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 March 31, 1999

                                       or

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

For the transition period from __________________ to _________________

                         Commission File Number 1-13793

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

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

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


DELAWARE                                                             06-1504091
------------------------------------------------- ----------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
                                                            Identification No.)

12 E. BROAD STREET, HAZLETON, PENNSYLVANIA                               18201
------------------------------------------------- ----------------------------
(Address of principal executive offices)                            (Zip Code)


                                 (570) 459-3700
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing 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 May 12, 1999.


<PAGE>




                                TABLE OF CONTENTS

Item
No.
                                                                       Page
                                                                       Number
PART  I - CONSOLIDATED FINANCIAL INFORMATION

1         CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Statements of Financial Condition
         March 31, 1999 (unaudited) and September 30, 1998.............      1

         Consolidated Statements of Operations for the Three Months Ended
         March 31, 1999 and 1998 (unaudited)...........................    2-3

         Consolidated Statements of Operations for the Six Months Ended
         March 31, 1999 and 1998 (unaudited)...........................    4-5

         Consolidated Statements of Changes in Equity for the Years Ended
         September 30, 1998 and 1997 and the Six Months Ended March 31, 1999  6

         Consolidated Statements of Cash Flows for the Six Months Ended
         March 31, 1999 and 1998(unaudited)..............................  7-8

         Notes to Consolidated Financial Statements (unaudited).........  9-13

2         Management's Discussion and Analysis of Financial Condition
         and Results of Operations...................................... 14-26

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............................ 28-29

Signatures





<PAGE>


                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statements of Financial Condition
                March 31, 1999 (unaudited) and September 30, 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                           March 31,        September 30,
                                                                             1999               1998
                               Assets                                     (unaudited)
<S>                                                                       <C>               <C> 

Cash and cash equivalents                                                     $ 2,186           $ 3,053
Securities available-for-sale                                                 198,410           189,094
Securities held-to-maturity (estimated fair value of $29,909 at
    March 1999 and $32,072 in September 1998)                                  28,347            31,770
Loans (less allowance for loan losses of $2,402 for March 1999 and
    $2,273 for September 1998)                                                312,437           282,706
Accrued interest receivable                                                     4,003             3,998
Assets acquired through foreclosure                                                50               112
Property and equipment, net                                                     8,964             8,648
Other assets                                                                    3,536             2,887
                                                                                -----             -----
     Total assets                                                           $ 557,933         $ 522,268
                                                                            =========         =========

                       Liabilities and Equity

Deposits                                                                    $ 344,514         $ 324,005
Federal Home Loan Bank advances                                               127,989           106,498
Other borrowings                                                                  278               825
Advances from borrowers for taxes and insurance                                 1,037               717
Accrued interest payable                                                          962             1,028
Other liabilities                                                               1,945             1,761
                                                                                -----             -----

     Total liabilities                                                      $ 476,725         $ 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                                                     62,115            62,083
Common stock acquired by stock benefit plans                                  (7,811)           (4,799)
Retained earnings - substantially restricted                                   29,138            27,208
Accumulated other comprehensive income                                          1,764             2,878
Treasury stock, at cost (321,368 shares)                                      (4,062)                 -
                                                                              -------                 -

     Total equity                                                            $ 81,208           $87,434
                                                                             --------           -------

            Total liabilities and equity                                    $ 557,933         $ 522,268
                                                                            =========         =========

</TABLE>
                                      -1-

<PAGE>



                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
         For the Three Months Ended March 31, 1999 and 1998 (unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>


                                                                            For the Three Months Ended
                                                                         March 31, 1999     March 31, 1998
                                                                                   (unaudited)
<S>                                                                      <C>                <C>   

Interest Income:
  Loans                                                                      $ 5,805           $  5,258 
  Mortgage-related securities                                                  1,093                688 
  Investment securities:
     Taxable                                                                   1,274                962 
     Non-taxable                                                                 803                206
                                                                                 ---                ---
     Total interest income                                                     8,975              7,114
                                                                             

Interest Expense:
  Deposits                                                                     3,294              3,084 
  Federal Home Loan Bank advances and other                                    1,350                629 
                                                                               -----                ---
     Total interest expense                                                    4,644              3,713
                                                                            

Net interest income                                                            4,331              3,401     

Provision for loan losses                                                        135                219 
                                                                                 ---                ---  


Net interest income after provision for loan losses                            4,196              3,182  

Non-interest Income:
  Service charges and other fees                                                 194                153  
  Other income                                                                    97                 23
  Insurance premium income                                                        78                  -
  Gain (loss) on sale of:
     Real estate owned                                                           (15)                 -       
     Loans                                                                        15                 (2)  
     Available-for-sale securities                                                (1)                 -
                                                                             --------            ------  
        Total non-interest income                                                368                174      

Non-interest Expense:
  Salaries and net employee benefits                                           1,844              1,459            
  Occupancy costs                                                                423                386        
  Federal deposit insurance premiums                                              74                 72      
  Data processing                                                                117                 62      
  Professional fees                                                              204                 73       
  Federal Home Loan Bank service charges                                          96                101      
  Charitable contributions                                                        37              4,773     
  Other                                                                          441                307       
                                                                                 ---                ---      
    Total non-interest expense                                                 3,236              7,233
                                                                             

Income (loss) before income taxes                                              1,328            (3,877)        

Income taxes                                                                     255            (1,386)    
                                                                                 ---            -------    


Net income (loss)                                                             $1,073           $(2,491) 
                                                                              ======           ========         
</TABLE>
                                      -2-
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
         For the Three Months Ended March 31, 1999 and 1998 (unaudited)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                              For the Three Months Ended
                                                                                      March 31,
                                                                                1999               1998
                                                                                ----               ----
                                                                                     (unaudited)
<S>                                                                         <C>              <C> 

Other  comprehensive  income  (loss),  net of tax  
  Unrealized  gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period             $ (811)                $ 90
    Less:  Reclassification adjustment for gains included in
      net income                                                                (1)                   -
                                                                               ----                ----            
Other comprehensive income (loss)                                           $ (810)                $ 90
Comprehensive income (loss)                                                   $ 263           $ (2,401)
                                                                              =====           =========

Earnings per share - basic                                                   $ 0.19                 N/A
                                                                             ======                 ===
Earnings per share - diluted                                                 $ 0.19                 N/A
                                                                             ======                 ===

</TABLE>
                                      -3-

<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
          For the Six Months Ended March 31, 1999 and 1998 (unaudited)
                     (in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                 For the Six Months Ended
                                                                                        March 31,
                                                                                  1999               1998
                                                                                  ----               ----
                                                                                       (unaudited)
<S>                                                                            <C>                <C> 

Interest Income:
  Loans                                                                        $ 11,548            $ 10,526
  Mortgage-related securities                                                     2,297               1,399
  Investment securities:
     Taxable                                                                      2,638               1,769
     Non-taxable                                                                  1,460                 334
                                                                                  -----               -----
     Total interest income                                                       17,943              14,028

Interest Expense:
  Deposits                                                                        6,610               6,314
  Federal Home Loan Bank advances and other                                       2,670               1,107
                                                                                  -----               -----
     Total interest expense                                                       9,280               7,421

Net interest income                                                               8,663               6,607

Provision for loan losses                                                           183                 487
                                                                                    ---                 ---


Net interest income after provision for loan losses                               8,480               6,120

Non-interest Income:
  Service charges and other fees                                                    411                 308
  Other Income                                                                      182                  45
  Insurance premium income                                                          123                   -
  Gain (loss) on the sale of:
     Real estate owned                                                             (30)                (34)
     Loans                                                                           35                   4
     Available-for-sale securities                                                   33                   8
     Other                                                                          (1)                   2
                                                                                    ---                ---- 
     Total  non-interest income                                                     753                 333

Non-interest Expense:
  Salaries and net employee benefits                                              3,560               2,683
  Occupancy costs                                                                   842                 760
  Federal deposit insurance premiums                                                146                 143
  Data processing                                                                   242                 136
  Professional fees                                                                 427                 120
  Federal Home Loan Bank and other service charges                                  193                 178
  Charitable contributions                                                           45               4,898
  Other                                                                             885                 579
                                                                                    ---                 ---
     Total non-interest expense                                                   6,340               9,497

Income (loss) before income taxes                                                 2,893             (3,044)

Income taxes                                                                        642             (1,110)
                                                                                    ---             -------


Net income (loss)                                                               $ 2,251           $ (1,934)
                                                                                =======           =========
</TABLE>
                                      -4-


<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
          For the Six Months Ended March 31, 1999 and 1998 (unaudited)
                     (in thousands, except per share data)
<TABLE>
<CAPTION>



                                                                                For the Six Months Ended
                                                                                      March 31,
                                                                                1999               1998
                                                                                ----               ----
                                                                                     (unaudited)
<S>                                                                           <C>                 <C> 

Other  comprehensive  income  (loss),  net of tax  
   Unrealized  gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period              $(1,136)             $ 494
    Less:  Reclassification adjustment for gains included in
      net income                                                                  22                  5
                                                                             -------         ----------      
Other comprehensive income (loss)                                           $ (1,114)             $ 489
Comprehensive income (loss)                                                  $ 1,137          $ (1,445)
                                                                             =======          =========

Earnings per share - basic                                                    $ 0.39                N/A
                                                                              ======                ===
Earnings per share - diluted                                                  $ 0.38                N/A
                                                                              ======                ===

</TABLE>
                                      -5-

<PAGE>


                     Northeast Pennsylvania Financial Corp.
                  Consolidated Statements of Changes in Equity
                For the Years Ended September 30, 1998 and 1997,
                    and the Six Months Ended March 31, 1999
<TABLE>
<CAPTION>


                                                               Common Stock                 Unrealized
                                                  Additional    Acquired by                 Gain (loss)
                                        Common     Paid-in     stock benefit   Retained        on AFS      Treasury    Total
                                        Stock      Capital         plans       Earnings      Securities      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                             32           300                                                   332
released
Net changes in gains (losses) on
 securities available-for-sale,                                                                 (1,114)                (1,114)
 net of  tax
Treasury stock at cost,                                                                                      (4,062)   (4,062)
321,368 shares
Cash dividend paid                                                                   (321)                                (321)
Net income                                                                          2,251                                2,251
                                        ------         -----        -----         -------       -------                ------- 

Balance March 31, 1999                  $ 64      $ 62,115     $ (7,811)         $ 29,138       $ 1,764    $ (4,062)  $ 81,208
                                        ====      ========     =========         ========       =======    =========  ========

</TABLE>
                                      -6-




<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statement of Cash Flows
          For the Six Months Ended March 31, 1999 and 1998 (unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                         For the Six Months Ended
                                                                                                 March 31,
                                                                                            1999          1998
                                                                                            ----          ----
                                                                                                 (unaudited)
<S>                                                                                      <C>           <C> 

Operating Activities:
Net Income (loss)                                                                        $ 2,251       ($ 1,934)
Adjustments to reconcile net income to net cash provided by operating activities:
  Provision (Recovery) for REO loss                                                           10            (53)
  Provision for loan losses                                                                  183             487
  Depreciation                                                                               398             292
  Deferred income tax (benefit) provision                                                    141          (1,979)
  Funding of First Federal Charitable Foundation                                               -           4,761
  ESOP expense                                                                               332               -
  Amortization and accretion on:
     Held-to-maturity securities                                                              28              18
     Available-for-sale securities                                                           171              56
  Amortization of deferred loan fees                                                        (230)           (136)
(Gain) loss on sale of:
     Assets acquired through foreclosure                                                      30              26
     Loans                                                                                   (35)             (4)
     Available-for-sale securities                                                           (33)             (8)
  Gain (loss) on disposal of property and equipment                                            1              (2)
  Changes in assets and liabilities:
    Increase in accrued interest receivable                                                   (5)            (668)
    Increase in other assets                                                                 (94)            (172)
    Decrease in  accrued interest payable                                                    (66)            (141)
    Increase (decrease) in accrued income taxes payable                                     (467)             620
    Increase in other liabilities                                                            651              503
                                                                                             ---              ---

      Net cash provided by operating activities                                            3,266            1,666

Investing Activities:
Net increase in loans                                                                    (36,344)          (8,560)
Proceeds from sale of:
  Available-for-sale securities                                                            5,769               -
  Assets acquired through foreclosure                                                        116              226
  Loans                                                                                    6,601            2,098
Proceeds from repayments of held-to-maturity securities                                   16,953           13,038
Proceeds from repayments of available-for-sale securities                                 39,770           15,570
Proceeds from disposal of fixed assets                                                        67                2
Purchase of:
  Held-to-maturity securities                                                            (13,558)         (31,118)
  Available-for-sale securities                                                          (55,728)         (40,662)
  Office properties and equipment                                                           (782)            (637)
  Federal Home Loan Bank stock                                                            (1,075)            (697)
                                                                                         -------            -----

Net cash used in investing activities                                                    (38,211)         (50,740)

Financing Activities:
  Net increase (decrease) in deposit accounts                                             20,509           (2,463)
  Net increase (decrease) in Federal Home Loan Bank short-term advances                    6,500           (5,000)
  Borrowings of Federal Home Loan Bank long-term advances                                 15,000           25,000
  Repayments of Federal Home Loan Bank long-term advances                                     (9)              (9)
  Net increase in advances from borrowers for taxes and insurance                            320              524
</TABLE>
                                      -7-

<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statement of Cash Flows
          For the Six Months Ended March 31, 1999 and 1998 (unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>


                                                                                            For the Six Months Ended 
                                                                                                March 31,

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

    Net increase (decrease) in other borrowings                                            (547)            131
    Net proceeds from issuance of common stock                                                -          52,120
    Purchase of common stock for stock incentive plan                                    (3,312)              -
    Purchase of treasury stock                                                           (4,062)              -
    Cash dividend on common stock                                                          (321)              -
                                                                                          -----      ----------

    Net cash provided by financing activities                                            34,078          70,303

Increase (decrease) in cash and cash equivalents                                           (867)         21,229

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

Cash and cash equivalents, end of year                                                   $ 2,186       $ 34,443
                                                                                         =======       ========

Supplemental  disclosures of cash flow information:  
  Cash paid during the period for:
     Interest                                                                            $ 9,346        $ 7,562
                                                                                         =======        =======
     Income taxes                                                                          $ 947          $ 250
                                                                                           =====          =====
Net change in unrealized gains (losses) on securities
   Available-for-sale, net of tax                                                      $  (1,114)         $ 489
                                                                                       =========          =====
Supplemental disclosure - non-cash information:
  Transfer from loans to real estate owned                                                  $ 94            $44
                                                                                            ====           ===
ESOP shares committed to be released                                                       $ 300            $ -
                                                                                           =====           ====





</TABLE>
                                      -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 six months ended March 31, 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 the greater  Hazleton  area,  Mountaintop,
         Bloomsburg, Lehighton, and all of Schuylkill County, through ten office
         locations.  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 FIDACO,  Inc.,  Abstractors,  Inc., and First Federal Bank.
         First Federal Bank and Abstractors,  Inc. are wholly-owned subsidiaries
         of Northeast  Pennsylvania  Financial Corp. FIDACO, Inc. is an inactive
         subsidiary  of First  Federal  Bank with the only major  asset being an
         investment in Hazleton Community Development Corporation.  Abstractors,
         Inc. is a title insurance agency. 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, basic and diluted,  were $0.19 for the three months
         ended  March 31,  1999 and $0.39 and $0.38,  respectively,  for the six
         months ended March 31, 1999.  Due to the Bank's recent  conversion  and
         formation  of the Company,  earnings  per share  figures for prior year
         periods are not applicable.
                                      -9-
<PAGE>

         The following table presents the  reconciliation  of the numerators and
         denominators of the basic and diluted EPS computations.
<TABLE>
<CAPTION>



                                                                                     Three Months Ended
                                                                    March 31, 1999                March 31, 1998
                                                                    --------------                --------------

<S>                                                                <C>    <C>  

Net Income                                                          $ 2,251                             -
                                                                    =======                      ========  


Basic:
Weighted average shares outstanding                               6,427,350                             -
Less:  Unallocated/unearned shares held by stock
   benefit plans                                                  (685,113)                             -
Less:  Weighted Treasury shares                                    (79,828)
Plus:  ESOP shares released
   or committed to be released                                      50,348                             -
                                                                     ------                      --------     
   
                                                                  5,712,757                             -
                                                                  =========                       =======  

Earnings per share  - basic                                           $0.39                           N/A
                                                                      =====                           ===




                                                                 March 31, 1999                March 31, 1998
                                                                 --------------                --------------
Diluted:

Net Income                                                            $2,251                             -
                                                                      ======                      ========    


Basic weighted shares outstanding                                  5,712,757 
Dilutive Instruments:
  Dilutive effect of stock awards                                    243,468                             -
                                                                     -------                      --------    
                                                                   5,956,225                             -
                                                                   =========                     =========    

Earnings per share - diluted                                           $0.38                           N/A
                                                                       =====                           ===
</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.

                                      -10-
<PAGE>

         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
         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 would 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  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. This
         Statement  is  effective  for  all  fiscal  quarters  of  fiscal  years
         beginning  after June 15,  1999.  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.

         In October 1998,  the FASB issued  Statement No. 134,  "Accounting  for
         Mortgage-backed   Securities   Retained  after  the  Securitization  of
         Mortgage Loans Held for Sale by a Mortgage  Banking  Enterprise."  This
         Statement  requires  that after the  securitization  of a mortgage loan
         held for  sale,  an  entity  engaged  in  mortgage  banking  activities
         classify any retained  mortgage-backed  securities based on the ability
         and intent to sell or hold those  investments,  except  that a mortgage
         banking    enterprise   must   classify   as   trading   any   retained
         mortgage-backed securities that it commits to sell before or during the
         securitization  process.  This  Statement  is  effective  for the first
         fiscal quarter  beginning after December 15, 1998 with earlier adoption
         permitted.  This  Statement  provides  a  one-time  opportunity  for an
         enterprise to  reclassify,  based on the ability and intent on the date
         of adoption of this  Statement,  mortgage-backed  securities  and other
         beneficial  interests  retained after  securitization of mortgage loans
         held  for  sale  from the  trading  category,  except  for  those  with
         commitments in place. The Company has not yet determined the impact, if
         any, of this Statement,  including,  if applicable,  its provisions for
         the potential  reclassifications of certain investment  securities,  on
         earnings, financial condition or equity.
                                      -11-
<PAGE>

         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.

         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 total amount of the liquidation  account,  which decreases
         if  the   balances  of  eligible   deposits   decrease  at  the  annual
         determination dates, approximated $28.5 million at March 31, 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 March 31,  1999,  there  were no shares of
         preferred stock issued.
                                      -12-

<PAGE>


<TABLE>
<CAPTION>

4.       Loans

          Loans are summarized as follows:                            March 31,            September 30,
                                                                       1999                    1998
                                                                    (unaudited)
                                                                     ----------            -------------
<S>                                                                <C>                      <C> 

          Real Estate loans:
            One-to four-family                                       $ 176,491              $ 176,924
            Multiple family and commercial                              23,794                 11,938
            Construction                                                 2,478                  3,759
                                                                         -----                  -----
          Total real estate loans                                      202,763                192,621
                                                                       -------                -------

          Consumer Loans:
            Home equity loans and lines of credit                       66,246                 52,244
            Automobile                                                  24,662                 24,589
            Education                                                    2,754                  2,351
            Unsecured lines of credit                                    1,657                  1,589
            Other                                                        3,123                  3,423
                                                                         -----                  -----
          Total consumer loans                                          98,442                 84,196
                                                                        ------                 ------
          Commercial loans                                              15,253                  9,742
                                                                        ------                  -----
          Total loans                                                  316,458                286,559
                                                                       -------                -------
            Less:
               Allowance for loan losses                               (2,402)                 (2,273)
               Deferred loan origination fees                          (1,619)                 (1,580)
                                                                       -------                -------
          Total loans, net                                           $ 312,437               $282,706
                                                                     =========               ========

</TABLE>
<TABLE>
<CAPTION>

                                        For the six                                                For the six
                                       months ended               For the year ended              months ended
                                      March 31, 1999              September 30, 1998             March 31, 1998
                                      --------------              ------------------             --------------
<S>                                  <C>                          <C>                            <C> 

Balance, beginning of period              $ 2,273                       $ 1,272                      $ 1,272
Charge-offs                                  (56)                          (76)                         (27)
Recoveries                                      2                            18                            2
Provision for loan losses                     183                         1,059                          487
                                              ---                         -----                          ---
Balance, end of period                    $ 2,402                       $ 2,273                      $ 1,734
                                          =======                       =======                      =======
</TABLE>


5.       Deposits

         Deposits consist of the following major classifications (in thousands):
<TABLE>
<CAPTION>

                                                                      March 31, 1999            September 30, 1998
                                                                      --------------            ------------------
                                                                                 Percent                     Percent
                                                                      Amount     of Total          Amount    of Total
                                                                ------------- ------------- -------------- ------------
<S>                                                                 <C>           <C>            <C>         <C>  

          Savings accounts (passbook, statement, clubs)             $ 69,951        20.3%        $ 69,956       21.6%
          Money market accounts                                       19,676         5.7%          16,368        5.0%
          Certificates of deposit less than $100,000                 170,801        49.6%         159,918       49.4%
          Certificates of deposit greater than $100,000(1)            41,188        12.0%          36,150       11.2%
          NOW Accounts                                                30,708         8.9%          31,182        9.6%
          Non-interest bearing deposits                               12,190         3.5%          10,431        3.2%
                                                                      ------         ----          ------        ----
          Total deposits at end of period                           $344,514       100.0%        $324,005      100.0%
                                                                    ========       ======        ========      ======


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

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
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.
                                      -14-
<PAGE>

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.
Additionally, the Bank has entered into an agreement to sell approximately $21.0
million of fixed rate long term mortgages,  borrowing approximately $9.0 million
from the Federal Home Loan Bank of Pittsburgh and purchasing approximately $30.0
million of adjustable rate mortgages,  ("ARMS") including 3/1, 5/1 and 7/1 ARMS.
The Company at the same time is committed to selling $10.0 million of investment
securities  which have low yielding coupons and will be purchasing $10.0 million
in higher yielding investments.  The expected result of these transactions is to
increase income for the current  quarter and have a slightly  positive impact on
the net interest  margin.  From an interest rate risk  perspective the Bank will
have reduced its interest  rate risk while  continuing  to maintain its level of
profitability.  The Bank is also  evaluating the offering of loan products which
it has  historically  not  offered,  such as  nonconforming  or subprime  one-to
four-family  loans.  In the event the Bank  originates  such loan  products,  it
currently intends to hold such loans in its portfolio.

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
                                      -15-
<PAGE>

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
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.     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 March 31, 1999,  the Bank's  cumulative  one year gap was a negative
11.9% 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. March's interest rate sensitivity gap reflects the initial
impact of a $45.0 million restructuring  transaction  undertaken by the Company.
This   restructuring   transaction   includes  the  sale,   from  the  Bank,  of
approximately  $21.0  million  of fixed  rate  long  term  mortgages,  borrowing
approximately  $14.0 million from the Federal Home Loan Bank of  Pittsburgh  and
the  subsequent  purchase of  approximately  $20.0  million of  adjustable  rate
mortgages  and  mortgage-backed  securities,  $10.0  million  of fixed rate home
equity loans, and $5.0 million of fixed rate long term investment securities. In
addition,  this  transaction  includes the sale of $10.0  million of  investment
securities  that have low yielding  coupons from the Company and the purchase of
$10.0 million in higher yielding  investments.  This  restructuring  transaction
began in March with the purchase of  approximately  $10.0  million of fixed rate
home equity loans from another  financial  institution  and the purchase of $4.0
million of the fixed rate long-term investment  securities that were funded with
short-term FHLB advances.  The remainder of the transaction  will be executed in
the third quarter.  The short-term  FHLB  borrowings  were replaced with a $15.0
million long-term advance in the month of April.
                                      -16-
<PAGE>

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.

E.       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 may vary
from the Bank's model  primarily due to  differences  in  assumptions  utilized,
including estimated loan prepayment rates,  reinvestment rates and deposit decay
rates. The following table sets forth the Bank's NPV as of March 31, 1999.

<TABLE>
<CAPTION>
   
                                                                                                 NPV as % of Portfolio
      Change in                                   Net PortfolioValue                               Value of Assets
    Interest Rates          ---------------------------------------------------------     -------------------------------------
   In Basis Points                                                                            NPV
    (Rate Shock)               Amount            $ Change             % Change              Ratio              Change (1)
-----------------------------------------------------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                            <C>               <C>                     <C>                <C>                    <C> 

        300                    27,870            (36,153)                (56.47%)             5.60%                 (621)
        200                    41,339            (22,684)                (35.43%)             8.05%                 (376)
        100                    53,872            (10,151)                (15.86%)            10.19%                 (162)
       Static                  64,023                   0                   0.00%            11.81%                     0
        -100                   70,915               6,893                  10.77%            12.82%                   101
        -200                   74,194              10,171                  15.89%            13.19%                   138
        -300                   77,217              13,195                  20.61%            13.51%                   170

<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
                                      -17-
<PAGE>

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.

F.       Non-Performing Assets

     The   following   table   presents   information   regarding   the   Bank's
     non-performing assets at the dates indicated:
<TABLE>
<CAPTION>

                                                                              March 31,           September 30,
                                                                                 1999                  1998
                                                                                 ----                  ----
<S>                                                                           <C>                 <C>  

Non-performing loans:
 Non-accrual loans                                                                $ 915            $   1,239
Real estate owned and other repossessed assets                                       50                  112
                                                                                     --                  ---
     Total non-performing assets                                                  $ 965              $ 1,351
                                                                                  =====              =======

         Total non-performing loans as a percentage of total loans                0.29%                0.44%
         Total non-performing assets as a percentage of total assets              0.17%                0.26%
</TABLE>


G.       Liquidity and Capital Resources

The Bank's primary sources of funds on a long and short-term basis 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 March 31, 1999 and 1998,  the Bank's  liquidity  ratios were 10.6% and 22.3%,
respectively.

At March 31, 1999, the Bank exceeded all of its regulatory capital  requirements
with a tangible  capital level of $57.1  million,  or 10.7%,  of total  adjusted
assets,  which is above the  required  level of $8.0  million,  or 1.5%;  a core
capital level of $57.1 million or 10.7% of total adjusted assets, which is above
the required level of $16.0 million,  or 3.0%; and a risk-based capital of $59.5
million or 23.6% of risk-weighted  assets,  which is above the required level of
$20.2 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 March 31, 1999, cash and cash equivalents
and investment and mortgage-related securities available-for-sale totaled $200.1
million, or 35.9%, of total assets.

The Bank has other sources of liquidity if a need for  additional  funds arises,
including  FHLB  advances.  At March 31,  1999,  the Bank had $128.0  million in
advances  outstanding  from the FHLB,  and had an additional  overall  borrowing
                                      -18-
<PAGE>

capacity from the FHLB of $241.2 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 March 31, 1999, the Bank had  commitments to originate and purchase loans and
unused  outstanding  lines of credit and  undisbursed  proceeds of  construction
mortgages  totaling  $31.5  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 March 31, 1999,  totaled $162.7  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 March 31, 1999,  the Bank had $32.0 million in jumbo  certificates
which will be evaluated at maturity.

To improve its customer  delivery systems and expand its services,  the Bank has
been  investing  in new  computer  hardware  and  software  and in January  1999
relocated its Columbia Mall branch to a new location in Scott Township. The Bank
anticipates  that during  fiscal 1998 and 1999,  it will have  incurred  capital
expenditures of approximately $2.4 million to fund such plans. These anticipated
capital  expenditures  will be funded from the Bank's general  corporate  funds,
including  proceeds from the Conversion and its FHLB advances.  In addition,  in
March 1999, the Bank signed an agreement to purchase the assets and  liabilities
of the Danville  branch of Omega Bank.  This will be the eleventh  branch office
for First Federal Bank and the first office in Montour County.
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 March 31, 1999,
the Bank had total  equity,  determined in accordance  with  generally  accepted
accounting  principles,  of $58.8  million,  or 11.0%,  of total  assets,  which
approximated  the Bank's  regulatory  tangible  capital at that date of 10.7% 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.
                                      -19-
<PAGE>

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 is maintaining 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 was
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.

A contingency plan will be developed by June 30, 1999 for  mission-critical  and
required  mainframe  and  PC  based  applications,   third-party  relationships,
environmental  systems,  proprietary  programs and non-computer related systems.
This contingency plan will identify  scheduled  completion dates, test dates and
trigger dates.
                                      -20-
<PAGE>

Business  continuation  plans for critical  business  applications are in place.
These plans include  adequate  staffing on site during the Year 2000 date change
to quickly  repair any errant  applications.  In  addition,  in the event of any
problems  the  Company  would  follow  its  current   computer  outage  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.

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,  be it a supplier of services or a customer,
the Y2K issue could possibly have a material effect on the Company's  operations
and financial position.

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 March 31, 1999 and September 30, 1998

Total assets increased $35.7 million,  from $522.2 million at September 30, 1998
to $557.9  million at March 31, 1999.  The growth in assets was primarily due to
increases in loans receivable and investment securities, offset by a decrease in
cash and cash equivalents.

                                      -21-
<PAGE>

Cash and cash equivalents  decreased $867,000 to $2.2 million at March 31, 1999,
from $3.0  million at September  30, 1998 due to the  purchase of  approximately
$15.0 million in loans, increased loan originations, security purchases, and the
repurchase  of the  Company's  common  stock,  offset  by the  increase  in FHLB
advances and deposits.

Securities  available-for-sale  increased  $9.3  million,  or 4.9%,  from $189.1
million  at  September  30,  1998 to $198.4  million  at March 31,  1999,  while
securities  classified as held-to-maturity  decreased $3.4 million, or 10.8%, to
$28.3 million at March 31, 1999.  These changes were primarily  attributable  to
the increased security purchases, net of called securities.

Loans  increased  $29.7  million to $312.4  million at March 31, 1999.  This was
primarily due to a $14.9 million  increase in home equity loans resulting from 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.  Commercial  real estate loans  increased  $11.9 million,  and other
commercial loans increased $5.5 million due to marketing efforts and competitive
pricing of such products.

Prepaid expenses and other assets increased $649,000,  or 22.5%, to $3.5 million
at March 31, 1999.  This change was primarily due to an increase in the deferred
income  tax  benefit  resulting  from  a  decline  in  unrealized  gain/loss  on
available-for-sale securities.

Total deposits increased $20.5 million to $344.5 million at March 31, 1999. This
increase  in  deposits  was  primarily  due  to  a  $15.9  million  increase  in
certificates  of deposit  from $196.1  million at  September  30, 1998 to $212.0
million  at March 31,  1999,  as a result of  increased  marketing  efforts  and
competitive  pricing of such  products.  Also  contributing  to this change were
increases in money  market  accounts of $3.3  million and  non-interest  bearing
demand  accounts of $1.7 million,  resulting from a more active  solicitation of
such accounts.

FHLB advances  increased $21.5 million from $106.5 million at September 30, 1998
to  $128.0  million  at  March  31,  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 can be invested at yields higher than the
cost of the borrowed funds thereby increasing net interest income.

Total equity  decreased  $6.2 million to $81.2  million at March 31, 1999.  This
decrease in equity  resulted  primarily  from the  repurchase  of the  Company's
common stock, at a cost of $4.1 million,  along with 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 $1.9 million in retained
earnings.

J.  Comparison of Operating Results for the Three Months ended March 31, 1999
    and March 31, 1998

General.  The Company had net income of $1.1  million for the three months ended
March 31,  1999,  compared to a net loss of $2.5  million  for the three  months
ended March 31, 1998,  an increase of $3.6  million.  This increase in income is
primarily due to increases in net interest income and non-interest income offset
                                      -22-
<PAGE>

by an increase in the  provision  for income  taxes.  The loss in the prior year
period was primarily due to a one-time $4.8 million  non-recurring pre-tax ($3.1
million after-tax) expense related to the charitable  contribution made to First
Federal  Charitable   Foundation  ("the  Foundation")  in  connection  with  the
Conversion.  The Company's core net earnings  (quarterly  earnings excluding the
after-tax  impact  of the  non-recurring  contribution)  were  $651,000  for the
quarter ended March 31, 1998.

Interest Income. Total interest income increased by $1.9 million, or 26.2%, from
$7.1  million for the three  months ended March 31, 1998 to $9.0 million for the
three months ended March 31, 1999.  This was primarily due to a $129.3  million,
or 33.2%,  increase in the average balance of interest earning assets, offset by
a slight  decrease in the weighted  average  yield on interest  earning  assets.
Specifically  interest  income on securities  increased $1.3 million,  or 70.8%,
from $1.9  million to $3.2 million for the three months ended March 31, 1998 and
March 31, 1999,  respectively,  primarily due to a $99.4 million increase in the
average balance of such securities.

Also, interest income on loans increased $547,000,  or 10.4%. This was primarily
due to the increase of interest  income on consumer  loans of $443,000 from $1.3
million for the period ending March 31, 1998 to $1.8 million  primarily due to a
$23.1 million increase in the average balance of these loans. Interest income on
commercial  loans also increased  $181,000,  or 49.2%, to $550,000 for the three
months ended March 31, 1999, as a result of a $2.7 million,  or 23.3%,  increase
in the average balance of such loans.

Interest  Expense.  Interest expense  increased  $931,000,  or 25.1%,  from $3.7
million to $4.6  million for the three months ended March 31, 1998 and March 31,
1999, respectively. The increase in interest expense was primarily the result of
a $58.7  million  increase in the  average  balance of FHLB  advances  and other
borrowings,  which  increased  from $47.1  million  at March 31,  1998 to $105.7
million at March 31, 1999,  offset by a twenty-four  basis point decrease in the
weighted  average rate paid on such borrowings from 5.42% to 5.18% for the three
months  ended March 31, 1998 and March 31, 1999,  respectively.  The increase in
FHLB advances reflects  management's  determination to more heavily utilize FHLB
advances to fund asset  growth.  The increase in interest  expense also resulted
from increased interest expense on certificates of deposit, which was the result
of a $25.1 million increase in the average balance of certificates of deposit.

Provision  for Loan Losses.  The Bank's  provision for loan losses for the three
months  ended March 31,  1999 was  $135,000  compared to $219,000  for the three
months ended March 31, 1998.  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. 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
generally added to the allowance.
                                      -23-
<PAGE>

Non-interest  Income.  Non-interest income increased $194,000,  from $174,000 to
$368,000,  for the  three  months  ended  March 31,  1998 and  March  31,  1999,
respectively. The increase in non-interest income was primarily due to a $78,000
increase in insurance  premium  income from closings  performed by the Company's
title  insurance  subsidiary.  Other  income  increased  $74,000 from $23,000 to
$97,000 for the three months ended March 31, 1998 and 1999,  respectively due to
rental  income and an increase in the cash  surrender  value of  Directors'  and
Officers' life insurance policies.  Contributing to the increase in non-interest
income was a $41,000,  or 27.0%,  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 decreased from $7.2 million to
$3.2  million for the three  months  ended  March 31,  1998 and March 31,  1999,
respectively,  due  primarily to a one-time $4.8 million  non-recurring  expense
relating to the funding of the Foundation in the prior period. This decrease was
offset by increases in compensation and employee benefits of $385,000, or 26.4%,
to $1.8 million for the three months ended March 31, 1999,  primarily due to the
expense  of the  ESOP and  stock  award  programs.  Other  non-interest  expense
increased  $134,000,  or 43.6%,  primarily due to increased marketing efforts of
deposit and loan products,  an increase in the provision for loss on REO, and an
increase in overall operating expenses. Professional fees increased $131,000 due
to increased legal and accounting fees associated with being a public company.

Income Taxes.  The Company had an income tax provision of $255,000 for the three
months ended March 31, 1999, compared to a benefit of $1.4 million for the three
months  ended March 31, 1998  resulting  in  effective  tax rates of 19.2%,  and
(35.7%),  for the three  months  ended  March  31,  1999,  and  March 31,  1998,
respectively.  The  increase  in income  tax  expense  was  attributable  to the
increase in income  before taxes.  The decline in the effective tax rate,  below
the statutory rate, was the result of increased tax-free security purchases.

K.   Comparison of Operating Results for the Six Months ended March 31, 1999 
     and March 31, 1998.

General.  For the six months  ended March 31, 1999,  the Company  reported a net
profit of $2.3 million,  compared to a $1.9 million net loss for the same period
in 1998.  The loss at March  31,  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 $1.2 million for the six months ended March 31, 1998.

Interest Income.  Total interest income increased $3.9 million,  or 27.9%,  from
$14.0 million to $17.9 million for the six months ended March 31, 1998 and March
31, 1999, respectively, primarily due to a $132.6 million, or 34.9%, 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 $2.9  million,  or 82.6%,  increase  in  interest  income on
securities,  to $6.4 million for the six months ended March 31, 1999,  primarily
due to a $107.5 million increase in the average balance of such securities.
                                      -24-
<PAGE>

Interest income on loans also increased $1.0 million,  or 9.7%, to $11.5 million
for the six months  ended  March 31,  1999,  primarily  due to the  increase  in
interest  income on consumer  loans of  $938,000,  or 35.0%,  to $3.6 million at
March 31,  1999,  due to a $22.7  million  increase  in the  average  balance of
consumer  loans from $62.9  million at March 31, 1998 to $85.6  million at March
31, 1999. This increase  relates to increased  marketing  effort and competitive
pricing of these loans.  Interest income on commercial loans increased $305,000,
or 50.1%, from $609,000 at March 31, 1998 to $914,000 at March 31, 1999.

Interest Expense.  Interest expense increased $1.9 million,  or 25.1%, from $7.4
million to $9.3  million  for the six months  ended March 31, 1998 and March 31,
1999, respectively. The increase in interest expense was primarily the result of
a  $62.4  million  increase  in the  average  balance  of FHLB  advances,  which
increased  from $40.4  million at March 31, 1998 to $102.8  million at March 31,
1999,  offset by a slight  decrease in the  weighted  average  rate paid on such
borrowings from 5.49% at March 31, 1998 to 5.21% at March 31, 1999. The increase
in FHLB advances  reflects  management's  determination  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
$17.2 million, or 9.1%, rise in the average balance of certificate accounts.

Provision for Loan Losses. The Bank's provision for loan losses was $183,000 for
the six months  ended March 31,  1999,  compared to $487,000  for the six months
ended March 31, 1998.  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.  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 generally added to the allowance.


Non-interest income. The Company experienced a $420,000 increase in non-interest
income from  $333,000 to  $753,000  for the six months  ended March 31, 1998 and
March 31, 1999,  respectively,  due  primarily to an increase in other income of
$137,000  from  rental  income and an increase  in the cash  surrender  value of
Officers and  Directors  life  insurance  policies.  Also  contributing  to this
increase  was a $123,000  increase in  insurance  premium  income from  closings
performed by the Company's title insurance  subsidiary.  Service charges and fee
income also increased  $103,000  primarily due to increased customer activity on
various deposit and loan accounts.
                                      -25-
<PAGE>

Non-interest expense.  Total non-interest expense decreased from $9.5 million to
$6.3  million  for the six  months  ended  March 31,  1998 and  March 31,  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  $877,000,  or 32.7%,
primarily  due to the  establishment  of the  ESOP  and  stock  award  programs.
Professional  fees  increased  $307,000 due to an increased  amount of legal and
audit fees associated with being a public company.  Other  non-interest  expense
increased  $306,000,  or 52.8%,  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 is an increase in
general operating expenses, as well as an increase in the provision for REO.

Income taxes.  The Company had income tax expense of $642,000 for the six months
ended March 31,  1999,  compared to a benefit of $1.1 million for the six months
ended March 31, 1998,  resulting  in an effective  tax rate of 22.2% for the six
months ended March 31, 1999. The increase in income tax expense was attributable
to the increase in income before taxes for the six months ended March 31, 1999.

                                      -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.

                                      -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.

                                      -28-
<PAGE>

         (B)   Reports on Form 8-K

               On January 27,  1999,  the Company  filed an 8-K to announce  its
               earnings  for the first  quarter and to declare a cash  dividend.
               The  press  release   announcing   Company's   earnings  and  the
               declaration of a cash dividend were filed by exhibit.

               On March 16,  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.

               On March 22,  1999,  the Company  filed an 8-K to announce it had
               entered into an agreement  to purchase a new branch  office.  The
               press release announcing the agreement was filed by exhibit.


                                      -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:     May 14, 1999                         By: /s/ E. Lee Beard
         ----------------------------
                                               E. Lee Beard
                                               President and Chief Executive
Officer

Date:     May 14, 1999                         By: /s/ Patrick J. Owens, Jr.
         --------------------------
                                               Patrick  J. Owens, Jr.
                                               Chief Financial Officer and
                                               Treasurer

                                      -30-