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 September 30, 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                                (I.R.S. Employer
 incorporation 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       NO   X
                                                               ------   ------

                      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 1,507,650
shares of common stock, par value $0.01 per share, outstanding as of November 4,
1999.
<PAGE>
<TABLE>
<CAPTION>
                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.

                                   FORM 10-QSB

                                      INDEX
                                                                                   Page
                                                                                   ----
<S>                                                                                 <C>
PART I.FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheet at
           September 30, 1999 (unaudited) and June 30, 1999 .......................  1

           Consolidated  Income Statement and Statement of Comprehensive Income
           for the Three Months Ended September 30, 1999 and 1998 (unaudited) .....  2

           Consolidated Statement of Changes in Equity
           for the Three Months Ended September 30, 1999 ..........................  3

           Consolidated Statement of Cash Flows for the
           Three Months Ended September 30, 1999 and 1998 .........................  4

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

Item 2.    Management's Discussion and Analysis or Plan of Operation ..............  6

PART II:OTHER INFORMATION

Item 1.    Legal Proceedings ...................................................... 11

Item 2.    Changes in Securities and Use of Proceeds .............................. 11

Item 3.    Defaults Upon Senior Securities ........................................ 11

Item 4.    Submission of Matters to a Vote of Security Holders .................... 11

Item 5.    Other Information ...................................................... 11

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

SIGNATURES ........................................................................ 13
</TABLE>
<PAGE>
                         PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS.
           --------------------

                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

                SEPTEMBER 30, 1999 (UNAUDITED) AND JUNE 30, 1999
             (In thousands, except share and per share information)
<TABLE>
<CAPTION>
                                                                    September 30,   June 30,
                                                                        1999         1999
                                                                     ----------    ---------
                                                                    (Unaudited)
<S>                                                                   <C>          <C>
Assets:
         Cash and cash equivalents ................................        $991       $1,853
         Interest-bearing deposits with banks .....................      11,493       13,383
                                                                      ---------    ---------
            Total cash and cash equivalents .......................      12,484       15,236
         Held-to-maturity securities (fair value of $5,415 at
            9/99 and $1,492 at 6/99)...............................       9,373        1,492

         Available for sale securities ............................      27,459       27,424
         Loans (less allowance for loan loss of $430 at 9/99
            and $419 at 6/99)......................................      77,560       72,789
         Property and equipment, net ..............................       1,292        1,281
         Accrued interest receivable ..............................         881          836
         Real estate owned, net ...................................         134           53
         Other assets .............................................         466          420
                                                                      ---------    ---------
                  Total assets ....................................    $129,650     $119,531
                                                                      =========    =========
Liabilities and Equity:

         Deposits .................................................     $97,953      $95,815
         Advances from borrowers for taxes and insurance ..........          15           26
         Borrowed funds ...........................................       9,000        1,000
         Accrued interest payable and other liabilities ...........         197          174
                                                                      ---------    ---------
                  Total liabilities ...............................     107,165       97,015

         Common Stock ($.01 par value; 6,000,000 authorized shares,
            1,587,000 shares issued ...............................          16           16
         Additional paid-in capital ...............................      14,869       14,869
         Unearned Employee Stock Ownership Plan (ESOP) shares .....      (1,210)      (1,227)
         Retained earnings - substantially restricted .............       9,834        9,596
         Accumulated other comprehensive income ...................      (1,024)        (738)
                                                                      ---------    ---------
                  Total equity ....................................      22,485       22,516
                                                                      ---------    ---------

                  Total liabilities and equity ....................    $129,650     $119,531
                                                                       ========     ========
</TABLE>

                                       1
<PAGE>
                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                          CONSOLIDATED INCOME STATEMENT

      FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                              Sepember 30,  September 30,
                                                                 1999           1998
                                                               -------         -------
                                                                     (Unaudited)
<S>                                                             <C>            <C>
Interest income:
         Loans .............................................    $1,426         $1,335
         Interest and dividends on securities:
                  Taxable ..................................       464            321
                  Non-taxable ..............................       119              7
                  Dividends ................................        10             10
                  Interest-bearing deposits with banks .....       133            246
                                                               -------        -------
                           Total interest income ...........     2,152          1,919
Interest expense:
         Deposits ..........................................       970          1,085
         FHLB advances and other borrowings ................        50             --
                                                               -------        -------
                  Total interest expense ...................     1,020          1,085

         Net interest income ...............................     1,132            834
         Provision for loan losses .........................         9              5
                                                               -------        -------
         Net interest income after provision for loan losses     1,123            829

Noninterest income:
         Other loan fees and service charges ...............        92             69
         Gain (loss) on sale of:
                  Real estate owned ........................       (21)             1
                  Other ....................................        11             12
                                                               -------        -------
                           Total noninterest income ........        82             82

Noninterest Expense:
         Salaries and net employee benefits ................       388            322
         Occupancy costs ...................................        68             68
         Federal deposit insurance premiums ................        14             15
         Data processing ...................................        39             38
         Professional fees .................................        79             37
         Foreclosed real estate expenses, net ..............        32             31
         Charitable contributions ..........................         5              2
         Other noninterest expense .........................       136            107
                                                               -------        -------
                           Total noninterest expense .......       761            620

Income before provision for income taxes ...................       443            290
Income tax provision .......................................       126             92
                                                               -------        -------
NET INCOME .................................................      $317           $199
                                                               =======        =======
</TABLE>
                                       2
<PAGE>
                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

      FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                September 30,       September 30,
                                                                                      1999                1998
                                                                               -----------------   -----------------
                                                                                           (Unaudited)
<S>                                                                                       <C>                  <C>
Net income ....................................................................           $ 317                $199

Increase/(decrease) in unrealized losses available-for-sale securities ........           (285)                  49
                                                                                          -----                ----

Comprehensive income ..........................................................            $ 32                $248
                                                                                          =====                ====
</TABLE>


                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                         STATEMENT OF CHANGES IN EQUITY

                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                      Accumulated
                                                  Additional                             Other
                                       Common      Paid-in              Retained     Comprehensive      Net
                                        Stock      Capital     ESOP     Earnings        (Loss)         Equity
                                     ---------  ---------- ----------  ----------  --------------  -----------
<S>                                    <C>       <C>        <C>         <C>           <C>           <C>
Balance at June 30, 1999 .........     $ 16      $ 14,869   $ (1,227)   $  9,596      $   (738)     $ 22,516
Net income .......................       --            --         --         317            --           317
Dividend payment .................       --            --         --         (79)           --           (79)
Increase in unrealized losses on
   available-for-sale securities..       --            --         --          --          (286)         (286)
ESOP shares earned ...............       --            --         17          --            --            17
                                       ----      --------   --------    --------      --------      --------
Balance at September 30, 1999 ....     $ 16      $ 14,869   $ (1,210)   $  9,834      $ (1,024)     $ 22,485
                                       ====      ========   ========    ========      ========      ========
</TABLE>

                                       3
<PAGE>
                    SECURITY OF PENNSYLVANIA FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

               FOR THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                        September 30,  September 30,
                                                             1999        1998
                                                         -----------    ----------
                                                                (unaudited)
<S>                                                       <C>         <C>
OPERATING ACTIVITIES:
Net income ............................................   $    371    $    198
Adjustments to reconcile net income to net cash
         provided by operating activities:
Provision for loan losses and foreclosed real estate ..          9           5
Depreciation and amortization .........................         26          62
Dividend Payment ......................................        (78)         --
Real estate acquired through foreclosure ..............        (81)        (40)
Change in assets and liabilities:
         Accrued interest receivable ..................        (46)        (44)
         Other assets .................................         96        (364)
         Accrued interest payable and other liabilities         23          98
                                                          --------    --------

Net cash provided by operating activities .............        257         (85)
                                                          --------    --------

INVESTMENT ACTIVITIES:
Purchase of held-to-maturity securities ...............     (7,622)       (420)
Purchase of available-for-sale securities .............       (285)     (2,250)
Proceeds from maturities of held-to-maturity securities      2,094       1,886
Proceeds from the call of held-to-maturity securities .        250          --
Proceeds from maturities and principal paydowns on
         available-for-sale securities ................         --       1,796
Loans made to customers, net of principal collected ...     (4,771)        365
Acquisition of office premises and equipment ..........        (37)        (37)

NET CASH USED IN INVESTING ACTIVITIES .................    (10,371)      1,340
                                                          --------    --------

FINANCING ACTIVITIES:

Net increase (decrease) in deposit accounts ...........      2,138      (2,316)
Net (decrease) in advances from borrowers
         for taxes and insurance ......................        (11)        (23)
Borrowed funds ........................................      8,000          --
                                                          --------    --------

Net cash provided by financing activities .............     10,127      (2,339)
                                                          --------    --------

Increase (decrease) by cash and equivalents ...........      4,747        (910)
Cash and equivalents - beginning of the year ..........     11,858      27,315
                                                          --------    --------
Cash and equivalents - end of year ....................   $ 16,605    $ 26,405
                                                          ========    ========

Supplemental Disclosure of Cash Flow Information:
         Interest paid on deposits ....................   $  3,138    $    987
         Income taxes paid ............................        (65)         77

Supplemental Disclosure of Non-Cash Information:
         Transfer from loans to real estate owned .....         50          35
</TABLE>

                                       4
<PAGE>
                    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 "OTS").  The Association is regulated by the  Commonwealth of Pennsylvania,
the OTS and the Federal Deposit Insurance Corporation. 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  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  months  ended  September  30,  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 Annual Report on Form 10-KSB filed with the Securities
and Exchange Commission.

                                       5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
        ----------------------------------------------------------

         The following analysis discusses changes in the financial condition and
results of operations at and for the three months ended  September 30, 1999, and
should  be  read  in  conjunction  with  the  Company'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 noninterest  expense.  The Association's  noninterest
expense  principally  consists of  compensation  and employee  benefits,  office
occupancy  and

                                       6
<PAGE>
equipment  expense,   federal  deposit  insurance  premiums,   data  processing,
advertising and business 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  Company'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,  in  February  1999,  the  Association  opened a  commercial  loan
department.  The  Association  expects to expand its  services in that area.  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  through  taking  advantage  of  technological
advances when  appropriate;  and (iv)  maintaining a strong  regulatory  capital
position.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1999 AND JUNE 30, 1999

         Total assets  increased  $10.1  million,  or 8.5%, to $129.7 million at
September 30, 1999 compared to $119.5 million at June 30, 1999. The increase was
primarily due a $7.9 million increase in held-to-maturity  securities due to the
purchase of additional  callable  government  agency  securities  and short-term
commercial  paper  investments.  The loan portfolio also increased $4.7 million,
primarily due to $5.9 million of mortgage loan originations  during the quarter.
These increases were primarily funded by Federal Home Loan Bank borrowings which
increased by $8.0 million to $9.0 million at September  30, 1999. An increase of
$2.2 million in deposits,  primarily  due to special  interest  rates offered on
certificates of deposit during the latter part of the quarter,  also helped fund
the asset growth. Total equity decreased $31,000 at September 30, 1999 primarily
due to an increase in unrealized  losses on securities and a dividend payment of
$79,350, offset by increased earnings.

COMPARISON  OF OPERATING  RESULTS FOR THE THREE MONTHS ENDED  SEPTEMBER 30, 1999
AND 1998

         GENERAL.  The Company  reported  net income of  $317,000,  or $0.22 per
share,  for the three months ended  September  30, 1999,  which  represented  an
increase of $118,300, or 59.5%, in net income compared to the three month period
ended September 30, 1998. Due to the timing of the  Association's  conversion to
stock  form,  earnings  per share  figures  for the  prior  year's  quarter  are
inapplicable. Based on annualized earnings, the return on assets for the quarter
was 0.98% compared to 0.73% for the first quarter in 1998.  Return on equity for
the three months ended  September 30, 1999  decreased to 5.64% compared to 8.33%
for the three  months  ended  September  30,  1998 as the Company  continued  to
assimilate   the  infusion  of  capital  it  received  in  the   conversion   in
higher-

                                       7
<PAGE>
yielding investments.

         NET INTEREST INCOME. Net interest income increased $297,000,  or 35.7%,
from $834,000 for the three months ended  September 30, 1998 to $1.1 million for
the three months ended September 30, 1999,  primarily due to higher  outstanding
loan and investment  balances.  The increase in loan and investment balances was
due to $5.9  million in loan  originations  and a $7.9  million  increase in the
security portfolio during the quarter. A $64,000,  or 5.9%, decrease in interest
expense also contributed to the increase in net interest income. The decrease in
interest  expense was primarily  attributable  to lower  interest  rates paid on
deposits,  offset in part by the  increased  interest  paid on Federal Home Loan
Bank borrowings.

         PROVISION  FOR LOAN LOSSES.  Provisions  for loan losses are charged to
operations to bring the total allowance for loan losses to a level considered by
management to be adequate to provide for probable  losses based on  management's
evaluation of the quality and  composition of the loan  portfolio,  the level of
nonperforming loans and charge-offs, the amount of loan commitments and lines of
credit  outstanding  and the general  economy of the Company's  market area. The
provision for loan losses increased by $4,000, or 80.0%, to $9,000 for the three
months ended  September 30, 1999 compared to the September 30, 1998 quarter.  At
September  30, 1999 and  September  30, 1998,  the allowance for loan losses was
$430,000 and $419,000,  respectively,  which  represented 58.6% of nonperforming
loans and 0.55% of total loans at September 30, 1999 and 24.6% of  nonperforming
loans and 0.65% of total loans at September 30, 1998.

         While  management   believes  that,  based  on  information   currently
available,  the  Company's  allowance  for loan  losses is  sufficient  to cover
probable  losses  inherent in its loan portfolio at this time, no assurances can
be given  that  the  Company's  level  of  allowance  for  loan  losses  will be
sufficient  to  cover  loan  losses  incurred  by the  Company  or  that  future
adjustments  to the  allowance for loan losses will not be necessary if economic
and other conditions differ substantially from the economic and other conditions
used by  management  to determine  the current  level of the  allowance for loan
losses.  Management  may increase  its level of  allowance  for loan losses as a
percentage of total loans and nonperforming  loans if the level of multi-family,
commercial,  construction or consumer  lending as a percentage of its total loan
portfolio increases.

         NONINTEREST INCOME. Loan fees and service charges increased $22,800, or
33.0% for the three  months  ended  September  30,  1999  compared  to the prior
quarter  due  to  the  high  volume  of  loan   originations   in  the  quarter.
Nevertheless,  noninterest income remained at $82,000 for the three months ended
September 30, 1999 and September 30, 1998 due to the loss of $21,000 on the sale
of real  estate  owned  compared  to a gain of $1,000 on the sale of real estate
owned for the three months  ended  September  30, 1998.  The loss on the sale of
real estate  owned  occurred as the Company  continued  to  foreclose on problem
loans and sell the real estate owned.

         NONINTEREST EXPENSE.  Noninterest expense increased $141,000, or 22.8%,
from $620,000 for the three months ended  September 30, 1998 to $761,000 for the
three months ended September 30, 1999 due primarily to increases in salaries and
benefits,   professional  fees  and  other  noninterest  expense.  Specifically,
salaries and employee benefits increased $66,000, or 20.5%, from the first

                                       8
<PAGE>
quarter in 1998 to the first  quarter in 1999 due to ordinary  merit  raises and
the  addition  of  personnel  to  staff  the  new  commercial  loan  department.
Professional fees and other noninterest  expense increased $42,000, or 114%, and
$29,300,  or 27.4%,  respectively,  primarily due to increased costs  associated
with the additional requirements of being a public company.

         PROVISION FOR INCOME TAXES.  Income tax expense increased  $34,000,  or
36.9%,  to $126,000 for the three months ended  September  30, 1999  compared to
$92,000 for the three months ended  September  30,  1998,  primarily  due to the
increase in pre-tax income. The effective tax rates were 28.4% and 31.7% for the
three months ended September 30, 1999 and 1998, respectively.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  primary  sources of funds are  deposits,  principal and
interest  payments on loans,  mortgage-backed  and  investment  securities.  The
Company  uses  the  funds  generated  to  support  its  lending  and  investment
activities as well as any other demands for liquidity such as deposit  outflows.
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 Company has  continued  to  maintain  levels of liquid  assets
greater than those  required 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 Company's currently required liquidity ratio is 4.0%.
At September  30, 1999 and 1998 the  Company's  liquidity  ratios were 32.1% and
22.0%, respectively.

         At September 30, 1999, the  Association  exceeded all of its regulatory
capital requirements with a tangible capital level of $16.2 million, or 12.6% of
total adjusted  assets,  which is above the required  level of $1.9 million,  or
1.5%; core capital of $16.2 million,  or 12.6%, of total adjusted assets,  which
is above the required level of $5.1 million,  or 4.0%; and risk-based capital of
$16.6 million,  or 28.2%, of risk-weighted  assets,  which is above the required
level of $4.7 million, or 8.0%.

         The Company has other  sources of  liquidity  if a need for  additional
funds arises,  including FHLB  advances.  At September 30, 1999, the Company had
advances outstanding from the FHLB of $9.0 million and at September 30, 1999 had
an overall borrowing capacity from the FHLB of $55.5 million.

         The  Company'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
Company's  operating,  financing,  lending and investing  activities  during any
given period.  At September 30, 1999, cash and due from banks,  interest-bearing
deposits with banks and investment  securities  available for sale totaled $40.0
million, or 30.9% of total assets.

                                       9
<PAGE>
         At September 30, 1999, the Company had  commitments to originate  loans
and unused outstanding lines of credit and undisbursed  proceeds of construction
mortgages  totaling  $6.6  million.  The Company  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
September  30,  1999,   totaled  $33.9   million.   The  Company   expects  that
substantially all of the maturing  certificate  accounts will be retained by the
Company at maturity.

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.  Additionally,  the  Association's
service bureau conducting testing with other third parties that communicate with
the service  bureau.  No problems  were  encountered  during  these  tests.  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.  Primarily the Association will resort to a manual
method for  handling  customer  transactions  and  although  cumbersome  will be
adequate. 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

         REPORTING  COMPREHENSIVE  INCOME.  In  September  1997,  the  Financial
Accounting Standard Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income,  "  which  establishes  standards  for  the  reporting  and  display  of
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial  statements.  This statement requires that all items that are required
to be  recognized  as  components  of  comprehensive  income  be  reported  in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  The  statement  does not  require a specific  format for
financial   statement  but  requires  that  an  enterprise   display  an  amount
representing  total  comprehensive  income  for the  period  in  that  financial
statement. This statement

                                       10

<PAGE>
is effective for fiscal years  beginning  after  December 15, 1997.  The Company
adopted this statement as of July 1, 1998.

         ACCOUNTING FOR DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES.  In June
1998, the FASB issued SFAS No. 133,  "Accounting for Derivative  Instruments and
Hedging  Activities."  This  statement  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 this statement,  the Company,  as of April
1, 1999,  transferred  debt  securities  classified as  held-to-maturity  to the
available-for-sale  category.  Such  transfer  will not call into  question  the
Company's intention to hold other debt to maturity in the future. This statement
is effective for financial statements for periods beginning after June 15, 1999.

                           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 results of operations.

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

                  Not applicable.

ITEM 3. Defaults Upon Senior Securities.
        --------------------------------

                  None.

ITEM 4. Submission of Matters to a Vote of Security Holders.
        ----------------------------------------------------

                  None.

ITEM 5. Other Information.
        ------------------

                  None.


                                       11
<PAGE>
ITEM 6. Exhibits and Reports On Form 8-K (Ss.249.308 of This Chapter)
        -------------------------------------------------------------

         (a)      Exhibits

                  2.1      Amended  Plan  of  Conversion  (including  the  Stock
                           Articles of Incorporation  and Bylaws of the 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.*

                  11.0     Statement regarding Computation of Per Share Earnings

                  27.0     Financial Data Schedule

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

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

         (b)      Reports on Form 8-K

                           On  July  23,  1999,  the  Company  filed  an  8-K to
                  announce the declaration of a cash dividend. The press release
                  announcing the dividend was filed by exhibit.

                                       12
<PAGE>
                                   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: November 5, 1999         By: /s/ RICHARD C. LAUBACH
                                    -------------------------------
                                    Richard C. Laubach
                                    President and Chief Executive Officer
                                    (principal executive officer)

Dated: Novermber 5, 1999
                                By: /s/ DAVID P. MARCHETTI, SR.
                                    -------------------------------
                                    David P. Marchetti, Sr.
                                    Chief Financial Officer and Treasurer
                                    (principal financial and accounting officer)






                                       13