<PAGE> 1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[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 1-14577


                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


Delaware                                                              23-2980576
--------------------------------------------------------------------------------
(State or other jurisdiction of incorporation                  (I.R.S. Employer
or organization                                              Identification No.)

31 W. Broad Street, Hazleton, Pennsylvania                                 18201
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

                                 (570) 454-0824
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)

                                 Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changes since last report)


      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
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
                                                      -----       -----
                                                  Yes   X      No  
                                                      -----       -----

APPLICABLE ONLY TO CORPORATE ISSUERS:

      State the number of shares  outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: the Issuer had 1,587,000 shares
of common stock, par value $0.01 per share, outstanding as of May 11, 1999.

<PAGE> 2


                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                                   FORM 10-QSB

                                      INDEX

                                                                           Page
                                                                           ----

PART I.     FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheet at
        March 31, 1999 and June 30,1998 (unaudited)...........................1

        Consolidated Income Statement and Statement of
        Comprehensive Income for the Three and Nine
        Months Ended March 31, 1999 and 1998 (unaudited)......................2

        Consolidated Statement of Cash Flows for the Nine Months Ended 
        March 31, 1999 and 1998 ..............................................4

        Notes to Consolidated Financial Statements............................5


Item 2. Management's Discussion and Analysis .................................6

PART II:    OTHER INFORMATION

Item 1. Legal Proceedings....................................................12

Item 2. Changes in Securities and Use of Proceeds............................12

Item 3. Defaults Upon Senior Securities......................................12

Item 4. Submission of Matters to a Vote of Security Holders..................12

Item 5. Other Information....................................................12

Item 6. Exhibits and Reports on Form 8-K.....................................12

SIGNATURES ..................................................................13




<PAGE> 3



                        PART I.  FINANCIAL INFORMATION


Item 1.     Financial Statements.
            --------------------

                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

                  MARCH 31, 1999 (UNAUDITED) AND JUNE 30, 1998
                                 (In thousands)
<TABLE>
<CAPTION>
                                                       AT           AT
                                                    MARCH 31,      June 30,
                                                      1999          1998
                                                   ----------     ---------
                                                    (UNAUDITED)
<S>                                                  <C>           <C>      
Assets:
  Cash and cash equivalents......................    $  16,605     $  11,858
   Held-to-maturity securities
     (fair value of $21,503 on 3/31/99 and 20,807 
       in 6/30/98)                                      19,466        20,783
  Available for sale securities..................       14,643         7,900
   Loans (less allowance for loan loss of $436 in       
     3/31/99 And $496 in 6/30/98)................       69,891        69,211
  Property and equipment, net....................        1,291         1,364
  Other assets...................................        1,732           874
                                                      --------      --------
    Total assets.................................     $123,628      $111,990
                                                      ========      ========

Liabilities and Equity:
  Deposits.......................................     $100,518      $102,604
  Accrued interest payable and other 
    liabilities..................................          421           156
                                                      --------      --------
    Total liabilities............................      100,939       102,760
                                                      --------      --------

   Common Stock ($.01 par value; 6,000,000 
     authorized shares, 1,587,000 shares issued..           16            
  Additional paid-in capital.....................       14,868            --
  Unearned ESOP Shares...........................       (1,270)
  Retained earnings - substantially restricted...        9,331         9,361
  Accumulated other comprehensive income.........         (256)         (131)
                                                      --------      --------
    Total equity.................................       22,689         9,230
                                                      --------      --------

    Total liabilities and equity.................     $123,628      $111,990
                                                      ========      ========
</TABLE>

                                       1




<PAGE> 4

                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
             CONSOLIDATED INCOME AND COMPREHENSIVE INCOME STATEMENTS

          FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      MARCH 31,     March 31,
                                                         1999          1998
                                                      ----------    ----------
                                                      (UNAUDITED)
<S>                                                       <C>           <C>   
Interest income:
  Loans............................................       $1,323        $1,330
     Interest and dividends on securities..........          450           341
     Interest-bearing deposits with banks..........          213           228
                                                          ------        ------
      Total interest income........................        1,986         1,899

Interest expense:
  Deposits.........................................          986         1,065

  Net interest income..............................        1,000           834
  Provision for loan losses........................           10            71
                                                          ------        ------

  Net interest income after provision for 
   loan losses.....................................          990           763

Noninterest income:
  Other loan fees and service charges..............           85            59
     Gain (loss) on sale of other real estate owned
        and other assets...........................          (29)          (54)
                                                             ----          ----
      Total noninterest income.....................           56             5

Noninterest Expense:
  Salaries and net employee benefits...............          349           303
  Occupancy costs..................................           83            56
  Other Noninterest Expense........................          290           228
                                                          ------        ------

Total noninterest expense..........................          722           587

Income (loss) before provision for income taxes              324           181
Income tax provision (benefit)                                77            85      
                                                              --            --

Net income                                                   247            96
Inc  rease (decrease) in unrealized losses available 
  for sale securities                                       (126)           (9)
                                                            -----           ---

Comprehensive income (loss)                                 $121          $ 87
                                                             ===            ==

Common stock outstanding                                     1,587,000    N/A
Earnings per share - net income                               $.16        N/A

</TABLE>

                                       2

<PAGE> 5


                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
             CONSOLIDATED INCOME AND COMPREHENSIVE INCOME STATEMENTS

           FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      March 31,     March 31,
                                                         1999          1998
                                                      ----------    ----------
                                                      (unaudited)   (unaudited)
<S>                                                       <C>           <C>   
Interest income:
  Loans............................................       $3,929        $3,988

     Interest and dividends on securities..........        1,061         1,071
     Interest-bearing deposits with banks..........          768           661
                                                          ------        ------
        Total interest income......................        5,758         5,728

Interest expense:
  Deposits.........................................        3,137         3,179

  Net interest income..............................        2,621         2,549
  Provision for loan losses........................           65           144
                                                          ------        ------
  Net interest income after provision for loan 
    losses.........................................        2,556         2,405

Noninterest income:
  Other loan fees and service charges..............          230           198
   Gain (loss) on sale of: Real estate owned and 
     other assets..................................         (119)          (17)
                                                           -----          ----

      Total noninterest income.....................          111           181

Noninterest expense:
  Salaries and net employee benefits...............        1,028           979
  Occupancy costs..................................          219           170
  Other noninterest expense........................        1,505           649
                                                          ------        ------

      Total noninterest expense....................        2,751         1,798

Income (Loss) before provision for income taxes....          (84)          788
Income tax provision (benefit).....................          (53)          330
                                                          ------        ------

Net Income (loss)..................................          (31)          458
Increase (decrease) in unrealized losses 
  available for sale securities....................         (125)           43
                                                           ------           --
Comprehensive income (loss)........................        $(156)        $  501
                                                           ======        ======

Common stock outstanding                                    N/A          N/A
Earnings per share - net income                             N/A          N/A

</TABLE>

                                       3






<PAGE> 6

                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

            FOR NINE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                      March 31,     March 31,
                                                         1999          1998
                                                      ----------    ----------
<S>                                                    <C>           <C>    
OPERATING ACTIVITIES:
Net income (loss)..................................    $   (31)      $   458
Adjustments  to  reconcile   net  income  to  net  
  cash  provided  by  operating activities:
Provision for loan losses and foreclosed real 
  estate...........................................         65            66
Amortization and accretion on investment 
  securities.......................................      1,735        (4,186)
Depreciation and amortization......................        113            77
Deferred income taxes..............................         --            --
(Gain) Loss on sale of:
  Real estate acquired through foreclosure.........        200            66
  Securities.......................................         --           (63)
Change in assets and liabilities:
  Accrued interest receivable......................         (1)           27
  Other assets.....................................     (2,080)         (637)
  Accrued interest payable and other liabilities...        275            81

Net cash provided by operating activities..........    $   276       $(4,111)

INVESTMENT ACTIVITIES:
Purchase of held-to-maturity securities............    $(1,500)      $    --
Purchase of available-for-sale securities..........    (10,925)       (1,250)
Proceeds from the call of held-to-maturity
  securities.......................................      6,935         2,741
Proceeds from maturities and principal paydowns on
  available-for-sale securities....................        600         4,750
Proceeds from principal paydowns of held-to-maturity 
  securities.......................................        715           784
Loans made to customers, net of principal
  collected........................................        499        (4,811)
Acquisition of office premises and equipment.......        113            45
Proceeds from sale of foreclosed real estate.......       (166)          260
                                                         ------        -----
Net cash used in investing activities..............    $(1,729)      $ 3,019
                                                       ========      =======

FINANCING ACTIVITIES:
Net increase (decrease) in deposit accounts........    $(2,086)      $ 2,669
Net increase (decrease) in advances from borrowers
  for taxes and insurance..........................        (10)         (103)
Net proceeds from issuance of common stock.........     16,145            -- 
                                                        ------         ------
Net cash provided by financing activities..........    $14,049       $  2,566
                                                       -------       --------
Increase (decrease) by cash and equivalents........      4,747          1,650
Cash and equivalents - beginning of period.........     11,858          9,034
                                                        ------          -----
Cash and equivalents - end of period...............    $16,605       $ 10,684
                                                       =======       ========
Supplemental Disclosure of Cash Flow Information:
  Interest paid on deposits........................    $ 3,137       $  3,179
  Income taxes paid................................    $   (65)      $    330

Supplemental Disclosure of Non-Cash Information:
  Transfer from loans to real estate owned.........    $    50       $    321
</TABLE>
                                           4

<PAGE> 7


                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                   Notes to Consolidated Financial Statements

(1)   Organization
      ------------

      Security of Pennsylvania  Financial Corp. (the Company") was  incorporated
under the laws of  Delaware  in August  1998 for the  purpose  of serving as the
holding company of Security Savings  Association of Hazleton (the "Association")
as part of the  Association's  conversion  from  the  mutual  to  stock  form of
organization  (the  "Conversion").  The  Company is a savings  and loan  holding
company and is subject to  regulation by the Office of Thrift  Supervision,  the
Federal   Deposit   Insurance   Corporation  and  the  Securities  and  Exchange
Commission.  The  Conversion,  completed  on December  30, 1998  resulted in the
Company issuing an aggregate of 1,587,000  shares of its common stock, par value
$.01 per share,  at a price of $10 per share,  of which  1,511,617  shares  were
issued in a  subscription  offering  and 75,383  shares  were issued and sold to
Security Savings Charitable Foundation. Prior to the Conversion, the Company had
not engaged in any material operations.

(2)   Accounting Principles
      ---------------------

      The   accompanying   unaudited   financial   statements   of  Security  of
Pennsylvania  Financial  Corp.  have been prepared in accordance  with generally
accepted  accounting  principles  for  interim  financial  information  and with
instructions  to Form 10-QSB and of Regulation S-B.  Accordingly,  the financial
statements  do not  include all of the  information  and  footnotes  required by
generally accepted accounting principles for complete financial  statements.  In
the opinion of management,  all  adjustments  (consisting of a normal  recurring
nature)  considered  necessary  for a  fair  presentation  have  been  included.
Operating  results  for the three and nine  months  ended March 31, 1999 are not
necessarily  indicative  of the  results  that may be  expected  for the current
fiscal year.

      For further  information,  refer to the consolidated  financial statements
included in the Company's  offering  prospectus  prepared in connection with the
Conversion filed with the Securities and Exchange Commission.


                                       5


<PAGE> 5



Item 2. Management's Discussion and Analysis. 
        ------------------------------------

      The following  analysis  discusses changes in the financial  condition and
results of operations at and for the three and nine months ended March 31, 1999,
and  should  be read in  conjunction  with  the  Bank's  Consolidated  Financial
Statements and the notes thereto, appearing in Part I, Item 1 of this document.

FORWARD-LOOKING STATEMENTS

      This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward -looking statements, which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identified  by  use  of  the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project,"  or similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse effect on the
operations of the Company and the subsidiaries  include, but are not limited to,
changes in: interest rates, general economic conditions,  legislative/regulatory
changes, monetary and fiscal policies of the U.S. Government, including policies
of the U.S.  Treasury and the Federal Reserve Board,  the quality or composition
of the loan or investment portfolios,  demand for loan products,  deposit flows,
competition,  demand for  financial  services in the  Company's  market area and
accounting  principles and guidelines.  These risks and uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements. Further information concerning the Company and
its business,  including  additional  factors that could  materially  affect the
Company's financial results, is included in the Company's filings with the SEC.

      The Company does not undertake - and specifically disclaims any obligation
- to  publicly  release  the  result of any  revisions  which may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

GENERAL

      Security of  Pennsylvania  Financial  Corp. (the "Company") is the holding
company for Security  Savings  Association  of Hazleton (the  "Association"),  a
Pennsylvania  chartered  capital stock savings  association.  The  Association's
results of operations are dependent  primarily on net interest income,  which is
the difference  between the income earned on its loan and investment  portfolios
and its  cost  of  funds,  consisting  of the  interest  paid  on  deposits  and
borrowings.  Results  of  operations  are  also  affected  by the  Association's
provision for loan losses,  loan and security sales activities,  service charges
and other fee income, and non-interest  expense. The Association's  non-interest
expense  principally  consists of  compensation  and employee  benefits,  office
occupancy  and equipment  expense,  federal  deposit  insurance  premiums,  data
processing,  advertising and business  




                                       6

<PAGE> 9


promotion  and other  expenses.  Results of  operations  are also  significantly
affected by general economic and competitive conditions, particularly changes in
interest rates, government policies and actions of regulatory authorities.

MANAGEMENT STRATEGY

      The  Association's  operating  strategy has been that of a community-based
banking  institution,  offering a wide variety of savings products to its retail
customers,  while  concentrating  on residential and consumer  lending and, to a
lesser extent, multi-family and commercial real estate and construction lending.
Additionally,  as of February 1999, the Association has opened a commercial loan
department  and expects to expand its services in that area. It is expected that
these loans will provide a higher spread in the lending  portfolio.  In order to
promote  long-term  financial  strength  and  profitability,  the  Association's
operating  strategy  has focused on: (i)  maintaining  strong  asset  quality by
originating  primarily one- to four-family  mortgage loans and home equity loans
and lines of credit  secured by  residential  real estate  located in its market
area; (ii) managing its interest rate risk within the context of its significant
fixed-rate  one- to  four-family  mortgage  lending  activity;  (iii)  providing
products  and delivery  systems  directed at the needs and  expectations  of its
customer  base,  including  taking  advantage  of  technological  advances  when
appropriate; and (iv) maintaining a strong regulatory capital position.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND JUNE 30, 1998

      Total assets at March 31, 1999 increased $11.6 million, or 10.4%, compared
to June 30, 1998.  The increase was  primarily  due to the sale of the Company's
common stock in the Company's  initial public offering in December 1998.  During
the same period,  deposits  declined $2.1 million or 2.0%, due to withdrawals by
depositors   purchasing  stock  in  the  initial  public   offering.   Increased
competition in the  marketplace,  a low interest rate  environment  and a strong
stock market also contributed to the decrease.

      The use of the proceeds  from the initial  public  offering  resulted in a
$5.4 million  increase in investment  securities and a $5.0 million  increase in
money market  investments  (included in cash and cash  equivalents) on March 31,
1999 compared to June 30, 1998.  Loans  increased  $680,000 or 1.0% at March 31,
1999 compared to June 30, 1998.

      Total equity increased $13.5 million from June 30, 1998,  primarily due to
the influx of capital from the conversion to stock form of ownership in December
1998.



                                       7




<PAGE> 10



COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 
AND 1998

      Net income for the  quarter  increased  $151,000  or 157%  compared to the
third quarter last year.  Earnings per share were 16 cents.  Based on annualized
earnings,  return on assets for the  quarter  was .78% as  compared to .36% last
year.  Return on equity for three months ended March 31, 1999 was 4.37% compared
to 7.17% for three  months  ended March 31, 1998 as the higher  level of capital
from the initial  public  offering  affected the Company's  ability to prudently
deploy such capital.

      Net  interest  income  during  the  period  increased  $166,000  or 19.9%.
Interest  income  rose 4.6% or $87,000,  primarily,  from  increased  revenue on
investment  securities.  Lower  interest  rates  resulted  in  interest  expense
declining $79,000 or 7.4%.

      The provision for loan losses  decreased  $61,000 during the quarter ended
March 31, 1999  compared to the third  quarter last year.  On March 31, 1999 the
allowance  for loan loss was .62% of loans  compared to .69% on March 31,  1998.
The  allowance  account and  resulting  provision  for loan losses are  reviewed
periodically by management and the Board of Directors taking into  consideration
the make-up of the loan portfolio,  level of non-performing loans,  charge-offs,
loan  commitments,  lines of  credit  and  general  economic  conditions  in the
company's  market area.  Management's  analysis at March 31, 1999 indicated that
the reduced provision was appropriate to maintain an adequate level of reserves.

      Noninterest  income increased $51,000 primarily due to an increase in loan
fees and a reduction in the loss on the sale of other real  estate.  Noninterest
expense increased $135,000 or 23.0% when compared to last year. The increase was
primarily caused by a $46,000 increase in salaries and employee benefits.  Merit
raises and increased staff contributed to the increase in salaries. The increase
was also  attributable  to a $27,000  increase in occupancy  costs and a $26,000
increase in  foreclosed  real estate and other  expenses.  Price  increases  for
services were a major factor for the rise in occupancy and other expenses.

      The following is a comparative  schedule of  non-interest  expense for the
three months ended March 31:

<TABLE>
<CAPTION>

               [Dollars in thousands)          Change
                                             1999  1998  $       %
                                             --------------     ---
      <S>                               <C>         <C>   <C>  <C> 
      Salaries and employee benefits    $    349    303   46    15.2
      Occupancy costs                         83     56   27    48.2
      Data processing                         45     35   10    28.6
      Foreclosed real estate                  40     14   26   185.7
      F.D.I.C. insurance                      15     15    0     0
      All other                              190    164   26    15.9
                                             --------------- 
                        Total           $    722    587  135    23.0
                                             ===    ===  ===
</TABLE>


                                       8





<PAGE> 11



COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 1999 
AND 1998

      A net loss of $31,000 was reported  for the nine month period  compared to
net income of $458,000 for the same period last year.  The loss was due to a one
time charge of $753,000  relating to the funding of Security Savings  Charitable
Foundation established in connection with the Association's  conversion to stock
form.  If adjusted for the one time charge,  net income would have  approximated
$503,000.  Using the adjusted  net income  return on assets would have been .57%
compared to .58% last year and return on equity  would have been 4.20%  compared
to 7.17%  last  year.  Return on equity for the  current  period was  negatively
affected  by the need to  effectively  deploy  the  influx of  capital  from the
initial public offering.

      Net  interest  income  for the nine  month  period  ended  March 31,  1999
increased $72,000 or 2.8%. Interest income increased $30,000, primarily due to a
$107,000 increase in income from interest-bearing deposits in banks, offset by a
$59,000 decrease in income from loans.  The level of investment  securities rose
due to the  investment of funds from the initial  public  offering.  Loan income
declined  as a moderate  increase in volume did not offset the effect of a lower
interest rate  environment.  Interest  expense declined $42,000 due primarily to
lower interest rates.

      The provision for loan losses  declined  $79,000 when compared to the same
period last year.  The  provision is evaluated  by  management  and the Board of
Directors  periodically  based on the  make-up of the loan  portfolio,  level of
non-performing loans, charge-offs, loan commitments, lines of credit and general
economic  conditions  in the  marketplace.  Management's  analysis  at this time
indicated  that the  Association  could  decrease  the loss  reserve  and  still
maintain a more than adequate level of reserves.

      Non interest income  declined  $70,000 in the quarter ended March 31, 1999
compared to the same period  ended March 31, 1998 due to a $108,000  increase in
the loss on sale of other real estate owned. Loan fees and other service charges
increased $32,000,  primarily because of increased volume.  Non-interest expense
increased $953,000, primarily due to the one time charge of $753,000 to form the
Foundation. If adjusted for the one time charge, non interest expense would have
increased  $200,000 or 11.1%.  A $49,000  increase in both salaries and benefits
and occupancy  costs together with a $61,000  increase in foreclosed real estate
expenses were the primary reasons for the increase.

      The  following is a schedule of  non-interest  expense for the nine months
ended March 31.

<TABLE>
<CAPTION>

               [Dollars in thousands)          Change
                                             1999  1998  $       %
                                             --------------     ---
      <S>                               <C>         <C>   <C>  <C> 
      Salaries and employee benefits    $  1,028    979    49    5.0
      Occupancy costs                        219    170    49   28.8
      Data processing                        119    103    16   15.5
      Foreclosed real estate                 112     51    61  119.6
      F.D.I.C. Insurance                      45     46    (1)   2.2
      All other                            1,228    449   779  173.5
                                           -------------------
                  Total                    2,751  1,798   953   53.0
                                           =====  =====   ===   ====
</TABLE>


                                       9


<PAGE> 12


LIQUIDITY AND CAPITAL RESOURCES

      The following  discussion refers to the Company's wholly owned subsidiary,
the  Association.  The  Association's  primary  sources  of funds are  deposits,
principal  and  interest  payments  on  loans,  mortgage-backed  and  investment
securities.  The Association uses the funds generated to support its lending and
investment activities.  While maturities and scheduled amortization of loans are
predictable  sources  of funds,  deposit  flows,  mortgage  prepayments  and the
exercise of call  features are greatly  influenced  by general  interest  rates,
economic  conditions and competition.  The Association has continued to maintain
the  required  levels  of liquid  assets as  defined  by OTS  regulations.  This
requirement  of the  OTS,  which  may be  varied  at the  direction  of the  OTS
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term  borrowings.  The  Association's  currently  required
liquidity ratio is 4.0%. At March 31, 1999 and 1998, the Association's liquidity
ratios were 30.3% and 21.2%, respectively.

      At March 31, 1999, the Association  exceeded all of its regulatory capital
requirements  with a tangible capital level of $15.6 million,  or 13.3% of total
adjusted  assets,  which is above the  required  level of 3.0%;  core capital of
$15.6 million,  or 13.3% of total adjusted  assets,  which is above the required
level  of  4.0%;  and  risk-based   capital  of  $16.1  million,   or  30.9%  of
risk-weighted assets, which is above the required level of 8.0%.

      The  Association  has other sources of liquidity if a need for  additional
funds arises,  including Federal Home Loan Bank ("FHLB") advances.  At March 31,
1999, the Association did not have any advances  outstanding  from the FHLB, but
has an overall borrowing capacity from the FHLB of $51.3 million.

      The  Association's  most  liquid  assets  are  cash  and due  from  banks,
interest-bearing  deposits with banks and its  investment  and  mortgage-related
securities  available-for-sale.  The levels of these assets are dependent on the
Association's operating,  financing, lending and investing activities during any
given  period.  At March 31,  1999,  cash and due from  banks,  interest-bearing
deposits with banks and investment  securities  available for sale totaled $31.2
million, or 25.3% of total assets.

      At March 31, 1999, the  Association had commitments to originate loans and
unused  outstanding  lines of credit and  un-disbursed  proceeds of construction
mortgages totaling $4.1 million.  The Association  anticipates that it will have
sufficient  funds  available to meet its current loan  origination  commitments.
Certificate  accounts,  which are scheduled to mature in less than one year from
March  31,  1999,   totaled  $33.8  million.   The   Association   expects  that
substantially all of the maturing  certificate  accounts will be retained by the
Association at maturity.

      The  initial  impact  of the  Conversion  on  the  liquidity  and  capital
resources of the Company was significant as it substantially  increased the cash
assets of the Company and  Association,  and the capital base of both.  At March
31, 1999,  the  Association  had total equity,  determined  in  accordance  with
generally accepted  accounting  principles,  of $22.6 million, or 18.3% of total
assets.  The  Association's  regulatory  tangible  capital at March 31, 1999 was
13.3% of assets. An institution with a ratio of tangible capital to total assets
of greater than or equal to 5% is considered to be  "well-capitalized"  pursuant
to OTS regulations.


                                       10


<PAGE> 13



YEAR 2000 COMPLIANCE

      As the year 2000  approaches,  an  important  business  issue has  emerged
regarding how existing  application  software programs and operating systems can
accommodate this date value.  Many existing  application  software products were
designed to  accommodate  only  two-digits.  For example,  "96" is stored on the
system and represents 1996. The Association  relies  significantly on an outside
service bureau for its data  processing.  While the Association has not received
any guarantee from the outside  service bureau that the bureau will be Year 2000
compliant,  the service  bureau has  completed  its  assessment of its Year 2000
compliance  and resolved all  identified  problems.  The  Association's  service
bureau  completed  its proxy  testing of their  system and the  Association  has
conducted  on-line  testing at each of its  offices on  February  14,  1999.  No
problems were  encountered  during  testing.  The  Association has completed its
inventory  and  assessment  and has completed  upgrading its internal  system to
handle  the Year 2000  problem.  The cost to the  Association  for the  internal
system upgrade, not including staff time, has been less than $50,000.  There can
be no  assurances,  however,  that the  performance by the  Association  and its
service bureau will be effective to remedy all potential problems. To the extent
the  Company's  systems  are not  fully  Year  2000  compliant,  there can be no
assurance that potential  systems  interruptions or the cost necessary to update
software would not have a materially  adverse effect on the Company's  business,
financial  condition,   results  of  operations  and  business  prospects.   The
Association  has prepared a  contingency  plan in the event there are any system
interruptions,  in which the  Association  will  resort to a manual  method  for
handling  customer  transactions.  Any  Year  2000  failure  on the  part of the
Association's  customers  could  result  in  additional  expense  or loss to the
Association.  The  Association  plans to work with its  customers to address any
potential Year 2000 problems.

RECENT ACCOUNTING PRONOUNCEMENTS

      ACCOUNTING  FOR DERIVATIVE  INSTRUMENTS  AND HEDGING  ACTIVITIES.  In June
1998, the FASB issued SFAS No. 133,  "Accounting for Derivative  Instruments and
Hedging  Activities"  ("SFAS No. 133"). SFAS No. 133 establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments embedded in other contracts and for hedging activities.  It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measure those instruments at fair value. In
connection with the implementation of SFAS No. 133, the Association may transfer
debt  securities  classified  as  held-to-maturity  to  the   available-for-sale
category.  Such a  transfer  will  not  call  into  question  the  Association's
intention  to hold  other  debt to  maturity  in the  future.  SFAS  No.  133 is
effective for financial  statements for periods  beginning  after June 15, 1999.
Management has not yet  determined the impact,  if any, of this statement on the
Association.  Management  plans to adopt SFAS No.  133  during  its fiscal  year
ending June 30, 1999 in order to use the special provision allowing the transfer
of debt  securities  classified as  held-to-maturity  to the  available-for-sale
category. Management has not identified which securities might be transferred to
the  available-for-sale  category;  and, as a result,  is not able to  determine
whether such transfer could have a material  impact on its financial  condition.
If the Association had  transferred  all of its  held-to-maturity  securities to
available-for-sale  securities as of March 31, 1999,  its  shareholders'  equity
would have decreased by approximately $35,324.


                                       11

<PAGE> 14


                           PART II: OTHER INFORMATION

Item 1: Legal Proceedings
        -----------------

            The Company is not involved in any pending legal  proceedings  other
than routine  legal  proceedings  occurring in the ordinary  course of business.
Such routine legal proceedings,  in the aggregate, are believed by management to
be immaterial to the Company's financial condition or the results of operation.

Item 2. Changes in Securities and Use of Proceeds
        -----------------------------------------

             None

Item 3. Defaults Upon 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

             2.1 Amended Plan of Conversion (including the Stock Articles of 
                 Incorporation and Bylaws of Security Savings Association of
                 Hazleton)*

             3.1 Certificate  of  Incorporation  of  Security  of  Pennsylvania
                 Financial Corp.*

             3.2 Bylaws of Security of Pennsylvania Financial Corp.*

             10.1 Change in Control Agreement between Security Savings 
                  Association of Hazleton and Jan Pasdon.

             27.0 Financial Data Schedule

*Incorporated  by  reference  into  this  document  from  the  Exhibits  to  the
Registration  Statement in Form SB-2, and any amendments  thereto,  Registration
No. 333-63271.

(b)          Reports on Form 8-K:

             None


                                       12



<PAGE> 15



                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the issuer caused
this  report  to be  signed  on its  behalf  by the  undersigned  hereunto  duly
authorized.


                              SECURITY OF PENNSYLVANIA FINANCIAL CORP.


Dated: May 12, 1999                 By:   /s/ Richard C. Laubach   
                                          -------------------------
                                    Richard C. Laubach
                                    President and Chief Executive Officer
                                    (principal executive officer)

Dated: May 12, 1999                 By:   /s/ David P. Marchetti, Sr.  
                                          -----------------------------
                                    David P. Marchetti, Sr.
                                    ChiefFinancial Officer and Treasurer
                                    (Principal financial and accounting
                                     officer)





                                       13