UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

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

                  For the quarterly period ended June 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 1-13793

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                     NORTHEAST PENNSYLVANIA FINANCIAL CORP.
-------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)
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DELAWARE                                                             06-1504091
-------------------------------------------------- ----------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
                                                              entification No.)
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12 E. BROAD STREET, HAZLETON, PENNSYLVANIA                                18201
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(Address of principal executive offices)                             (Zip Code)
-------------------------------------------------- ----------------------------


                                 (570) 459-3700
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              (Registrant's telephone number, including area code)
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                                 Not Applicable
-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changes since last report)

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         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing 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: The Registrant had
5,800,683 shares of Common Stock outstanding as of August 12, 1999.


<PAGE>




                                TABLE OF CONTENTS

Item
No.
                                                                           Page
                                                                          Number
PART  I - CONSOLIDATED FINANCIAL INFORMATION

Item 1   CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Statements of Financial Condition at
         June 30, 1999 (unaudited) and September 30, 1998..............       1

         Consolidated Statements of Operations for the Three Months Ended
         June 30, 1999 and 1998 (unaudited)............................       2

         Consolidated Statement of Comprehensive Income for the Three Months
         Ended June 30, 1999 and 1998 (unaudited).......................      3

         Consolidated Statements of Operations for the Nine Months Ended
         June 30, 1999 and 1998 (unaudited).............................      4

         Consolidated Statement of Comprehensive Income for the Nine Months
         Ended June 30, 1999 and 1998 (unaudited)........................     5

         Consolidated  Statements  of  Changes  in Equity  for the
         Years  Ended September  30,  1998 and 1997 and the Nine  Months
         Ended June 30, 1999 (unaudited).................................     6

         Consolidated Statements of Cash Flows for the Nine Months Ended
         June 30, 1999 and 1998(unaudited)...............................     7

         Notes to Consolidated Financial Statements (unaudited).........      9


Item 2   Management's Discussion and Analysis of Financial Condition
         and Results of Operations.......................................    14

Item 3   Quantitative and Qualitative Disclosures about Market Risk......    27

Part II - OTHER INFORMATION

1         Legal Proceedings..............................................    28

2         Changes in Securities and Use of Proceeds......................    28

3         Defaults Upon Senior Securities................................    28

4         Submission of Matters to a Vote of Security Holders............    28

5         Other Information..............................................    28

6         Exhibits and Reports on Form 8 - K.............................    28

Signatures


<PAGE>
<TABLE>
<CAPTION>


                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statements of Financial Condition
                June 30, 1999 (unaudited) and September 30, 1998
                                 (in thousands)

                                                                           June 30,         September 30,
                                                                             1999               1998
                               Assets                                             (unaudited)
<S>                                                                        <C>              <C>

Cash and cash equivalents                                                     $ 8,128           $ 3,053
Securities available-for-sale                                                 189,542           189,094
Securities held-to-maturity (estimated fair value of $28,820 at
    June 1999 and $32,072 in September 1998)                                   28,330            31,770
Loans (less allowance for loan losses of $2,520 for June1999 and
    $2,273 for September 1998)                                                341,376           282,706
Accrued interest receivable                                                     4,465             3,998
Assets acquired through foreclosure                                                75               112
Property and equipment, net                                                     9,655             8,648
Other assets                                                                    7,616             2,887
                                                                                -----             -----
     Total assets                                                           $ 589,187         $ 522,268
                                                                            =========         =========

                       Liabilities and Equity

Deposits                                                                    $ 364,480         $ 324,005
Federal Home Loan Bank advances                                               142,984           106,498
Other borrowings                                                                  305               825
Advances from borrowers for taxes and insurance                                 1,515               717
Accrued interest payable                                                        1,134             1,028
Other liabilities                                                               2,737             1,761
                                                                                -----             -----

     Total liabilities                                                      $ 513,155         $ 434,834
                                                                            ---------         ---------

Preferred stock ($.01 par value; 2,000,000 authorized shares;  0
    shares issued)                                                                  -                 -
Common stock ($.01 par value; 16,000,000 authorized shares;
    6,427,350 shares issued)                                                       64                64
Additional paid-in capital                                                     62,110            62,083
Common stock acquired by stock benefit plans                                  (7,272)           (4,799)
Retained earnings - substantially restricted                                   30,194            27,208
Accumulated other comprehensive income (loss)                                 (1,479)             2,878
Treasury stock, at cost (626,667 shares)                                      (7,585)                 -
                                                                              -------                 -

     Total equity                                                            $ 76,032           $87,434
                                                                             --------           -------

            Total liabilities and equity                                     $589,187         $ 522,268
                                                                             ========         =========
</TABLE>
                                     Page 1


<PAGE>

<TABLE>
<CAPTION>

                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
          For the Three Months Ended June 30, 1999 and 1998 (unaudited)
                                 (in thousands)

                                                                              For the Three months ended
                                                                                         June 30,
Interest Income:                                                                   1999             1998
                                                                                   ----             ----
                                                                                       (unaudited)
<S>                                                                          <C>               <C>

  Loans                                                                      $ 6,291           $  5,445
  Mortgage-related securities                                                    897                899
  Investment securities:
     Taxable                                                                   1,518              1,224
     Non-taxable                                                                 848                367
                                                                                 ---                ---
     Total interest income                                                     9,554              7,935

Interest Expense:
  Deposits                                                                     3,320              3,149
  Federal Home Loan Bank advances and other                                    1,666                619
                                                                               -----                ---
     Total interest expense                                                    4,986              3,768

Net interest income                                                            4,568              4,167

Provision for loan losses                                                        149                292
                                                                                 ---                ---


Net interest income after provision for loan losses                            4,419              3,875

Non-interest Income:
  Service charges and other fees                                                 223                180
   Other income                                                                  123                 67
   Insurance premium income                                                       61                  -
   Gain (loss) on sale of:
     Real estate owned                                                           (8)               (38)
     Loans                                                                       246                 14
     Available-for-sale securities                                                31                  -
    Other                                                                        (5)                  -
                                                                                 ---                  -
      Total non-interest income                                                  671                223

Non-interest Expense:
  Salaries and net employee benefits                                           1,898              1,622
  Occupancy costs                                                                426                390
  Data processing                                                                129                 72
  Professional fees                                                              159                 94
  Federal Home Loan Bank service charges                                         133                108
  Charitable contributions                                                        38                 25
  Other                                                                          597                422
                                                                                 ---                ---
     Total non-interest expense                                                3,380              2,733

Income before income taxes                                                     1,710              1,365

Income taxes                                                                     330                374
                                                                                 ---                ---


Net income                                                                   $ 1,380           $   991
                                                                             =======           =======

Earnings per share - basic                                                   $ 0.27               $0.17
                                                                             ======               =====
Earnings per share - diluted                                                 $ 0.25               $0.17
                                                                             ======               =====

</TABLE>
                                     Page 2
<PAGE>

<TABLE>
<CAPTION>


                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statement of Comprehensive Income
          For the Three Months Ended June 30, 1999 and 1998 (unaudited)
                     (in thousands, except per share data)

                                                                              For the Three Months Ended
                                                                                      June 30,
                                                                                1999               1998
                                                                                ----               ----
                                                                                     (unaudited)
<S>                                                                          <C>                  <C>

Net Income                                                                   $ 1,380              $ 991
                                                                             =======              =====

Other  comprehensive  income  (loss),  net of tax
    Unrealized gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period             $ (3,263)              $ (8)
    Less:  Reclassification adjustment for gains included in
      net income                                                                  20                   -
                                                                                ----                ----            -
Other comprehensive loss                                                    $ (3,243)              $ (8)
Comprehensive income (loss)                                                 $ (1,863)            $  983
                                                                            =========             =======


</TABLE>
                                     Page 3



<PAGE>

<TABLE>
<CAPTION>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
          For the Nine Months Ended June 30, 1999 and 1998 (unaudited)
                     (in thousands, except per share data)
                                                                                 For the Nine Months Ended
                                                                                        June 30,
                                                                                  1999               1998
                                                                                  ----               ----
                                                                                       (unaudited)
<S>                                                                             <C>                <C>

Interest
Income:
  Loans                                                                         $17,839             $15,971
  Mortgage-related securities                                                     3,194               2,299
  Investment securities:
    Taxable                                                                       4,156               2,993
    Non-Taxable                                                                   2,308                 701
                                                                                  -----                 ---
    Total interest income                                                        27,497              21,964

Interest Expense:
  Deposits                                                                        9,931               9,464
  Federal Home Loan Bank advances and other                                       4,336               1,726
                                                                                  -----               -----
    Total interest expense                                                       14,267              11,190

Net interest income                                                              13,230              10,774

Provision for loan losses                                                           343                 779
                                                                                    ---                 ---

Net interest income after provision for loan losses                              12,887               9,995

Non-interest Income:
  Service charges and other fees                                                    635                 488
  Other Income                                                                      305                 112
  Insurance premium income                                                          184                   -
  Gain (loss) on the sale of:
     Real estate owned                                                             (39)                (72)
     Loans                                                                          282                  17
     Available-for-sale securities                                                   64                   9
     Other                                                                          (6)                   2
                                                                                    ---                   -
     Total  non-interest income                                                   1,425                 556

Non-interest Expense:
  Salaries and net employee benefits                                              5,461               4,306
  Occupancy costs                                                                 1,246               1,149
  Data processing                                                                   371                 208
  Professional fees                                                                 624                 214
  Federal Home Loan Bank and other service charges                                  324                 286
  Charitable contributions                                                           83               4,924
  Other                                                                           1,637               1,142
                                                                                  -----               -----
     Total non-interest expense                                                   9,746              12,229

Income (loss) before income taxes                                                 4,566             (1,678)

Income taxes                                                                        973               (736)
                                                                                    ---               -----

Net income (loss)                                                                $3,593              $(942)
                                                                                 ======              ======

Earnings per share - basic                                                       $ 0.65             $(0.16)
                                                                                 ======             =======
Earnings per share - diluted                                                     $ 0.62             $(0.16)
                                                                                 ======             =======

</TABLE>
                                     Page 4
<PAGE>

<TABLE>
<CAPTION>


                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statement of Comprehensive Income
          For the Nine Months Ended June 30, 1999 and 1998 (unaudited)
                     (in thousands, except per share data)

                                                                               For the Nine Months Ended
                                                                                      June 30,
                                                                                1999               1998
                                                                                ----               ----
                                                                                     (unaudited)
<S>                                                                          <C>                <C>

Net Income (loss)                                                            $ 3,593            $ (942)
                                                                             =======            =======

Other  comprehensive  income  (loss),  net of tax
    Unrealized  gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period              $(4,399)             $ 487
    Less:  Reclassification adjustment for gains included in
      net income                                                                  42                  6
                                                                             -------         ----------
Other comprehensive income (loss)                                           $ (4,357)             $ 481
Comprehensive loss                                                           $ (764)            $ (461)
                                                                             =======            =======


</TABLE>
                                     Page 5



<PAGE>
<TABLE>
<CAPTION>

                     Northeast Pennsylvania Financial Corp.
                  Consolidated Statements of Changes in Equity
              For the Years Ended September 30, 1998 and 1997, and
                 the Nine Months Ended June 30, 1999 (unaudited)


                                                                 Common Stock               Accumulated
                                                  Additional     Acquired by                   other
                                        Common     Paid-in     stock benefit   Retained     comprehensive   Treasury     Total
                                        Stock      Capital         plans       Earnings     income (loss)     Stock     Equity

<S>                                     <C>        <C>           <C>           <C>         <C>              <C>         <C>

Balance September 30, 1996               $ -           $ -           $ -         $ 25,874           $253                $ 26,127

Net changes in gains (losses) on
  securities available-for-sale,                                                                   1,030                   1,030
  net of tax
Net income                                                                          1,381                                  1,381
                                        ----           ----          ----          ------        -------                 -------
Balance September 30, 1997               $ -           $ -           $ -         $ 27,255        $ 1,283                 $28,538

Issuance of Common Stock ($.01
  par value; 16,000,000
  authorized shares; 6,427,350            64                                                                                  64
  shares issued)
Additional paid-in Capital                          61,959                                                                61,959
Unearned employee stock ownership
 plan (ESOP) shares                                              (5,142)                                                 (5,142)
ESOP shares committed to be                            124           343                                                     467
released
Net changes in gains (losses) on                                                                   1,595                   1,595
 securities available-for-sale,
 net of tax
Net loss                                                                              (47)                                   (47)
                                        ----           ----          ----          ------        ------                 ---------
Balance September 30, 1998              $ 64      $ 62,083     $ (4,799)         $ 27,208        $ 2,878                $ 87,434

Unearned stock awards                                            (3,312)                                                 (3,312)
ESOP shares committed to be                             27           428                                                     455
released
Stock awards committed to be                                         411                                                     411
 released
Net changes in gains (losses) on
 securities available-for-sale,                                                                  (4,357)                 (4,357)
 net of  tax
Treasury stock at cost,                                                                                       (7,585)    (7,585)
626,667 shares
Cash dividend paid                                                                  (607)                                  (607)
Net income                                                                          3,593                                  3,593
                                        ----           ----          ----          ------      --------      -------    --------
Balance June 30, 1999                   $ 64      $ 62,110     $ (7,272)         $ 30,194      $ (1,479)    $ (7,585)   $ 76,032
                                        ====      ========     =========         ========      =========    =========   ========

</TABLE>
                                     Page 6


<PAGE>
<TABLE>
<CAPTION>

                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statement of Cash Flows
          For the Nine Months Ended June 30, 1999 and 1998 (unaudited)
                                 (in thousands)
                                                                                         For the Nine Months Ended
                                                                                                 June 30,
                                                                                            1999          1998
                                                                                            ----          ----
<S>                                                                                      <C>             <C>
Operating Activities:                                                                           (unaudited)
Net Income (loss)                                                                        $ 3,593         ($ 942)
Adjustments to reconcile net income to net cash provided by operating activities:
  Provision (Recovery) for REO loss                                                           12            (68)
  Provision for loan losses                                                                  343             779
  Depreciation                                                                               626             451
  Deferred income tax (benefit) provision                                                    142         (1,888)
  Funding of First Federal Charitable Foundation                                               -           4,761
  ESOP expense                                                                               455               -
  Stock award expense                                                                        411               -
  Amortization and accretion on:
     Held-to-maturity securities                                                              32              45
     Available-for-sale securities                                                           302             130
  Amortization of deferred loan fees                                                       (597)           (232)
(Gain) loss on sale of:
     Assets acquired through foreclosure                                                      39              72
     Loans                                                                                 (282)            (17)
     Available-for-sale securities                                                          (64)             (9)
  Gain (loss) on disposal of property and equipment                                            6             (2)
  Changes in assets and liabilities:
    Increase in accrued interest receivable                                                (467)           (905)
    Increase in other assets                                                             (2,137)           (339)
    Increase (decrease) in  accrued interest payable                                         106            (25)
    Increase (decrease) in accrued income taxes payable                                    (566)             751
    Increase in other liabilities                                                          1,542              87
                                                                                           -----              --

      Net cash provided by operating activities                                            3,496           2,649

Investing Activities:
Net increase in loans                                                                   (66,023)        (23,657)
Proceeds from sale of:
  Available-for-sale securities                                                           19,401               -
  Assets acquired through foreclosure                                                        147             256
  Loans                                                                                    7,728           4,814
Proceeds from repayments of held-to-maturity securities                                   17,593          17,535
Proceeds from repayments of available-for-sale securities                                 48,984          22,070
Proceeds from disposal of fixed assets                                                        71               2
Purchase of:
  Held-to-maturity securities                                                           (14,545)        (45,821)
  Available-for-sale securities                                                         (72,562)        (81,834)
  Office properties and equipment                                                        (1,710)         (1,780)
  Federal Home Loan Bank stock                                                           (3,600)         (1,222)
                                                                                         -------         -------

Net cash used in investing activities                                                   (64,156)       (109,637)

Financing Activities:
  Net increase in deposit accounts                                                        40,475           8,749
  Net decrease in Federal Home Loan Bank short-term advances                             (8,500)         (8,000)
  Borrowings of Federal Home Loan Bank long-term advances                                 45,000          50,000
  Repayments of Federal Home Loan Bank long-term advances                                   (14)            (13)
  Net increase in advances from borrowers for taxes and insurance                            798             780

</TABLE>
                                     Page 7
<PAGE>

<TABLE>
<CAPTION>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statement of Cash Flows
          For the Nine Months Ended June 30, 1999 and 1998 (unaudited)
                                 (in thousands)

                                                                                        For the Nine Months
                                                                                            Ended June 30,

                                                                                            1999        1998
                                                                                              (unaudited)
<S>                                                                                     <C>              <C>

    Net increase (decrease) in other borrowings                                          $ (520)          $ 257
    Net proceeds from issuance of common stock                                                 -         52,120
    Purchase of common stock for stock incentive plan                                    (3,312)              -
    Purchase of treasury stock                                                           (7,585)              -
    Cash dividend on common stock                                                          (607)              -
                                                                                           -----              -

    Net cash provided by financing activities                                             65,735        103,893

Increase (decrease) in cash and cash equivalents                                           5,075        (3,095)

Cash and cash equivalents, beginning of year                                               3,053         13,214
                                                                                           -----         ------

Cash and cash equivalents, end of year                                                     8,128         10,119
                                                                                           =====         ======

Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
     Interest                                                                             14,160         11,215
                                                                                          ======         ======
     Income taxes                                                                          1,391            400
                                                                                           =====            ===
Net change in unrealized gains (losses) on securities
   available-for-sale, net of tax                                                        (4,357)            481
                                                                                         =======            ===
Supplemental disclosure - non-cash information:
  Transfer from loans to real estate owned                                                   161             86
                                                                                             ===             ==
</TABLE>
                                     Page 8

<PAGE>

Northeast Pennsylvania Financial Corp.
Notes to Consolidated Financial Statements (unaudited)

1.       Summary of Significant Accounting Policies

         Basis of Financial Statements Presentation

         The  accompanying  consolidated  financial  statements were prepared in
         accordance  with  instructions  to Form  10-Q,  and  therefore,  do not
         include information or footnotes necessary for a complete  presentation
         of  financial  position,  results  of  operations  and  cash  flows  in
         conformity with generally accepted accounting principles.  However, all
         normal recurring  adjustments which, in the opinion of management,  are
         necessary for a fair  presentation  of the financial  statements,  have
         been included. These financial statements should be read in conjunction
         with the audited financial statements and the notes thereto included in
         the Company's  Annual  Report for the period ended  September 30, 1998.
         The results for the nine months ended June 30, 1999 are not necessarily
         indicative  of the  results  that may be  expected  for the year  ended
         September 30, 1999.

         Business

         Northeast  Pennsylvania  Financial Corp. (the "Company") is the holding
         company for First Federal Bank.  The  Company's  principal  subsidiary,
         First Federal Bank, serves Northeast and Central  Pennsylvania  through
         eleven full service office  locations and two loan production  offices.
         The Bank provides a wide range of banking  services to  individual  and
         corporate  customers.  The Company is subject to competition from other
         financial  institutions  and other  companies  that  provide  financial
         services.  The Company is subject to the regulations of certain federal
         agencies  and  undergoes  periodic  examinations  by  those  regulatory
         authorities.

         Principles of Consolidation and Presentation

         The  accompanying  financial  statements  of the  Company  include  the
         accounts of First Federal Bank,  Abstractors,  Inc.,  and FIDACO,  Inc.
         First Federal Bank and Abstractors, Inc., a title insurance agency, are
         wholly-owned  subsidiaries  of Northeast  Pennsylvania  Financial Corp.
         FIDACO,  Inc. is an inactive  subsidiary  of First Federal Bank and its
         only major asset is an  investment  in Hazleton  Community  Development
         Corporation.  All material inter-company balances and transactions have
         been   eliminated   in   consolidation.   Prior   period   amounts  are
         reclassified,  when  necessary,  to  conform  with the  current  year's
         presentation.

         Earnings per Share

         Earnings  per share  (EPS),  basic and  diluted,  were $0.27 and $0.25,
         respectively,  for the three  months  ended June 30,  1999  compared to
         $0.17 for the three months  ended June 30,  1998,  and $0.65 and $0.62,
         respectively,  for the nine  months  ended June 30,  1999,  compared to
         ($0.16) for the nine months ended June 30, 1998.

                                     Page 9


<PAGE>

<TABLE>
<CAPTION>

         The following table presents the  reconciliation  of the numerators and
         denominators of the basic and diluted EPS computations.

                                                            Three months ended                Nine months ended
                                                                 June 30,                           June 30,
                                                            1999             1998            1999             1998
                                                              (Dollars in thousands, except per share data)
<S>                                                        <C>           <C>              <C>             <C>

Net Income                                                  $1,380            $991           $3,593          $(942)
                                                            ======            ====           ======         ======
Basic:
Weighted average shares issues                           6,427,350       6,427,350        6,427,350       6,427,350
Less:  Unallocated/unearned shares held by stock
   benefit plans                                         (771,282)       (514,188)        (713,836)       (514,188)
Less:  Weighted Treasury shares                          (532,729)               -        (230,795)               -
Plus:  ESOP shares released
   or committed to be released                             66,418           6,428           57,132            6,428
                                                         --------       ---------        ---------        ---------
                                                        5,189,757       5,919,590        5,539,851        5,919,590
                                                         =========       =========        =========       ==========

Earnings per share  - basic                                  $0.27           $0.17            $0.65         $(0.16)
                                                             =====           =====            =====         =======


                                                            Three months ended                Nine months ended
                                                                 June 30,                           June 30,
                                                            1999             1998            1999             1998
                                                              (Dollars in thousands, except per share data)

Diluted:

Net Income                                                  $1,380            $991           $3,593          $(942)
                                                            ======            ====           ======          ======
Basic weighted shares outstanding                        5,189,757       5,919,590        5,539,851       5,919,590
Dilutive Instruments:
  Dilutive effect of stock awards                          242,438               -          243,089       -
                                                           -------               -          -------       -
                                                         5,432,195       5,919,590        5,782,940       5,919,590
                                                         =========       =========        =========      ==========

Earnings per share - diluted                                 $0.25           $0.17            $0.62         $(0.16)
                                                             =====           =====            =====         =======
</TABLE>


2.        Recent Accounting Pronouncements

         In September  1997,  the Financial  Accounting  Standards  Board issued
         Statement of Financial Accounting Standard No. 131,  "Disclosures About
         Segments  of an  Enterprise  and  Related  Information."  SFAS No.  131
         establishes  standards  for the way that  public  business  enterprises
         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  shareholders.  It also  establishes  standards  for  related
         disclosures  about products and services,  geographic  areas, and major
         customers.  SFAS No. 131 is  effective  for  financial  statements  for
         fiscal years beginning after December 15, 1997.  Management has not yet
         determined the impact,  if any, of this statement on the Company.  This
         statement  requires  changes  in  disclosures  and would not affect the
         financial condition or operating results of the company.


         In February 1998, the FASB issued SFAS No. 132, "Employer's Disclosures
         About  Pensions and Other Post  Retirement  Benefits."  This  Statement
         revises employers'  disclosures about pension and other post-retirement
                                    Page 10
<PAGE>

         benefit  plans.  It does not change the  measurement  or recognition of
         those plans. It standardizes  the disclosure  requirements for pensions
         and other post-retirement benefits to the extent practicable,  requires
         additional  information on changes in the benefit  obligations and fair
         values of plan  assets that will  facilitate  financial  analysis,  and
         eliminates  certain  disclosures that are no longer useful as they were
         when "FASB Statements No. 87, Employers'  Accounting for Pensions,  No.
         88,  Employers'  Accounting for Settlements and Curtailments of Defined
         Benefit  Pension  Plans  and for  Termination  Benefits,  and No.  106,
         Employers'   Accounting   for   Post-retirement   Benefits  Other  Than
         Pensions," were issued.  This statement requires changes in disclosures
         and will not affect the financial condition or operating results of the
         Company.  This  Statement is effective  for the fiscal years  beginning
         after December 15, 1997.

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments and Hedging  Activities."
         This  statement  (as  amended  by SFAS  137 in June  1999)  establishes
         accounting  and  reporting   standards  for   derivative   instruments,
         including certain derivative  instruments  embedded in other contracts,
         (collectively  referred to as derivatives) 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. The accounting for changes in the fair value
         of a derivative  depends on the intended use of the  derivative and the
         resulting designation.  If certain conditions are met, a derivative may
         be specifically designated as (a) a hedge of the exposure to changes in
         the fair value of a recognized  asset or  liability or an  unrecognized
         firm commitment,  (b) a hedge of the exposure to variable cash flows of
         a forecasted  transaction,  or (c) a hedge of certain foreign  currency
         exposures. SFAS 133 as amended, is effective for all fiscal quarters of
         fiscal  years  beginning  after  June 15,  2000.  Earlier  adoption  is
         permitted. The Company adopted SFAS 133 in its fiscal fourth quarter of
         1998,  including its provision for the reclassification of investments,
         resulting   in  a   $56.2   million   transfer   of   securities   from
         held-to-maturity to available-for-sale.

         3.       Conversion to Stock Form of Ownership

         The Company is a business  corporation  formed at the  direction of the
         Bank under the laws of  Delaware  on December  16,  1997.  On March 31,
         1998: (i) the Bank converted from a federally  chartered mutual savings
         and loan association to a federally  chartered stock savings bank; (ii)
         the Bank issued all of its  outstanding  capital  stock to the Company;
         and (iii) the Company consummated its initial public offering of common
         stock, par value $.01 per share (the "Common  Stock"),  by selling at a
         price of $10.00 per share,  5,437,062 shares of Common Stock to certain
         eligible account holders of the Bank who had subscribed for such shares
         (collectively,  the  "Conversion"),  by selling  514,188  shares to the
         Bank's Employee Stock Ownership Plan and related trust ("ESOP"), and by
         contributing  476,100  shares  of  Common  Stock to The  First  Federal
         Charitable  Foundation  (the  "Foundation"),  a  charitable  foundation
         dedicated  to the  communities  served by the Bank.  The  common  stock
         contributed by the Company to the Foundation at a value of $4.8 million
         was  charged to expense.  The  Conversion  resulted in net  proceeds of
         $52.1  million,  after  expenses of $2.2  million.  Net proceeds of $25
         million  were  invested  in the Bank to  increase  the Bank's  tangible
         capital to 13.3% of the Bank's total adjusted assets.
                                    Page 11
<PAGE>

         The  Bank  established  a  liquidation  account  at  the  time  of  the
         conversion  in an amount equal to the equity of the Bank as of the date
         of its latest balance sheet date,  September 30, 1997, contained in the
         final  Prospectus  used  in  connection  with  the  Conversion.  In the
         unlikely event of a complete liquidation of the Bank, (and only in such
         an event), eligible depositors who continue to maintain accounts at the
         Bank shall be entitled to receive a distribution  from the  liquidation
         account.  The amount of the liquidation account decreases to the extent
         the balances of eligible  deposits  decrease.  The liquidation  account
         approximated $15.3 million at September 30, 1998.

         The  Company may not  declare  nor pay  dividends  on its stock if such
         declaration   and  payment  would   violate   statutory  or  regulatory
         requirements.

         In addition to the 16,000,000  authorized  shares of common stock,  the
         Company authorized 2,000,000 shares of preferred stock with a par value
         of $0.01 per share (the "Preferred  Stock").  The Board of Directors is
         authorized,  subject to any  limitations  by law,  to  provide  for the
         issuance of the shares of preferred stock in series,  to establish from
         time to time the number of shares to be included  in each such  series,
         and to fix the  designation,  powers,  preferences,  and  rights of the
         shares of each  such  series  and any  qualifications,  limitations  or
         restriction  thereof.  As of June 30,  1999,  there  were no  shares of
         preferred stock issued.

                                    Page 12
<PAGE>

<TABLE>
<CAPTION>

4.       Loans

          Loans are summarized as follows:                          June 30,              September 30,
                                                                      1999                   1998
                                                                        (Dollars in thousands)
<S>                                                                   <C>                   <C>

          Real Estate loans:
            One-to four-family                                        $189,595              $ 176,924
            Multiple family and commercial                              28,425                 11,938
            Construction                                                 3,290                  3,759
                                                                         -----                  -----
          Total real estate loans                                      221,310                192,621
                                                                       -------                -------

          Consumer Loans:
            Home equity loans and lines of credit                       65,602                 52,244
            Automobile                                                  31,540                 24,589
            Education                                                    2,555                  2,351
            Unsecured lines of credit                                    1,710                  1,589
            Other                                                        5,349                  3,423
                                                                         -----                  -----
          Total consumer loans                                         106,756                 84,196
                                                                       -------                 ------
          Commercial loans                                              17,189                  9,742
                                                                        ------                  -----
          Total loans                                                  345,255                286,559
                                                                       -------                -------
            Less:
               Allowance for loan losses                                (2,520)                (2,273)
               Deferred loan origination fees                           (1,359)                (1,580)
                                                                     ----------              ---------
          Total loans, net                                           $ 341,376               $282,706
                                                                     =========               ========
</TABLE>
<TABLE>
<CAPTION>

    Allowance for loan losses is summarized as follows:

                                       For the nine                                               For the nine
                                       months ended               For the year ended              months ended
                                       June 30, 1999              September 30, 1998              June 30, 1998
                                       -------------              ------------------              -------------
<S>                                    <C>                        <C>                             <C>

Balance, beginning of period              $ 2,273                       $ 1,272                      $ 1,272
Charge-offs                                  (99)                          (76)                         (36)
Recoveries                                      3                            18                            7
Provision for loan losses                     343                         1,059                          779
                                              ---                         -----                          ---
Balance, end of period                    $ 2,520                       $ 2,273                      $ 2,022
                                          =======                       =======                      =======
</TABLE>


5.       Deposits
<TABLE>
<CAPTION>

         Deposits consist of the following major classifications (in thousands):

                                                                      June 30, 1999             September 30, 1998
                                                                      -------------             ------------------
                                                                                 Percent                     Percent
                                                                      Amount     of Total          Amount    of Total
                                                                ------------- ------------- -------------- ------------
<S>                                                               <C>             <C>           <C>           <C>

          Savings accounts (passbook, statement, clubs)              $71,380        19.6%        $ 69,956       21.6%
          Money market accounts                                       20,723         5.7%          16,368        5.0%
          Certificates of deposit less than $100,000                 183,776        50.4%         159,918       49.4%
          Certificates of deposit greater than $100,000(1)            42,014        11.5%          36,150       11.2%
          NOW Accounts                                                32,445         8.9%          31,182        9.6%
          Non-interest bearing deposits                               14,142         3.9%          10,431        3.2%
                                                                      ------         ----          ------        ----
          Total deposits at end of period                          $ 364,480      100.00%        $324,005      100.0%
                                                                   =========      =======        ========      ======
<FN>


         (1) Deposit balances in excess of $100,000 are not federally insured.
</FN>
</TABLE>
                                    Page 13


<PAGE>

Item 2            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

In  addition  to  historical   information,   this  10-Q  may  include   certain
forward-looking  statements  based  on  current  management  expectations.   The
Company's   actual  results  could  differ   materially  from  those  management
expectations.  Factors  that could  cause  future  results to vary from  current
management  expectations  include,  but are not  limited  to,  general  economic
conditions,  legislative and regulatory changes, monetary and fiscal policies of
the  federal  government,  changes in tax  policies,  rates and  regulations  of
federal,  state and local tax  authorities,  changes in interest rates,  deposit
flows,  the cost of  funds,  demand  for loan  products,  demand  for  financial
services, competition,  changes in the quality or composition of the Bank's loan
and  investment  portfolios,  changes  in  accounting  principles,  policies  or
guidelines,  avoidance of any adverse effect as a result of the Year 2000 issue,
and  other  economic,   competitive,   governmental  and  technological  factors
affecting  the Company's  operations,  markets,  products,  services and prices.
Further  description of the risks and uncertainties to the business are included
in detail in Section B, Management  Strategy;  Section C, Management of Interest
Rate Risk and Market  Risk  Analysis;  and  Section  G,  Liquidity  and  Capital
Resources.

A.       General

The  Company is the holding  company  for First  Federal  Bank (the  "Bank"),  a
federally chartered capital stock savings bank regulated by the Office of Thrift
Supervision ("OTS"). The Bank'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
Bank's provision for loan losses,  loan and security sales,  service charges and
other fee income,  and non-interest  expense.  The Bank's  non-interest  expense
principally consists of compensation and employee benefits, office occupancy and
equipment expense,  professional fees, federal deposit insurance premiums,  data
processing,   and  advertising  and  business  promotion  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.

The Bank  acquired the assets and  liabilities  of the Danville  branch of Omega
Bank in June 1999. This increases the Bank's total number of branches to eleven,
while adding the first branch in Montour County.

B.        Management Strategy

Since  fiscal  year  1993,  the  Bank's  operating  strategy  has been that of a
community-based  bank, offering a wide variety of savings products to its retail
customers, while concentrating on residential and construction lending and, to a
lesser  extent,  consumer  lending and small  business and municipal  commercial
lending. In order to promote long-term financial strength and profitability, the
Bank's operating  strategy has focused on: (i) maintaining  strong asset quality
by originating  one-to  four-family  loans in its market area;  (ii)  increasing
profitability  by emphasizing  higher  yielding  consumer and commercial  loans;
(iii) managing its interest rate risk by emphasizing  shorter-term,  fixed-rate,
one-to four-family loans, in addition to consumer and commercial loans; limiting
                                    Page 14
<PAGE>

its retention of  newly-originated  longer-term  fixed-rate  one-to  four-family
loans; soliciting longer-term deposits;  utilizing longer-term advances from the
Federal Home Loan Bank of Pittsburgh  ("FHLB");  and investing in investment and
mortgage-related securities having shorter estimated durations; (iv) meeting the
banking needs of its customers  through expanded  products and improved delivery
systems by taking  advantage of  technological  advances;  and (v) maintaining a
strong regulatory capital position.

The Bank has attempted to diversify and expand its loan products to better serve
its  customer  base by  placing a  greater  emphasis  on  consumer  lending  and
commercial lending, primarily to small businesses and municipalities. During the
quarter the Bank hired two experienced  commercial lenders to provide additional
coverage in market areas where we have  determined  an  opportunity  exists.  In
addition to the two  commercial  lenders,  the Bank has hired a loan  production
officer in Berks  county.  During the  quarter  the Bank  completed  a series of
transactions,  which sold fixed rate long term  mortgages  and  investments  and
purchased adjustable rate mortgages and higher yielding investments.  The result
of these  transactions was to increase income for the current quarter and have a
positive impact on net interest margin while reducing interest rate risk in this
transaction.

C.       Management of Interest Rate Risk and Market Risk Analysis

The  principal  objective  of the Bank's  interest  rate risk  management  is to
evaluate the interest  rate risk  included in certain  balance  sheet  accounts,
determine  the level of risk  appropriate  given the Bank's  business  strategy,
operating  environment,  capital  and  liquidity  requirements  and  performance
objectives, and manage the risk consistent with the Board of Directors' approved
guidelines.  Through such management, the Bank seeks to reduce the vulnerability
of its  operations  to changes in interest  rates.  The Board of  Directors  has
established an Asset  Liability  Committee  ("ALCO"),  which is responsible  for
reviewing the Bank's  asset/liability  policies and interest rate risk position.
The ALCO meets on a quarterly  basis and reports  trends and interest  rate risk
position to the Finance  Committee  of the Board of  Directors.  It then reviews
with them its activities and strategies,  the effect of those  strategies on the
Bank's net interest  margin,  the market value of the portfolio,  and the effect
the changes in interest  rates will have on the Bank's  portfolio  and  exposure
limits.  The extent of the  movement of interest  rates is an  uncertainty  that
could have a negative impact on the earnings of the Bank.

In recent  years,  the Bank has  utilized  the  following  strategies  to manage
interest rate risk: (i)  emphasizing the origination and retention of fixed-rate
mortgages   having   terms  of  maturity  of  not  more  than   fifteen   years,
adjustable-rate  and  shorter-term  loans,  commercial loans and consumer loans;
(ii) limiting the  origination of all greater than 15-year  fixed-rate  mortgage
loans to no more  than 25% of the  total  originations  in a given  year;  (iii)
selling,  in the secondary market,  fixed-rate mortgage loans with terms greater
than 15 years,  while  retaining the servicing  rights,  and; (iv)  investing in
shorter-term and, to a lesser extent, adjustable-rate securities which generally
bear  lower  yields,  compared  to  longer-term  investments,  but which  better
position the Bank for increases in market interest rates.

Management   believes   that   reducing  its  exposure  to  interest  rate  risk
fluctuations  will  enhance  long-term   profitability.   However,   the  Bank's
strategies may adversely  impact net interest income due to lower initial yields
on some of these investments in comparison to longer-term fixed-rate investments
and whole loans. To promote a higher yield on its investment securities while at
the same time addressing the Bank's interest rate risk management policies,  the
Bank  has  invested  a  significant  portion  of  its  portfolio  of  investment
securities in  longer-term  (more than five years)  federal  agency  obligations
                                    Page 15
<PAGE>

which have call  features.  Given the rates of such  securities in comparison to
current market interest rates, the Bank anticipates the substantial  majority of
such securities will be called prior to their contractual maturity.  However, if
changes in interest  rates exceed ranges  anticipated  by the Bank in estimating
the anticipated life of such callable  securities,  the Bank would be subject to
increased interest rate or reinvestment risk,  depending on the direction of the
change in market interest rates.

D.       Net Portfolio Value

The Bank's  interest  rate  sensitivity  is primarily  monitored  by  management
through  the use of a  model  which  estimates  the  change  in the  Bank's  net
portfolio value ("NPV") over a range of interest rate  scenarios.  Such analyses
are prepared by a third party for the Bank. NPV is the present value of expected
cash flows from assets,  liabilities,  and off-balance sheet contracts.  The NPV
ratio, under any interest rate scenario,  is defined as the NPV in that scenario
divided by the market value of assets in the same scenario.  The model estimates
loan prepayment rates, reinvestment rates, and deposit decay rates. The OTS also
produces a similar  analysis  using its own model,  based upon data submitted on
the Bank's quarterly Thrift  Financial  Reports,  the results of which vary from
the Bank's model due to differences in assumptions utilized. The following table
sets forth the Bank's internal NPV as of June 30, 1999.
<TABLE>
<CAPTION>


                                                                                               NPV as % of Portfolio
     Change in                                                                                    Value of Assets
   Interest Rates
  In Basis Points
    (Rate Shock)

                                             Net PortfolioValue
                          ---------------------------------------------------------     -------------------------------------
                                                                                              NPV
                             Amount               $ Change             % Change              Ratio              Change (1)
-----------------------------------------------------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                            <C>               <C>                     <C>                <C>                   <C>
        300                    40,680            (24,390)                (37.48%)             7.77%                 (355)
        200                    49,612            (15,458)                (23.76%)             9.18%                 (215)
        100                    57,877             (7,193)                (11.05%)            10.37%                  (95)
       Static                  65,070                   0                   0.00%            11.32%                     0
       -100                    67,456               2,386                   3.67%            11.48%                    16
       -200                    63,985             (1,085)                 (1.67%)            10.75%                  (57)
       -300                    59,221             (5,849)                 (8.99%)             9.83%                 (149)

------------------------------------------
<FN>

(1) Expressed in basis  points
</FN>
</TABLE>

As is the case with gap  analysis,  certain  shortcomings  are  inherent  in the
methodology used in the NPV interest rate risk measurements. Modeling changes in
NPV requires the making of certain  assumptions which may or may not reflect the
manner in which actual  yields and costs  respond to changes in market  interest
rates.  In this regard,  NPV assumes that the composition of the Bank's interest
sensitive  assets and liabilities  existing at the beginning of a period remains
constant  over the period  being  measured  and also  assumes  that a particular
change  in  interest  rates  is  reflected  uniformly  across  the  yield  curve
regardless  of the  duration  to maturity or  repricing  of specific  assets and
liabilities.  Accordingly,  NPV measurements provide an indication of the Bank's
interest rate risk exposure at a particular point in time. Such measurements are
not  intended to and do not provide a precise  forecast of the effect of changes
in market  interest rates on the Bank's net interest income and will differ from
actual results.
                                    Page 16

<PAGE>

E.      Gap Analysis.

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such  assets and  liabilities  are  "interest  rate  sensitive"  and by
monitoring a bank's  interest rate  sensitivity  "gap." An asset or liability is
said to be  interest  rate  sensitive  within a specific  time period if it will
mature or reprice within that time period.  The interest rate sensitivity gap is
defined as the difference between the amount of interest-earning assets maturing
or repricing  within a specific  time period and the amount of  interest-bearing
liabilities  maturing or repricing within a period. A gap is considered positive
when the amount of interest rate sensitive assets exceeds the amount of interest
rate  sensitive  liabilities.  A gap is  considered  negative when the amount of
interest  rate  sensitive  liabilities  exceeds  the  amount  of  interest  rate
sensitive  assets.  Accordingly,  during a period of rising  interest  rates, an
institution  with a negative gap position would be in a worse position to invest
in higher  yielding  assets as compared to an  institution  with a positive  gap
position  which,  consequently,  may result in the cost of its  interest-bearing
liabilities  increasing  at a rate  faster  than its  yield on  interest-earning
assets than if it had a positive gap. During a period of falling interest rates,
an   institution   with  a  negative  gap  position   would  tend  to  have  its
interest-bearing  liabilities  repricing  downward  at a  faster  rate  than its
interest-earning assets as compared to an institution with a positive gap which,
consequently,  may tend to  positively  affect  the  growth of its net  interest
income.  At June 30,  1999,  the Bank's  cumulative  one year gap was a negative
13.2% of total  assets  compared  to a  negative  7.8% at  September  30,  1998.
September's  interest  rate  sensitivity  gap  reflects  the  impact of the Bank
prefunding  investments  which it had determined had a high  likelihood of being
called in the first fiscal quarter of 1999.  These  investments were funded with
short term FHLB advances  which were repaid in subsequent  quarter with proceeds
of called securities.

Certain shortcomings are inherent in gap analysis. For example, although certain
assets and liabilities may have similar maturities or periods to repricing, they
may react in different  degrees to changes in market interest  rates.  Also, the
interest  rates on certain  types of assets and  liabilities  may  fluctuate  in
advance of changes in market interest rates, while interest rates on other types
may lag behind changes in market rates.  Additionally,  certain assets,  such as
adjustable  rate  loans,  generally  have  features  which  restrict  changes in
interest  rates  both on a  short-term  basis  and over  the life of the  asset.
Further,  in the  event of  changes  in  interest  rates,  prepayment  and early
withdrawal  levels would likely deviate  significantly  from prior  projections.
Finally,  the ability of many borrowers to service their  adjustable-rate  loans
may decrease in the event of an interest rate increase.

F.       Non-Performing Assets
<TABLE>
<CAPTION>

The following  table presents  information  regarding the Bank's  non-performing
assets at the dates indicated:
                                                                               June 30,           September 30,
                                                                                 1999                  1998
<S>                                                                             <C>                <C>

Non-performing loans:
 Non-accrual loans                                                              $ 1,053            $   1,239
Real estate owned and other repossessed assets                                       75                  112
                                                                                     --                  ---
     Total non-performing assets                                                $ 1,128              $ 1,351
                                                                                =======              =======

         Total non-performing loans as a percentage of total loans                0.31%                0.44%
         Total non-performing assets as a percentage of total assets              0.19%                0.26%

</TABLE>
                                    Page 17

<PAGE>
G.       Liquidity and Capital Resources

The  Bank's  primary  sources  of funds are  deposits,  principal  and  interest
payments on loans, mortgage-backed and investment securities, and FHLB advances.
The Bank  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 Bank 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 Bank's current required  liquidity ratio is 4.0%. At June 30, 1999 and 1998,
the Bank's liquidity ratios were 12.4% and 14.6%, respectively.

At June 30, 1999, the Bank exceeded all of its regulatory  capital  requirements
with a  tangible  capital  level of $56.8  million,  or 10.0% of total  adjusted
assets,  which is above the  required  level of $8.6  million,  or 1.5%;  a core
capital level of $56.8  million,  or 10.0% of total  adjusted  assets,  which is
above the required level of $17.0 million,  or 3.0%; and a risk-based capital of
$60.6 million,  or 21.2% of  risk-weighted  assets,  which is above the required
level of $22.9 million, or 8.0%.

The Bank's most liquid assets are cash and cash  equivalents  and its investment
and mortgage-related securities  available-for-sale.  The levels of these assets
are  dependent  on  the  Bank's  operating,  financing,  lending  and  investing
activities  during any given period. At June 30, 1999, cash and cash equivalents
and investment and mortgage-related securities available-for-sale totaled $197.7
million, or 33.5% of total assets.

The Bank has other sources of liquidity if a need for  additional  funds arises,
including  FHLB  advances.  At June 30,  1999,  the Bank had  $142.0  million in
advances  outstanding  from the FHLB,  and had an additional  overall  borrowing
capacity from the FHLB of $260.3 million.  Depending on market  conditions,  the
pricing of deposit products and FHLB advances,  the Bank may continue to rely on
FHLB borrowings to fund asset growth.

At June 30, 1999,  the Bank had  commitments to originate and purchase loans and
unused  outstanding  lines of credit and  undisbursed  proceeds of  construction
mortgages  totaling  $42.3  million.  The  Bank  anticipates  that it will  have
sufficient  funds  available to meet these  commitments.  Certificate  accounts,
including Individual Retirement Account ("IRA") accounts, which are scheduled to
mature in less than one year from June 30, 1999,  totaled  $176.7  million.  The
Bank expects that substantially all of the maturing certificate  accounts,  with
the exception of jumbo certificates of deposit,  will be retained by the Bank at
maturity. At June 30, 1999, the Bank had $32.2 million in jumbo certificates.

In June 1999,  the Bank  acquired  the assets and  liabilities  of the  Danville
branch of Omega Bank.  This is the eleventh branch office for First Federal Bank
and the first one in Montour  County.  During  June the Bank also  received  the
approval to open an additional  office in the  Shavertown  area of Back Mountain
and a  supermarket  branch in Freeland.  Both of these  branches are expected to
open in the  fourth  quarter  of  fiscal  1999.  The Bank has also  hired a loan
production  officer operating in Berks County. It is expected that this LPO will
enhance the Bank's  mortgage  lending  capabilities.  In June 1999,  the Company
                                    Page 18
<PAGE>

received  approval from the  Pennsylvania  Department of Banking to form a trust
company,  Northeast  Pennsylvania Trust Co. (the "Trust"). The Trust is expected
to begin  operations in the fourth fiscal  quarter of 1999. The Trust will serve
current customers and potentially other financial institutions' customers,  with
trust,  estate  and  asset  management  services  and  products.  Management  is
currently evaluating further expansion.

The initial impact of the  Conversion on the liquidity and capital  resources of
the Bank was significant as it substantially  increased the liquid assets of the
Bank and the capital  base on which the Bank  operates.  Additionally,  the Bank
invested  the  substantial  majority  of  its  conversion  proceeds  in  readily
marketable  investment  grade  securities  which, if liquidity needs  developed,
could be sold by the Bank to provide additional liquidity. At June 30, 1999, the
Bank  had  total  equity,  determined  in  accordance  with  generally  accepted
accounting  principles,  of $57.3  million,  or 10.0%,  of total  assets,  which
approximated  the Bank's  regulatory  tangible  capital at that date of 10.0% 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.

H.       Year 2000 Disclosure

The following  section contains  forward-looking  statements which involve risks
and uncertainties. The actual impact on the Company of the Year 2000 issue could
materially  differ  from  that  which  is  anticipated  in  the  forward-looking
statements as a result of certain factors identified below.

 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.  Year 2000 issues  result from the  inability of many  computer
programs or computerized equipment to accurately calculate,  store or use a date
after  December 31, 1999.  The erroneous  date can be interpreted in a number of
different  ways,  the most common being Year 2000  represented as the year 1900.
Correctly  identifying  and  processing  Year 2000 as a leap year may also be an
issue. These  misinterpretations  of various dates in the Year 2000 could result
in a system failure or  miscalculations  causing  disruptions of normal business
operation  including,  among  other  things,  a temporary  inability  to process
transactions,   track  important  customer  account   information,   or  provide
convenient access to this information.

The  Bank  is  subject  to the  regulation  and  oversight  of  various  banking
regulators,  which  requires  complying with specific  timetables,  programs and
guidance regarding Year 2000 issues.  Regulatory  examination of the Bank's Year
2000 programs are conducted on a periodic basis and reports are submitted by the
Bank to the banking  regulators on a periodic  basis.  In addition,  reports are
currently provided on a monthly basis to the Board of Directors.

Company  State of  Readiness.  The Company has  completed an  assessment  of its
financial  and  operational  software  systems in  accordance  with the  various
regulatory  agency  guidance  documents.  The Company  maintains an inventory of
hardware and software  systems,  which  ranges from  mission  critical  software
systems  and  personal   computers  to  security  and  video  equipment   backup
generators,  and general  office  equipment.  The Company  has  prioritized  its
hardware and software systems to focus on the most critical systems first.

For most of its mission critical software systems, the Company relies on a major
data  processing  provider in the  banking  industry.  The Company has  received
written  representations and warranties from that vendor that the system is Year
                                    Page 19
<PAGE>

2000  compliant.  The Company  has  successfully  completed  testing its mission
critical systems.  The Company is also upgrading personal computers to meet both
system and Year 2000 requirements.  In connection with the Company's assessment,
a number of the less  significant  third party vendors  advised the Company that
their  software is Year 2000  compliant,  and the Company has fully  tested that
software.

The Company has communicated with all of its significant vendors,  suppliers and
large  commercial  customers  to  determine  the extent to which the  Company is
vulnerable  to those  third-parties'  failure  to  remedy  their  own Year  2000
problems.  In the event that any of them do not  successfully  achieve Year 2000
compliance in a timely  manner,  the Company's  business or operations  could be
adversely  affected.  If significant  suppliers fail to meet Year 2000 operating
requirements,   the  Company  intends  to  engage  alternative  suppliers.   For
insignificant  vendors,  the Company will not necessarily validate that they are
Year 2000 compliant. No insignificant vendor has responded that they will not be
compliant by March 1999. The Bank has surveyed its large commercial customers as
to their Y2K preparedness.  Respondents have acknowledged their awareness of Y2K
issues and currently  believe that these issues will not materially affect their
financial condition,  liquidity,  or results of operations.  The extent to which
customers  are Y2K  compliant  is  considered  in the Bank's  decision to extend
credit.

Contingency  Plan.  The Company is in the process of obtaining  back-up  service
providers  and  assessing  the  potential  adverse  risks  to the  Company.  The
Company's  contingency  plans involve the use of manual labor to compensate  for
the loss of certain  automated  computer  systems and  inconveniences  caused by
disruption in command systems.

The  contingency  plan  focuses  on  mission  critical  functions,  third  party
relationships,  environmental  system,  proprietary  programs,  and non-computer
related systems.  The contingency  plan has identified  completion  dates,  test
dates and trigger dates.  The  contingency  plan is primarily  based upon manual
back up systems and as such includes all necessary forms and procedures in order
to be certain that all required  information can be appropriately  recorded.  In
addition, this plan includes adequate staffing on site during the Year 2000 date
change  weekend,  to be certain that the Year 2000 changes have been  adequately
addressed.  In  addition,  in the event of any  other  unforeseen  problems  the
Company would follow its current computer business continuation plans until such
problems are corrected.

Cost of Year 2000.  Over the past several years,  the Company's  Technology Plan
has called for an aggressive  schedule for  installing  new systems or upgrading
old systems in order to build a technology  infrastructure  which will allow the
Company to offer  competitive  products  and  improve  customer  services  while
providing for internal efficiencies.  The technology improvements as part of the
Technology  Plan have  allowed  the Company to avoid  specific  costly Year 2000
issues. The Company estimates its expenditures specifically associated with Year
2000 will be $75,000  during the fiscal year ending  September  1999 and $50,000
during the fiscal year ending September 2000.

The  Company  believes  that the  costs or the  consequences  of  incomplete  or
untimely  resolution of its Year 2000 issues do not  represent a known  material
event or uncertainty  that is reasonably  likely to affect its future  financial
results,  or cause its  reported  financial  information  not to be  necessarily
indicative of future operating results or future financial  condition.  However,
if  compliance  is not achieved in a timely  manner by the Company or any of its
significant related third-parties, the Y2K issue could have a material effect on
the Company's operations and financial position.
                                    Page 20
<PAGE>

The cost of the  projects  and the date on which the  Company  plans to complete
both Year 2000  modifications and systems  conversions are based on management's
best  estimates,  which are derived  utilizing  numerous  assumptions  of future
events including the continued  availability of certain  resources,  third-party
modification  plans and other factors.  However,  there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those  plans.  Specific  factors  that  might  cause such  material  differences
include,  but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.

Risks of Year 2000.  The Year 2000 issue presents  potential  risks of uncertain
magnitude.  The risks arise both with regard to systems purchased by the Company
through third party vendors as well as those outside the control of the Company,
such as with ATM networks or credit card  processors.  These  failures may cause
delays in the  ability of  customers  to access  their funds  through  automated
teller machines,  point of sale terminals at retail  locations,  or other shared
networks.  The Year 2000  issue  also  poses  the  potential  risk for  business
disruption due to a mission critical software system failure, which could result
in  inaccurate   interest  payment   calculations,   credit   transactions,   or
record-keeping.  The Company and the OTS are closely  monitoring the progress of
the Company's  major third party vendors and, to date,  the Company is satisfied
with their  progress.  However,  if the Company,  its customers,  or vendors are
unable to resolve  Year 2000  issues in a timely  manner,  it could  result in a
material financial risk.

I.  Comparison of Financial Condition at June 30, 1999 and September 30, 1998

Total assets  increased  $66.9 million from $522.2 million at September 30, 1998
to $589.2  million at June 30, 1999.  The growth in assets was  primarily due to
increases in loans  receivable,  cash, and other assets,  which were offset by a
decrease in investment securities.

Cash and cash  equivalents  increased  $5.1  million to $8.1 million at June 30,
1999,  from $3.0 million at September 30, 1998,  primarily due to an increase in
FHLB  advances  and  deposits,  offset by the  purchase of  approximately  $45.0
million in loans, increased loan originations,  purchase of the Company's common
stock and additional shares for the employee stock award program.

Securities  classified as held-to-maturity  decreased $3.4 million, or 10.8%, to
$28.3 million at June 30, 1999, while  available-for-sale  securities  increased
$448,000,  from $189.1  million at September 30, 1998 to $189.5  million at June
30, 1999. These changes were primarily  attributable to the effect of called and
sold  securities,  net of security  purchases,  combined with an adjustment  for
unrealized gain/loss on available-for-sale securities.

Loans  increased  $58.7  million to $341.4  million at June 30,  1999.  This was
primarily due to a $16.5 million increase in multiple family and commercial real
estate loans due to marketing efforts and competitive  pricing of such products.
Home equity loans and lines of credit  increased  $13.4 million as a result of a
$10.0 million  purchase of loans from another  financial  institution,  combined
with increased  originations due to marketing efforts and competitive pricing of
such loans.  Mortgage loans  increased  $12.7 million due to the  acquisition of
$5.6 million in loans from the branch purchase of Omega Bank,  combined with the
net effect of loans purchased from other financial  institutions  and loans sold
to government  agencies.  Other consumer loans increased $9.2 million due to the
purchase of $4.0 million in various  consumer loans from the branch  purchase of
                                    Page 21
<PAGE>

Omega Bank, combined with increased indirect auto loan originations.  Commercial
loans  increased  $7.4  million  due to  competitive  pricing of such  products,
combined  with the  acquisition  of $2.4  million in  commercial  loans from the
branch purchase of Omega Bank.

Prepaid expenses and other assets increased $4.7 million to $7.6 million at June
30,  1999.  This  change was  primarily  due to a $2.6  million  increase in the
deferred income tax benefit resulting from a decline in unrealized  gain/loss on
available-for-sale  securities,   combined  with  a  $1.5  million  increase  in
intangible  assets  resulting from goodwill  relating to the purchase of the new
branch  office.  The goodwill and core deposit  premium will be amortized over a
period of six to ten years.

Total deposits increased $40.5 million,  or 12.5%, to $364.5 million at June 30,
1999. This increase in deposits was primarily due to a $29.7 million increase in
certificates  of deposit  from $196.1  million at  September  30, 1998 to $225.8
million  at June 30,  1999,  as a result  of  increased  marketing  efforts  and
competitive  pricing of such  products,  combined  with the  assumption of $11.3
million in various  certificate of deposit  accounts from the branch purchase of
Omega Bank. Also  contributing to this change was an increase of $9.4 million in
checking  accounts due to increases in money market accounts of $4.3 million and
non-interest  bearing  demand  accounts of $3.8 million,  resulting  from a more
active  solicitation  of such  accounts,  combined with the  acquisition of $2.6
million in various  checking  accounts  from the branch  purchase of Omega Bank.
Savings accounts  increased $1.4 million due to accounts  acquired in the branch
purchase of Omega Bank.

FHLB advances  increased $36.5 million from $106.5 million at September 30, 1998
to  $143.0  million  at  June  30,  1999.  This  was a  result  of  management's
determination to place increased  emphasis on the utilization of FHLB borrowings
to fund asset growth.  FHLB  borrowings have been invested at yields higher than
the cost of the borrowed funds thereby increasing net interest income.

Total equity  decreased  $11.4 million to $76.0  million at June 30, 1999.  This
decrease in equity  resulted  primarily  from the  repurchase  of the  Company's
common stock, at a cost of $7.6 million,  along with a $4.3 million  decrease in
unrealized  gain (loss) on securities.  Contributing  to this decline was a $3.3
million  acquisition  of stock for stock benefit  plans.  These  decreases  were
offset by operating  results for the period  resulting in a net increase of $3.0
million in retained earnings.

J.  Comparison of Operating Results for the Three Months ended June 30, 1999
    and June 30, 1998

General.  The Company had net income of $1.4  million for the three months ended
June 30,  1999,  compared to net income of $991,000  for the three  months ended
June 30, 1998,  an increase of $389,000 or 39.3%.  This  increase was  primarily
attributable  to a $1.6 million rise in interest  income,  as well as a $448,000
increase in  non-interest  income,  offset by increases in interest  expense and
non-interest expense of $1.2 million and $647,000, respectively.

Interest Income.  Total interest income increased $1.6 million,  or 20.4%,  from
$7.9  million for the three  months  ended June 30, 1998 to $9.5 million for the
three months ended June 30, 1999. This was primarily due to a $104.4 million, or
23.8%,  increase in the average balance of interest earning assets,  offset by a
slight  decrease  in the  weighted  average  yield on interest  earning  assets.
                                    Page 22
<PAGE>

Specifically,  interest income on loans increased $846,000 from $5.4 million for
the period  ending June 30, 1998 to $6.3  million.  This was  primarily due to a
$571,000  increase in interest  income on consumer  loans due to a $31.6 million
increase in the average  balance of these loans.  Interest  income on commercial
loans increased  $263,000 due to a $4.9 million  increase in the average balance
of these loans. Interest income on securities increased $773,000 to $3.3 million
for the three  months  ended  June 30,  1999  primarily  due to a $69.3  million
increase in average balances of investment securities.

Interest Expense.  Interest expense increased $1.2 million,  or 32.3%, from $3.8
million to $5.0  million for the three  months  ended June 30, 1998 and June 30,
1999, respectively. The increase in interest expense was primarily the result of
an $82.4  million  increase in the average  balance of FHLB  advances  and other
borrowings,  which  increased  from  $46.2  million  at June 30,  1998 to $128.5
million at June 30, 1999.  The increase in FHLB advances  reflects  management's
decision  to  more  heavily   utilize  FHLB   advances  to  fund  asset  growth.
Contributing  to this  change was a $169,000  increase  in  interest  expense on
certificates of deposit, which was the result of a $24.8 million increase in the
average balance of these accounts.

Provision  for Loan Losses.  The Bank's  provision for loan losses for the three
months  ended June 30, 1999 was  $149,000  compared  to  $292,000  for the three
months  ended  June 30,  1998.  The  provision  for loan  losses  increases  the
allowance  for  loan  losses  which is  maintained  at a level  that  management
considers  adequate to provide for estimated  losses based upon an evaluation of
known and inherent risks in the loan  portfolio.  Loan losses,  other than those
incurred on loans held for sale, are charged  directly against the allowance and
recoveries  on  previously   charged-off  loans  are  added  to  the  allowance.
Management's  evaluation is based upon, among other things,  delinquency trends,
the volume of  non-performing  loans,  prior loss  experience of the  portfolio,
current economic  conditions,  and other relevant factors.  Although  management
believes  it has  used the  best  information  available  to it in  making  such
determinations,  and that the  allowance  for loan  losses is  adequate,  future
adjustments  to the allowance may be necessary,  and net income may be adversely
affected if  circumstances  differ  substantially  from the assumptions  used in
determining  the  level  of  the  allowance.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the  Company's  allowance  for losses on loans.  Such  agencies  may require the
Company to recognize  additions to the allowance based on their judgements about
information available to them at the time of their examination.

Non-interest  Income.  Non-interest  income increased  $448,000 from $223,000 to
$671,000, for the three months ended June 30, 1999. The increase in non-interest
income was primarily due to an increase in gain on sale of loans from $14,000 to
$246,000 for the three months  ended June 30, 1999,  primarily  due to increased
sales  of  mortgage  loans  in the  current  period.  Insurance  premium  income
increased  $61,000 as a result of  closings  performed  by the  Company's  title
insurance subsidiary.  Other income increased $56,000 due to increases in rental
income,  commission earned on consumer loan insurance,  and cash surrender value
of Directors'  and Officers'  life  insurance  policies.  Contributing  to these
increases  was a $43,000  increase in service  charges and other fees  resulting
from increased customer activity on the various deposit and loan accounts.

Non-interest Expense. Total non-interest expense increased from $2.7 million for
the three  months ended June 30, 1998 to $3.4 million for the three months ended
June 30, 1999.  This increase was due  primarily to an increase in  compensation
and employee benefits of $276,000, or 17.0%, for the three months ended June 30,
1999  primarily  due to  amortization  of  goodwill  associated  with branch and
                                    Page 23
<PAGE>

subsidiary   acquisitions,   the  expenses  associated  with  branch  expansion,
establishment  of the employee  stock award  program,  and an  adjustment to the
employee 401(K) plan. Other non-interest  expense increased $175,000,  or 41.5%,
primarily due to amortization of goodwill  associated with branch and subsidiary
acquisitions,   increased  marketing  efforts  of  deposit  products,   employee
recruitment  expense,  supply expense,  an increase in the provision for loss on
REO, and additional tax expense associated with the corporation formed March 31,
1998.  Professional fees increased $65,000, or 69.1%, due to increased legal and
accounting fees associated with being a public company. Data processing expenses
increased $57,000 or 79.2% due to increased depreciation expense relating to new
teller and mainframe hardware and software.

Income Taxes.  The Company had an income tax provision of $330,000 for the three
months  ended June 30,  1999,  compared to a provision of $374,000 for the three
months ended June 30, 1998 resulting in effective tax rates of 19.3%, and 27.4%,
respectively.  The change in income tax expense was  attributable  to  increased
tax-free security purchases, offset by the increase in income before taxes.

K.   Comparison of Operating Results for the Nine Months ended June 30, 1999
     and June 30, 1998.

General.  For the nine months  ended June 30,  1999,  the Company  reported  net
income of $3.4  million,  compared to a $942,000 net loss for the same period in
1998.  The  loss  at  June  30,  1998  relates  to  the  one-time  $4.8  million
non-recurring  pre-tax ($3.1 million  after-tax) expense relating to the funding
of the  Foundation in connection  with the  Conversion.  The Company's  core net
earnings   (earnings   excluding  the  after-tax  impact  of  the  non-recurring
contribution) were $2.2 million for the nine months ended June 30, 1998.

Interest Income.  Total interest income increased $5.5 million,  or 25.2%,  from
$22.0  million to $27.5 million for the nine months ended June 30, 1998 and June
30, 1999, respectively, primarily due to a $123.2 million, or 30.8%, increase in
the average balance of interest  earning assets,  offset by a slight decrease in
the  weighted  average  yield on interest  earning  assets.  This  increase  was
primarily  due to a $3.7  million,  or 61.2%,  increase  in  interest  income on
securities,  to $9.7 million for the nine months ended June 30, 1999,  primarily
due to a $99.1 million increase in the average balance of such securities.

Interest income on loans also increased $1.9 million, or 11.7%, to $16.0 million
for the nine  months  ended June 30,  1999,  primarily  due to the  increase  in
interest income on consumer loans of $1.5 million,  or 35.7%, to $5.7 million at
June 30,  1999,  due to a $25.7  million  increase  in the  average  balance  of
consumer  loans from $66.0 million at June 30, 1998 to $91.7 million at June 30,
1999.  This  increase  is a result of the  purchase  of home  equity  loans from
another  financial  institution,  increased  marketing  effort  and  competitive
pricing of these loans.  Interest income on commercial loans increased $540,000,
or 47.9%, from $1.1 million at June 30, 1998 to $1.6 million at June 30, 1999.

Interest Expense.  Interest expense increased $3.1 million, or 27.5%, from $11.2
million to $14.3  million for the nine  months  ended June 30, 1998 and June 30,
1999, respectively. The increase in interest expense was primarily the result of
a  $69.0  million  increase  in the  average  balance  of FHLB  advances,  which
increased  from  $42.3  million at June 30,  1998 to $111.4  million at June 30,
1999,  offset by a slight  decrease in the  weighted  average  rate paid on such
borrowings  from 5.45% at June 30, 1998 to 5.20% at June 30, 1999.  The increase
                                    Page 24
<PAGE>

in FHLB advances  reflects  management's  decision to more heavily  utilize FHLB
advances to fund asset growth. This increase in interest expense was also due to
an overall  increase in interest  expense on deposits  primarily  due to a $19.8
million, or 10.5%, rise in the average balance of certificate accounts.

Provision for Loan Losses. The Bank's provision for loan losses was $343,000 for
the nine months  ended June 30,  1999,  compared to $779,000 for the nine months
ended June 30, 1998. The allowance is increased by the provision for loan losses
which is charged to operations.  Loan losses, other than those incurred on loans
held for sale,  are charged  directly  against the allowance  and  recoveries on
previously charged-off loans are added to the allowance.  The allowance for loan
losses is maintained at a level that  management  considers  adequate to provide
for estimated losses based upon an evaluation of known and inherent risks in the
loan  portfolio.  Management's  evaluation  is based upon,  among other  things,
delinquency trends, the volume of non-performing loans, prior loss experience of
the portfolio, current economic conditions, and other relevant factors. Although
management  believes it has used the best information  available to it in making
such determinations,  and that the allowance for loan losses is adequate, future
adjustments  to the allowance may be necessary,  and net income may be adversely
affected if  circumstances  differ  substantially  from the assumptions  used in
determining  the  level  of  the  allowance.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the  Company's  allowance  for losses on loans.  Such  agencies  may require the
Company to recognize  additions to the allowance based on their judgements about
information available to them at the time of their examination.

Non-interest   income.   The  Company   experienced  an  $869,000   increase  in
non-interest income from $556,000 to $1.4 million for the nine months ended June
30, 1998 and June 30,  1999,  respectively,  due to the largest  factor  being a
$265,000  increase  in gain on sale of loans due to sales of  mortgage  loans to
various  government  agencies.  Other income increased $193,000 primarily due to
increased  rental income and an increase in the cash surrender value of Officers
and Directors life insurance policies.  Also contributing to this increase was a
$184,000  increase in insurance  premium  income from closings  performed by the
Company's  title  insurance  subsidiary.  Service  charges  and fee income  also
increased  $147,000  primarily  due to  increased  customer  activity on various
deposit and loan accounts.

Non-interest expense. Total non-interest expense decreased from $12.2 million to
$9.7  million  for the  nine  months  ended  June 30,  1998  and June 30,  1999,
respectively,  due  primarily to a one-time $4.8 million  non-recurring  expense
relating  to the funding of the  Foundation  in March 1998.  This  decrease  was
offset by an increase in salary and benefit  expense of $1.2 million,  or 26.8%,
primarily due to the expense associated with branch expansion,  establishment of
the ESOP and stock award programs,  and an adjustment to the employee 401K plan.
Other non-interest  expense increased  $495,000,  or 43.3%,  primarily due to an
increase in advertising and public relations, resulting from increased marketing
efforts of loan and deposit products. Also contributing to the increase in other
expense were increases in general operating expenses, the provision for REO, and
tax expense  associated with the  corporation  formed March 31, 1998, as well as
amortization  of goodwill  associated  with branch and subsidiary  acquisitions.
Professional fees increased  $410,000 due to an increased amount of legal, audit
and consulting  fees  associated  with being a public  company.  Data processing
increased  $163,000 due to depreciation  expense related to the  installation of
new teller and mainframe hardware and software.

Income taxes. The Company had income tax expense of $973,000 for the nine months
ended June 30, 1999, compared to a benefit of $736,000 for the nine months ended
June 30, 1998,  resulting in an effective  tax rate of 21.3% for the nine months
                                    Page 25
<PAGE>

ended June 30, 1999. The primary reason that the 1999 effective tax rate for the
nine month period is substantially  below the statutory tax rate is the level of
tax-free income generated by the Company's tax free securities.  The increase in
income tax expense was  attributable  to the increase in income before taxes for
the nine months ended June 30,  1999.  The benefit for income taxes in the prior
year relates to the net  operating  loss  generated  by the one-time  charitable
contribution to the Foundation.

                                    Page 26


<PAGE>

Item 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Incorporated  by  reference  to Part I, Item 2,  Sections C, D and E on
pages 15-17, inclusive.

                                    Page 27

<PAGE>

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 operation.

Item 2.           Changes in Securities and Use of Proceeds

                  Not applicable.

Item 3.           Defaults Upon Senior  Securities

                  Not applicable.

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

                  None.

Item 5.           Other information

                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K

         (A)    Exhibits

                2.1        Amended Plan of Conversion (including the Federal
                           Stock Charter and Bylaws of First Federal Bank).*

                3.1        Certificate of Incorporation of Northeast
                           Pennsylvania Financial Corp.*

                3.2        Bylaws of Northeast Pennsylvania Financial Corp.*

                4.0        Form of Stock Certificate of Northeast Pennsylvania
                           Financial Corp.*

              11.0         Statement regarding Computation of Per Share Earnings
                           (See Notes to Consolidated Financial Statements)

              27.0         Financial Data Schedule (submitted only with filing
                           in electronic format)




*    Incorporated  herein by reference  into this  document from the Exhibits to
     Form S-1, Registration Statement, and any amendments thereto,  Registration
     No. 333-43281.

         (B)   Reports on Form 8-K
                                    Page 28
<PAGE>


               On April 20,  1999,  the  Company  filed an 8-K to  announce  its
               earnings  for the second  quarter and to announce it had received
               approval to repurchase 5% of its  outstanding  shares.  The press
               release announced the Company's  earnings and the approval of the
               stock repurchase was filed by exhibit.

               On April 21,  1999,  the  Company  filed an 8-K to  announce  the
               establishment  of a dividend  reinvestment  plan and to declare a
               cash  dividend.   The  press  release  announcing  the  Company's
               establishment   of  the  dividend   reinvestment   plan  and  the
               declaration of a cash dividend were filed by exhibit.

               On April 26,  1999 the  Company  filed an 8-K to  announce it had
               completed its  repurchase of 5% of its  outstanding  shares.  The
               press release  announcing the completion of the stock  repurchase
               was filed by exhibit.

                                    Page 29



<PAGE>
                                   SIGNATURES

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




                                                  NORTHEAST PENNSYLVANIA
                                                  FINANCIAL CORP.


Date:     August 13, 1999                 By: /s/ E. Lee Beard
                                          E. Lee Beard
                                          President and Chief Executive Officer

Date:    August 13, 1999                  By: /s/ Patrick  J. Owens, Jr.
                                          Patrick  J. Owens, Jr.
                                          Chief Financial Officer and Treasurer




<PAGE>

                                  Exhibit Index

27.0  Financial Data Schedule (submitted only with filing in electronic format)