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, 2001

                                       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                                (I.R.S. Employer
incorporation or organization)                               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 __
                                                    ------         ------

     The Registrant had 5,313,844  shares of Common Stock  outstanding as of May
11, 2001.


<PAGE>


<TABLE>
                                TABLE OF CONTENTS
<S>                                                                             <C>
Item
No.
                                                                                        Page
                                                                                        Number
PART  I - CONSOLIDATED FINANCIAL INFORMATION

Item 1   CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Statements of Financial Condition at
         March 31, 2001 (unaudited) and September 30, 2000.................             1

         Consolidated Statements of Operations for the Three Months Ended
         March 31, 2001 and 2000 (unaudited)...............................             2

         Consolidated Statement of Comprehensive Income for the Three Months
         Ended March 31, 2001 and 2000 (unaudited).........................             3

         Consolidated Statements of  Operations for the Six Months Ended
         March 31, 2001 and 2000 (unaudited)...............................             4

         Consolidated Statements of  Comprehensive Income for the Six Months Ended
         March 31, 2001 and 2000 (unaudited)...............................             5

         Consolidated Statements of Changes in Equity for the Years Ended
         September 30, 2000, 1999 and 1998 and the Six Months Ended March 31,
         2001(unaudited)...................................................             6

         Consolidated Statements of Cash Flows for the Six Months Ended March
         31, 2001 and 2000
         (unaudited).......................................................           7-8

         Notes to Consolidated Financial Statements (unaudited)............          9-15


Item 2   Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................         16-23

Item 3   Quantitative and Qualitative Disclosures about Market Risk........            24

Part II - OTHER INFORMATION

1        Legal Proceedings.................................................            25

2        Changes in Securities and Use of Proceeds.........................            25

3        Defaults Upon Senior Securities...................................            25

4        Submission of Matters to a Vote of Security Holders...............         25-26

5        Other Information.................................................            26

6        Exhibits and Reports on Form 8-K..................................            26

Signatures

</TABLE>

<PAGE>

                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statements of Financial Condition
                March 31, 2001 (unaudited) and September 30, 2000
                                 (in thousands)
<TABLE>
<S>                                                                          <C>                <C>
                                                                               March 31,        September 30,
                                                                                 2001               2000
                                                                                 ----               ----
                               Assets                                        (unaudited)

Cash and cash equivalents                                                       $11,065          $ 6,295
Securities available-for-sale                                                   211,421          157,474
Securities held-to-maturity (estimated fair value of $32,504 at
    March 31, 2001 and $28,129 at September 30, 2000)                            32,810           30,336
Loans (less allowance for loan losses of $5,135 at March 31, 2001
    and $4,162 at September 30, 2000)                                           486,459          415,105
Accrued interest receivable                                                       6,504            5,401
Assets acquired through foreclosure                                                 644              173
Property and equipment, net                                                      11,799            9,878
Intangible assets                                                                13,725            1,446
Other assets                                                                      8,258           11,234
                                                                                  -----           ------
     Total assets                                                              $782,685        $ 637,342
                                                                               ========        =========

                       Liabilities and Equity

Deposits                                                                       $481,336        $ 419,671
Federal Home Loan Bank advances                                                 210,951          137,461
Other borrowings                                                                  5,276            1,654
Advances from borrowers for taxes and insurance                                   1,152              639
Accrued interest payable                                                          1,568            2,472
Other liabilities                                                                 3,727            2,470
                                                                                  -----            -----

     Total liabilities                                                         $704,010        $ 564,367
                                                                               --------        ---------

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                                                       62,182           62,164
Common stock acquired by stock benefit plans                                    (5,808)          (6,221)
Retained earnings - substantially restricted                                     34,619           33,207
Accumulated other comprehensive loss                                               (50)          (3,711)
Treasury stock, at cost (1,108,506 shares at March 31, 2001 and
1,134,201 shares at September 30, 2000)                                        (12,332)         (12,528)
                                                                               --------         --------
     Total equity                                                               $78,675          $72,975
                                                                                -------          -------

            Total liabilities and equity                                       $782,685        $ 637,342
                                                                               ========        =========

</TABLE>
                                       1
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
         For the Three Months Ended March 31, 2001 and 2000 (unaudited)
                      (in thousands, except per share data)
<TABLE>
<S>                                                                             <C>             <C>
                                                                                For the Three months ended
                                                                                         March 31,
Interest Income:                                                                2001               2000
                                                                                ----               ----
                                                                                      (unaudited)
  Loans                                                                        $9,748             $7,577
  Mortgage-related securities                                                   1,590                923
  Investment securities:
     Taxable                                                                    1,746              1,805
    Non-taxable                                                                   456                857
                                                                                  ---                ---
     Total interest income                                                     13,540             11,162

Interest Expense:
  Deposits                                                                      5,136              3,693
  Federal Home Loan Bank advances and other                                     2,900              2,763
                                                                                -----              -----

     Total interest expense                                                     8,036              6,456

Net interest income                                                             5,504              4,706

Provision for loan losses                                                         264                238
                                                                                  ---                ---


Net interest income after provision for loan losses                             5,240              4,468

Non-interest Income:
  Service charges and other fees                                                  403                271
   Insurance premium income                                                       488                 47
   Trust fee income                                                               132                  2
   Other income (expense)                                                         (7)                105
   Gain (loss) on sale of:
     Real estate owned                                                              9               (73)
     Loans                                                                         19                  5
    Available-for-sale securities                                                 132                  1
                                                                                  ---                  -
      Total non-interest income                                                 1,176                358

Non-interest Expense:
  Salaries and net employee benefits                                            2,575              1,911
  Occupancy costs                                                                 694                506
  Data processing                                                                 175                139
  Professional fees                                                               162                144
  Federal Home Loan Bank service charges                                          197                160
  Amortization                                                                    343                 97
  Other                                                                           951                596
                                                                                  ---                ---

     Total non-interest expense                                                 5,097              3,553

Income before income taxes                                                      1,319              1,273

Income taxes                                                                      296                174
                                                                                  ---                ---


Net income                                                                     $1,023            $ 1,099
                                                                               ======            =======

Earnings per share - basic                                                     $0.21             $ 0.23
                                                                               =====             ======
Earnings per share - diluted                                                   $0.21             $ 0.22
                                                                               =====             ======

</TABLE>
                                       2
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                 Consolidated Statements of Comprehensive Income
         For the Three Months Ended March 31, 2001 and 2000 (unaudited)
                      (in thousands, except per share data)
<TABLE>
<S>                                                                           <C>               <C>
                                                                               For the Three Months Ended
                                                                                     March 31,
                                                                                 2001             2000
                                                                                 ----             ----
                                                                                      (unaudited)
Net Income                                                                    $1,023            $ 1,099

Other comprehensive income (loss), net of tax
  Unrealized gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period               $1,999            $ (613)
    Less:  Reclassification adjustment for gains included in net
      income                                                                      87                  1
                                                                                  --                  -
Other comprehensive income (loss)                                             $1,912            $ (614)
Comprehensive income                                                          $2,935              $ 485
                                                                              ======              =====

</TABLE>
                                       3
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Operations
          For the Six Months Ended March 31, 2001 and 2000 (unaudited)
                      (in thousands, except per share data)
<TABLE>
<S>                                                                             <C>                   <C>
                                                                                 For the Six Months Ended
                                                                                          March 31,
                                                                                   2001                2000
                                                                                   ----                ----
                                                                                         (unaudited)
Interest Income:
  Loans                                                                          $19,304            $ 14,867
  Mortgage-related securities                                                      2,601               1,836
  Investment securities:
     Taxable                                                                       3,678               3,454
    Non-Taxable                                                                      918               1,734
                                                                                     ---               -----
     Total interest income                                                        26,501              21,891

Interest Expense:
  Deposits                                                                        10,359               7,459
  Federal Home Loan Bank advances and other                                        5,419               5,002
                                                                                   -----               -----

     Total interest expense                                                       15,778              12,461

Net interest income                                                               10,723               9,430

Provision for loan losses                                                            264                 443
                                                                                     ---                 ---


Net interest income after provision for loan losses                               10,459               8,987

Non-interest Income:
  Service charges and other fees                                                     768                 586
  Insurance premium income                                                           565                 106
  Trust fee income                                                                   270                   3
  Other income (expense)                                                            (95)                 211
  Gain (loss) on the sale of:
     Real estate owned                                                                 5               (113)
     Loans                                                                           497                  14
     Available-for-sale securities                                                  (51)                (13)
                                                                                    ----                ----
     Total non-interest income                                                     1,959                 794

Non-interest Expense:
  Salaries and net employee benefits                                               4,686               3,878
  Occupancy costs                                                                  1,272                 975
  Data processing                                                                    345                 260
  Professional fees                                                                  360                 302
  Federal Home Loan Bank and other service charges                                   378                 325
  Amortization                                                                       535                 191
  Other                                                                            1,709               1,268
                                                                                   -----               -----

     Total non-interest expense                                                    9,285               7,199

Income before income taxes                                                         3,133               2,582

Income taxes                                                                         818                 337
                                                                                     ---                 ---


Net income                                                                        $2,315             $ 2,245
                                                                                  ======             =======

Earnings per share - basic                                                         $0.49              $ 0.45
                                                                                   =====              ======
Earnings per share - diluted                                                       $0.47              $ 0.43
                                                                                   =====              ======
</TABLE>
                                       4
<PAGE>


                     Northeast Pennsylvania Financial Corp.
              Consolidated Statement of Comprehensive Income (Loss)
          For the Six Months Ended March 31, 2001 and 2000 (unaudited)
                                 (in thousands)
<TABLE>
<S>                                                                           <C>               <C>
                                                                                 For the Six Months Ended
                                                                                       March 31,
                                                                                 2001               2000
                                                                                 ----               ----
                                                                                      (unaudited)
Net Income                                                                     $2,315            $ 2,245
                                                                               ======            =======

Other comprehensive income (loss), net of tax
  Unrealized gains (losses) on securities:
    Unrealized holding gains (losses) arising during the period                $3,627          $ (1,705)
    Less:  Reclassification adjustment for losses included in
      net income                                                                 (34)                (8)
                                                                                 ----                ---
Other comprehensive income (loss)                                              $3,661           $(1,697)
Comprehensive income                                                           $5,976              $ 548
                                                                               ======              =====
</TABLE>
                                       5
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                  Consolidated Statements of Changes in Equity
           For the Three Years Ended September 30, 2000, 1999 and 1998
               and the Six Months Ended March 31, 2001 (unaudited)
                                 (in thousands)
<TABLE>
<S>                                           <C>       <C>           <C>           <C>          <C>            <C>          <C>

                                                                      Common Stock               Accumulated
                                                        Additional    Acquired by                   Other
                                               Common     Paid In    stock benefit   Retained   Comprehensive    Treasury    Total
                                               Stock     Capital         plans       Earnings    Income(loss)      Stock     Equity

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 shares issued)                      64                                                                            64
Additional paid-in Capital                                61,959                                                             61,959
Unearned Employee Stock Ownership
     Plan (ESOP) shares                                                (5,142)                                              (5,142)
ESOP shares committed to be released                         124           343                                                  467
Net changes in gains (losses) on
     securities available for sale, net of tax                                                      1,595                     1,595
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 released                          77           557                                                  634
Stock awards                                                (41)           488                                                  447
Net changes in gains (losses) on
securities available for sale, net of tax                                                         (5,752)                   (5,752)
Treasury stock at cost, (626,667 shares)                                                                         (7,585)    (7,585)
Cash dividend paid                                                                      (955)                                 (955)
Net income                                                                              4,565                                 4,565
                                              -------    -------       -------       --------    --------        -------    -------
Balance September 30, 1999                    $    64    $62,119      $(7,066)       $ 30,818   $ (2,874)       $(7,585)   $ 75,476

ESOP shares committed to be released                          89           328                                                  417
Stock awards                                                (44)           517                                                  473
Net changes in gains (losses) on
securities available-for-sale, net of tax                                                           (837)                     (837)
Treasury stock at cost, (507,534 shares)                                                                         (4,943)    (4,943)
Cash dividend paid                                                                    (1,547)                               (1,547)
Net income                                                                             3,936                                  3,936
                                              -------    -------       -------       --------    --------        -------    -------
Balance,  September 30, 2000                  $    64    $62,164      $(6,221)       $ 33,207    $(3,711)      $(12,528)    $72,975
                                              =======    =======       =======       ========    ========        =======    =======

ESOP shares committed to be released                         115           186                                                  301
Stock awards                                                (19)           227                                                  208
Stock options exercised (32,808 shares)                    (204)                                                     391        187
Net changes in gains (losses) on
securities available-for-sale, net of tax                                                           3,661                     3,661
Treasury stock at cost, (222,165 shares)                                                                         (2,569)     (2,569)
Acquisition of Higgins Insurance
Associates (215,052 shares)                                 126                                                    2,374      2,500
Cash dividend paid                                                                      (903)                                 (903)
Net income                                                                              2,315                                 2,315
                                              -------    -------       -------       --------    --------        -------    -------
Balance,  March 31,  2001                     $    64    $62,182      $(5,808)       $ 34,619    $   (50)      $(12,332)    $78,675
                                              =======    =======       =======       ========    ========        =======    =======
</TABLE>

                                       6

<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Cash Flows
          For the Six Months Ended March 31, 2001 and 2000 (unaudited)
                                 (in thousands)
<TABLE>
<S>                                                                                     <C>                <C>
                                                                                           For the Six Months Ended
                                                                                                  March 31,
                                                                                             2001           2000
                                                                                             ----           ----
Operating Activities:                                                                            (unaudited)
Net Income                                                                                $ 2,315          $ 2,245
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
  Provision for REO loss                                                                      203               40
  Provision for loan losses                                                                   264              443
  Depreciation                                                                                687              560
  Amortization                                                                                535              191
  Deferred income tax provision                                                             2,828              932
  ESOP expense                                                                                301              187
  Stock award expense                                                                         208              280
  Amortization and accretion on:
     Held-to-maturity securities                                                              (3)                2
     Available-for-sale securities                                                          (358)               13
  Amortization of deferred loan fees                                                        (204)             (99)
(Gain) loss on sale of:
     Assets acquired through foreclosure                                                      (5)              113
     Loans                                                                                  (497)             (14)
     Available-for-sale securities                                                             51               13
  Changes in assets and liabilities:
    Increase in accrued interest receivable                                               (1,103)            (803)
    Increase in other assets                                                             (14,972)          (2,480)
    Increase (decrease) in accrued interest payable                                         (904)              498
    Decrease in accrued income taxes payable                                                (807)          (1,380)
    Increase in other liabilities                                                           2,064              489
                                                                                            -----              ---

      Net cash provided by (used in) operating activities                               $ (9,397)           $1,230

Investing Activities:
Net increase in loans                                                                  $ (73,660)        $(47,421)
Proceeds from sale of:
  Available-for-sale securities                                                            48,811            5,313
   Held to maturity securities                                                              3,983                -
  Assets acquired through foreclosure                                                         158              112
  Loans                                                                                     1,916              923
Proceeds from repayments of held-to-maturity securities                                         -                2
Proceeds from repayments of available-for-sale securities                                   8,445            3,793
Purchase of:
  Held-to-maturity securities                                                             (6,454)          (1,005)
  Available-for-sale securities                                                          (93,929)         (16,123)
  Office properties and equipment                                                         (2,608)            (347)
  Federal Home Loan Bank stock                                                           (11,000)          (3,225)
                                                                                         --------          -------

Net cash used in investing activities                                                 $ (124,338)        $(57,978)

Financing Activities:
  Net increase (decrease) in deposit accounts                                            $ 61,665         $(3,133)
  Net decrease in Federal Home Loan Bank short-term advances                                4,500           15,000
  Borrowings of Federal Home Loan Bank long-term advances                                 110,000           50,000
  Repayments of Federal Home Loan Bank long-term advances                                (41,010)             (10)
  Net increase (decrease) in advances from borrowers for taxes and insurance                  513             (53)

</TABLE>
                                       7
<PAGE>


                     Northeast Pennsylvania Financial Corp.
                      Consolidated Statements of Cash Flows
          For the Six Months Ended March 31, 2001 and 2000 (unaudited)
                                 (in thousands)
<TABLE>
<S>                                                                                     <C>             <C>
                                                                                             For the Six Months
                                                                                                Ended March 31,

                                                                                             2001           2000
                                                                                             ----           ----
                                                                                                (unaudited)
    Net increase (decrease) in other borrowings                                             3,622           (119)
    Purchase of treasury stock                                                            (2,569)         (4,215)
    Stock issued for the purchase of Higgins Insurance Associates, Inc.                     2,500               -
    Stock options exercised                                                                   187               -
    Cash dividend on common stock                                                           (903)           (741)
                                                                                            -----           -----

     Net cash provided by financing activities                                           $138,505         $56,729

(Increase) decrease in cash and cash equivalents                                            4,770            (19)

Cash and cash equivalents, beginning of year                                                6,295           4,177
                                                                                            -----           -----

Cash and cash equivalents, end of year                                                    $11,065          $4,158
                                                                                          =======          ======

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
     Interest                                                                             $16,682         $11,963
                                                                                          =======         =======
     Income taxes                                                                            $535            $807
                                                                                             ====            ====
Supplemental disclosure - non-cash information:
  Transfer from loans to real estate owned                                                   $827            $449
                                                                                             ====            ====
   Net change in unrealized losses on securities
     Available-for-sale, net of tax                                                       $ 5,967        $(1,697)
                                                                                          =======         =======
</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,  2000.  The results for the six months  ended March 31,
          2001  are  not  necessarily  indicative  of the  results  that  may be
          expected for the year ending September 30, 2001.

          Northeast  Pennsylvania  Financial  Corp.  (the  "Company") has a $2.0
          million investment in the preferred stock of Buildersfirst.com.  Since
          the investment does not have a readily  determinable market value, the
          Company is not accounting  for the investment  under SFAS No. 115. The
          accounting  for this security was guided by EITF Topic No. D-68,  EITF
          Topic No. 98-13, and EITF Topic No. 99-10, which, in essence,  provide
          that  investee  losses  should be  absorbed  by  investments  in other
          securities  once an investee's  common equity has been exceeded by net
          losses.

         Business

          The  Company  is the  holding  company  for  First  Federal  Bank (the
          "Bank"),   Northeast   Pennsylvania   Trust  Co.  (the  "Trust  Co."),
          Abstractors,  Inc.,  and Higgins  Insurance  Agency  ("Higgins").  The
          Company  through  its  subsidiaries  serves  Northeastern  and Central
          Pennsylvania  through  sixteen full service  community  banking office
          locations,  three financial centers and a loan production  office. The
          Company  provides a wide range of  financial  services to  individual,
          small   business  and  corporate   customers.   The  Company  and  all
          subsidiaries   are  subject  to  competition   from  other   financial
          institutions  and  companies  that  provide  financial  services.  The
          Company,  the Bank,  the Trust Co.  and  Higgins  are  subject  to the
          regulations  of  federal  and  state  agencies  and  undergo  periodic
          examinations by those regulatory authorities.

          On November 10, 2000, the Company  acquired  Security of  Pennsylvania
          Financial  Corp.  for  $17.50  per  share.   The  total  cost  of  the
          acquisition  was  $25.9  million.  The  intangibles  acquired  will be
          amortized  using  both  straight  line  and  accelerated   methods  of
          amortization  over lives ranging from 13 to 31 years.  The transaction
          is accounted for using the purchase method of accounting.  Immediately
          upon consummating the transaction,  Security of Pennsylvania Financial
          Corp. ("Security") and its subsidiary, Security Savings Association of
          Hazleton,  were merged  into the  Company and the Bank,  respectively.
          Security was the holding  company of Security  Savings  Association of
          Hazleton,  headquartered in Hazleton,  Pennsylvania.  Security Savings
          Association  of Hazleton had been serving its  customers and community
          since  1889,  out of  four  offices  located  in  Luzerne  and  Carbon
          counties,  Pennsylvania.


                                       9

<PAGE>

          The balance sheets contained in the Form 10-Q's for March 31, 2001 and
          December 31, 2000 reflect acquired assets and liabilities of Security.
          Results  of  former  Security  operations  have been  included  in the
          consolidated  Statement of Operations  prospectively  from the date of
          acquisition.  Following  are the pro  forma  results  which  have been
          prepared as though the Company had acquired  Security at the beginning
          of the period presented.

              PRO FORMA UNAUDITED COMBINED CONDENSED INCOME STATEMENT
                   FOR THE SIX MONTHS ENDED MARCH 31, 2001
                     (In thousands, except per share data)


                                                           As
                                                        Reported      Pro forma
                                                        --------      ----------


         Net interest income                              10,723        11,310
         Other income                                      1,959           380
         Net income                                        2,315       (1,562)

         Earnings per share-basic                        $  0.49     $  (0.33)
         Earnings per share-diluted                      $  0.47     $  (0.32)


         Principles of Consolidation and Presentation

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

                                       10

<PAGE>


         Earnings per Share

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

<TABLE>
<S>                                                <C>              <C>               <C>              <C>
                                                      Three months ended                  Six months ended
                                                           March 31,                          March 31,
                                                      2001            2000             2001             2000
                                                      ----            ----             ----             ----
                                                                          (unaudited)
                                                         (Dollars in thousands, except per share data)

       Basic:

       Net Income                                   $1,023            $1,099            $2,315          $2,245
                                                    ======            ======            ======          ======

       Weighted average shares outstanding
                                                 4,648,655         4,741,317         4,587,369       4,872,922
       Plus:  ESOP shares released
          or committed to be released              160,684           109,266           154,257         102,839
                                                   -------           -------           -------         -------

                                                 4,809,339         4,850,583         4,741,626       4,975,761
                                                 =========         =========         =========       =========

       Earnings per share  - basic                   $0.21             $0.23             $0.49           $0.45
                                                     =====             =====             =====           =====



                                                      Three months ended                  Six months ended
                                                           March 31,                          March 31,
                                                      2001            2000             2001             2000
                                                      ----            ----             ----             ----
                                                                          (unaudited)
                                                         (Dollars in thousands, except per share data)

       Diluted:  (1)

       Net Income                                   $1,023             $1,099           $2,315          $2,245
                                                    ======             ======           ======          ======

       Basic weighted shares outstanding         4,809,339          4,850,583        4,741,626       4,975,761
       Dilutive Instruments:
         Dilutive effect of outstanding
          stock options                             25,798                  -            5,213               -
         Dilutive effect of stock awards           132,289            194,369          142,871         193,896
                                                   -------            -------          -------         -------
                                                 4,967,426          5,044,952        4,889,710       5,169,657
                                                 =========          =========        =========       =========

       Earnings per share  - diluted                 $0.21              $0.22            $0.47           $0.43
                                                     =====              =====            =====           =====
</TABLE>

2.       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 in  connection
          with  the  Bank's   conversion  from  the  mutual  to  stock  form  of
          organization.  On March 31, 1998, the Company issued 6,427,350 shares,
          par value  $.01 per share  (the  "Common  Stock"),  including  514,188
          shares to the Bank's  Employee Stock  Ownership Plan and related trust
          (the "ESOP") and a  contribution  of 476,100 shares of Common Stock to
          The  First  Federal  Charitable  Foundation  (the  "Foundation").  The
          Company received net proceeds of $52.1 million, after expenses of $2.2
          million from the offering.

          As required by regulation the Bank  established a liquidation  account
          at the time of its  Conversion in an amount equal to the equity of the
          Bank as of  September  30, 1997.  In

                                       11
<PAGE>

          the unlikely event of a complete liquidation of the Bank, (and only in
          such an event),  eligible depositors who continue to maintain accounts
          at the Bank  shall be  entitled  to  receive a  distribution  from the
          liquidation  account.  The amount of the liquidation account decreases
          to the extent the balances of eligible deposits decrease. However, the
          liquidation  account does not increase if deposit  accounts  increase.
          The  liquidation  account  approximated  $6.8 million at September 30,
          2000.

          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 has 2,000,000  authorized 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, 2001, there were
          no shares of preferred stock issued.

                                       12

<PAGE>


3.  Securities
     Securities are summarized as follows:
<TABLE>
<S>                                                  <C>              <C>           <C>           <C>
                                                                          March 31, 2001
                                                                            (unaudited)
                                                                          (in thousands)
                                                                       Gross           Gross
                                                     Amortized        Unrealized    Unrealized          Fair
                                                        Cost           Gains          Losses           Value
                                                     ---------        ----------    ----------        ------
Available-for-sale securities:

   Municipal securities                                $34,511          $54            $(762)         $33,803
   Obligations of U.S. Government agencies              17,999          120              (19)          18,100
   Mortgage-related securities                         102,151        1,201              (78)         103,274
   Trust Preferred securities                           13,716            -           (1,585)          12,131
   Corporate Bonds                                      26,971          672              (19)          27,624
                                                      --------       --------        --------        --------

     Total debt securities                             195,348        2,047           (2,463)         194,932

   FHLB stock                                           10,673            -                 -          10,673
   Freddie Mac stock                                     1,514          231                 -           1,745
   Fannie Mae stock                                      1,000           14                 -           1,014
  Other equity securities                                2,967           93               (3)           3,057
                                                      --------       --------        --------        --------

     Total equity securities                            16,154          338               (3)          16,489
                                                      --------       --------        --------        --------

           Total                                      $211,502       $2,385          $(2,466)        $211,421
                                                      ========       ========        ========        ========

Held-to-maturity securities:

   Municipal securities                                 $3,551           $-            $(145)          $3,406
   Obligations of U.S. government agencies              26,787            9             (170)          26,626
   Certificates of deposit                               2,472            -                 -           2,472
                                                      --------       --------        --------        --------

           Total                                       $32,810           $9            $(315)         $32,504
                                                      ========       ========        ========        ========
</TABLE>
                                       13

<PAGE>

<TABLE>
<S>                                                    <C>          <C>             <C>               <C>
                                                                         SEPTEMBER 30, 2000
                                                                         ------------------
                                                                           (in thousands)
                                                                       Gross           Gross
                                                       Amortized    Unrealized      Unrealized          Fair
                                                         Cost          Gains          Losses            Value
                                                       ---------    ----------      ----------        --------
Available-for-sale securities:

   Municipal securities                                 $35,503          $-          $(2,471)         $33,032
   Obligations of U.S. Government agencies               39,477           -           (1,404)          38,073
   Mortgage-related securities                           53,810          88             (822)          53,076
   Trust Preferred securities                            13,729           -           (2,296)          11,433
   Corporate Bonds                                       11,407          22              (13)          11,416
                                                        -------     -------          --------         -------
     Total debt securities                              153,926         110           (7,006)         147,030
                                                        -------     -------          --------         -------

   FHLB stock                                             6,873           -                 -           6,873
   Freddie Mac stock                                        910         350                 -           1,260
   Fannie Mae stock                                       1,000           3                 -           1,003
  Other equity securities                                   813         497               (2)           1,308
                                                        -------     -------          --------         -------

     Total equity securities                              9,596         850               (2)          10,444
                                                        -------     -------          --------         -------
           Total                                       $163,522        $960          $(7,008)        $157,474
                                                        =======     =======          ========         =======

Held-to-maturity securities:

   Municipal securities                                  $3,551          $-            $(328)          $3,223
   Obligations of U.S. government agencies               26,785           -           (1,879)          24,906
                                                        -------     -------          --------         -------

           Total                                        $30,336          $-          $(2,207)        $28,129
                                                        =======     =======          ========         =======
</TABLE>

4.       Loans
<TABLE>
<S>                                                                  <C>                  <C>
        Loans are summarized as follows:                               March 31,          September 30,
                                                                         2001                2000
                                                                         ----                ----
                                                                      (unaudited)
                                                                              (in thousands)
        Real Estate loans:
          One-to four-family                                          $235,347               $205,790
          Multi-family and commercial                                   67,766                 52,669
          Construction                                                   7,956                  3,152
                                                                         -----                  -----
        Total real estate loans                                        311,069                261,611
                                                                       -------                -------

        Consumer Loans:
          Home equity loans and lines of credit                         79,530                 72,416
          Automobile                                                    59,503                 50,941
          Education                                                      3,693                  3,516
          Unsecured lines of credit                                      1,875                  1,817
          Other                                                         10,955                  8,021
                                                                        ------                  -----
        Total consumer loans                                           155,556                136,711
                                                                       -------                -------
        Commercial loans                                                26,649                 22,481
                                                                        ------                 ------
        Total loans                                                    493,274                420,803
                                                                       -------                -------
          Less:
             Allowance for loan losses                                 (5,135)               (4,162)
             Deferred loan origination fees                            (1,680)               (1,536)
                                                                       -------               -------
        Total loans, net                                              $486,459               $415,105
                                                                      ========               ========
</TABLE>
                                       14

<PAGE>



     The activity in the allowance for loan losses is as follows (in thousands):
<TABLE>
<S>                                             <C>                        <C>                          <C>
                                                  For the six                                              For the six
                                                 months ended              For the year ended             months ended
                                                March 31, 2001             September 30, 2000            March 31, 2000
                                                --------------             ------------------            --------------
                                                  (unaudited)                                             (unaudited)
         Balance, beginning of period                $4,162                      $2,924                       $2,924
         Additional allowance from
          acquisition of Security                       817                           -                            -
         Charge-offs                                  (116)                       (247)                         (47)
         Recoveries                                       8                          18                            2
         Provision for loan losses                      264                       1,467                          443
                                                        ---                       -----                          ---
         Balance, end of period                      $5,135                      $4,162                       $3,322
                                                     ======                      ======                       ======
</TABLE>

5.       Deposits

         Deposits consist of the following major classifications (in thousands):
<TABLE>
<S>                                                             <C>             <C>             <C>         <C>
                                                                      March 31, 2001            September 30, 2000
                                                                      --------------            ------------------
                                                                         (unaudited)
                                                                                 Percent                     Percent
                                                                      Amount     of Total          Amount    of Total
                                                                     --------   ----------        --------  ----------
                                                                     --------   ----------        --------  ----------
        Savings accounts (passbook, statement, clubs)                $91,334        18.98%        $70,369       16.77%
        Money market accounts                                         34,133         7.09          31,635        7.54
        Certificates of deposit less than $100,000                   220,630        45.83         180,775       43.08
        Certificates of deposit greater than $100,000(1)              61,940        12.87          81,847       19.50
        NOW Accounts                                                  50,092        10.41          37,781        9.00
        Non-interest bearing deposits                                 23,207         4.82          17,264        4.11
                                                                      ------         ----          ------        ----
        Total deposits at end of period                             $481,336       100.00%       $419,671      100.00%
                                                                    ========       =======       ========      =======
<FN>
         (1) Deposit balances in excess of $100,000 are not federally insured.
</FN>
</TABLE>
                                       15
<PAGE>



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

In   addition   to   historical   information,   this  10-Q   includes   certain
forward-looking  statements based on current management expectations.  Northeast
Pennsylvania  Financial  Corp.  (the  "Company")  intends  such  forward-looking
statements to be covered by the safe harbor provisions of the Private Securities
Reform Act of 1995 and is  including  this  statement  for purposes of such safe
harbor  provisions.  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,  and other  economic,  competitive,  governmental  and
technological  factors affecting the Company's  operations,  markets,  products,
services  and  prices.   These  factors   should  be  considered  in  evaluating
forward-looking  statements  and  undue  reliance  should  not be placed on such
statements.  Further  description of the risks and uncertainties to the business
are  included  in detail in  Section  B,  Management  Strategy;  and  Section D,
Liquidity and Capital Resources.

A.       General

The Company is the holding company for First Federal Bank, a federally-chartered
capital  stock  savings  bank  regulated  by the  Office of  Thrift  Supervision
("OTS"),  Abstractors,  Inc.,  Trust Co.,  Abstractors,  Inc., and Higgins.  The
Company does not transact any material  business other than through the Bank and
its other subsidiaries. Accordingly the information set forth in this Form 10-Q,
including the financial  information,  primarily relates to the Bank. 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.

In June 1998, the Company  purchased  Abstractors,  Inc. a local title insurance
agency.  In June 1999,  the  Company  received  approval  from the  Pennsylvania
Department of Banking to form a trust company,  Northeast Pennsylvania Trust Co.
The Trust began  operations in the first fiscal  quarter of 2000.  The Trust Co.
offers  current  customers  and,  potentially,   other  financial  institutions'
customers trust, estate and asset management services and products.

On November 10, 2000, the Company  acquired  Security of Pennsylvania  Financial
Corp., the holding company for Security Savings Association of Hazleton, a local
financial institution.  In December 2000, the Company acquired Higgins Insurance
Agency, a Pottsville based insurance  agency,  which has been serving  customers
throughout  Schuylkill and Luzerne Counties since 1946. Higgins offers personal,
health and commercial insurance.

                                       16
<PAGE>

B.       Management Strategy

The  Company's  operating  strategy  is  that  of  a  community-based  financial
institution,  offering a wide  variety of  financial  products to its retail and
business customers. The Bank, while maintaining its focus on residential lending
has been concentrating on increasing its consumer, small business and commercial
lending. In order to promote long-term financial strength and profitability, the
Company's  operating strategy has focused on: (i) meeting the financial needs of
its customers through expanded product offerings,  improved delivery systems and
by taking  advantage of  technological  advances,  including the internet;  (ii)
increasing profitability by emphasizing  higher-yielding consumer and commercial
loans; (iii) maintaining a strong regulatory capital position; (iv) managing its
interest rate risk by emphasizing  consumer and commercial loans, in addition to
shorter term, adjustable rate, one-to four-family loans,  soliciting longer-term
deposits and utilizing  longer-term  advances from the Federal Home Loan Bank of
Pittsburgh (the "FHLB");  and (v) maintaining  strong asset quality by utilizing
strong underwriting guidelines.

C.       Non-Performing Assets and Impaired Loans

The following table presents information regarding the Bank's non-performing
loans, real estate owned and other repossessed assets at the dates indicated:
<TABLE>
<S>                                                                       <C>                        <C>
                                                                           March 31,                September 30,
                                                                             2001                        2000
                                                                             ----                        ----
                                                                          (unaudited)
                                                                                      (in thousands)
Non-performing loans:
 Non-accrual loans plus other impaired loans                                  $5,482                    $3,499
Real estate owned and other repossessed assets                                   644                       173
                                                                                 ---                       ---
     Total non-performing assets                                              $6,126                    $3,672
                                                                              ======                    ======

         Total non-performing loans as a percentage of total loans             1.12%                     0.83%
         Total non-performing assets as a percentage of total assets           0.78%                     0.58%

</TABLE>

The increase in  non-performing  assets was  primarily  the result of additional
delinquencies  associated  with the Security  Savings  acquisition.  Included in
non-accrual  was plus other  impaired  loans at September 30, 2000 and March 31,
2001 is a $2.0 million impaired loan to a commercial  borrower.  This commercial
loan is secured by a  portfolio  of NASDAQ  traded  securities  whose  value has
fluctuated greatly in recent periods.


D.  Allowance for Loan Losses

An allowance is maintained to absorb losses inherent in the loan portfolio.  The
adequacy of the  allowance is  periodically  evaluated by management to maintain
the allowance at a level that is sufficient to absorb expected loan losses.  The
allowance  for loan  losses  is also  increased  by  balances  acquired  through
acquisitions,  recoveries and is decreased by  charge-offs.  The Company charges
current  earnings with a provision for loan losses to maintain the allowance for
loan losses at a level deemed  appropriate  by management.  In  determining  the
provision,  management  considers both specifically  identified problem loans as
well as credit risks not specifically identified in the loan portfolio.

                                       17
<PAGE>

The  Company's  determination  as to the  adequacy of the  allowance is based on
management's  evaluation of past loan loss experience,  known and inherent risks
in the loan portfolio,  possible adverse  situations that have occurred that may
affect a  borrower's  ability  to  repay,  the  estimated  value  of  underlying
collateral, economic conditions, and other relevant factors. Management assesses
the adequacy of the allowance through a formula allowance,  specific  allowances
for identified problem loans and an unallocated allowance.

The formula allowance  element gives  consideration to historical losses and the
current   composition  of  the  portfolios.   Losses  are  recognized  when  (a)
information  indicates that it is probable that a loss has been incurred and (b)
the amount of the loss can be  reasonably  estimated.  Borrowers are impacted by
events that result in loan default such as job loss, divorce,  medical crisis or
the loss of a major tenant. The time-frame between the occurrence of such events
and the  resulting  default and loss  realization  is between 1.0 and 2.5 years,
depending  upon the loan type.  Therefore,  for example,  if the general  credit
characteristics of a portion of a loan portfolio have not changed  significantly
over time,  losses can be estimated by calculating  historical  loss  experience
over a period of two years.

The formula  allowance  is  determined  by  applying  loss  factors  against all
non-impaired  loans. Loss factors may be adjusted for significant  factors that,
in management's  judgment,  affect the collectibility of the portfolio as of the
evaluation  date. Loss factors are calculated  based on models that estimate the
probability  that  loans  will  become   delinquent  and  ultimately  result  in
foreclosure  over a period of between 1.0 and 2.5 years,  depending  on the loan
type,  and the  rates of loss  that have been  experienced  on such  loans.  The
foreclosure  and loss  rates are then  reviewed  in order to  attempt to predict
losses going forward. A contingency factor is then added to provide for the risk
associated with imprecision in estimating inherent loan losses.

Specific allowances are established against individual residential 1-4 mortgage,
consumer,  commercial,  and  commercial and  multi-family  real estate loans for
which  management has performed  analyses and concluded  that,  based on current
information  and events,  it is probable that the Bank will be unable to collect
all  amounts  due  according  to the  contractual  terms of the loan  agreement.
Generally,  management believes that full collectibility in the normal manner is
improbable if a loan is severely  delinquent or if it has been  determined  that
borrower  cash flow is  inadequate  for debt  repayment.  The amount of specific
allowance  is  determined  by an  estimation  of any  underlying  fair  value of
collateral, net of the cost of disposition of the collateral, and the fair value
is compared to the net book value of the loan. If the net book value exceeds the
fair  value,  a specific  allowance  is  established  in an amount  equal to the
excess.  Loans  evaluated  for specific  allowance are excluded from the formula
allowance analysis so as not to double-count loss exposure.

An  unallocated  allowance  is  established  for losses  which may not have been
identified  through the  formula and  specific  portions of the  allowance.  The
unallocated  portion is more subjective and requires a high degree of management
judgment and experience.  Management has identified  several factors that impact
credit  losses that are not  considered  in either the  formula or the  specific
allowance  segments.  These  factors  consist of industry  and  geographic  loan
concentrations,   changes  in  the  composition  of  loan   portfolios   through
acquisitions and new business strategies, changes in underwriting processes, and
trends in problem  loan and loss  recovery  rates.  Each factor is analyzed  and
assigned a range of values.  At this time,  management has chosen an unallocated
allowance amount at the mid-point of the range for each factor.

                                       18
<PAGE>


E. Liquidity and Capital Resources

The Bank's  primary  sources of funds on a long-term  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.  At March 31, 2001 and 2000, the
Bank's liquidity ratios were 8.4% and 4.6%, respectively.

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, 2001, cash and cash equivalents
and investment and mortgage-related securities available-for-sale totaled $222.5
million, or 28.4% of total assets.

The Bank has other sources of liquidity if a need for  additional  funds arises,
including  FHLB  advances.  At March 31,  2001,  the Bank had $211.0  million in
advances  outstanding  from the FHLB, and had an overall  borrowing  capacity of
$358.5 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, 2001, the Bank had  commitments to originate and purchase loans and
unused  outstanding  lines of credit and  undisbursed  proceeds of  construction
mortgages  totaling  $52.3  million.  The  Bank  anticipates  that it will  have
sufficient  funds  available to meet these  commitments.  Certificate  accounts,
including  Individual  Retirement Account ("IRA") and KEOGH accounts,  which are
scheduled  to mature in less than one year from March 31, 2001,  totaled  $209.6
million.  Based on past experience,  the Bank expects that  substantially all of
these maturing certificate accounts, with the exception of jumbo certificates of
deposit,  will be retained by the Bank at maturity.  At March 31, 2001, the Bank
had $57.1 million in jumbo certificates, the majority of which are deposits from
local school districts and municipalities.

At March 31, 2001, the Bank exceeded all of its regulatory capital  requirements
with a  tangible  capital  level of  $47.2  million,  or 6.2% of total  adjusted
assets,  which is above the  required  level of $11.4  million,  or 1.5%; a core
capital level of $47.2 million, or 6.2% of total adjusted assets, which is above
the required level of $22.8 million,  or 3.0%; and a risk-based capital of $52.4
million, or 11.9% of risk-weighted  assets, which is above the required level of
$35.4 million, or 8.0%.

At March 31, 2001,  the Bank had total equity,  determined  in  accordance  with
generally accepted  accounting  principles,  of $58.5 million, or 7.7%, of total
assets,  which approximated the Bank's regulatory  tangible capital at that date
of 6.2% of assets.  An  institution  with a ratio of  tangible  capital to total
assets of greater than or equal to 5.0% is considered  to be  "well-capitalized"
pursuant to OTS regulations.


                                       19
<PAGE>


F.  Comparison of Financial Condition at March 31, 2001 and September 30, 2000

On November  10, 2000  Northeast  Pennsylvania  Financial  Corp.  completed  its
acquisition of Security of Pennsylvania  Financial Corp. for $17.50 per share in
a transaction accounted for using the purchase method of accounting.

As a result of the  acquisition  of Security  Savings in  November of 2000,  the
asset base increased $145.4 million from $637.3 million at September 30, 2000 to
$782.7 million at March 31, 2001. The growth was in loans receivable, investment
securities and intangible assets.

Available-for-sale  securities  increased $53.9 million,  from $157.5 million at
September  30,  2000 to $211.4  million  at March 31,  2001.  The  increase  was
primarily  attributable to the purchase of mortgage backed securities  utilizing
proceeds from the sale of mortgage loans and advances from the FHLB.

Loans increased $71.4 million to $486.5 million at March 31, 2001, primarily due
to the loans obtained from the Security acquisition. The largest increase was in
one-to four-family real estate loans which increased $29.6 million,  as a result
of $61.6 million of loans  acquired from  Security,  offset by the sale of $28.4
million of Security's  fixed rate mortgage  loans.  In addition,  consumer loans
increased  $18.8  million and  multi-family  and  commercial  real estate  loans
increased $15.1 million

Intangible  assets increased $12.3 million to $13.7 million at March 31, 2001 as
a result of a core deposit  intangible  of $9.1 million  created by the Security
acquisition.  The core deposit  intangible is being  amortized on an accelerated
basis over a 13 to 31 year life.  Goodwill from the purchase of Security is $1.1
million which is being amortized over a 20 year life. Also  contributing to this
increase is $2.6 million of goodwill  created as a result of the  acquisition of
Higgins  Insurance  Associates,  Inc.,  which is being  amortized over a 20 year
life.

Deposits  increased  $61.6 million from $419.7  million at September 30, 2000 to
$481.3 million at March 31, 2001. The largest  increase was in savings  accounts
and  certificates  of deposit,  which increased $21.0 million and $19.9 million,
respectively, from the acquisition of Security combined with increased marketing
efforts and competitive  pricing of such products.  NOW accounts increased $12.3
million  from  $37.8  million  to $50.1  million  as a result  of a more  active
solicitation of such accounts and the Security acquisition.

FHLB advances increased $73.5 million, from $137.5 million at September 30, 2000
to  $211.0  million  at  March  31,  2001.  This was a  result  of  management's
utilization  of FHLB  borrowings  to fund  the  purchase  of  Security,  and the
purchase of investment securities.

Total equity  increased  $5.7 million to $78.7  million at March 31, 2001.  This
increase in equity resulted primarily from a $3.7 million net of tax decrease in
unrealized  losses on securities  reflected in accumulated  other  comprehensive
income, along with retention of earnings for the period, partially offset by the
effect of the  purchase by the Company of an  additional  222,000  shares of its
common stock during the period at a cost of $2.6 million.  Equity also increased
through the issuance of 215,052  shares of treasury  stock in the amount of $2.4
million for the purchase of Higgins.

                                       20

<PAGE>


G.  Comparison of Operating Results for the Three Months ended March 31, 2001
    and March 31, 2000

General.  The Company had net income of $1.0  million for the three months ended
March 31, 2001 and $1.1 million for the three months ended March 31, 2000.

Interest  Income.  Total interest  income  increased $2.3 million,  or 21.3%, to
$13.5 million for the three months ended March 31, 2001.  This was primarily due
to a $107.3  million,  or 17.3%,  increase  in the  average  balance of interest
earning assets.  Specifically,  interest income on loans increased $2.2 million,
or  28.7%,  from $7.6  million  for the  period  ending  March 31,  2000 to $9.8
million. This was due to a $57.6 million increase in the average balance of real
estate  loans and a $31.8  million  increase in the average  balance of consumer
loans.  Interest income on total securities  increased  $207,000 to $3.8 million
for the three  months  ended March 31,  2001  primarily  due to a $13.2  million
increase in the average balance of such securities.

Interest Expense.  Interest expense increased $1.6 million,  or 24.5%, from $6.4
million for the three  months ended March 31, 2001 to $8.0 million for the three
months ended March 31, 2000,  due primarily to a $54.9  million  increase in the
average  balance on  certificates  of deposit.  Also,  interest  expense on FHLB
advances and other borrowings  increased  $137,000,  due to a higher outstanding
balance.

Provision for Loan Losses. The Company's provision for loan losses for the three
months  ended March 31,  2001 was  $264,000  compared to $238,000  for the three
months ended March 31, 2000.  The increase in the  provision was a result of the
$76.6 million  increase in net outstanding  loan balances from March 31, 2000 to
March 31,  2001.  Management's  evaluation  is based upon,  among other  things,
delinquency trends, the volume of non-performing loans, prior loss experience of
the portfolio, current economic conditions, and other relevant factors. Although
management  believes it has used the best information  available to it in making
such determinations,  and that the allowance for loan losses is adequate, future
adjustments  to the allowance may be necessary,  and net income may be adversely
affected if  circumstances  differ  substantially  from the assumptions  used in
determining  the  level  of  the  allowance.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the  Company's  allowance  for losses on loans.  Such  agencies  may require the
Company to recognize  additions to the allowance based on their judgements about
information available to them at the time of their examination.

Non-interest  Income.  Non-interest income increased $818,000,  from $358,000 to
$1.2  million,  for the three  months  ended  March 31,  2001.  The  increase in
non-interest  income was  primarily  due to a  $441,000  increase  in  insurance
premium  income from  Higgins.  Service  charges and other fee income  increased
$132,000  as a result  of  higher  outstanding  balances  on  deposits  and more
transactions.  Gain on  available-for-sale  securities increased $131,000 due to
sales of securities during the quarter. Trust fee income increased $130,000 as a
result of a larger asset base under management.

Non-interest Expense. Total non-interest expense increased from $3.6 million for
the three months ended March 31, 2000 to $5.1 million for the three months ended
March 31, 2001, respectively.  Salaries and employee benefits increased $664,000
as a result of new staff from the  acquisitions  of Security and Higgins.  Other
non-interest expense increased $355,000,  or 59.6%,  primarily due to a $134,000
increase in expense for assets acquired through foreclosure and repossession, as
well as general  increases in operating  expenses  such as supplies and postage.

                                       21
<PAGE>
Amortization  expense  increased  $246,000  due to expense  associated  with the
acquisition of Security and Higgins.  Occupancy expense increased  $188,000 as a
result of additional expense incurred with properties acquired from Security.

Income Taxes.  The Company had an income tax provision of $296,000 for the three
months ended March 31,  2001,  compared to a provision of $174,000 for the three
months ended March 31, 2000 reflecting a effective tax rate of 22.4%, and 13.7%,
respectively, for those periods. The increase in the effective tax rate was as a
direct result of the sale of tax-exempt municipal securities.

H.   Comparison of Operating Results for the Six Months ended March 31, 2001
     and March 31, 2000.

General.  The  Company had net income of $2.3  million for the six months  ended
March 31, 2001 and $2.2 million for the six months ended March 31, 2000.

Interest Income.  Total interest income increased $4.6 million,  or 21.1%,  from
$21.9  million  for the six  months  ended  March 31,  2000 to $26.5 for the six
months  ended  March 31,  2001,  primarily  due to an $89.4  million,  or 14.6%,
increase  in the  average  balance of  interest  earning  assets.  Specifically,
interest  income on loans  increased $4.4 million from $14.9 million for the six
month period  ending  March 31, 2000 to $19.3  million,  due to a $58.8  million
increase in the average  balance of real estate loans, a $30.6 million  increase
in the average  balance of consumer  loans,  and a $3.9 million  increase in the
average  balance  of  commercial  loans.  Interest  income  on total  securities
increased  $173,000  to $7.2  million  for the six months  ended  March 31, 2001
primarily  due  to a $3.9  million  increase  in the  average  balance  of  such
securities.

Interest Expense.  Interest expense increased $3.3 million, or 26.6%, from $12.5
million for the six months  ended  March 31,  2000 to $15.8  million for the six
months  ended  March 31,  2001,  primarily  due to a $2.2  million  increase  in
certificates  of deposit  interest  expense.  Interest  expense on checking  and
savings rose $412,000 and $302,000, respectively. The higher interest expense on
deposits  was a direct  reflection  of  higher  outstanding  balances.  Interest
expense on FHLB  advances and other  borrowings  increased  $417,000 due to a 49
basis point increase in the average rate.

Provision for Loan Losses.  The Company's  provision for loan losses for the six
months ended March 31, 2001 was $264,000 compared to $443,000 for the six months
ended March 31, 2000.  The  decrease was due to an increase in the  provision at
March 31, 2000 as a result of loan  purchases  during that quarter.  Information
relating to the  Company's  allowance  for loan  losses  appears in Section D of
Management's Discussion and Analysis of this Form 10-Q.

Non-interest  Income.  The  Company  experienced  a  $1.2  million  increase  in
non-interest  income from  $794,000  for the six months  ended March 31, 2000 to
$2.0  million for the six months ended March 31,  2001.  The primary  reason for
this increase was a $483,000  increase in gain on sale of loans,  resulting from
the sale of Security's fixed rate mortgage loans. Also contributing change was a
$459,000  increase in insurance  premium  income from  Higgins and  Abstractors.
Trust  fee  income  increased  $267,000  from  an  increased  asset  base  under
management.  Service charges and other fees increased $182,000 due to additional
branches and a larger customer base.  Offsetting  these increases was a $306,000
decrease  in other  income  largely  due to losses  derived  from the  Company's
investment in Buildersfirst.com.

                                       22
<PAGE>
Non-interest  Expense.  Total  non-interest  expense increased $2.1 million,  or
29.0%,  from $7.2  million to $9.3  million  for the six months  ended March 31,
2001. The largest  increase,  $808,000,  was in salary and net employee benefits
expense as a result of new staff from Security and Higgins.  Other  non-interest
expense  increased  $441,000  mainly  due to the  expenses  associated  with the
repossession  and  foreclosure  of assets.  General  operating  expenses such as
supplies  and  postage  also  increased  due to  additional  branch and  company
expansion.  Amortization  expense  increased  $344,000  due to the  purchase  of
Security and Higgins.  Occupancy expense increased  $297,000 due to expenditures
on properties acquired from Security Savings.

Income Taxes.  The Company had income tax expense of $818,000 for the six months
ended March 31,  2001,  compared to expense of $337,000 for the six months ended
March  31,  2000,   reflecting   effective  tax  rates  of  26.1%,   and  13.1%,
respectively.  The increase in the effective tax rate was the result of the sale
of tax-exempt municipal securities.

                                       23

<PAGE>


Item 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                    As of March 31, 2001, there have been no material changes in
                    the  quantative  and  qualitative  disclosures  about market
                    risks presented in the Company's  Annual Report on Form 10-K
                    for the fiscal year ended September 30, 2000.

                                       24
<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

                    On December  31,  2000,  the Company  issued an aggregate of
                    215,052 shares of its common stock to the four  stockholders
                    of Higgins Insurance Associates, Inc., all of whom were also
                    officers  of  Higgins  Insurance,  in  connection  with  its
                    acquisition  of Higgins  Insurance.  Those shares of Company
                    common  stock  were  valued  at $2.5  million,  based on the
                    closing  price of the common  stock on  December  1, 2000 as
                    reported in the American Stock Exchange,  as provided in the
                    agreement to acquire Higgins  Insurance.  The Company relied
                    upon the exemption  from  registration  under the Securities
                    Act of 1933 provided by Section 4(2) of the Act.

                    On February  28,  2001,  the Company  issued an aggregate of
                    32,808 shares of its common stock to three  directors of its
                    financial  institution  subsidiaries  upon their exercise of
                    options,  at an  exercise  price of $5.71 per  share,  which
                    those persons initially received as directors of Security of
                    Pennsylvania   Financial  Corp.   Security  of  Pennsylvania
                    Financial  Corp. was acquired by the Company on November 10,
                    2000 at  which  point  their  options  were  converted  into
                    options to purchase Company common stock. The Company relied
                    upon the exemption  from  registration  under the Securities
                    Act provided by Section 4(2) of that Act.


Item 3.           Defaults Upon Senior  Securities

                    Not applicable.

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

                    The Annual  Meeting of the  Stockholders  of the Company was
                    held on January  31,  2001.  The results of the vote were as
                    follows:

                  1. The following individuals were elected as directors, each
                     for a three-year term:
<TABLE>
                <S>                                  <C>                                        <C>
                                                      VOTES FOR                              VOTES WITHHELD
                                                      ---------                              --------------
                  E. Lee Beard                       4,843,956                                   131,641

                  William R. Davidson                4,870,570                                   105,027

                  Thomas L. Kennedy                  4,850,821                                   124,776
</TABLE>
                                       25
<PAGE>

                  2.The  appointment of  KPMG  LLP  as  independent  auditors of
                    Northeast  Pennsylvania  Financial Corp. for the fiscal year
                    ended September 30, 2001 was ratified by the stockholders by
                    the following vote:

                     FOR        AGAINST         ABSTAIN
                  4,912,385     45,914          17,298


Item 5.           Other information

                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K

(A)      Exhibits

     3.1  Certificate  of  Incorporation  of  Northeast  Pennsylvania  Financial
          Corp.*

     3.2  Bylaws  (as  amended   effective   December  29,  2000)  of  Northeast
          Pennsylvania Financial Corp.*

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

     10.1 Northeast Pennsylvania Financial Corp. 1998 Stock-Based Incentive Plan
          **

     10.2 Northeast Pennsylvania Financial Corp. 2000 Stock Based Option Plan**

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

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

     **   Incorporated  herein by reference  into this  document  from the proxy
          statement  for the  2000  Annual  Meeting  of  Shareholders  filed  on
          December 17, 1999.

(B)      Reports on Form 8-K

          On January 24, 2001,  the Company filed an amendment to the 8-K it had
          filed on November 21, 2000.  The amendment  incorporated  by reference
          the audited financial statements of Security of Pennsylvania Financial
          Corp.  and  provided pro forma  financial  information  regarding  the
          Company's acquisition of Security of Pennsylvania Financial Corp.

                                       26
<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 11, 2001                      By: /s/ E. Lee Beard
                                               ----------------
                                                   E. Lee Beard
                                                   President and Chief Executive
                                                   Officer

Date:    May 11, 2001                      By: /s/ Patrick J. Owens, Jr.
                                               -------------------------
                                                   Patrick J. Owens, Jr.
                                                   Treasurer