge to operations in the
form of a provision is warranted.  If loan demand intensifies or
nonperforming asset levels continue to deteriorate, management will
consider adjusting the monthly provision amount for the remainder of 1999. 

NONINTEREST INCOME:

Noninterest income rose $59 or 16.7 percent for the first quarter of 1999
to $412 compared to $353 for the first quarter of 1998.  Service charges,
fees and commissions increased $27 which can be primarily attributed to an
increase in fees related to automated teller machine transactions. In
addition, the Company recorded $32 in net gains on the sale of one-to-four-
family residential mortgages on the secondary market.  The Company began
operation of its secondary mortgage banking operations in the second
quarter of 1998.  As this department completes its first full year of
operation, management expects gains on the sale of such loans and the
subsequent servicing fees to become a more prominent portion of noninterest
income in the future.

NONINTEREST EXPENSE:

The general components of noninterest expense include the costs of
providing salaries and necessary employee benefits, maintaining facilities
and general operating costs such as insurance, supplies, advertising, data
processing and other related expenses.  Several of these costs and expenses
are variable while the remainder are fixed.  In its efforts to control the
variable portion of these expenses, management employs budgets and other
related strategies.

Noninterest expense amounted to $2,228 for the first three months of 1999,
a $98 or 4.6 percent increase over the $2,130 recorded for the same period
last year.  The Company experienced a slightly improved overhead to average
assets ratio for the first quarter of 1999.  This ratio equaled 1.9 percent
for the first three  months of 1999 compared to 2.0 percent for the same
period of 1998.  A company can also measure its efficiency with the
operating efficiency ratio.  This ratio is defined as a company's
noninterest expense, excluding other real estate expense, as a percentage
of net interest income and noninterest income less nonrecurring gains and 
losses.  The Company's operating efficiency ratio, unlike the overhead
ratio, was less favorable  for the first quarter of 1999 as compared to one
year earlier.  For the first three months of 1999, this ratio rose to 59.8
percent  as compared to 59.1 percent for the same period of 1998. 

Salaries and employee benefit expenses comprise the majority of the
Company's noninterest expense.  These expenses totaled $1,164 or 52.2
percent of noninterest expense for the quarter ended March 31, 1999. In
comparison, these expenses were $1,094 or 51.4 percent of noninterest
expense for the first quarter of 1998.  Additional staffing needs relative
to the opening of the Clarks Summit branch office along with merit
increases related to personnel performance appraisals effective in the
first quarter of 1999 were the primary reasons for the increase.  

Net occupancy and equipment expenses remained relatively constant.  For the
first three months of 1999 these expenses totaled $348 as compared to $352
for the same period last year. During the first quarter of 1999, the
Company broke ground on its fourteenth branch office. This office which
will be located in Dickson City, Pennsylvania, is scheduled to open in the
third quarter of this year.  Such project will be funded from normal
operations.  Management expects increases in occupancy costs for the
remainder of 1999 relative to the operation of the Clarks Summit facility
and the opening of the Dickson City branch office.

Other expenses amounted to $716 for the first quarter of 1999, an increase
of $32 over the $684 reported for the same period of 1998.  The primary
causes for this increase are a greater amount of Pennsylvania shares tax
and increased stationary and supplies cost related to the operation of the
Clarks Summit facility.  

On October 20, 1998, the Federal Deposit Insurance Corporation ("FDIC")
decided to retain the existing Bank Insurance Fund ("BIF") and Savings
Association Insurance Fund ("SAIF") assessment schedules of 0 to 27 basis
points per year for the first semiannual assessment period of 1999. 
According to FDIC statistics: (i) 95.1 percent of all BIF-member
institutions are estimated to be listed in the lowest risk category, thus
paying no premiums; (ii) only 0.1 percent of both BIF- and SAIF-member
institutions are estimated to be in the highest risk category, paying a
premium of 27 cents per 100 dollars in deposits; (iii) the average annual
assessment rate is projected to be 0.08 cents per 100 dollars and 0.25
cents per 100 dollars for BIF-member and SAIF-member institutions,
respectively; (iv) the FDIC-approved rate schedules are expected to
maintain the reserve ratios through June 30, 1999; (v) at June 30, 1998,
the BIF reserve ratio was 1.40 percent and the SAIF reserve ratio was 1.38
percent; and (vi) there will continue to be a separate levy assessed on all
FDIC-insured institutions to bear the cost of bonds sold by the Finance
Corporation ("FICO") between 1987 and 1989 in support of the former Federal
Savings and Loan Insurance Corporation.  The 1996 law required the FICO
rate on BIF-assessable deposits to be one-fifth the rate for SAIF
assessable deposits until January 1, 2000. 

Major components of noninterest expense for the quarters ended March 31,
1999, and March 31, 1998, are summarized as follows:

<TABLE>
<CAPTION>

NONINTEREST EXPENSES
                                                                     THREE MONTHS ENDED
                                                                          MARCH 31,
                                                                     1999          1998
---------------------------------------------------------------------------------------
<S>                                                                <C>           <C>
SALARIES AND EMPLOYEE BENEFITS EXPENSE:
Salaries and payroll taxes........................................ $  996        $  935 
Employee benefits.................................................    168           159
                                                                   ------        ------
  Salaries and employee benefits expense..........................  1,164         1,094
                                                                   ------        ------

NET OCCUPANCY AND EQUIPMENT EXPENSE:
Net occupancy expense.............................................    166           138
Equipment expense.................................................    182           214 
                                                                   ------        ------
  Net occupancy and equipment expense.............................    348           352
                                                                   ------        ------

OTHER EXPENSES:
Marketing expense.................................................     39            51 
Other taxes.......................................................     80            63
Stationery and supplies...........................................    107            87
Contractual services..............................................    218           223
Insurance including FDIC assessment...............................     31            19
Other.............................................................    241           241 
                                                                   ------        ------
  Other expenses..................................................    716           684 
                                                                   ------        ------
    Total noninterest expense..................................... $2,228        $2,130
                                                                   ======        ======

</TABLE>

INCOME TAXES:

For the first quarter of 1999, the Company reported tax expense of $319
compared to $276 for the same period of 1998.  The effective tax rate rose
to 21.9 percent for the three months ended March 31, 1999, from 20.5
percent for the same period of 1998.  Higher earnings along with a lower
amount of tax-exempt income contributed to the increased effective tax
rate. Tax-exempt interest income as a percentage of total interest income
declined from 9.2 percent for the first quarter of 1998, to 8.9 percent for
the same quarter this year.  Management expects the Company's effective tax
rate to remain relatively stable for the remainder of 1998 through
emphasizing income on tax-exempt investments and loans as well as utilizing
investment tax credits available through its investment in a residential
housing program for elderly and low- to moderate-income families.

It is management's determination that a valuation reserve need not be
established for the deferred tax assets as it is more likely than not that
these assets could be principally realized through carryback to taxable
income in prior years and by future reversals of existing taxable temporary
differences or, to a lesser extent, through future taxable income.  The
Company performs monthly reviews on the tax criteria related to the
recognition of deferred tax assets.








COMM BANCORP, INC.
OTHER INFORMATION                                                        
                 ---------------------------------------------------------

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
          NONE

ITEM 2.   CHANGES IN SECURITIES
          NONE

ITEM 3.   DEFAULTS OF SENIOR SECURITIES
          NONE

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          NONE

ITEM 5.   OTHER INFORMATION
          NONE

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          (a) Exhibits:
              10.01-Change in Control Agreement between David L. Baker and Comm
              Bancorp, Inc. dated September 16, 1998.
          
              10.02-Change in Control Agreement between Scott A. Seasock and
              Comm Bancorp, Inc. dated September 16, 1998.

              10.03-Change in Control Agreement between Thomas E. Sheridan and
              Comm Bancorp, Inc. dated September 16, 1998.

              27-Financial Data schedule

          (b) Reports on Form 8-K
        
              5-On April 22, 1999, the Company filed a report on Form 8-K,
              disclosing the Board of Directors authorization of the purchase
              of up to 220,000 shares of the Company's issued and outstanding
              common stock, from time to time, in open market purchases,
              through a licensed broker-dealer in accordance with the terms,
              conditions and restrictions contained in Rule 10b-18.

              7(c)-Form of Press Release detailing the Company's plans to
              purchase up to 220,000 shares of its issued and outstanding
              common stock.
    


                           COMM BANCORP, INC.
                                FORM 10-Q











                             SIGNATURE PAGE
                             --------------




Pursuant to the requirements of Section 13 or 15(d) 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.


                                  Registrant, Comm Bancorp, Inc.


Date: May 12, 1999                     /s/ David L. Baker                 
                                       -----------------------------
                                       David L. Baker
                                       Chief Executive Officer


Date: May 12, 1999                     /s/ Scott A. Seasock              
                                       -----------------------------
                                       Scott A. Seasock
                                       Chief Financial Officer
                                       (Principal Financial Officer)


Date: May 12, 1999                     /s/ Stephanie A. Ganz             
                                       -----------------------------
                                       Stephanie A. Ganz
                                       Vice President of Finance
                                       (Principal Accounting Officer)


                              EXHIBIT INDEX

ITEM NUMBER         DESCRIPTION                             PAGE
-----------         -----------                             ----
   10.01            Changes in Control Agreement             46
                    between David L. Baker and
                    Comm Bancorp, Inc. dated
                    September 16, 1998                       

   10.02            Changes in Control Agreement              52
                    between Scott A. Seasock and
                    Comm Bancorp, Inc. dated
                    September 16, 1998


   10.03            Changes in Control Agreement              58
                    between Thomas E. Sheridan and
                    Comm Bancorp, Inc. dated
                    September 16, 1998

    27              Financial Data Schedule                   64