UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549
                                FORM 10-K

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

For the fiscal year ended DECEMBER 31, 2000
                          -----------------

                                           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          0-17455
                               ------------

                                  COMM BANCORP, INC.
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         (Exact name of registrant as specified in its charter)

            PENNSYLVANIA                                     23-2242292
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(State or other jurisdiction of              (I.R.S. Employer Identification
 incorporation or organization                Number)

125 NORTH STATE STREET, CLARKS SUMMIT, PA                      18411
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(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code         (570) 586-0377
                                                  ----------------------------

Securities registered pursuant to Section 12(b) of the Act:

          Title of each class              Name of each exchange on which
                                           registered
               NONE
----------------------------------        ------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

                      COMMON STOCK, PAR VALUE $0.33 PER SHARE
------------------------------------------------------------------------------
                                 (Title of class)

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing sale price: $35,799,750 AT MARCH 15, 2001.

Indicate the number of shares outstanding of the registrant's common stock,
as of the latest practicable date: 1,987,279 AT MARCH 15, 2001.

                   DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Stockholders for the year ended
December 31, 2000, are incorporated by reference in Part II of this Annual
Report.  Portions of the registrant's 2001 Proxy Statement are incorporated
by reference in Part III of this Annual Report.


                              Page 1 of 189
                        Exhibit Index on Page 43


                           COMM BANCORP, INC.
                             FORM 10-K INDEX

PART I                                                            Page
------                                                            ----
Item  1. Business.................................................  3

Item  2. Properties............................................... 27

Item  3. Legal Proceedings........................................ 28

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

PART II
-------
Item  5. Market for the Registrant's Common Equity and Related
         Stockholder Matters...................................... 28

Item  6. Selected Financial Data.................................. 29

Item  7. Management's Discussion and Analysis of Financial
         Condition and Results of Operations...................... 29

Item 7A. Quantitative and Qualitative Disclosures about Market
         Risk..................................................... 29

Item  8. Financial Statements and Supplementary Data.............. 29

Item  9. Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure......................  *

PART III
--------
Item 10. Directors, Executive Officers, Promoters and Control
         Persons of the Registrant................................ 30

Item 11. Executive Compensation................................... 32

Item 12. Security Ownership of Certain Beneficial Owners and
         Management............................................... 38

Item 13. Certain Relationships and Related Transactions........... 39

PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on
         Form 8-K................................................. 40

Signatures........................................................ 41

Exhibit Index..................................................... 43



*Not Applicable


                          COMM BANCORP, INC.
                               FORM 10-K

PART I

ITEM 1. BUSINESS

GENERAL

We are a registered bank holding company incorporated in 1983 as a
Pennsylvania business corporation and are headquartered in Clarks Summit,
Pennsylvania.  We have two wholly-owned subsidiaries, Community Bank and
Trust Company, referred to as Community Bank, and Comm Realty Corporation,
referred to as Comm Realty.  Our business consists primarily of the
management and supervision of Community Bank. Comm Realty, organized in
2000 as a Pennsylvania business corporation, holds, manages and sells
foreclosed or distressed assets on behalf of Community Bank.  Our principal
source of income is dividends paid by Community Bank.  At December 31,
2000, we had approximately:

     -  $419.7 million in total assets,
     -  $297.5 million in loans,
     -  $378.7 million in deposits, and
     -  $37.6 million in stockholders' equity.

Community Bank is a Pennsylvania commercial bank and a member of the
Federal Reserve System whose deposits are insured by the Bank Insurance
Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC").
Community Bank is a full-service commercial bank providing a range of
products and services, including time and demand deposit accounts,
consumer, commercial and mortgage loans, and commercial leases to
individuals and small- to medium-sized businesses in its Northeastern
Pennsylvania market area.  At December 31, 2000, Community Bank had
fourteen branch banking offices located in the Pennsylvania counties of
Lackawanna, Susquehanna, Wayne and Wyoming.

In 1999, Community Bank organized a leasing subsidiary, Community Leasing
Corporation, referred to as Community Leasing, a Pennsylvania business
corporation, to engage in commercial leasing.  In 2000, Community Bank
organized a financial services subsidiary, Comm Financial Services
Corporation, referred to as Comm Financial Services, a Pennsylvania
business corporation, to engage in selling insurance products and services
and in providing asset management services.

We have combined financial information about Comm Realty, Community Leasing
and Comm Financial Services with our financial information as none of these
subsidiaries meet the quantitative thresholds for reportable operating
segments and all of these subsidiaries share a majority of the aggregation
criteria for reportable operating segments. Moreover, we consider Community
Bank's branch banking offices to be a single operating segment because
these branches have similar:

     -  Economic characteristics,
     -  Products and services,
     -  Operating processes,
     -  Delivery systems,
     -  Customer bases, and
     -  Regulatory oversight.

We have not operated any other reportable operating segments in the three-
year period ended December 31, 2000.

As of December 31, 2000, we had 169 full-time equivalent employees.  We and
Community Bank are not parties to any collective bargaining agreement and
employee relations are considered to be good.

SUPERVISION AND REGULATION

The following discussion sets forth the material elements of the regulatory
framework applicable to us and Community Bank and provides certain specific
information. This regulatory framework is primarily intended for the
protection of investors in our common stock, depositors of Community Bank
and the BIF that insures bank deposits.  To the extent that the following
information describes statutory and regulatory provisions, it is qualified
by reference to those provisions.  A change in the statutes, regulations or
regulatory policies applicable to us or Community Bank may have a material
effect on our business.

INTERCOMPANY TRANSACTIONS

Various governmental requirements, including Sections 23A and 23B of the
Federal Reserve Act, limit borrowings by us from Community Bank and also
limit various other transactions between us and Community Bank.  For
example, Section 23A limits to no more than 10.0 percent of its total
capital the aggregate outstanding amount of Community Bank's loans and
other "covered transactions" with any particular nonbank affiliate
including financial subsidiaries, and limits to no more than 20.0 percent
of its total capital the aggregate outstanding amount of Community Bank's
covered transactions with all of its affiliates including financial
subsidiaries.  At December 31, 2000, approximately $3.8 million was
available for loans to us from Community Bank.  Section 23A also generally
requires that Community Bank's loans to its nonbank affiliates including
financial subsidiaries be secured, and Section 23B generally requires that
Community Bank's transactions with its nonbank affiliates including
financial subsidiaries be at arm's-length terms.  Also, we and Community
Bank and any financial subsidiary are prohibited from engaging in certain
"tie-in" arrangements in connection with extensions of credit or provision
of property or services.

SUPERVISORY AGENCIES

As a Pennsylvania commercial bank and member of the Federal Reserve System,
Community Bank is subject to primary supervision, regulation, and
examination by the Pennsylvania Department of Banking and the Federal
Reserve Board.  Community Bank is subject to extensive Pennsylvania and
federal statutes and regulations that significantly affect its business and
activities.  Community Bank must file reports with its regulators
concerning its activities and financial condition and obtain regulatory
approval to enter into certain transactions.  Community Bank is also
subject to periodic examinations by its primary and secondary regulators to
ascertain compliance with various regulatory requirements. Other applicable
statutes and regulations relate to insurance of deposits, allowable
investments, loans, leases, acceptance of deposits, trust activities,
mergers, consolidations, payment of dividends, capital requirements,
reserves against deposits, establishment of branches and certain other
facilities, limitations on loans to one borrower and loans to affiliated
persons, activities of subsidiaries and other aspects of the business of
banks.  Recent federal legislation has instructed federal agencies to adopt
standards or guidelines governing banks' internal controls, information
systems, loan documentation, credit underwriting, interest rate exposure,
asset growth, compensation and benefits, asset quality, earnings and stock
valuation and other matters. Federal Law gives the federal banking agencies
greater flexibility in implementing standards on asset quality, earnings
and stock valuation. Regulatory authorities have broad flexibility to
initiate proceedings designed to prohibit banks from engaging in unsafe and
unsound banking practices.

We, Community Bank and our subsidiaries are also affected by various other
governmental requirements and regulations, general economic conditions and
the fiscal and monetary policies of the federal government and the Board of
Governors of the Federal Reserve System ("Federal Reserve Board"). The
monetary policies of the Federal Reserve Board influence to a significant
extent the overall growth of loans, leases, investments, deposits, interest
rates charged on loans and interest rates paid on deposits.  The nature and
impact of future changes in monetary policies are often unpredictable.

We are subject to the jurisdiction of the Securities and Exchange
Commission ("SEC") for matters relating to the offering and sale of our
securities.  We are also subject to the SEC's rules and regulations
relating to periodic reporting, insider trading reports and proxy
solicitation materials.  Our common stock is listed for quotation of prices
on The NASDAQ Stock Market-Registered Trademark- and, therefore, we are
subject to the listing rules and regulations imposed by The NASDAQ Stock
Market-Registered Trademark-.

SUPPORT OF COMMUNITY BANK

Under current Federal Reserve Board policy, we are expected to act as a
source of financial and managerial strength to Community Bank by standing
ready to use available resources to provide adequate capital funds to
Community Bank during periods of financial adversity and by maintaining the
financial flexibility and capital-raising capacity to obtain additional
resources for assisting Community Bank.  The support expected by the
Federal Reserve Board may be required at times when we may not have the
resources or inclination to provide it.

If a default occurred with respect to Community Bank, any capital loans to
Community Bank from us would be subordinate in right of payment to payment
of Community Bank depositors and certain of its other obligations.

LIABILITY OF COMMONLY CONTROLLED BANKS

Community Bank can be held liable for any loss incurred, or reasonably
expected to be incurred, by the FDIC in connection with the default of a
commonly controlled FDIC-insured depository institution, or any assistance
provided by the FDIC to a commonly controlled FDIC-insured depository
institution in danger of default.

"Default" is generally defined as the appointment of a conservator or
receiver, and "in danger of default" is generally defined as the existence
of certain conditions indicating that a default is likely to occur in the
absence of regulatory assistance.

DEPOSITOR PREFERENCE STATUTE

In the "liquidation or other resolution" of Community Bank by any receiver,
federal law provides that deposits and certain claims for administrative
expenses and employee compensation against Community Bank are afforded a
priority over the general unsecured claims against Community Bank,
including federal funds and letters of credit.

ALLOWANCE FOR LOAN LOSSES

There are certain risks inherent in making all loans.  These risks include
interest rate changes over the time period in which loans may be repaid,
risks resulting from changes in our Northeastern Pennsylvania economy,
risks inherent in dealing with individual borrowers, and, in the case of
loans backed by collateral, the risks resulting from uncertainties about
the future value of the collateral.  As a result, we maintain an allowance
for loan losses at a level believed adequate to absorb potential losses
resulting from these risks.

The information explaining our systematic analysis and procedural
discipline utilized for determining our allowance for loan losses and its
elements is filed at Exhibit 13 to this report and is incorporated in its
entirety by reference under this Item 1.

CAPITAL REQUIREMENTS

We are subject to risk-based capital requirements and guidelines imposed by
the Federal Reserve Board, which are substantially similar to the capital
requirements and guidelines imposed by the Federal Reserve Board on
Community Bank.  For this purpose, a bank's or bank holding company's
assets and certain specified off-balance sheet commitments are assigned to
four risk categories, each weighted differently based on the level of
credit risk that is ascribed to those assets or commitments.  In addition,
risk-adjusted assets are adjusted for low-level recourse and market-risk
equivalent assets.  A bank's or bank holding company's capital, in turn,
includes the following tiers:

    -  Core Tier I capital, which includes common equity, non-cumulative
       perpetual preferred stock, a limited amount of cumulative perpetual
       preferred stock, and minority interests in equity accounts of
       consolidated subsidiaries, less goodwill, certain identifiable
       intangible assets, and certain other assets, and

    -  Supplementary Tier II capital, which includes, among other items,
       perpetual preferred stock not meeting the Tier I definition,
       mandatory convertible securities, subordinated debt and allowances
       for loan and lease losses, subject to certain limitations, less
       certain required deductions.

We and Community Bank, like other bank holding companies and banks, are
required to maintain Tier I and Total Capital, the sum of Tier I and Tier
II capital, less certain deductions, equal to at least 4.0 percent and 8.0
percent of their total risk-adjusted assets, including certain off-balance
sheet items, such as unused lending commitments and standby letters of
credit.  At December 31, 2000, we met both requirements, with Tier I and
Total Capital equal to 14.1 percent and 15.3 percent of total risk-adjusted
assets.  Community Bank also met both requirements at December 31, 2000,
with Tier I and Total Capital equal to 13.5 percent and 14.7 percent of
total risk-adjusted assets.

The Federal Reserve Board has adopted rules to incorporate market and
interest rate risk components into their risk-based capital standards.
Amendments to the risk-based capital requirements, incorporating market
risk, became effective January 1, 1998.  Under the new market-risk
requirements, capital will be allocated to support the amount of market
risk related to a financial institution's ongoing trading activities.

The Federal Reserve Board also requires bank holding companies and banks to
maintain a minimum Leverage ratio, Tier I capital to adjusted total assets,
of 3.0 percent if the bank holding company has the highest regulatory
rating and meets certain other requirements, or of 3.0 percent plus an
additional cushion of at least 1.0 to 2.0 percentage points if the bank
holding company does not meet these requirements.  At December 31, 2000,
our Leverage ratio was 8.7 percent and Community Bank's Leverage ratio was
8.3 percent.

The Federal Reserve Board may set capital requirements higher than the
minimums noted above for bank holding companies whose circumstances warrant
it. For example, bank holding companies experiencing or anticipating
significant growth may be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant
reliance on intangible assets.  Furthermore, the Federal Reserve Board has
indicated that it will consider a Tangible Tier I Leverage ratio, deducting
all intangibles, and other indicia of capital strength in evaluating
proposals for expansion or new activities or when a bank holding company
faces unusual or abnormal risk.

Failure to meet capital requirements could subject us and Community Bank to
a variety of enforcement remedies, including the termination of deposit
insurance by the FDIC, and to certain restrictions on its business.  The
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
among other things, identifies five capital categories for insured banks:
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, and requires federal
bank regulatory agencies to implement systems for prompt corrective action
for insured banks that do not meet minimum capital requirements based on
these categories. FDICIA imposes progressively more restrictive constraints
on operations, management and capital distributions, depending on the
category in which an institution is classified.  Unless a bank is well
capitalized, it is subject to restrictions on its ability to offer brokered
deposits, on "pass-through" insurance coverage for certain of its accounts
and on certain other aspects of its operations.  FDICIA generally prohibits
a bank from paying any dividend or making any capital distribution or
paying any management fee to its holding company if the bank would
thereafter be undercapitalized.  An undercapitalized bank is subject to
regulatory monitoring and may be required to divest itself of or liquidate
subsidiaries.  Holding companies of the institutions may be required to
divest themselves of the institutions or divest themselves of or liquidate
other affiliates. An undercapitalized bank must develop a capital
restoration plan, and its parent bank holding company must guarantee the
bank's compliance with the plan up to the lesser of 5.0 percent of the
bank's assets at the time it became undercapitalized or the amount needed
to comply with the plan.  Critically undercapitalized institutions are
prohibited from making payments of principal and interest on subordinated
debt and are generally subject to the mandatory appointment of a
conservator or receiver.

Rules adopted by the Federal Reserve Board under FDICIA provide that a
state member bank is deemed to be well capitalized if the bank has a total
risk-based capital ratio of 10.0 percent or greater, a Tier I risk-based
capital ratio of 6.0 percent or greater, and a Leverage ratio of 5.0
percent or greater and the institution is not subject to a written
agreement, order, capital directive, or prompt corrective action directive
to meet and maintain a specific level of any capital measure.  As of
December 31, 2000, Community Bank was well capitalized, based on the prompt
corrective action ratios and guidelines described above.  It should be
noted, however, that a bank's capital category is determined solely for the
purpose of applying the Federal Reserve Board's prompt corrective action
regulations, and that the capital category may not constitute an accurate
representation of the bank's overall financial condition or prospects.

BROKERED DEPOSITS

Under FDIC regulations, no FDIC-insured bank can accept brokered deposits
unless it is well capitalized, or adequately capitalized and receives a
waiver from the FDIC.  In addition, these regulations prohibit any bank
that is not well capitalized from paying an interest rate on brokered
deposits in excess of three-quarters of one percentage point over certain
prevailing market rates.  As of December 31, 2000, Community Bank held no
brokered deposits.

DIVIDEND RESTRICTIONS

We are a legal entity separate and distinct from Community Bank.  In
general, under Pennsylvania law, we cannot pay a cash dividend if the
payment would render us insolvent.  Our revenues primarily consist of
dividends paid by Community Bank.  Various federal and state statutory
provisions limit the amount of dividends Community Bank can pay to us
without regulatory approval.  Under Pennsylvania law, Community Bank may
declare and pay dividends to us only out of accumulated net earnings and as
long as the surplus of Community Bank would not be reduced below its stated
paid-in capital. At December 31, 2000, approximately $2.6 million was
available for payment of dividends to us.


In addition, federal bank regulatory agencies have authority to prohibit
Community Bank from engaging in an unsafe or unsound practice in conducting
its business.  Depending upon the financial condition of the bank in
question, the payment of dividends could be deemed to constitute an unsafe
or unsound practice.  The ability of Community Bank to pay dividends in the
future is currently influenced, and could be further influenced, by bank
regulatory policies and capital guidelines.

DEPOSIT INSURANCE ASSESSMENTS

The deposits of Community Bank are insured up to regulatory limits by the
FDIC and, accordingly, are subject to deposit insurance assessments to
maintain the BIF administered by the FDIC.  The FDIC has adopted
regulations establishing a permanent risk-related deposit insurance
assessment system.  Under this system, the FDIC places each insured bank in
one of nine risk categories based on the bank's capitalization and
supervisory evaluations provided to the FDIC by the institution's primary
federal regulator.  An insured bank's insurance assessment rate is then
determined by the risk category into which it is classified.

The annual insurance premiums on bank deposits insured by the BIF vary
between $0.00 per $100 of deposits for banks classified in the highest
capital and supervisory evaluation categories to $0.27 per $100 of deposits
for banks classified in the lowest capital and supervisory evaluation
categories.  BIF assessment rates are subject to semi-annual adjustment by
the FDIC within a range of up to five basis points without public comment.
The FDIC also possesses authority to impose special assessments from time
to time.  Community Bank paid no BIF insurance premium in 2000.

The Deposit Insurance Funds Act provides for assessments to be imposed on
insured depository institutions with respect to deposits insured by the
BIF, in addition to assessments currently imposed on depository
institutions with respect to BIF-insured deposits, to pay for the cost of
Financing Corporation ("FICO") funding.  The FDIC established the FICO
assessment rates effective for the fourth quarter 2000 at approximately
$0.0202 per $100 annually for BIF-assessable deposits.  The FICO
assessments are adjusted quarterly to reflect changes in the assessment
bases of the FDIC insurance funds and do not vary depending upon a
depository institution's capitalization or supervisory evaluations.  In
2000, Community Bank paid FICO assessments of $73,773.

INTERSTATE BANKING AND BRANCHING

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
("Riegle-Neal"), we are subject to certain concentration limits and other
requirements:

    -  Bank holding companies, like ourselves, are permitted to acquire
       banks and bank holding companies located in any state,

    -  Any bank that is a subsidiary of a bank holding company is
       permitted to receive deposits, renew time deposits, close loans,
       service loans, and receive loan payments as an agent for any other
       depository institution subsidiary of that bank holding company, and

    -  Banks are permitted to acquire branch offices outside their home
       state by merging with out-of-state banks, purchasing branches in
       other states, and establishing de-novo branch offices in other
       states.

The ability of banks to acquire branch offices through purchases or
openings of other branches is contingent, however, on the host state having
adopted legislation "opting in" to those provisions of Riegle-Neal.  In
addition, the ability of a bank to merge with a bank located in another
state is contingent on the host state not having adopted legislation
"opting out" of that provision of Riegle-Neal.  Pennsylvania has opted in
to all of these provisions upon the condition that another host state has
similar or reciprocal requirements.

As of the date of this report, we are not contemplating any interstate
acquisitions of a bank or a branch office.

CONTROL ACQUISITIONS

The Change in Bank Control Act prohibits a person or group of persons from
acquiring "control" of a bank holding company, unless the Federal Reserve
Board has been notified and has not objected to the transaction.  Under a
rebuttable presumption established by the Federal Reserve Board, the
acquisition of 10.0 percent or more of a class of voting stock of a bank
holding company with a class of securities registered under Section 12 of
the Exchange Act, like ourselves, would, under the circumstances set forth
in the presumption, constitute acquisition of control of the bank holding
company.

In addition, a company is required to obtain the approval of the Federal
Reserve Board under the Bank Holding Company Act before acquiring 25.0
percent, 5.0 percent in the case of an acquirer that is a bank holding
company, or more of any class of outstanding common stock of a bank holding
company, like ourselves, or otherwise obtaining control or a controlling
influence over that bank holding company.

PERMITTED NONBANKING ACTIVITIES

The Federal Reserve Board permits us or our subsidiary to engage in
nonbanking activities that are so closely related to banking or managing or
controlling banks as to be a proper incident thereto. For a discussion of
other activities that are financial in nature in which we can engage, see
the caption that follows entitled "Financial Services Modernization."

The Federal Reserve Board requires us to serve as a source of financial and
managerial strength to Community Bank and not to conduct our operations in
an unsafe and unsound manner.  Whenever the Federal Reserve Board believes
an activity that we perform or our control of a nonbank subsidiary, other
than a nonbank subsidiary of Community Bank, constitutes a serious risk to
the financial safety, soundness, or stability of Community Bank and is
inconsistent with sound banking principles or the purposes of the federal
banking laws, the Federal Reserve Board may require us to terminate that
activity or to terminate control of that subsidiary.  While the types of
permissible activities are subject to change by the Federal Reserve Board,
the principal nonbanking activities that presently may be conducted by a
bank holding company or its subsidiary without prior approval of the
Federal Reserve Board are:

    -  Servicing Activities. Furnishing services for, establishing or
       acquiring a company that engages solely in servicing activities
       for:

       -  us or Community Bank in connection with activities authorized by
          law, such as commitments entered into by any subsidiary with
          third parties as long as we or our servicing company comply with
          published guidelines and do not act as a principal in dealing
          with third parties.

       -  the internal operations of Community Bank, such as:

          -  accounting, auditing and appraising;
          -  advertising and public relations;
          -  data processing and transmission services, data bases or
             facilities;
          -  personnel services;
          -  courier services;
          -  holding or operating property used by our subsidiaries or for
             their future use;
          -  liquidating property acquired from Community Bank; and
             selling, purchasing or underwriting insurance, such as blanket
             bond insurance, group insurance for employees and property and
             casualty insurance.

    -  Safe deposit business. Conduct a safe deposit business or acquire
       voting securities of a company that conducts such business.

    -  Securities or property representing five percent or less of any
       company.  Acquiring five percent or less of the outstanding voting
       securities of any company regardless of that company's activities.

    -  Extending credit and servicing loans.  Making, acquiring,
       brokering, or servicing loans or other extensions of credit,
       including factoring, issuing letters of credit and accepting
       drafts, for the company's account or for the account of others.

    -  Activities related to extending credit.  Any activity usual in
       connection with making, acquiring, brokering or servicing loans or
       other extensions of credit, as determined by the Federal Reserve
       Board.  The Federal Reserve Board has determined that the following
       activities are usual in connection with making, acquiring,
       brokering or servicing loans or other extensions of credit:

       -  Real estate and personal property appraising. Performing
          appraisals of real estate and tangible and intangible personal
          property, including securities.

       -  Arranging commercial real estate equity financing. Acting as
          intermediary for the financing of commercial or industrial
          income-producing real estate by arranging for the transfer of
          the title, control, and risk of such a real estate project to
          one or more investors, if the bank holding company and its
          affiliates do not have an interest in, or participate in
          managing or developing, a real estate project for which it
          arranges equity financing, and do not promote or sponsor the
          development of the property.

       -  Check-guaranty services. Authorizing a subscribing merchant to
          accept personal checks tendered by the merchant's customers in
          payment for goods and services, and purchasing from the merchant
          validly authorized checks that are subsequently dishonored.

       -  Collection agency services. Collecting overdue accounts
          receivable, either retail or commercial.

       -  Credit bureau services. Maintaining information related to the
          credit history of consumers and providing the information to a
          credit grantor who is considering a borrower's application for
          credit or who has extended credit to the borrower.

       -  Asset management, servicing, and collection activities. Engaging
          under contract with a third party in asset management,
          servicing, and collection of assets of a type that an insured
          depository institution may originate and own, if the company
          does not engage in real property management or real estate
          brokerage services as part of these services.

       -  Acquiring debt in default. Acquiring debt that is in default at
          the time of acquisition under certain conditions.

       -  Real estate settlement servicing. Providing real estate
          settlement services.

    -  Leasing personal or real property.  Leasing personal or real
       property or acting as agent, broker, or advisor in leasing such
       property under certain conditions.

    -  Operating nonbank depository institutions:

       -  Industrial banking. Owning, controlling, or operating an
          industrial bank, Morris Plan bank, or industrial loan company,
          so long as the institution is not a bank, or

       -  Operating a savings association. Owning, controlling or
          operating a savings association, if the savings association
          engages only in deposit-taking activities, lending, and other
          activities that are permissible for bank holding companies.

    -  Trust company functions.  Performing functions or activities that
       may be performed by a trust company, including activities of a
       fiduciary, agency or custodial nature, in the manner authorized by
       federal or state law, so long as the company is not a bank for
       purposes of the Bank Holding Company Act.

    -  Financial and investment advisory activities.  Acting as investment
       or financial advisor to any person, including, without, in any way,
       limiting the foregoing:

       -  Serving as investment adviser, as defined in section 2(a)(20) of
          the Investment Company Act of 1940, 15 U.S.C. 80a-2(a)(20), to
          an investment company registered under that act, including
          sponsoring, organizing, and managing a closed-end investment
          company,

       -  Furnishing general economic information and advice, general
          economic statistical forecasting services, and industry studies,

       -  Providing advice in connection with mergers, acquisitions,
          divestitures, investments, joint ventures, leveraged buyouts,
          recapitalizations, capital structurings, financing transactions
          and similar transactions, and conducting financial feasibility
          studies,

       -  Providing information, statistical forecasting, and advice with
          respect to any transaction in foreign exchange, swaps, and
          similar transactions, commodities, and any forward contract,
          option, future, option on a future, and similar instruments,

       -  Providing educational courses, and instructional materials to
          consumers on individual financial management matters, and

       -  Providing tax-planning and tax-preparation services to any
          person.

    -  Agency transactional services for customer investments:

       -  Securities brokerage.  Providing securities brokerage services,
          including securities clearing and/or securities execution
          services on an exchange, whether alone or in combination with
          investment advisory services, and incidental activities,
          including related securities credit activities and custodial
          services, if the securities brokerage services are restricted to
          buying and selling securities solely as agent for the account of
          customers and does not include securities underwriting or
          dealing.

       -  Riskless principal transactions.  Buying and selling in the
          secondary market all types of securities on the order of
          customers as a "riskless principal" to the extent of engaging in
          a transaction in which the company, after receiving an order to
          buy or sell a security from a customer, purchases or sells the
          security for its own account to offset a contemporaneous sale to
          or purchase from the customer.  This does not include: (i)
          selling bank-ineligible securities at the order of a customer
          that is the issuer of the securities, or selling bank-ineligible
          securities in any transaction where the company has a
          contractual agreement to place the securities as agent of the
          issuer; or (ii) acting as a riskless principal in any
          transaction involving a bank-ineligible security for which the
          company or any of its affiliates acts as underwriter, during the
          period of the underwriting or for 30 days thereafter, or dealer.

       -  Private placement services.  Acting as an agent for the private
          placement of securities in accordance with the requirements of
          the Securities Act of 1933 ("1933 Act") and the rules of the
          SEC, if the company engaged in the activity does not purchase or
          repurchase for its own account the securities being placed, or
          held in inventory unsold portions of issues of these securities.

       -  Futures commission merchant.  Acting as a futures commission
          merchant for unaffiliated persons in the execution, clearance,
          or execution and clearance of any futures contract and option on
          a futures contract traded on an exchange in the United States or
          abroad under certain conditions.

       -  Other transactional services.  Providing to customers as agent
          transactional services with respect to swaps and similar
          transactions.

    -  Investment transactions as principal:

       -  Underwriting and dealing in government obligations and money
          market instruments.  Underwriting and dealing in obligations of
          the United States, general obligations of states and their
          political subdivisions, and other obligations that state member
          banks of the Federal Reserve System may be authorized to
          underwrite and deal in under 12 U.S.C. 24 and 335, including
          bankers' acceptances and certificates of deposit, under the same
          limitations as would be applicable if the activity were
          performed by the bank holding company's subsidiary member banks
          or its subsidiary nonmember banks as if they were member banks.

       -  Investing and trading activities.  Engaging as principal in:
          (i) foreign exchange; (ii) forward contracts, options, futures,
          options on futures, swaps, and similar contracts, whether traded
          on exchanges or not, based on any rate, price, financial asset,
          including gold, silver, platinum, palladium, copper, or any
          other metal approved by the Federal Reserve Board, nonfinancial
          asset, or group of assets, other than a bank-ineligible security
          under certain conditions; and (iii) forward contracts, options,
          futures, options on futures, swaps, and similar contracts,
          whether traded on exchanges or not, based on an index of a rate,
          a price, or the value of any financial asset, nonfinancial
          asset, or group of assets, if the contract requires such
          settlement.

       -  Buying and selling bullion, and related activities.  Buying,
          selling and storing bars, rounds, bullion, and coins of gold,
          silver, platinum, palladium, copper, or any other metal approved
          by the Federal Reserve Board, for the company's own account or
          the account of others, and providing incidental services such as
          arranging for storage, safe custody, assaying, and shipment.

    -  Management consulting and counseling activities:

       -  Management consulting.  Providing management consulting advice
          under certain conditions.

       -  Employee benefits consulting services.  Providing consulting
          services to employee benefit, compensation and insurance plans,
          including designing plans, assisting in the implementation of
          plans, providing administrative services to plans, and
          developing employee communication programs for plans.

       -  Career counseling services.  Providing career counseling
          services to: (i) a financial organization and individuals
          currently employed by, or recently displaced from, a financial
          organization; (ii) individuals who are seeking employment at a
          financial organization; and (iii) individuals who are currently
          employed in or who seek positions in the finance, accounting,
          and audit departments of any company.

    -  Support services:

       -  Courier services.  Providing courier services for: (i) checks,
          commercial papers, documents, and written instruments, excluding
          currency or bearer-type negotiable instruments, that are
          exchanged among banks and financial institutions; and (ii) audit
          and accounting media of a banking or financial nature and other
          business records and documents used in processing such media.

       -  Printing and selling Magnetic Ink Character Recognition
          ("MICR")-encoded items.  Printing and selling checks and related
          documents, including corporate image checks, cash tickets,
          voucher checks, deposit slips, savings withdrawal packages, and
          other forms that require MICR-encoding.

    -  Insurance agency and underwriting:

       -  Credit insurance.  Acting as principal, agent, or broker for
          insurance, including home mortgage redemption insurance, that
          is: (i) directly related to an extension of credit by the bank
          holding company or any of its subsidiaries; and (ii) limited to
          ensuring the repayment of the outstanding balance due on the
          extension of credit in the event of the death, disability or
          involuntary unemployment of the debtor.

       -  Finance company subsidiary.  Acting as agent or broker for
          insurance directly related to an extension of credit by a
          finance company that is a subsidiary of a bank holding company
          under certain conditions.

       -  Engaging in any general insurance agency activities.

    -  Community development activities:

       -  Financing and investment activities.  Making equity and debt
          investments in corporations or projects primarily designed to
          promote community welfare, such as the economic rehabilitation
          and development of low-income areas by providing housing,
          services, or jobs for residents.

       -  Advisory activities.  Providing advisory and related services
          for programs primarily designed to promote community welfare.

    -  Money orders, savings bonds, and travelers' checks.  The issuance
       and sale at retail of money orders and similar consumer-type
       payment instruments, the sale of U.S. savings bonds, and the
       issuance and sale of travelers' checks.

    -  Data processing.  Providing data processing and data transmission
       services, facilities, including data processing and data
       transmission hardware, software, documentation, or operating
       personnel, data bases, advice, and access to such services,
       facilities, or data bases by any technological means under certain
       conditions.

COMMUNITY REINVESTMENT ACT

The Community Reinvestment Act of 1977, as amended ("CRA"), and the
regulations promulgated to implement the CRA are designed to create a
system for bank regulatory agencies to evaluate a depository institution's
record in meeting the credit needs of its community.  CRA regulations
establish tests for evaluating both small and large depository
institutions' investment in their community.  A small bank is defined as a
bank having total assets of less than $250 million and is independent or is
an affiliate of a holding company with less than $1 billion in assets.  A
large retail institution is one which does not meet the small bank
definition.  A large retail institution can be evaluated under one of two
tests:  (i) a three-part test evaluating the institution's lending, service
and investment performance; or (ii) a strategic plan designed by the
institution with community involvement and approved by the appropriate
federal bank regulator.  A large institution must choose one of these
options under which to be examined.  In addition, the CRA regulations
include separate rules regarding the manner in which wholesale banks and
limited purpose banks will be evaluated for compliance.

For the purposes of the CRA regulations, Community Bank is deemed to be a
large bank, based upon financial information as of December 31, 2000.
Community Bank will be examined under the three-part test relating to
lending, service and investment performance.  Community Bank received an
"outstanding" rating in its last CRA examination which was held on March
22, 1999.  "Outstanding" is the highest CRA rating that a depository
institution can receive.

CONCENTRATION

We are not dependent for deposits nor exposed by loan concentrations to a
single customer or to a small group of customers, the loss of any one or
more of which would have a materially adverse effect on our financial
condition.

FINANCIAL SERVICES MODERNIZATION

On November 12, 1999, President Clinton signed into law the Gramm-Leach-
Bliley (the "GLB") Act which was, in general, effective on March 11, 2000.
The GLB Act contains some of the most far-reaching changes governing the
operations of companies doing business in the financial services industry.
The GLB Act eliminates the restrictions placed on the activities of banks
and bank holding companies and creates two new structures, financial
holding companies and financial subsidiaries. We and Community Bank will be
allowed to provide a wider array of financial services and products that
were reserved only for insurance companies and securities firms.  In
addition, we can now affiliate with an insurance company and a securities
firm. We would qualify to elect to become a financial holding company.
This election is made to the Federal Reserve Board.  A financial holding
company has authority to engage in activities referred to as "financial
activities" that are not permitted to bank holding companies.  A financial
holding company may also affiliate with companies that are engaged in
financial activities.  A "financial activity" is an activity that does not
pose a safety and soundness risk and is financial in nature, incidental to
an activity that is financial in nature, or complimentary to a financial
activity.

The GLB Act lists certain activities as financial in nature:

    -  Lending, investing or safeguarding money or securities,

    -  Underwriting insurance or annuities, or acting as an insurance or
       annuity principal, agent or broker,

    -  Providing financial or investment advice,

    -  Issuing or selling interests in pools of assets that a bank could
       hold,

    -  Underwriting, dealing in or making markets in securities,

    -  Engaging in any activity that the Federal Reserve Board found
       before the GLB Act to be related closely to banking, see the
       section in this report entitled "Permitted Nonbanking Activities,"

    -  Engaging within the United States in any activity that a bank
       holding company could engage in outside of the country, if the
       Federal Reserve Board determined before the GLB Act that the
       activity was usual in connection with banking or other financial
       operations internationally,

    -  Merchant banking, acquiring or controlling ownership interests in
       an entity engaged in impermissible activities, if: (i) the
       interests are not held by a depository institution; (ii) the
       interests are held by a securities affiliate or an investment
       advisory affiliate of an insurance company as part of underwriting,
       merchant or investment banking activity; (iii) the interests are
       held long enough to enable their sale in a manner consistent with
       the financial viability of such an activity; and (iv) we do not
       control the entity except to the extent necessary to obtain a
       reasonable return on the investment, or

    -  Insurance portfolio investing, acquiring or controlling ownership
       interests in an entity engaged in impermissible activities, if:
       (i) the interests are not held by a depository institution; (ii)
       the interests are held by an insurance or annuity company; (iii)
       the interests represent investments made in the ordinary course of
       business in accordance with state law; and (iv) we do not control
       the entity except to the extent necessary to obtain a reasonable
       return on the investment.

The GLB Act instructs the Federal Reserve Board to adopt a regulation or
order defining certain additional activities as financial in nature, to the
extent they are consistent with the purposes of the GLB Act.  These are:

    -  Lending, exchanging, transferring, investing for others or
       safeguarding financial assets other than money or securities,

    -  Providing any method of transferring financial assets, and

    -  Arranging, effecting or facilitating financial transactions for
       third parties.

Other activities also may be decided by the Federal Reserve Board to be
financial in nature or incidental to a financial activity if they meet
specified criteria.  The Federal Reserve Board is instructed to consider:
(i) the purposes of the GLB Act and the Bank Holding Company Act; (ii)
changes in the market in which financial holding companies compete; (iii)
changes in the technology used to deliver financial services; and (iv)
whether the proposed activity is necessary or appropriate to allow a
financial holding company and its affiliates to compete effectively,
deliver services efficiently and offer services through the most advanced
technological means available.

The GLB Act gives national banks authority to use "financial subsidiaries"
to engage in financial activities.  This authority has some limitations.
Community Bank is a Pennsylvania commercial bank. Under Pennsylvania Law,
there is currently parity with the permitted activities for national banks.
Therefore, Community Bank is permitted to own a financial subsidiary to
engage in financial activities. However, a financial subsidiary of
Community Bank may not, as a principal:

      -  Underwrite insurance or annuities,
      -  Engage in real estate development or investment,
      -  Engage in merchant banking, or
      -  Engage in insurance portfolio investment activities.

A bank's investment in a financial subsidiary will affect the way it
calculates its capital.  The bank must deduct from its assets and
stockholders' equity the total of its investments in financial
subsidiaries.  Moreover, a bank must present its financial information in
two ways: in accordance with generally accepted accounting principles, and,
separately, in a manner that reflects the segregation of the bank's
investments in financial subsidiaries.

As of the date of this report, we have not decided whether to elect to
become a financial holding company, to engage in any financial activities,
or to establish any financial subsidiaries in addition to Community Bank.

PRIVACY

Title V of the GLB Act creates a minimum federal standard of privacy by
limiting the instances which we and Community Bank may disclose nonpublic
personal information about a consumer of our products or services to
nonaffilitated third parties.  A state, such as Pennsylvania, can impose a
greater or more restrictive standard of privacy than the GLB Act.  The GLB
Act distinguishes "consumers" from "customers" for purposes of the notice
requirements imposed by this Act.  We are required to give a "consumer" a
privacy notice only if we intend to disclose nonpublic personnel
information about the consumer to a nonaffiliated third party.  However, by
contrast, we are required to give a "customer" a notice of our privacy
policy at the time of the establishment of a customer relationship and then
annually, thereafter during the continuation of the customer relationship.

The term consumer is different from the term customer.  A consumer means an
individual who obtains or has obtained a financial product or service from
Community Bank that is to be primarily used for personal, family or
household purposes or that of the individual's representative.  A customer
is an individual with a continuous relationship with Community Bank.  The
Federal Reserve Board issued proposed regulations effective November 13,
2000, however, compliance is optional until July 1, 2001, which give
several examples of a consumer and customer relationship:

    -  An individual who applies to Community Bank for credit for
       personal, family or household purposes is a consumer of a financial
       service, regardless of whether the credit is extended.

    -  An individual who provides nonpublic personal information to
       Community Bank in order to obtain a determination about whether he
       or she may qualify for a loan to be primarily used for personal,
       family, or household purposes is a consumer of a financial service,
       regardless of whether the loan is extended by Community Bank or
       another financial institution.

    -  An individual who provides nonpublic personal information to
       Community Bank in connection with obtaining or seeking to obtain
       financial, investment or economic advisory services is a consumer
       regardless of whether Community Bank establishes an ongoing
       advisory relationship.

    -  An individual who negotiates a workout with Community Bank for a
       loan that Community Bank owns is a consumer regardless of whether
       Community Bank originally extended the loan to the individual.

    -  An individual who has a loan from Community Bank is Community
       Bank's consumer even if Community Bank:

       -  Hires an agent to collect on the loan,
       -  Sells the rights to service the loan, or
       -  Bought the loan from the financial institution that originated
          the loan.


    -  An individual is not Community Bank's consumer solely because
       Community Bank processes information about the individual on behalf
       of a financial institution that extended the loan to the
       individual.

On the other hand, the following are several examples of a customer
relationship:

    -  A customer has a continuing relationship with Community Bank if the
       customer:

       -  Has a deposit, credit, trust or investment account with
          Community Bank,

       -  Purchases an insurance product from Community Bank,

       -  Holds an investment product through Community Bank,

       -  Enters into an agreement or understanding with Community Bank
          whereby Community Bank undertakes to arrange or broker a home
          mortgage loan for the customer or consumer,

       -  Has a loan that Community Bank services where Community Bank
          owns the servicing rights,

       -  Enters into a lease of personal property with Community Bank, or

       -  Obtains financial, investment, or economic advisory services
          from Community Bank for a fee.

    -  A person does not, however, have a continuing relationship with
       Community Bank and therefore is not a customer, if:

       -  The person only obtains a financial product or service in an
          isolated transaction, such as withdrawing cash from Community
          Bank's ATM or purchasing a cashier's check or money order,

       -  Community Bank sells the person's loan and does not retain the
          rights to service the loan, or

       -  Community Bank sells the person airline tickets, travel
          insurance or travelers' checks in an isolated transaction.

In general, Community Bank cannot disclose to a nonaffiliated third party
any nonpublic personal information of its customers and consumers unless
Community Bank provides its customer and consumer with a notice that
includes:

    -  Community Bank's policies and practices with regard to:

       -  Disclosing nonpublic personal information to nonaffiliated third
          parties,

       -  The categories of persons to whom the information is or may be
          disclosed, and

       -  The policy for disclosure to former customers.

    -  Categories of nonpublic information that are collected by Community
       Bank,

    -  Community Bank's policies to protect the confidentiality and
       security of nonpublic personal information,

    -  The disclosure, if required, under the Fair Credit Reporting Act,
       and

    -  In addition, Community Bank must provide an opt out notice to each
       of its consumers and customers that explains accurately the right
       to opt out of any disclosure by Community Bank of the customer's or
       consumer's nonpublic personal information and the means by which
       the customer or consumer may exercise the opt out right.

The GLB Act sets forth a new requirement that this notice to a consumer or
customer must be in clear and conspicuous or "plain English" language and
presentation.  The proposed regulations give several examples of the rules
to follow in drafting these notices:

    -  Community Bank makes its notice reasonably understandable if,
       Community Bank:

       -  Presents the information contained in the notice in clear,
          concise sentences, paragraphs and sections,

       -  Uses short explanatory sentences and bullet lists, whenever
          possible,

       -  Uses definite, concrete, everyday words and active voice,
          whenever possible,

       -  Avoids multiple negatives,

       -  Avoids legal and highly technical business terminology, and

       -  Avoids boilerplate explanations that are imprecise and readily
          subject to different interpretations.

    -  Community Bank designs its notice to call attention to the nature
       and significance of the information contained in the notice if, to
       the extent applicable, Community Bank:

       -  Uses a plain-language heading to call attention to the notice,

       -  Uses a typeface and type size that are easy to read, and

       -  Provides wide margins and ample line spacing.

    -  If Community Bank provides a notice on the same form as another
       notice or other documents, Community Bank designs its notice to
       call attention to the nature and significance of the information
       contained in the notice if Community Bank uses:

       -  Larger type size(s), boldface or italics in the text,

       -  Wider margins and line spacing in the notice, or

       -  Shading or sidebars to highlight the notice, whenever possible.

The GLB Act creates certain exceptions to the prohibition on disclosure of
nonpublic personal information of customers.  Some of these exceptions are:

    -  With the consent of the customer or consumer,

    -  To effect, administer or enforce a transaction requested or
       authorized by the customer or consumer,

    -  The servicing or processing of a financial product or service
       requested or authorized by the customer or consumer,

    -  The maintaining or servicing of the customer's or consumer's
       account with Community Bank or with another entity as part of a
       private label credit card program,

    -  Disclosure to persons holding a legal or beneficial interest
       relating to the customer or consumer or to persons acting in a
       fiduciary or representative capacity on behalf of the customer or
       consumer,

    -  Providing information to insurance rate advisory organizations,
       guaranty funds or agencies, rating agencies, persons assessing
       Community Bank's compliance with industry standards and Community
       Bank's attorneys, accountants and auditors, and

    -  Disclosure permitted under other laws, such as the Right to
       Financial Privacy Act, to law enforcement agencies or under local
       and state laws.

Community Bank cannot disclose an account number or similar form of access
code for a credit card account, deposit account or transaction account of
a customer to any nonaffiliated third party for use in telemarketing,
direct mail marketing or other marketing through electronic mail to the
customer.

COMMUNITY BANK

Community Bank's legal headquarters is located at 125 North State Street,
Clarks Summit, Lackawanna County, Pennsylvania 18411. Community Bank is a
community bank that seeks to provide personal attention and professional
financial assistance to its customers.  Community Bank is a locally managed
and oriented financial institution established to serve the needs of
individuals and small  and medium-sized businesses.  Community Bank's
business philosophy includes offering direct access to its President and
other officers and providing friendly, informed and courteous service,
local and timely decision making, flexible and reasonable operating
procedures and consistently-applied credit policies.

MARKETING AREA

Community Bank's primary market area comprises Lackawanna, Susquehanna,
Wayne and Wyoming counties located in the Northeast corner of the
Commonwealth of Pennsylvania.  The largest municipality in this market area
is the City of Scranton with a population of approximately 72.7 thousand
based upon 2000 census data.  There are no Community Bank branches located
within the City of Scranton.  All of the branches are located outside of
Scranton in rural or small-town settings.  See Item 2 in this report for a
description of the location of each branch office.

Community Bank competes with 17 commercial banks, three thrift institutions
and 20 credit unions, many of which are substantially larger in terms of
assets and liabilities.  In addition, Community Bank experiences
competition for deposits from mutual funds and security brokers.  Consumer,
mortgage and insurance companies compete for various types of loans.
Principal methods of competing for banking, permitted nonbanking services
and financial activities include price, nature of product, quality of
service and convenience of location.

FUTURE LEGISLATION

Various legislation, including proposals to substantially change the
financial institution regulatory system and to expand or contract the
powers of banking institutions and bank holding companies, is from time to
time introduced in Congress.  This legislation may change banking statutes
and our operating environment in substantial and unpredictable ways.  If
enacted, such legislation could increase or decrease the cost of doing
business, limit or expand permissible activities or affect the competitive
balance among banks, savings associations, credit unions, and other
financial institutions.  We cannot accurately predict whether any of this
potential legislation will ultimately be enacted, and if enacted, the
ultimate effect that it, or implementing regulations, would have upon our
financial condition or results of operations.

ITEM 2.   PROPERTIES

Our corporate headquarters is located at 125 North State Street, Clarks
Summit, Lackawanna County, Pennsylvania.  We own this facility which has
approximately 24,000 square feet.

Our remaining banking centers are described as follows:

<TABLE>
<CAPTION>

                                                                  Approximate
Location                                 Type of Ownership       Square Footage
-------------------------------------------------------------------------------
<S>                                      <C>                     <C>
61 Church Street, Montrose, PA                 Owned                  3,500
-------------------------------------------------------------------------------
Route 106, Clifford, PA                        Owned                  1,300
-------------------------------------------------------------------------------
Route 6 West, Tunkhannock, PA                  Owned                  3,500
-------------------------------------------------------------------------------
Route 29, Eaton Township, PA                  Leased                  2,175
-------------------------------------------------------------------------------
Route 307, Lake Winola, PA                    Leased                  1,250
-------------------------------------------------------------------------------
Route 6, Eynon, PA                            Leased                  1,850
-------------------------------------------------------------------------------
97 College Avenue, Factoryville, PA            Owned                  1,850
-------------------------------------------------------------------------------
125 North State Street, Clarks Summit, PA      Owned                  3,860
-------------------------------------------------------------------------------
57 Main Street, Nicholson, PA                  Owned                  6,000
-------------------------------------------------------------------------------
1601 Main Street, Dickson City, PA             Owned                  5,330
-------------------------------------------------------------------------------
521 Main Street, Forest City, PA               Owned                  7,100
-------------------------------------------------------------------------------
347 Main Street, Simpson, PA                   Owned                  5,500
-------------------------------------------------------------------------------
37 Dundaff Street, Carbondale, PA              Owned                  4,300
-------------------------------------------------------------------------------
Lake Como Road, Lakewood, PA                  Leased                    900
-------------------------------------------------------------------------------

</TABLE>

We consider our facilities to be suitable and adequate for our current and
immediate future purposes.

ITEM 3.   LEGAL PROCEEDINGS

We, Community Bank and our subsidiaries are not parties to any legal
proceedings that could have any significant effect upon our financial
condition or operating results.  In addition, we, Community Bank and our
subsidiaries are not parties to any legal proceedings under federal and
state environmental laws.

PART II.

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

We had 1,122 stockholders of record, including individual participants in
security position listings, and 1,987,279 shares of common stock, par value
of $0.33 per share, the only authorized class of common stock outstanding
as of March 15, 2001.  Our common stock trades on The NASDAQ Stock Market-
Registered Trademark- as CommBcp under the symbol "CCBP."  The high and low
closing sale prices and dividends per share of our common stock for the
four quarters of 2000 and 1999 are summarized in the following table:

<TABLE>
<CAPTION>

                                                               Dividends
2000:                   High                 Low               Declared
-------------------------------------------------------------------------
<S>                   <C>                 <C>                  <C>
First quarter         $40.50              $33.25                $0.17
-------------------------------------------------------------------------
Second quarter         35.50               27.25                 0.17
-------------------------------------------------------------------------
Third quarter          27.50               25.13                 0.18
-------------------------------------------------------------------------
Fourth quarter        $30.75              $25.38                $0.18
-------------------------------------------------------------------------

                                                               Dividends
1999:                   High                 Low               Declared
------------------------------------------------------------------------
<S>                   <C>                 <C>                  <C>

First quarter         $28.00              $25.50                $0.13
------------------------------------------------------------------------
Second quarter         32.00               24.00                 0.13
------------------------------------------------------------------------
Third quarter          42.00               30.00                 0.15
------------------------------------------------------------------------
Fourth quarter        $40.50              $37.25                $0.16
------------------------------------------------------------------------

</TABLE>

We have paid cash dividends since 1983.  It is our present intention to
continue the dividend payment policy, although the payment of future
dividends must necessarily depend upon earnings, financial position,
appropriate restrictions under applicable law and other factors relevant at
the time the Board of Directors considers any declaration of dividends. For
information on dividend restrictions on us and Community Bank, refer to our
consolidated financial statements and notes to these statements filed at
Exhibit 13 to this report and incorporated in their entirety by reference
under this Item 5.

ITEM 6.   SELECTED FINANCIAL DATA

The information called for by this item is filed at Exhibit 13 to this
report and is incorporated in its entirety by reference under this Item 6.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The information called for by this item is filed at Exhibit 13 to this
report and is incorporated in its entirety by reference under this Item 7.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item is filed at Exhibit 13 to this
report and is incorporated in its entirety by reference under this Item 7A.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and notes to these statements are
filed at Exhibit 13 to this report and are incorporated in their entirety
by reference under this Item 8.

The supplementary data is filed at Exhibit 13 to this report and is
incorporated in its entirety by reference under this Item 8.

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF
THE REGISTRANT

DIRECTORS

At December 31, 2000, we had thirteen directors. Our directors are elected
at each annual meeting of stockholders for a one-year term and until their
successors are elected and qualified.

The following information is presented for each of our current directors,
all of who have been nominated to become a director at our 2001 Annual
Stockholders Meeting.

<TABLE>
<CAPTION>
                       AGE AS OF                                                  DIRECTOR
NAME               MARCH 15, 2001    PRINCIPAL OCCUPATION FOR PAST FIVE YEARS       SINCE
------------------------------------------------------------------------------------------
<S>                <C>               <C>                                          <C>
David L. Baker           55          Senior Vice President of Community Bank,       1988
                                     President and Chief Executive Officer of
                                     Comm Bancorp, Inc. and Community Bank from
                                     1996 to 2000.
------------------------------------------------------------------------------------------
Thomas M. Chesnick       66          Retired. Vice President of Community Bank      2000
                                     from 1996 to 1999.
------------------------------------------------------------------------------------------
William F. Farber, Sr.   63          Retired. President of Farber's Restaurants     1983
                                     from 1996 to 1998.
------------------------------------------------------------------------------------------
Judd B. Fitze            49          Partner in Farr, Davis & Fitze, a law firm.    1995
------------------------------------------------------------------------------------------
John P. Kameen           59          Publisher of The Forest City News.             1983
                                                  --------------------
------------------------------------------------------------------------------------------
William A. Kerl          64          President of Carbondale Concrete Company,      2000
                                     Inc. and Kerl Coal, Oil & Trucking Company,
                                     Inc.
------------------------------------------------------------------------------------------
Erwin T. Kost            57          President of Kost Tire Distributors, Inc.      1997
------------------------------------------------------------------------------------------
William B. Lopatofsky    69          Retired.                                       1983
------------------------------------------------------------------------------------------
Robert A. Mazzoni        52          Partner in Mazzoni & Karam, a law firm.        2000
------------------------------------------------------------------------------------------
J. Robert McDonnell      65          Owner of McDonnell's Restaurant.               1983
------------------------------------------------------------------------------------------
Joseph P. Moore, III(1)  49          President of J.J. Motors, Inc.                 2000
------------------------------------------------------------------------------------------
Theodore W. Porosky      53          Owner of Porosky Lumber Company.               1997
------------------------------------------------------------------------------------------
Eric G. Stephens         49          Auto Dealer, H.L. Stephens & Son,              1988
                                     an automobile dealership.
------------------------------------------------------------------------------------------
(1)  A son of Joseph P. Moore, Jr., who is a director of Community Bank and owns beneficially more than five
     percent of our common stock.

</TABLE>

PRINCIPAL OFFICERS

Our principal officers are appointed by the Board of Directors and serve at
the will of the Board of Directors, subject to certain change in control
agreements discussed later in this report.

The following information is presented for our principal officers:

<TABLE>
<CAPTION>

                                                                   AGE AS OF
NAME AND POSITION               HELD SINCE   EMPLOYEE SINCE      MARCH 15, 2001
-------------------------------------------------------------------------------
<S>                             <C>          <C>                 <C>
William R. Boyle                   2001          2001(1)                41
Senior Vice President and
Chief Credit Officer
-------------------------------------------------------------------------------
William F. Farber, Sr.             1983           (3)                   63
Chairman, Acting President
and Chief Executive Officer(2)
-------------------------------------------------------------------------------
John P. Kameen                     1996           (3)                   59
Secretary
-------------------------------------------------------------------------------
J. Robert McDonnell                1983           (3)                   65
Vice President
-------------------------------------------------------------------------------
Scott A. Seasock                   1989          1989                   43
Senior Vice President and
Chief Financial Officer
-------------------------------------------------------------------------------
Thomas E. Sheridan                 1989          1985                   44
Senior Vice President and
Chief Operations Officer
-------------------------------------------------------------------------------
(1)  An employee of Community Bank since 1984 as Vice President.
(2)  Chairman since 1983, Acting President and Chief Executive Officer since 2001.
(3)  Not our employee or an employee of Community Bank.

</TABLE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Executive officers and directors and "beneficial owners" of more than 10.0
percent of our common stock must file initial reports of ownership and
reports of changes in ownership with the SEC and The NASDAQ Stock Market-
Registered Trademark- pursuant to Section 16(a).

We have reviewed the reports and written representations from the executive
officers and directors.  Based on this review, we believe that all filing
requirements were met during 2000.

ITEM 11. EXECUTIVE COMPENSATION

This section of the report contains a chart that shows the amount of
compensation earned by our executive officers whose salary and bonus
exceeded $100,000.  It also contains the performance graph comparing our
performance relative to a peer group and the report of our executive
compensation committee explaining the compensation philosophy for our most
highly paid officers.

                       SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>


                                                                     LONG-TERM COMPENSATION
                                                                 ------------------------------------------
                                   ANNUAL COMPENSATION              AWARDS            PAYOUTS
-----------------------------------------------------------------------------------------------------------
                                                OTHER ANNUAL               RESTRICTED   LTIP     ALL OTHER
                                SALARY   BONUS  COMPENSATION     OPTIONS    STOCK     PAYOUTS  COMPENSATION
NAME AND POSITION         YEAR   ($)      ($)       ($)(1)          (#)       (#)         ($)        ($)
-----------------------------------------------------------------------------------------------------------
<S>                       <C>   <C>      <C>    <C>              <C>       <C>        <C>      <C>
David L. Baker            2000  143,975  19,400     3,315         -0-        -0-        -0-        -0-
President and             1999  116,649  19,400     2,179         -0-        -0-        -0-        -0-
Chief Executive Officer   1998  116,151  19,400     3,245         -0-        -0-        -0-        -0-
-----------------------------------------------------------------------------------------------------------
Scott A. Seasock          2000   97,496  11,400     2,589         -0-        -0-        -0-        -0-
Senior Vice               1999   94,345  11,400     1,696         -0-        -0-        -0-        -0-
President and             1998   92,486  11,400     2,453         -0-        -0-        -0-        -0-
Chief Financial
Officer
-----------------------------------------------------------------------------------------------------------
Thomas E. Sheridan        2000   94,041  11,400     2,524         -0-        -0-        -0-        -0-
Senior Vice               1999   85,817  11,400     1,558         -0-        -0-        -0-        -0-
President and             1998   74,137  11,400     2,592         -0-        -0-        -0-        -0-
Chief Operations
Officer
-----------------------------------------------------------------------------------------------------------

(1) Represents the contribution Community Bank made on behalf of Mr. Baker, Mr. Seasock and Mr. Sheridan
    pursuant to the profit sharing plan.  Aggregate perquisites and other personal benefits were less than 10.0
    percent of the salary and bonus reported, and therefore, need not be presented.

</TABLE>

Executive officer compensation is determined by the Executive Compensation
Committee of Community Bank's Board of Directors.  Salaries and bonuses for
the executive officers are reviewed annually.  All executive compensation
is paid by Community Bank to the applicable executive.

EXECUTIVE COMPENSATION COMMITTEE REPORT

The Board of Directors is responsible for the governance of us, Community
Bank and our subsidiaries.  In fulfilling its fiduciary duties, the Board
of Directors acts in the best interests of our stockholders, customers and
communities.  To accomplish our strategic goals and objectives, the Board
of Directors engages competent persons who undertake to accomplish these
objectives with integrity and in a cost-effective manner.  The compensation
of these individuals is part of the Board of Directors' fulfillment of its
duties to accomplish our strategic mission.  Community Bank provides
compensation to our employees and those of Community Bank and our
subsidiaries.

The fundamental philosophy of the compensation program is to offer
competitive compensation opportunities for all employees based on the
individual's contribution and personal performance.  The objective of the
Executive Compensation Committee is to establish a fair compensation policy
to govern executive officers' base salaries and incentive plans to attract
and motivate competent, dedicated and ambitious managers whose efforts will
enhance our products and services, the results of which will be improved
profitability, increased dividends to our stockholders and subsequent
appreciation in the market value of our stock.

The compensation of top executives is reviewed and approved annually by the
Board of Directors.  The top executives whose compensation is determined by
this committee include the Chief Executive Officer and all other executive
management.  As a guideline for review in determining base salaries, this
committee uses information comprised from a Pennsylvania bank peer group.
This bank peer group is different from the peer group utilized for the
performance chart.  Pennsylvania peer group banks have been utilized
because of common industry issues and competition for the same executive
talent group.

EXECUTIVE COMPENSATION

The Board of Directors has determined that the 2000 compensation for the
President and Chief Executive Officer of $163,375, the Senior Vice
President and Chief Financial Officer of $108,896 and the Senior Vice
President and Chief Operations Officer of $105,441 were appropriate in
light of our 2000 performance accomplishments.  There is no direct
correlation, however, between such compensation and our performance, nor is
there any weight given by the Executive Compensation Committee to any
specific individual criteria.  Such 2000 compensation was based on the
Executive Compensation Committee's subjective determination after review of
all information that it deemed relevant.

EXECUTIVE OFFICERS

Compensation for executive officers is determined by the Executive
Compensation Committee based on its subjective analysis of the individual's
contribution to our strategic goals and objectives.  In determining whether
strategic goals have been achieved, the Board of Directors considers our
performance as measured by, among numerous other factors, the following:
(i) earnings; (ii) revenues; (iii) return on assets; (iv) return on equity;
(v) market share; (vi) total assets; and (vii) nonperforming loans.
Although the performance and increases in compensation are measured in
light of these factors, there is no direct correlation between any specific
criterion and the employees compensation, nor is there any specific weight
provided to any such criteria in this committee's analysis.  The
determination by this committee is subjective after review of all
information, including the above, it deems relevant.

Total compensation opportunities available to employees are influenced by
general labor market conditions, the specific responsibilities of the
individual and the individual's contributions to our success.  Individuals
are reviewed annually on a calendar year basis.  We strive to offer
compensation that is competitive with that offered by employers of
comparable size in the banking industry.  Through these compensation
policies, we strive to meet our strategic goals and objectives to our
constituencies and provide compensation that is fair and meaningful to our
employees.

           Submitted by the Executive Compensation Committee
           -------------------------------------------------
                        William F. Farber, Sr.
                             Judd B. Fitze
                            John P. Kameen
                          J. Robert McDonnell
                           Eric G. Stephens

ESTIMATED RETIREMENT BENEFITS

Community Bank has a profit sharing plan, which covers all employees who
have completed 1,000 hours of service, attained twenty-one (21) years of
age and have been employed by Community Bank for at least one year.  Normal
retirement age is sixty-five (65).  The normal retirement benefit is the
accumulated account balance of annual contributions, investment income and
forfeitures.  The annual contribution is determined by the Board of
Directors.  Contributions are allocated to each participant based on a pro-
rata share of compensation covered under the plan.  Investment income is
allocated to each participant based on a pro-rata share of the account
balances accumulated at the beginning of the year.  Forfeitures are
allocated to each participant based on a pro-rata share of compensation
covered under the plan.  If a participant separates from service prior to
retirement, the participant will be entitled to a portion of the profit
sharing account based on years of service according to the following
schedule:

                Years of Service                Vested Interest
                ----------------                ---------------
                  Less than 1                         0%
                       1                             10%
                       2                             20%
                       3                             30%
                       4                             40%
                       5                             60%
                       6                             80%
                   7 or more                        100%

A participant is always one hundred percent (100%) vested in pension plan
transferred balances.

During 2000, $88,370 was allocated among the participants' accounts for the
plan.  The amount contributed by Community Bank in 2000 to the plan for Mr.
Baker was $3,315 and Mr. Seasock was $2,589 and Mr. Sheridan was $2,524.
Both Messrs. Baker and Seasock have fourteen (14) years of credited service
under the plan. Mr. Sheridan has sixteen (16) years of credited service
under the plan.

CHANGE IN CONTROL AGREEMENTS

In 1998, we entered into agreements with David L. Baker, President and
Chief Executive Officer, Scott A. Seasock, Senior Vice President and Chief
Financial Officer, and Thomas E. Sheridan, Senior Vice President and Chief
Operations Officer, to provide these key officers with a reasonable degree
of financial security after the occurrence of a change in control. On
December 29, 2000, we terminated the Change in Control Agreement with Mr.
Baker.  As of such date, Mr. Baker has no further claims under or interest
in, the former agreement.

These agreements contain the following principal features:

    -  During the 24 months following a change in control, if the officer
       is terminated "without good cause" or "constructively terminated,"
       as these terms are defined in the agreement, then we, or our
       successor, shall:

       - Pay, in a lump sum or in 24 equal monthly installments, to the
        terminated officer an amount equal to two times his highest
        annual base salary rate during the five-year period ending on
        the date of termination,

       - Continue to provide the terminated officer and his dependents
         for a period of 24 months after the date of termination all
         health programs or their substantial equivalent at a cost to the
         terminated officer not exceeding the equivalent cost of coverage
         to senior management employees,

       - Pay any additional monies to the terminated officer to place him
         in the same after-tax position if there is imposed any excise
         tax as a result of the amount of these payments, and

       - Continue, for a six-year period, to provide indemnification
         protection under our Amended Articles of Incorporation and
         Bylaws and coverage under director's and officer's liability and
         fiduciary liability insurance policies.

    -  Under these agreements, a change in control means:

       - Acquisition of 25.0 percent or more of the voting power of all
         outstanding stock by a person or group of persons,

       - Combination of our Company into another entity in which our
         stockholders do not hold at least 50.0 percent of the voting
         power of the outstanding stock after the combination,

       - Nomination and election of 50.0 percent or more of the members
         of the Board without the recommendation of the Board, or

       - The sale of Community Bank to another financial institution.


FIVE-YEAR PERFORMANCE GRAPH

The following line graph comparing the cumulative total stockholder return
on our common stock, based on the market price change and assuming
reinvestment of dividends, with the cumulative total return of the index
for The NASDAQ Stock Market-Registered Trademark- (US Companies) and the
index for Mid-Atlantic Bank Stocks (Delaware, Maryland, New Jersey, New
York, Pennsylvania and Washington, D.C. Companies) during the five-year
period ended December 31, 2000.  The stockholder return shown on the graph
and table below is not necessarily indicative of future performance.  Our
common stock began trading on The NASDAQ Stock Market-Registered Trademark-
under the symbol "CCBP" on June 17, 1996.  Prior to that date, our common
stock was quoted on the Over-the-Counter Electronic Bulletin Board
Interdealer System.

























<TABLE>
<CAPTION>


                                                           1995     1996     1997     1998     1999     2000
                                                          -----    -----    -----    -----    -----    -----
<S>                                                       <C>      <C>      <C>      <C>      <C>      <C>
---------  Comm Bancorp, Inc............................. 100.0    189.9    263.0    212.5    300.7    236.8
           Total Returns Index for
-- - - --  The NASDAQ Stock Market-Registered Trademark-
            (US Companies)............................... 100.0    123.0    150.7    212.5    394.9    237.6
---------  Total Returns Index for
           Mid-Atlantic Bank Stocks...................... 100.0    143.5    203.9    226.1    287.3    352.0

NOTES:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indices are reweighed daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is
   used.
D. The index level for all series was set to $100.0 on 12/31/95.

</TABLE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This section describes how much stock our directors, nominees for director
and executive officers own.  It also describes the persons or entities that
own more than 5.0 percent of our voting stock.

STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS

This table indicates the number of shares of our common stock owned by the
directors and executive officers as of March 15, 2001.  The aggregate
number of shares owned by all directors and executive officers is 18.38
percent. Unless otherwise noted, each individual has sole voting and
investment power for the shares indicated below.

<TABLE>
<CAPTION>

                                           AMOUNT AND NATURE OF
NAME OF INDIVIDUAL OR IDENTITY OF GROUP   BENEFICIAL OWNERSHIP(1)   PERCENT OF CLASS
------------------------------------------------------------------------------------
<S>                                       <C>                       <C>
David L. Baker                                 14,484.310                  ---
------------------------------------------------------------------------------------
William R. Boyle(2)                             1,308.871                  ---
------------------------------------------------------------------------------------
Thomas M. Chesnick                             26,414.160                 1.33%
------------------------------------------------------------------------------------
William F. Farber, Sr.                        184,020.000                 9.26%
------------------------------------------------------------------------------------
Judd B. Fitze                                  12,945.804                  ---
------------------------------------------------------------------------------------
John P. Kameen                                 20,467.842                 1.03%
------------------------------------------------------------------------------------
William A. Kerl                                13,110.760                  ---
------------------------------------------------------------------------------------
Erwin T. Kost                                  10,079.000                  ---
------------------------------------------------------------------------------------
William B. Lopatofsky                          26,730.000                 1.35%
------------------------------------------------------------------------------------
Robert A. Mazzoni                                 100.000                  ---
------------------------------------------------------------------------------------
J. Robert McDonnell                            32,544.000                 1.64%
------------------------------------------------------------------------------------
Joseph P. Moore, III                              100.000                  ---
------------------------------------------------------------------------------------
Theodore W. Porosky                             3,782.904                  ---
------------------------------------------------------------------------------------
Scott A. Seasock(2)                             4,740.768                  ---
------------------------------------------------------------------------------------
Thomas E. Sheridan(2)                           6,378.865                  ---
------------------------------------------------------------------------------------
Eric G. Stephens                                8,146.701                  ---
------------------------------------------------------------------------------------
All Directors and Officers as a group
(13 Directors, 7 Officers, 16 persons
 in total)                                    365,353.985                18.38%
------------------------------------------------------------------------------------
(1)  Includes shares held (i) directly; (ii) jointly with spouse; (iii) by spouse; (iv) jointly with various
     relatives; (v) by the transfer agent in our dividend reinvestment account; and (vi) in various trusts.
(2)  Executive Officer, not a director.

</TABLE>

VOTING STOCK OWNED BY "BENEFICIAL OWNER"

The following are the persons or entities known by us to own beneficially
more than 5.0 percent of our common stock as of March 15, 2001.

<TABLE>
<CAPTION>

NAME AND ADDRESS           NUMBER OF SHARES(1)             PERCENT OF CLASS
-----------------------------------------------------------------------------
<S>                        <C>                             <C>
Joseph P. Moore, Jr.          189,935.00                         9.56%
400 Williamson Road
Gladwyne, PA 19035
-----------------------------------------------------------------------------
William F. Farber, Sr.        184,020.000                        9.26%
Crystal Lake Road
R.R.1, Box 1281
Carbondale, PA 18407
-----------------------------------------------------------------------------
(1)  Includes shares held (i) directly and (ii) in various trusts.

</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We encourage our directors and executive officers to have banking and
financial transactions with Community Bank.  All of these transactions are
made on comparable terms and with similar interest rates as those
prevailing for other customers.

The total consolidated loans made by Community Bank at December 31, 2000,
to our directors and officers as a group, members of their immediate
families and companies in which they have a 10.0 percent or more ownership
interest was $2.5 million or 6.9 percent of our total consolidated capital
accounts.  The largest amount for all of these loans in 2000 was $4.1
million or 11.0 percent of our total consolidated capital accounts.  During
2000, advances and repayments on these loans were $1.5 million and $3.1
million.  These loans did not involve more than the normal risk of
collectibility nor did they present any other unfavorable features.

From time to time, we engage Judd B. Fitze to represent us as our attorney.
Mr. Fitze is a director of us and Community Bank.  Mr. Fitze received
$6,000 in 2000 for his legal services on our behalf.

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. The consolidated financial statements and notes to these statements
       as well as the applicable reports of the independent certified
       public accountants are filed at Exhibit 13 to this report and are
       incorporated in their entirety by reference under this Item 14(a)1.

    2. All schedules are omitted because they are not applicable or the
       required information is shown in the financial statements or notes
       to these statements.

    3. The exhibits required by Item 601 of Regulation S-K are included
       under Item 14(c) to this report.

(b) Reports on Form 8-K:

We filed no current reports on Form 8-K during the quarter ended December
31, 2000.

(c) Exhibits required by Item 601 of Regulation S-K:

Exhibit Number Referred to
Item 601 of Regulation SK                         Description of Exhibit
--------------------------                        ----------------------
            2                                              None.
            3                                              None.
            4                                              None.
            9                                              None.
           10                                              None.
           11                                              None.
           12                                              None.
           13                                     Portions of the Annual Report
                                                  to Stockholders for Fiscal
                                                  Year Ended December 31, 2000.
           16                                              None.
           18                                              None.
           21                                     List of Subsidiaries.
           22                                              None.
           23                                              None.
           24                                              None.
           99                                              None.




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

COMM BANCORP, INC.
(Registrant)


BY:/s/ William F. Farber, Sr.                         March 21, 2001
   -----------------------------------                      --
   William F. Farber, Sr.,
   Chairman of the Board
   Acting President and Chief Executive Officer
   (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature and Capacity                                    Date

/s/ David L. Baker                                     March 21, 2001
--------------------------------------                       --
David L. Baker, Director


/s/ Thomas M. Chesnick                                 March 21, 2001
--------------------------------------                       --
Thomas M. Chesnick, Director


/s/ William F. Farber, Sr.                             March 21, 2001
--------------------------------------                       --
William F. Farber, Sr.,
Chairman of the Board/Acting President
and Chief Executive Officer/Director
(Principal Executive Officer)


/s/ Judd B. Fitze                                      March 21, 2001
--------------------------------------                       --
Judd B. Fitze, Director


/s/ Stephanie A. Ganz                                  March 21, 2001
--------------------------------------                       --
Stephanie A. Ganz,
Vice President of Finance
(Principal Accounting Officer)


/s/ John P. Kameen                                     March 21, 2001
--------------------------------------                       --
John P. Kameen, Director


/s/ William A. Kerl                                    March 21, 2001
--------------------------------------                       --
William A. Kerl, Director


/s/ Erwin T. Kost                                      March 21, 2001
--------------------------------------                       --
Erwin T. Kost, Director


/s/ William B. Lopatofsky                              March 21, 2001
--------------------------------------                       --
William B. Lopatofsky, Director


/s/ Robert A. Mazzoni                                  March 21, 2001
--------------------------------------                       --
Robert A. Mazzoni, Director


/s/ J. Robert McDonnell                                March 21, 2001
--------------------------------------                       --
J. Robert McDonnell,
Vice President/Director


/s/ Joseph P. Moore, III                               March 21, 2001
--------------------------------------                       --
Joseph P. Moore, III, Director


/s/ Theodore W. Porosky                                March 21, 2001
--------------------------------------                       --
Theodore W. Porosky, Director


/s/ Scott A. Seasock                                   March 21, 2001
--------------------------------------                       --
Scott A. Seasock, Chief Financial
Officer (Principal Financial Officer)


/s/ Eric G. Stephens                                   March 21, 2001
--------------------------------------                       --
Eric G. Stephens, Director




                                  EXHIBIT INDEX

ITEM NUMBER         DESCRIPTION                                 PAGE
-----------         -----------                                 ----

    13              Portions of the Annual Report to
                    Stockholders for Fiscal Year Ended
                    December 31, 2000                             44

    21              List of Subsidiaries of the Company          189



Comm Bancorp, Inc.
CONTENTS
        ------------------------------------------------------------------

INTRODUCTION

 46  President's Message to Stockholders

 48  Consolidated Selected Financial Data


MANAGEMENT'S DISCUSSION AND ANALYSIS

 49  Forward-Looking Discussion

 50  Operating Environment

 58  Review of Financial Position

108  Review of Financial Performance


CONSOLIDATED FINANCIAL STATEMENTS

124  Independent Auditors' Report

125  Consolidated Statements of Income and
     Comprehensive Income

126  Consolidated Balance Sheets

127  Consolidated Statements of Changes in
     Stockholders' Equity

128  Consolidated Statements of Cash Flows


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

129  Summary of significant accounting policies

145  Cash and due from banks

146  Investment securities

148  Loans, nonperforming assets and allowance for
     loan losses

151  Commitments, concentrations and contingent
     liabilities

152  Premises and equipment, net

153  Other assets

154  Deposits

155  Short-term borrowings

156  Long-term debt

157  Fair value of financial instruments

157  Employee benefit plans

157  Income taxes

160  Parent Company financial statements

161  Regulatory matters

166  Summary of quarterly financial information
     (unaudited)


MANAGEMENT'S DISCUSSION AND ANALYSIS 1999
VERSUS 1998

167  Operating Environment

169  Review of Financial Position

179  Review of Financial Performance


DIRECTORS AND OFFICERS

183  Boards of Directors and Corporate Officers


OTHER INFORMATION

187  Locations

188  Stockholder Information



COMM BANCORP, INC.
PRESIDENT'S MESSAGE TO STOCKHOLDERS
                                   -----------------------------------------

During the past year, we made great strides in laying a solid foundation
for a strategic plan that will provide your Company with the competitive
edge, which is vital for success in this fast-paced, demanding century.  We
have expanded our delivery system, initiated new product offerings and
enhanced our existing services.

I am pleased to report that we experienced solid growth in our traditional
product lines during 2000. Average loans and deposits grew 12% and 4% over
the prior year. Other financial highlights included improvements in fee
income of 25%, dividends per share declared of 23% and asset quality of 42%
over last year.

Our commercial relationships flourished this year as a result of the
changes to our delivery system. In 1999, we added community banking offices
in areas with a higher concentration of business activity. Not only have we
increased the volume of commercial loans in our portfolio, but we have
garnered comprehensive banking relationships by removing the logistical
constraints that had limited our ability to service them.

As a result of the higher concentration of business accounts, we have
restructured the loan department to enhance the administration of this area
and improve the quality of the existing portfolio. A Chief Credit Officer
has been appointed, and the loan department has been broken into functional
areas that are staffed by personnel who were redirected from other areas of
the bank. Additional professional resources have been added in critical
areas. We have enhanced the loan policy and are in the process of
strengthening our procedures, as well as centralizing loan documentation
and computerizing loan files. In 2001, we will explore other possible
expansion locations by analyzing the potential costs and benefits of each
site in relation to our financial position and performance.

The establishment of Comm Financial Services Corporation in the fourth
quarter was another strong statement of our commitment.  By expanding our
operations into new non-traditional financial products and services
insurances, allied lines, stocks and bonds, mutual funds, annuities,
pension plans and IRAs we expect Comm Financial to further existing customer
relationships, in addition to creating new affiliations. We anticipate an
improvement to our profitability as this subsidiary grows.

With the advance of e-commerce and the certainty of time constraints on our
customers, we believed it is essential to provide them with an Internet
service that will streamline their banking needs. In the first quarter of
2001, we implemented Klick-sm- Banking, which was in the planning and
development stages throughout this past year. Customers will be able to
perform balance transfers, pay bills, view images of canceled checks, trade
securities and shop on-line twenty-four hours a day, seven days a week from
the comfort and convenience of their home or office.

As we focus on providing our customers with a wide array of products and
services, we must never underestimate the value of superior service. In an
effort to ensure client satisfaction, we recently introduced a new company-
wide sales and service program that challenges employees to provide the
best service possible to our customers.  They are trained to obtain an
understanding of each customer's specific financial needs and coordinate
our products and services to best meet those needs.

Furthermore, in an effort to strengthen relationships in our business
communities, we have implemented a series of luncheon forums for area
business people. Through this outreach, we hope to raise awareness of our
bank and its specific products and service offerings.

In closing, I must commend all of our personnel for their efforts and
dedication that continue to heighten our success and make our growth
possible. Together we have positioned Comm Bancorp, Inc. as a leader in
and a vital member of our communities. Great plans are in place, and we
have great people to implement them. The future is ours.

Sincerely,


/s/ William F. Farber, Sr.
--------------------------
William F. Farber, Sr.
Chairman of the Board,
Acting President and Chief Executive Officer





<TABLE>
<CAPTION>



COMM BANCORP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
                                    ------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31                                       2000       1999       1998       1997      1996
------------------------------------------------------------------------------------------------------------
<S>                                                      <C>        <C>        <C>        <C>       <C>
CONDENSED STATEMENTS OF FINANCIAL PERFORMANCE:
Interest income......................................... $ 29,583   $ 27,812   $ 27,224   $ 26,142  $ 25,059
Interest expense........................................   15,212     14,022     13,960     14,068    13,550
                                                         --------   --------   --------   --------  --------
  Net interest income...................................   14,371     13,790     13,264     12,074    11,509
Provision for loan losses...............................      420        535        855        360       300
                                                         --------   --------   --------   --------  --------
  Net interest income after provision for loan losses...   13,951     13,255     12,409     11,714    11,209
Noninterest income......................................    2,457      2,112      2,673      1,776     1,387
Noninterest expense.....................................   11,069      9,429      9,364      7,956     7,383
                                                         --------   --------   --------   --------  --------
  Income before income taxes............................    5,339      5,938      5,718      5,534     5,213
Provision for income tax expense........................    1,139      1,338      1,218      1,134     1,013
                                                         --------   --------   --------   --------  --------
  Net income............................................ $  4,200   $  4,600   $  4,500   $  4,400  $  4,200
                                                         ========   ========   ========   ========  ========

CONDENSED STATEMENTS OF FINANCIAL POSITION:
Investment securities................................... $ 71,246   $105,630   $109,626   $105,666  $101,994
Net loans...............................................  294,245    273,051    244,090    246,429   231,859
Other assets............................................   54,249     28,431     34,535     29,716    20,959
                                                         --------   --------   --------   --------  --------
  Total assets.......................................... $419,740   $407,112   $388,251   $381,811  $354,812
                                                         ========   ========   ========   ========  ========
Deposits................................................ $378,721   $362,483   $344,253   $332,381  $320,456
Short-term borrowings...................................               5,500                 9,575
Long-term debt..........................................       36         39         41         44        46
Other liabilities.......................................    3,365      3,615      4,223      3,709     3,054
Stockholders' equity....................................   37,618     35,475     39,734     36,102    31,256
                                                         --------   --------   --------   --------  --------
  Total liabilities and stockholders' equity............ $419,740   $407,112   $388,251   $381,811  $354,812
                                                         ========   ========   ========   ========  ========

PER SHARE DATA:
Net income.............................................. $   2.11   $   2.17   $   2.04   $   2.00  $   1.91
Cash dividends declared.................................     0.70       0.57       0.37       0.30      0.28
Stockholders' equity.................................... $  18.95   $  17.43   $  18.00   $  16.39  $  14.21
Cash dividends declared as a percentage of net income...    33.21%     26.00%     18.14%     14.98%    14.83%
Average common shares outstanding....................... 1,995,834  2,125,164  2,205,545  2,200,960 2,200,080

SELECTED RATIOS (BASED ON AVERAGE BALANCES):
Net income as a percentage of total assets..............     1.03%      1.16%      1.19%      1.22%     1.21%
Net income as a percentage of stockholders' equity......    11.72      12.02      11.71      13.40     14.57
Stockholders' equity as a percentage of total assets....     8.81       9.66      10.18       9.14      8.30
Tier I capital as a percentage of adjusted total assets.     8.71       8.60       9.46       8.74      8.46
Net interest income as a percentage of earning assets...     4.04       4.01       4.06       3.87      3.79
Loans, net, as a percentage of deposits.................    79.17%     73.20%     73.88%     75.02%    69.83%

SELECTED RATIOS AND DATA (BASED ON PERIOD END BALANCES):
Tier I capital as a percentage of risk-adjusted assets..    14.08%     14.60%     17.69%     15.95%    15.72%
Total capital as a percentage of risk-adjusted assets...    15.33      15.86      18.94      17.20     16.98
Allowance for loan losses as a percentage of loans, net.     1.10%      1.37%      1.63%      1.52%     1.67%
Full-time equivalent employees..........................      169        167        161        161       149
Locations...............................................       14         14         12         12        10






Note: Average balances were calculated using average daily balances.  Average balances for loans include
nonaccrual loans.  Tax-equivalent adjustments were calculated using the prevailing statutory rate of 34.0
percent.

</TABLE>

COMM BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANAYLSIS
                                    ------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Management's Discussion and Analysis appearing on the following pages
should be read in conjunction with the Consolidated Financial Statements
beginning on page 124 and Management's Discussion and Analysis 1999 versus
1998 beginning on page 167.

FORWARD-LOOKING DISCUSSION:

Certain statements in this Form 10-K are forward-looking statements that
involve numerous risks and uncertainties.  The following factors, among
others, may cause actual results to differ materially from projected
results:

Local, domestic and international economic and political conditions and
government monetary and fiscal policies affect banking both directly and
indirectly.  Inflation, recession, unemployment, volatile interest rates,
tight money supply, real estate values, international conflicts and other
factors beyond our control may also adversely affect our future results of
operations.  Our management team, consisting of the Board of Directors and
executive officers, expects that no particular factor will affect the
results of operations.  Downward trends in areas such as real estate,
construction and consumer spending may adversely impact our ability to
maintain or increase profitability. Therefore, we cannot assure the
continuation of our current rates of income and growth.

Our earnings depend largely upon net interest income. The relationship
between our cost of funds, deposits and borrowings, and the yield on our
interest-earning assets, loans and investments, all influence net interest
income levels.  This relationship, defined as the net interest spread,
fluctuates and is affected by regulatory, economic and competitive factors
that influence interest rates, the volume, rate and mix of interest-earning
assets and interest-bearing liabilities, and the level of nonperforming
assets.  As part of our interest rate risk ("IRR") strategy, we monitor the
maturity and repricing characteristics of interest-earning assets and
interest-bearing liabilities to control our exposure to interest rate
changes.

In originating loans, some credit losses are likely to occur.  This risk of
loss varies with, among other things:

   -  General economic conditions,
   -  Loan type,
   -  Creditworthiness and debt servicing capacity of the borrower over
      the term of the loan, and
   -  The value and marketability of the collateral securing the loan.

We maintain an allowance for loan losses based on, among other things:

   -  Historical loan loss experience,
   -  Known inherent risks in the loan portfolio,
   -  Adverse situations that may affect a borrower's ability to repay,
   -  The estimated value of any underlying collateral, and
   -  An evaluation of current economic conditions.

We currently believe that the allowance for loan losses is adequate, but we
cannot assure that nonperforming loans will not increase in the future.

To a certain extent, our success depends upon the general economic
conditions in the geographic market area that we serve.  Although we expect
economic conditions in our market area to remain favorable, assurance
cannot be given that these conditions will continue.  Adverse changes to
economic conditions would likely impair loan collections and may have a
materially adverse effect on the consolidated results of operations and
financial position.

The banking industry is highly competitive, with rapid changes in product
delivery systems and consolidation of service providers.  We compete with
many larger institutions in terms of asset size.  These competitors also
have substantially greater technical, marketing and financial resources.
The larger size of these companies affords them the opportunity to offer
products and services not offered by us. We are constantly striving to meet
the convenience and needs of our customers and to enlarge our customer
base, however, we cannot assure that these efforts will be successful.

OPERATING ENVIRONMENT:

The economy in the year 2000 was marked by change.  Significant increases
in annual rates of the Gross Domestic Product ("GDP"), consumer spending
and business investment did not paint an accurate picture of the United
States economy in 2000. The longest economic expansion on record continued
well into the first half of 2000. At the beginning of the third quarter
tentative signs of an economic slowdown emerged. In the fourth quarter
these signs became even more pronounced. Higher energy prices squeezed
business profits and eroded disposable personal income. In addition,
inflated equity prices slumped, causing a substantial cut in household net
worth and discouraging the initial offering of new shares by businesses.
Both business and consumer spending, which had been high in recent years,
flattened in the fourth quarter. Due to the decline in consumer demand,
manufacturers lowered production to counter inventory buildups. Rising
concern about slower growth and potential layoffs resulted in a sharp
deterioration of consumer confidence.  By the end of 2000, the slowdown was
becoming more pronounced. Economists and analysts even started to voice
concerns over a possible recession.

As previously mentioned, the economy continued growing at a rapid pace in
the first and second quarters of 2000. In addition, inflationary pressures,
spurred by an extremely tight labor market, continued to persist. In
efforts to slow the heated economy and counter rising inflation, the
Federal Open Market Committee ("FOMC") raised the federal funds rate by a
total of one percent in the first half of the year, from 5.50 percent to
6.50 percent. The increase came in the form of two 25 basis point
increments on February 3 and March 22, and a 50 basis point move on May 18,
2000. The FOMC declined to raise rates during the remainder of the year as
accumulated evidence continued to suggest a slowdown.  At the end of 2000,
the growth moderation gave way to weakness.  Further data emerged, shortly
after the December meeting of the FOMC, indicating a marked weakening. Both
business investment and retail sales over the holiday season were sharply
lower than expected. A halt in manufacturing, in response to inventory
buildups, forced business short-term profit projections downward. Equity
prices plummeted and took consumer confidence with them. Based on these
developments, the FOMC called a special telephone conference on January 3,
2001, and cut the federal funds rate 50 basis points to 6.00 percent.
Although financial conditions picked up after the easing, the effects were
short-lived as a definite weakness set in. The FOMC cut rates again by 50
basis points on January 30, 2001.

In 2000, GDP, the total of goods and services produced within the United
States, expanded 5.0 percent, the strongest pace since 1984 and followed
strong growth of 4.2 percent in 1999 and 4.4 percent 1998. However, the
strong annual pace was not indicative of the problems plaguing the economy
at year-end. GDP rose at annual rates of only 2.2 percent in the third
quarter and 1.1 percent in the fourth quarter, after expanding at a 5.9
percent annual rate in the first half of 2000. The fourth quarter pace was
the weakest performance since the second quarter of 1995.  The downturn in
GDP resulted from a similar slowdown in consumer and business spending.
Consumers, feeling financial pressures from rising energy costs and an
ailing stock market, cutback on spending. In December of 2000, natural gas
prices reached a record high of $10.10 per million British thermal units on
the New York Mercantile Exchange, up from $6.59 in November. The Energy
Department warned natural gas consumers to expect a 50.0 percent rise in
home heating bills this winter.  In addition, personal wealth was affected
by drops in equity prices. The NASDAQ Stock Market-Registered Trademark-
Composite, which grew an incredible 85.6 percent in 1999, incurred a steep
drop in 2000 of negative 39.3 percent. Similarly, the Dow Jones Industrial
Average was down 6.2 percent in 2000 after posting a 25.2 percent gain in
1999. As a result, consumer spending, which posted a solid 5.3 percent
growth rate in 2000, slowed considerably in the fourth quarter, growing at
an annual rate of only 2.8 percent. Inflated energy prices, coupled with
higher interest rates, also eroded business profits. The erosion was
compounded by sluggish consumer spending.  Nonresidential investment,
commercial construction and outlays for equipment and software, which grew
at an annual rate of 12.6 percent in 2000, fell 0.6 percent in the fourth
quarter.

Employment conditions mirrored general economic conditions. Despite
continued low unemployment, large job gains in the first half of 2000
stagnated in the second half.  There were 2.0 million new jobs created in
2000, compared to 2.7 million in 1999.  However, approximately 90.0 percent
of the job creation occurred in the first six months of the year. In
addition, 85.0 percent of the total new jobs created were in service-
producing industries.  In line with slower production to counter inventory
buildups, employment in the manufacturing sector fell by 51.0 thousand jobs
in 2000. Additionally, the average workweek decreased from 34.5 hours in
1999 to 34.1 hours in 2000. Despite the static job growth, the unemployment
level, which is a lagging indicator, remained low at 4.0 percent at year-
end 2000, compared to 4.1 percent at the end of 1999. Compensation costs
increased 4.1 percent in 2000, compared to only 3.4 percent in 1999. The
majority of the increase was due to a 4.9 percent increase in benefits
costs; wages and salaries grew by 3.8 percent. In comparison, 1999 wages
and salaries increased 3.5 percent, while benefit costs rose 3.3 percent.

Consumer confidence levels followed the economy in 2000. After reaching a
record mid-year high, confidence levels began to taper off in autumn before
falling considerably by year-end. The consumer confidence index rose to a
high of 141.7 in July. Similarly, the current conditions index, which
measures people's perceptions of their own financial condition jumped to a
new high of 185.9 in July from 180.1 in June. In addition, the expectations
component, the perception of the general economy six months from now rose
to 112.2. Furthermore, consumers' perception of the labor market
strengthened significantly in July. The percentage of people saying jobs
were hard to get fell to a record low of 9.9 percent, while the percentage
of people saying jobs were plentiful jumped sharply to 55.1 percent.
However, as job growth slipped, the percentage of people saying jobs were
hard to get rose to 11.9 percent in December, while the number of people
saying jobs were plentiful fell to 51.3 percent. Confidence highs sagged as
the year went on and by December the consumer confidence index fell to
128.3, the lowest level all year. Prospects for the near future remained
bleak as confidence levels continued to falter into 2001. In January, the
confidence index plummeted 12.2 points, the largest drop since the last
recession in January 1991.

Economic activity was bustling in our four-county market area for much of
2000. However, the area did not escape the effects of the slowdown. In
February of 2000, officials from the Scranton and Wilkes-Barre chambers of
commerce announced the formation of the Great Valley Technology Alliance,
a far reaching economic development effort that calls for cooperation among
regional chambers of commerce, educational institutions and governments to
develop a comprehensive plan to bring high-tech jobs to the area. In
addition, six companies from out of the area announced plans to bring
operations to our region. Specifically, Corning, Inc. opened a new
manufacturing plant with 2,500 new job positions. Also, Cigna Healthcare
revealed a plan to build a new customer service center and staff it with
1,200 new jobs. Four other companies announced similar plans, creating 580
additional positions. Furthermore, Proctor and Gamble, Fleet Services and
Tobyhanna Army Depot, three of the areas largest employers, committed to
expand their current operations by 803 positions.  At the end of the year,
our market area began to experience some setbacks. Due to the slowing
economy, six major employers in the area announced significant layoffs,
eliminating nearly 800 jobs. For 2001, potential jobs created should
counteract the effects of any layoffs and keep employment levels healthy.
However, should the economy slow even further, activity and employment in
our market area could be hindered.

National, Pennsylvania and market area unemployment rates at December 31,
2000 and 1999, are summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                              2000     1999
--------------------------------------------------------------------------------------
<S>                                                                      <C>      <C>
National................................................................. 4.0%     4.1%
Pennsylvania............................................................. 4.4      4.1
Lackawanna County........................................................ 3.7      3.6
Susquehanna County....................................................... 4.2      4.3
Wayne County............................................................. 5.4      5.6
Wyoming County........................................................... 3.9%     4.5%

</TABLE>

New jobs created in the Commonwealth of Pennsylvania totaled 97.3 thousand
in 2000. Of the total jobs created, 93.2 thousand or 95.8 percent were in
service-producing industries.  In addition, the economic activity index for
the Commonwealth increased 2.2 percent in 2000, following a 2.6 percent
increase in 1999. Despite strong job creation and a solid index, the
Commonwealth's unemployment rate increased to 4.4 percent in 2000, from 4.1
percent in 1999. Employment conditions improved for our four-county market
area over that of the Commonwealth. Wyoming County experienced dramatic
improvement in their unemployment rate to 3.9 percent at year-end 2000,
from 4.5 percent at the end of the previous year. The improvement was
directly related to the jobs added by Proctor and Gamble, which operates a
plant located in Wyoming County. The unemployment rates for both
Susquehanna and Wayne Counties also improved. Lackawanna County's
unemployment rate, although slightly increasing, was still below that of
the Nation and Commonwealth.

Overall, the banking industry experienced its first downturn in nine years,
recording slower earnings in 2000 as compared to 1999. Net interest margin
compression, increased loan loss provisions and noninterest income
moderation all contributed to the earnings reduction. Despite the weakened
financial performance, the financial position for all Federal Deposit
Insurance Corporation ("FDIC")-insured commercial banks improved as
evidenced by strong growth in assets, loans and deposits. The overall size
of the balance sheet grew in 2000 as indicated by an increase in total
assets from $5,734 billion at December 31, 1999, to $6,239 billion at
December 31, 2000. Loans, net of unearned income, increased 9.3 percent
from $3,491 billion at year-end 1999 to $3,816 billion at year-end 2000.
Increases of $160 billion in real estate loans and $77 billion in
commercial loans were primarily responsible for the improvement. As a
result of the strong demand for loans, commercial bank investment
portfolios grew at a meager pace of 3.0 percent in 2000. Total deposits
grew from $3,831 billion at December 31, 1999, to $4,177 billion at
December 31, 2000, an increase of $346 billion. Noninterest-bearing
deposits increased 8.9 percent, while interest-bearing deposits grew 9.1
percent in 2000. The majority of the increase in interest-bearing deposits
was in higher-costing time deposits.  Although borrowed funds increased 5.6
percent in 2000, they were a less prominent portion of the total funding of
banks, declining from 22.7 percent at year-end 1999 to 22.2 percent at
year-end 2000. Asset quality deteriorated during 2000 as evidenced by a
30.0 percent increase in nonperforming loans. Moreover, the amount of net
loans charged-off increased from $20.4 billion in 1999 to $23.6 billion in
2000.

As mentioned previously, earnings performance for all insured commercial
banks declined in 2000. Specifically, banks earned $71.2 billion in 2000,
a decline of $380 million or 0.5 percent from the record-setting earnings
of $71.6 billion in 1999. Return on average assets ("ROAA") and return on
average equity ("ROAE") were 1.19 percent and 14.07 percent for the year
ended December 31, 2000, compared to 1.31 percent and 15.34 percent for the
same period of 1999. The year started positively as banks posted record-
breaking earnings of $19.5 billion in the first quarter of 2000. However,
industry earnings dropped 24.6 percent to $14.7 billion during the second
quarter as many banks realized losses on investment portfolio restructuring
and made additions to their allowance for loan losses accounts. With these
one-time charges behind, the industry earnings rebounded to $19.3 billion
for the third quarter. The positive results seen in the third quarter were
short-lived as earnings again plummeted during the fourth quarter.
Reductions in net interest income as a result of margin compression caused
net income to decline to $17.7 billion in the final quarter of 2000.

Declining net interest margins were a primary restraint to the growth of
commercial bank earnings in 2000. For all insured commercial banks, net
interest margins declined from 4.07 percent in 1999 to 3.95 percent in 2000
as the cost of funds accelerated faster than the yield on earnings assets.
For 2000, as a percentage of average earning assets, the cost of funds
increased 63 basis points compared to an earning assets yield rise of 51
basis points. One of the primary problems facing commercial banks in 2000
was raising low-cost core deposits to fund loan growth. With loans
generally growing two to three times faster than core deposits, banks
continued to fund incremental growth with relatively high-cost funds
putting additional pressure on existing margins. Provision for loan losses
was up over 33.8 percent compared to last year. For 2000, loan loss
provisions totaled $29.3 billion, an increase of $7.4 billion over 1999.
This marked the greatest increase in loss provisioning since 1989. Greater
provisions resulted from the escalation of loan losses and inventories of
nonperforming loans. Another major influence to the reduction in earnings
was the slowdown in the growth of noninterest income. Noninterest income
grew 14.0 percent from 1998 to 1999 compared to only 4.1 percent from 1999
to 2000. Lack of fee income growth, coupled with losses recognized on the
sale of investment securities, accounted for the decline in noninterest
income.

Contrary to the results for the overall industry, the financial performance
of all FDIC-insured commercial banks located in Pennsylvania improved in
2000, while their financial position declined. Net income improved from
$2,565 million in 1999 to $2,784 million in 2000, an 8.5 percent increase.
Both the ROAA and ROAE improved from 1999 to 2000. ROAA rose from 1.33
percent in 1999 to 1.46 percent in 2000. A similar improvement was also
exhibited in ROAE, which increased from 15.14 percent in 1999 to 17.35
percent in 2000. As a percentage of average earning assets, declines in
noninterest expenses more than offset reductions in net interest income and
noninterest income. The net interest margin tightened 14 basis points from
3.91 percent in 1999 to 3.77 percent in 2000 as a result of greater
competition in pricing both loan and deposit products. Noninterest income
as a percentage of average earning assets declined 17 basis points from
2.78 percent in 1999 to 2.61 percent in 2000. Offsetting these declines was
an improvement in expense control for this group as indicated by a 44 basis
point reduction in noninterest expense to average earning assets from 4.17
percent in 1999 to 3.73 percent in 2000. As aforementioned, the financial
position of Pennsylvania banks deteriorated as evidenced by changes in the
comparable balance sheets at December 31, 1999, and 2000. Total assets and
total loans, net, declined 3.0 percent and 6.1 percent, while total
deposits increased slightly by 2.5 percent.

The banking industry is expected to face some difficult conditions in 2001
as the economic downturn will force institutions to work harder to sustain
earnings growth. Rising energy prices, high levels of corporate and
household debt, tight labor markets and a weakening stock market are all
indications of slower economic growth, which will make the operating
environment treacherous in 2001. The ability to generate sufficient loan
demand and to control the deterioration of credit quality will be paramount
to the success of financial institutions. The recent actions taken to
deregulate the industry should assist banks by allowing them to increase
noninterest income through offering products and services previously
unavailable to commercial banks. However, these actions may also work
against commercial banks by intensifying an already competitive environment
for low-cost deposits.  Although most commercial banks maintain adequate
allowance for loan loss levels, a significant economic downturn could
seriously draw on these reserves causing future earnings to be reduced as
accounts are replenished.

Bank merger activity was expected to escalate during 2000 as a result of
the threatened elimination of the pooling-of-interest method of accounting
for business combinations. On September 7, 1999, the Financial Accounting
Standards Board ("FASB") issued an exposure draft of a proposed Statement
of Financial Accounting Standards ("SFAS"), "Business Combinations and
Intangible Assets." This proposal if adopted as a final SFAS, would
eliminate the pooling method causing all acquisitions to be accounted for
using the purchase method. Under the pooling method, assets and liabilities
previously recorded are carried forward to the surviving company. No other
assets or liabilities are recognized in the combination, and any excess of
the purchase price over the net assets of the acquired company is not
recorded. Under the purchase method, the acquiring company is required to
record the assets acquired and liabilities assumed at their fair value,
which may result in recording goodwill, the excess of the price paid over
the net assets received. Most analysts believed banks would hasten their
merger plans in order to avoid the recognition of goodwill and the
resulting charges to income in the form of amortization expense. At its
December 6, 2000, meeting, the FASB reached a tentative decision to modify
certain provisions of its exposure draft to require the use of a
nonamortization approach for purchased goodwill. Under this approach,
goodwill would not be amortized to earnings but would rather be reviewed
for impairment. Amortization expense would only be recorded in periods when
the recorded value of goodwill was more than its fair value. The FASB
expects to issue its final SFAS by the end of June 2001.

The uncertainty of the outcome of the proposed accounting rule along with
depressed prices of bank stocks caused merger activity to fall short of
expectations in 2000. Nationally, the number of bank deals announced
declined from 267 in 1999 to 183 in 2000. This is the second consecutive
year that the number of deals announced declined from the recent high of
413 in 1998. The average price to book value for commercial bank mergers in
2000 was 2.0 times compared to 2.3 times last year. The median price to
earnings was 19.6 times in 2000 and 21.8 times in 1999. In 2000, there were
66 deals announced throughout the Nation for commercial banks with asset
sizes similar to ours. These deals had an average price to book value of
2.3 times and a median price to earnings multiple of 20.6 times. Merger
activity in Pennsylvania consisted of eight deal announcements in 1999
having an average price to book of 2.4 times and a median price to earnings
of 21.9 times. For 2000, there were six deals with an average price to book
of 2.1 times and a median price to earnings of 21.2 times. Three of the
fourteen announcements over the past two years were for commercial banks
within our market area. The aggregate deal value of these acquisitions was
$264.5 million. The average price to book and median price to earnings were
2.2 times and 21.0 times. We expect that these recent acquisitions of local
commercial banks by New York-based banks will benefit us through an
improvement in our market share, as more customers seek service provided
through a local community bank.

Merger activity is expected to increase in 2001, as a result of increased
competitive pressure to provide customers with all the financial services
and products allowed under the recent deregulation of the financial
services industry. In addition, as the economy begins to falter, more
shareholders will become disenchanted with the moderate performance of
financial institution stocks, thus calling for a sale in an attempt to
maximize their wealth. Moreover, the reduction in earnings should lower
asking prices from sellers, which will accelerate merger activity, as they
become accretive to earnings without making extravagant cost savings and
revenue enhancement assumptions.

The most recent significant legislation affecting financial institutions
was the Gramm-Leach-Bliley ("GLB") Act. Effective on March 11, 2000, the
GLB Act repealed the Glass Steagall Act that restricted the affiliation of
banks, insurance companies and securities firms. The GLB Act allows for the
creation of new financial holding companies authorized to engage in
underwriting, selling insurance and securities, conducting both commercial
and merchant banking and investing in and developing real estate.

Review of Financial Position:

We provide a full range of financial services through our subsidiaries,
Community Bank and Trust Company ("Community Bank"), including its
subsidiaries, Community Leasing Corporation and Comm Financial Services
Corporation ("Comm Financial"); and Comm Realty Corporation.  Community
Bank operates fourteen full-service branch banking offices. These offices
are all similar with respect to the following:

    -  Economic characteristics,
    -  Products and services,
    -  Operating processes,
    -  Delivery systems,
    -  Customer bases, and
    -  Regulatory oversight.

Based on these similarities, we consider our branch banking offices to be
a single operating segment. Community Leasing Corporation, incorporated on
May 27, 1999, provides equipment lease financing to commercial customers.
On December 28, 2000, the Commonwealth of Pennsylvania's Department of
Banking approved the formation of Comm Financial to engage in selling
insurance products and services and in providing asset management services
to individuals and small- and medium-sized businesses. Comm Realty
Corporation, incorporated on November 21, 2000, holds, manages and sells
foreclosed or distressed assets on behalf of Community Bank. Community
Leasing Corporation, Comm Financial and Comm Realty Corporation did not
meet the qualitative thresholds for required segment disclosure. We had no
other reportable operating segments during the three years ended December
31, 2000.

For further discussion of the recent SFAS issued by the FASB related to
segment disclosure, refer to the note entitled, "Summary of significant
accounting policies-Segment disclosure," in the Notes to Consolidated
Financial Statements to this Annual Report.

Total assets were $419.7 million at December 31, 2000, an increase of $12.6
million from $407.1 million at December 31, 1999. Consistently strong loan
demand in 2000 was the primary contributing factor to the growth in total
assets. Total assets averaged $10.7 million or 2.7 percent higher in 2000
at $406.9 million, compared to $396.2 million in 1999. In comparison, our
local peer group, comprised of 25 participating banks located in
Northeastern Pennsylvania, posted 7.4 percent growth in average total
assets. Average earning assets as a percentage of average total assets was
virtually constant at 94.5 percent for 2000, in comparison to 94.4 percent
for 1999.  However, the composition of the balance sheet changed over 2000,
as loans played a more dominant role in the earning asset mix. Average
loans equaled 75.2 percent of average earning assets in 2000, compared to
69.0 percent in 1999, while average investments and federal funds sold as
a percentage of average earning assets declined to 24.8 percent in 2000,
compared to 31.0 percent in 1999. Repayments of U.S. Government-sponsored
agency mortgage-backed securities were used to supplement deposit growth in
funding the increased loan demand. The ratio of average earning assets to
average total assets for our peer group was 95.1 percent in 2000 and 94.6
percent in 1999.

The investment portfolio totaled $71.2 million at December 31, 2000, a
decrease of $34.4 million from $105.6 million reported at the end of 1999.
As previously mentioned, we utilized repayments of mortgage-backed
securities to fund loan demand.  In addition, obligations of states and
municipalities having short call features were sold to reduce the amount of
optionality risk in the portfolio. Obligations of states and municipalities
having longer call provisions were purchased subsequent to year-end 2000.
These sales were partially responsible for the $25.5 million in federal
funds sold outstanding at December 31, 2000. The investment portfolio
averaged $92.7 million in 2000, a decline of $19.8 million compared to
$112.5 million averaged in 1999. The tax-equivalent yield on the investment
portfolio was 6.53 percent in 2000 and 6.51 percent in 1999.

At December 31, 2000, loans, net of unearned income, amounted to $297.5
million, an increase of $20.6 million or 7.4 percent, compared to $276.9
million at December 31, 1999. Loan growth for our peer group was slightly
higher in 2000 at 9.6 percent. Our loans, net of unearned income, averaged
$31.0 million or 12.0 percent higher in 2000. Solid demand for all our
credit products contributed to the overall growth in the loan portfolio. In
addition, a higher interest rate environment had a positive effect on our
loan yields during 2000. The tax-equivalent yield on our loan portfolio
increased 16 basis points to 8.49 percent in 2000, compared to 8.33 percent
in 1999.

A major concern for 2000 was asset quality improvement. Enhanced efforts of
our Special Assets Department resulted in a $2.9 million reduction in
nonperforming assets to $4.0 million at December 31, 2000, compared to $6.9
million at the end of 1999.  A $4.0 million decline in nonperforming loans,
partially offset by a $1.1 million increase in foreclosed assets, caused
the improvement. As a percentage of loans, net of unearned income,
nonperforming assets equaled 1.35 percent at December 31, 2000, compared to
2.51 percent at December 31, 1999. The allowance for loan losses equaled
1.10 percent of loans, net of unearned income, at year-end 2000, compared
to 1.37 percent at the end of 1999. Net charge-offs exceeding the provision
for loan losses, coupled with the growth in the loan portfolio, caused the
decline in the ratio. This ratio for our peer group was 1.18 percent at
year-end 2000 and 1.17 percent at the end of the previous year.

Total deposits increased $16.2 million or 4.5 percent to $378.7 million at
December 31, 2000, from $362.5 million at the end of 1999. Deposits
averaged $365.2 million in 2000, an increase of $12.5 million compared to
$352.7 million in 1999. A full year of operating our two new branch
offices, certificate of deposit promotions and increased deposit
relationships with area school districts all contributed to the growth in
deposits. The composition of our deposits was constant during 2000, as
evidenced by the ratio of average interest-bearing deposits to average
total deposits. This ratio was 89.6 percent in 2000 and 1999. For our peer
group, this ratio equaled 88.2 percent in 2000, compared to 89.5 percent in
the previous year. Higher competitive interest rates in 2000 had a direct
effect on our cost of deposits. Our cost of deposits increased 19 basis
points to 4.60 percent in 2000, from 4.41 percent in 1999.

At December 31, 2000, our interest sensitivity and liquidity positions both
improved from the previous year end. With regard to our interest
sensitivity, the improvement was represented by the change in the one-year
cumulative ratio of rate sensitive assets ("RSA") to rate sensitive
liabilities ("RSL"). This ratio improved to 0.91 at year-end 2000, from
0.75 one year ago. Both ratios fall within the acceptable guidelines set
forth in our Asset/Liability Management Policy. The strengthening of our
liquidity position is best explained by the change in the net noncore and
net short-term noncore funding dependence ratios. These ratios improved to
negative 3.4 percent and negative 5.5 percent at December 31, 2000, from
0.5 percent and negative 0.5 percent at the end of 1999.

Stockholders' equity amounted to $37.6 million at December 31, 2000, an
increase of $2.1 million from $35.5 million at December 31, 1999.
Accumulated other comprehensive income, consisting entirely of unrealized
holding gains on available-for-sale investment securities, accounted for
$1.2 million of the increase.  Also affecting stockholders' equity was net
income of $4.2 million offset in part by common stock repurchases of $2.1
million and net cash dividends declared of $1.2 million. We also
experienced improvement in our risk-based capital ratios from the end of
1999. Specifically, our Leverage ratio, defined as Tier I capital as a
percentage of risk-adjusted assets, improved to 8.7 percent at December 31,
2000, from 8.6 percent at December 31, 1999.

During 2000, our focus was on laying the foundation for a long-term
strategic plan. Over the years, we have built a solid community branch-
banking network throughout four counties of Northeastern Pennsylvania. We
realize that in order to remain competitive we need to develop new lines of
business that will provide additional sources of fee-based revenue, further
expand our branch network into new markets, and provide customers with new
technology-based delivery systems and superior customer service.

After extensive research and planning, we decided to expand our operations
into new, non-traditional financial products and services. In the fourth
quarter of 2000, we established Comm Financial as a wholly-owned subsidiary
of Community Bank. Comm Financial offers various insurance, asset
management and retirement products and services to individual and
commercial customers. Through its product and service offerings, we expect
Comm Financial to support traditional operations by generating additional
fee revenue, and by creating new, as well as, furthering our on-going
customer relationships. In 2001, we plan to continue to pursue this non-
traditional avenue through possible acquisition opportunities.

Our recent delivery system expansion, through which we added community
banking offices in areas with a higher concentration of commercial
activity, began to positively affect our financial position.  This is
evident from the higher demand for and increased volume of commercial loans
in our loan portfolio.  By adding a greater proportion of commercial loans
to our  portfolio, we expect to improve financial performance, as these
types of loans typically carry a greater return as compared to traditional
retail lending.  In addition, this expansion has allowed us to obtain
commercial customers that would not have otherwise banked with us, due to
servicing limitations arising from logistical constraints.  We plan to
continue exploring other possible expansion locations in 2001 by analyzing
the potential costs and benefits of each site to our financial position and
performance.

The use of e-commerce, through the Internet, has become a popular means of
conducting all types of business transactions, including banking. In order
to provide customers with this new delivery channel, we have been planning
and developing our Internet-banking program, Klick-sm- Banking, throughout
2000. In the first quarter of 2001, this program will move into the
implementation phase. Through a series of promotional seminars, customers
will be apprised of the features and benefits of this service. Through
Klick-sm- Banking, accessed via our web site, customers will be provided
with a personal home page they can tailor to their individual needs.
Customers will be able to perform balance transfers, pay bills, view images
of canceled checks, trade securities and shop on-line twenty-four hours a
day, seven days a week from the comfort and convenience of their home or
office.

We realize that in addition to providing customers with a wide array of
products and services, as well as the latest banking conveniences, the
attribute that can set us apart from our competition is superior customer
service. In financial institutions, customer satisfaction is critical for
customer retention. The American Customer Satisfaction Index ("ACSI"),
which is based on a quarterly survey conducted by the University of
Michigan Business School's National Quality Research Center, scales
customer satisfaction by measuring a number of factors including customer
service, perceived quality, perceived value, customer expectations and
customer retention. According to the ACSI for the fourth quarter of 2000,
customer satisfaction in the banking sector rebounded 2.9 percent from the
fourth quarter of 1999, after a steady decline through the late 1990s. The
decline in the latter part of the decade was due primarily to customer
confusion caused by the large number of mergers in the banking industry. In
an effort to enhance our customer service, we recently introduced a new
company-wide sales and service program. The program challenges employees to
provide the best service possible to customers. It is designed to train
employees on how to obtain an understanding of the specific financial needs
of each customer and coordinate our products and services to meet those
needs.

INVESTMENT PORTFOLIO:

Our investment activities are second only to lending in importance to the
generation of wealth. This wealth is measured in terms of total return.
Total return is a comprehensive industry-wide approach measuring investment
portfolio performance by considering the sum of all interest income,
reinvestment income on all proceeds from repayments, and capital gains and
losses whether realized or unrealized. Our investment portfolio consists
primarily of fixed-rate bonds. As a result, interest rates have a
substantial influence on the wealth of these assets as they affect
earnings, reinvestment rates and market values. At the beginning of 2000,
the FOMC bias changed from neutral to restrictive as signs appeared that
the economy was overheating. Fixed-rate investors feared the value of their
portfolios would suffer as the FOMC enacted monetary policy by raising
short-term interest rates to ward off inflation. The FOMC did exactly this,
as they raised the federal funds rate 100 basis points during the first
five months of 2000. Normally this type of increase would have a profound
effect on long-term rates and the price of those bonds most closely related
to these maturities. However, as the year progressed, the influence of the
FOMC's actions were overshadowed by actions of the Treasury Department.
Investors raced into long-term Treasuries upon the announcement that the
United States Government would substantially reduce the federal debt
through cutting the size and frequency of new government debt issuance, and
use the $237 billion budget surplus to repurchase existing debt. As a
result, for much of the year, this interest in long-term bonds rallied them
so much, that their yields fell below those of shorter-term bonds to create
an inverted yield curve. This inversion caused a treacherous investing
environment as investors were not compensated for lending their funds for
a longer period of time. The inversion was so severe that it continued
throughout the latter part of the year even when the economy showed signs
of weakness and the FOMC changed from a restrictive bias to an
accommodative stance. Other major factors influencing the price of bonds in
2000 were the election of President Bush, threatened elimination of the
U.S. Government-sponsored agencies' line of credit with the U.S. Treasury
and increased oil prices. Concerns that the new Presidential Administration
would be able to institute significant tax cuts, which would slow future
debt reductions, sent long-term bond prices plummeting temporarily near the
end of 2000. Offsetting this influence was a short-lived rumor that the
Treasury Department would eliminate conditional lines of credit with U.S.
Government-sponsored agencies. As a result, investors moved funds from
agency investments into Treasuries causing their prices to rally.

Our investment portfolio consists primarily of short-term collateralized
mortgage obligations ("CMOs") of U.S. Government-sponsored agencies and
intermediate-term state and municipal obligations. The parts of the yield
curve most closely related to these investments include the two-year and
ten-year Treasuries as our CMOs had a modified duration of 1.5 years and
our municipal obligations had a modified duration of 6.0 years at December
31, 2000. Yields on the two-year U.S. Treasury note decreased 113 basis
points from 6.24 percent at year-end 1999 to 5.11 percent at year-end 2000.
The yield on this investment peaked at 6.93 percent on May 18, 2000, which
was the date of the last FOMC tightening move. The spread between a two-
year U.S. Treasury and a U.S. Government-sponsored agency CMO with a
weighted-average life of two-years widened from 60 to 70 basis points at
the beginning of 2000 to 140 to 150 basis points by the end of the year.
During 2000, the yield on the ten-year U.S. Treasury experienced a greater
decline as compared to the two-year U.S. Treasury. The ten-year declined
133 basis points from 6.45 percent at year-end 1999 to 5.12 percent at
year-end 2000. Similar to CMOs, spreads widened on intermediate-term state
and municipal obligations from 115 basis points at the beginning of 2000 to
187 basis points at the end of 2000. As a result of these changes in
interest rates and spreads, the net unrealized holding loss for CMOs
improved from $1,225 at December 31, 1999, to $236 at December 31, 2000.
Similarly, the value of our municipal holdings improved in 2000. The net
unrealized holding loss of $147 at year-end 1999 turned into a net
unrealized holding gain of $792 at year-end 2000. The structure and
composition of our investment portfolio led to improved wealth as it
allowed us to take advantage of the market rate changes. As aforementioned,
the principle gauge in determining the wealth improvement generated from
the investment portfolio is total return. In 2000, the total return on our
investment portfolio at 9.6 percent more than doubled our return last year.
The Lehman Brothers' aggregate-bond index, a benchmark used by most
investment managers, slightly outperformed us in 2000 scoring a total
return of 11.6 percent. However, our portfolio significantly outperformed
this industry standard in 1999 as we reported a total return of 3.9 percent
compared to the total return of the benchmark at negative 0.6 percent. Our
investment portfolio outperformed the local peer group's portfolio over the
past two years. The peer group's total return was 7.1 percent in 2000 and
2.4 percent in 1999. The additional wealth generated by exceeding the peer
group's total return by 250 basis points, based on the average volume of
our investment portfolio in 2000, approximated $2.3 million. Moreover, our
investment portfolio ranked in the 92nd percentile among all FDIC-insured
bank holding companies, based on an independent national investment
performance ranking company, with respect to total return over the past
three and five years.

Similar to the approach taken in assessing our performance with respect to
return, we evaluate our risk in comparison to all other financial
institutions. Risk is assessed by quantifying the average life of the
investment portfolio as compared to U.S. Treasury securities. Average life
is derived from the standard deviation or volatility of our total return to
that of U.S. Treasury securities over a one-year time horizon. This risk
measure improved from 2.4 years in 1999 to 1.9 years in 2000. This
improvement is more impressive when considered in conjunction with the
aforementioned total return betterment. Our portfolio continued to rank in
the upper one-third of all banks located in the United States for having
low risk. Moreover, the risk associated with our portfolio was less than
that of the local peer group having an average life of 3.3 years. Another
assessment of risk is modified duration, which measures the investment
portfolio's exposure to market value volatility as a result of interest
rate fluctuations. At December 31, 2000, our investment portfolio had a
modified duration of 2.4 years. The decrease in the investment portfolio's
modified duration from 2.9 years in 1999 reduced our portfolio's exposure
to future market value depreciation from rising interest rates. The
composite performance ranking from the national service, which takes into
consideration a number of comprehensive measures of both risk and return
over the past five years, ranked us in the 94th percentile. Bank holding
companies with investment portfolios ranking above the 80th percentile are
considered superior.

Understanding inherent risks and their potential effects are essential to
managing an investment portfolio. Specifically, federal regulations mandate
that investment portfolio managers and bank directors must be able to prove
that they understand and can manage various risk elements in the bank's
investment portfolio. Investment portfolio managers must demonstrate by
performing pre- and post-purchase tests for the impact of interest rate
changes on price volatility, cash flows and average life. Moreover,
regulations require, at a minimum, that investment oversight has:

   -  Developed adequate investment policies, procedures and risk limits,
   -  Implemented effective internal control programs,
   -  Identified, measured, monitored and controlled associated risks,
   -  Assured effective oversight of the investment function from
      directors and management, and
   -  Proved compliance with related laws, regulations, policies and
      accounting standards.

Our investment policy specifies approved investments and sets limits to
risk exposure on both individual securities and the overall portfolio. We
evaluate and limit our risk exposure by using quantitative techniques,
subjective analysis, regulatory guidance and the investment policy.

Among others, the major types of risks analyzed in our investment oversight
include:

    -  Market or IRR,
    -  Timing risk,
    -  Credit risk, and
    -  Liquidity risk.

Market or IRR relates to the inverse relationship between bond prices and
market yields.  This risk is defined as the risk that increases in general
market rates will result in market value losses. Market risk represents the
greatest risk to our bond portfolio. We quantify and limit such exposure
through "stress test" modeling and by limiting the duration of individual
securities and the portfolio as a whole. Stress tests conducted on our
portfolio at December 31, 2000, indicated expected market value declines of
1.9 percent for an increase in general market rates of 100 basis points,
4.3 percent for an increase of 200 basis points and 6.7 percent for an
increase of 300 basis points.  Our IRR position improved as compared to our
exposure at year-end 1999, as we anticipated market value depreciation of
3.2 percent, 6.2 percent and 8.0 percent given the same rate shocks. We
deem the present level of market risk appropriate given our capital
position and the overall composition of the balance sheet.

As aforementioned, the decline in general market rates in 2000 had a
positive effect on the value of our investment portfolio. Adjusting for
realized net gains of $374, the investment portfolio's market value
appreciated $2,180 or 2.1 percent in 2000. Comparatively, the local peer
group, as a function of the greater risk inherent in their portfolios,
experienced a slightly higher market value appreciation of 3.0 percent. At
December 31, 2000, the fair value of our investment portfolio represented
$1.01 per $1.00 of amortized cost. The peer group had the same ratio of
$1.01 of market value for each $1.00 of amortized cost at year-end 2000. We
reported a net unrealized holding gain of $409, net of income taxes of
$211, at December 31, 2000, and a net unrealized holding loss of $783, net
of income tax benefits of $403, at December 31, 1999.

In addition to affecting the market value of an investment portfolio,
interest rate changes can have a significant impact on the amount and
timing of cash flow receipts. Cash receipts from CMOs are an important
source of funding our loan demand. As interest rates increase, prepayments
on underlying mortgages generally decline, which could materially reduce
the cash flows available from these investments. Conversely, if interest
rates decline, as was the case in 2000, cash flows from CMOs will increase,
leaving the investor with a surplus of liquidity that must be reinvested at
lower rates. Despite the 113 basis point decline in short-term interest
rates, we did not experience a significant change in the pattern or timing
of our cash flows from CMOs. CMO principal payments did not fluctuate
materially during any one month in 2000 and ranged from 2.4 percent to 3.1
percent of principal outstanding. We attribute the stability of our cash
flows to the fact that we purchase and hold only CMO classes possessing the
highest quality with respect to their structure and composition. This cash
flow stability will become increasingly important to ward off an inordinate
amount of cash flows from refinancing activities if interest rates continue
their decline. We monitor our cash flow timing risk by employing a model
which utilizes median dealer prepayment assumptions to project future cash
flow streams under multiple interest rate scenarios. Projecting a decrease
of 200 basis points in 2001, we would expect our cash flow from CMOs to
increase by only $400 per month based on the result of this model.

We mitigate credit risk, the probability that an issuer cannot meet
principal and interest payments on a timely basis, through concentration
limitations. Except for U.S. Treasury securities and U.S. Government-
sponsored agencies, including mortgage-backed securities, there were no
securities of any individual issuer that exceeded 10.0 percent of our
stockholders' equity at December 31, 2000 and 1999. All securities, except
for $249 of tax-exempt obligations of local municipalities, are considered
"investment grade," receiving a rating of "Baa" or higher from Moody's or
"BBB" or higher from Standard and Poor's rating services at December 31,
2000.

Liquidity risk refers to the ease in converting a security to cash at or
near its true value. On a quarterly basis, we review the spread between the
bid price and the ask price quoted by a dealer in order to ensure liquidity
in the investment portfolio. We consider our liquidity risk exposure
limited because of the high concentration of short-term, high-quality U.S.
Government-sponsored agency CMOs, which normally offer the greatest
liquidity relative to other similar investments. The average bid-ask spread
on our CMO portfolio was 6/32's representing $91 or 0.2 percent of its
value at December 31, 2000. During 2000 and 1999, we did not own any
securities that were not actively traded in a liquid market. Additionally,
we did not own any investments that had highly volatile market values
relative to small changes in interest rates, which would have caused a
material effect on operating results or liquidity.

We consider many other types of risk including operational, legal,
reinvestment, yield curve, inflation, event, sector, and volatility. Most
of these risks are substantially mitigated through the previously-discussed
techniques or by limitations on the quality, quantity and maximum maturity
of each type of security as specified in our investment policy.

Investment securities as a percentage of total assets declined from 25.9
percent at year-end 1999 to 17.0 percent at the end of 2000. The decline in
the prominence of the investment portfolio was directly related to the 1999
delivery system expansion and to a lesser extent, of the timing of a
planned action to enhance call protection on tax-exempt municipal
obligations. As a result of expanding our delivery system through
increasing the number of community offices in areas having higher
concentrations of commercial activity, we continued to increase the size of
our loan portfolio in 2000. Funding for this increase was provided in part
by proceeds from the investment portfolio. In addition, during the latter
part of the fourth quarter of 2000, we decided to reduce our call risk
exposure through the sale of certain municipal obligations. The weighted-
average call and maturity of these securities approximated 5.3 years and
7.6 years. Subsequent to year-end 2000, we replaced these investments by
purchasing tax-exempt municipal obligations having a weighted-average call
and maturity of 11.0 years and 15.5 years. As a result of this action, we
have enhanced our call protection in the event rates decline. As previously
mentioned, the mix of the investment portfolio is comprised of two-thirds
short-term CMOs to provide liquidity and the remainder in intermediate-term
obligations of states and municipalities to lower our tax burden. Moreover,
this combination helps us to maximize our wealth or total return as these
call protected municipals outperform in a rates down environment, while
short-term CMOs outperform in a rising rate environment.

The carrying values of the major classifications of available-for-sale
securities as they relate to the total investment portfolio are summarized
as follows:

<TABLE>
<CAPTION>

DISTRIBUTION OF INVESTMENT SECURITIES AVAILABLE-FOR-SALE

                                2000             1999             1998             1997             1996
                           --------------  ---------------  ---------------  ---------------  ---------------
DECEMBER 31                 AMOUNT    %      AMOUNT    %      AMOUNT    %      AMOUNT    %      AMOUNT    %
-------------------------------------------------------------------------------------------------------------
<S>                        <C>     <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
U.S. Treasury securities.. $ 3,001   4.21% $  3,595   3.40% $ 11,060  10.09% $ 28,583  27.05% $ 35,619  34.92%
U.S. Government agencies..   1,025   1.44     1,635   1.55       637   0.58    10,388   9.83    18,606  18.24
State and municipals......  20,075  28.18    34,781  32.93    40,007  36.49    39,887  37.75    38,295  37.55
Mortgage-backed securities  45,269  63.54    63,523  60.14    55,834  50.93    23,746  22.47     7,058   6.92
Equity securities.........   1,876   2.63     2,096   1.98     2,088   1.91     3,062   2.90     2,416   2.37
                           ------- ------  -------- ------  -------- ------  -------- ------  -------- ------
  Total .................. $71,246 100.00% $105,630 100.00% $109,626 100.00% $105,666 100.00% $101,994 100.00%
                           ======= ======  ======== ======  ======== ======  ======== ======  ======== ======

</TABLE>


Proceeds from the sale of available-for-sale securities amounted to $16.7
million in 2000 and $11.1 million in 1999. In 2000, we sold state and
municipal obligations having an amortized cost of $16.3 million and equity
securities of local financial institutions having an amortized cost of $63.
As previously mentioned, the municipal obligations were sold to enhance
call protection. The equity securities were sold due to the fact that they
exhibited a lower total return as compared to available alternative
investments. Net gains recognized on the sale of investment securities
totaled $374 in 2000. Similar to the action taken in 2000, we sold
municipal obligations having an amortized cost of $10.7 million in 1999.
The weighted-average maturity of the municipal obligations sold in 1999 was
9.2 years compared to 13.0 years for those purchased as replacements.  The
weighted-average call date increased from 3.8 years to 9.7 years as a
result of the restructuring.  All of the replacement securities were bank-
qualified, "AAA" rated, insured general obligations which are backed by the
full faith, credit and taxing power of the governmental unit issuing the
obligation. In 1999, we recognized net gains of $408 on these sales.

Repayments from investment securities totaled $21.8 million in 2000 and
$39.1 million in 1999.  Based on the investment portfolio at December 31,
2000, we expect to receive $19.9 million of repayments in 2001, assuming no
change in the current interest rate environment.

In 2000, our investment securities purchases of $2.4 million consisted
entirely of intermediate-term state and municipal obligations. The
weighted-average tax-equivalent yield on these securities was 7.73 percent.
Their weighted-average maturity and call was 14.2 years and 8.5 years.
Investment purchases amounted to $49.7 million in 1999.  Specifically, we
purchased $3.7 million in short-term U.S. Treasury securities, $1.0 million
in U.S. Government-sponsored agencies, $34.3 million in short-term CMOs,
and $10.7 million in intermediate-term state and municipal obligations. The
majority of our 1999 acquisitions were CMOs purchased as an alternative to
U.S. Treasuries, in order to suffice future funding requirements, because
these securities offer superior returns for a similar amount of risk. The
total return on our CMO portfolio was 9.5 percent in 2000. In comparison,
the total return for a portfolio consisting of two-year U.S. Treasuries was
7.5 percent in 2000. Based on the average volume of CMOs held in our
portfolio of $54.9 million during 2000, we increased our wealth $1.1
million by investing in the portfolio of CMOs having a weighted-average
life of two years instead of an alternative portfolio of two-year U.S.
Treasuries. We plan to continue our investment strategy of acquiring
intermediate-term municipals to reduce our tax burden and short-term CMOs
to fund future loan demand throughout 2001.

The tax-equivalent yield on our investment portfolio improved slightly from
6.51 percent in 1999 to 6.53 percent in 2000. The yield on taxable
investments increased 4 basis points to 5.87 percent in 2000, while the
tax-equivalent yield on tax-exempt investments declined 15 basis points to
7.81 percent. The peer group experienced a yield improvement from 6.24
percent in 1999 to 6.55 percent in 2000.

At December 31, 2000, investment securities with an amortized cost of
$41,918 were pledged to secure deposits, to qualify for fiduciary powers
and for other purposes required or permitted by law.  At December 31, 1999,
the amortized cost of pledged securities equaled $35,157.  The fair value
of such securities equaled $41,678 at December 31, 2000, and $34,406 at
December 31, 1999.

The maturity distribution of the amortized cost, fair value and weighted-
average tax-equivalent yield of the available-for-sale portfolio at
December 31, 2000, is summarized as follows.  The weighted-average yield,
based on amortized cost, has been computed for state and municipals on a
tax-equivalent basis using the statutory tax rate of 34.0 percent. The
distributions are based on contractual maturity with the exception of
mortgage-backed securities, CMOs and equity securities.  Mortgage-backed
securities and CMOs have been presented based upon estimated cash flows,
assuming no change in the current interest rate environment. Equity
securities with no stated contractual maturities are included in the "After
ten years" maturity distribution. Expected maturities may differ from
contracted maturities because borrowers have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>

MATURITY DISTRIBUTION OF AVAILABLE-FOR-SALE PORTFOLIO

                                                 AFTER ONE       AFTER FIVE
                                   WITHIN        BUT WITHIN      BUT WITHIN        AFTER
                                  ONE YEAR       FIVE YEARS      TEN YEARS       TEN YEARS          TOTAL
                              -------------------------------------------------------------------------------
DECEMBER 31, 2000              AMOUNT  YIELD   AMOUNT  YIELD   AMOUNT  YIELD   AMOUNT  YIELD    AMOUNT  YIELD
-------------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>    <C>      <C>     <C>     <C>    <C>      <C>     <C>      <C>
Amortized cost:
U.S. Treasury securities..... $ 3,006   5.03%                                                  $ 3,006   5.03%
U.S. Government agencies.....                 $ 1,009   6.20%                                    1,009   6.20
State and municipals.........   1,460   6.53    1,425   7.13   $4,467   7.82% $11,931   8.06%   19,283   7.82
Mortgage-backed securities...  15,451   5.93   29,062   5.97      992   6.02                    45,505   5.96
Equity securities............                                                   1,823   6.94     1,823   6.94
                              -------         -------          ------         -------          -------
  Total...................... $19,917   5.84% $31,496   6.03%  $5,459   7.49% $13,754   7.91%  $70,626   6.46%
                              =======         =======          ======         =======          =======

Fair value:
U.S. Treasury securities..... $ 3,001                                                          $ 3,001
U.S. Government agencies.....                 $ 1,025                                            1,025
State and municipals.........   1,461           1,431          $4,674         $12,509           20,075
Mortgage-backed securities...  15,391          28,900             978                           45,269
Equity securities............                                                   1,876            1,876
                              -------         -------          ------         -------          -------
  Total...................... $19,853         $31,356          $5,652         $14,385          $71,246
                              =======         =======          ======         =======          =======
</TABLE>


For a discussion of recent SFASs issued by the FASB related to investment
securities, refer to the note entitled, "Summary of significant accounting
policies-Investment securities," in the Notes to Consolidated Financial
Statements to this Annual Report.

LOAN PORTFOLIO:

For the majority of financial institutions, lending is the primary business
activity.  Loans are the most significant component of earning assets, as
they generate the greatest amount of revenues. There are many economic
factors which impact loan demand.  Specifically, the housing market and the
economic factors affecting it, such as interest rates, personal income and
consumer confidence, may directly influence the demand for residential
mortgages. These factors are of significance to us, since loans to finance
one-to-four family residential properties account for over one-half of our
total lending activities.

Lower mortgage rates at year-end 2000 helped support the declining housing
industry.  Mortgage rates fell during the fourth quarter in anticipation of
the FOMC lowering interest rates in 2001. As a result, the average rate on
a fixed-rate first mortgage fell 53 basis from 7.91 percent at the end of
the third quarter of 2000 to 7.38 percent at year-end. However, the sharp
economic downturn, coupled with lower consumer confidence levels in the
second half of the year, repressed the exuberant housing market. Although
new home sales rebounded 13.4 percent in December 2000, due to the decline
in mortgage rates, the annual rate of new homes sold declined 0.7 percent
to 901 thousand homes in 2000, from 907 thousand homes in 1999. In
addition, existing homes sales fell 3.8 percent in 2000 to 5.0 million
sold, from 5.2 million in 1999. Furthermore, the construction sector fared
worse. Homebuilders started 1.61 million single family homes and apartment
buildings in 2000, a decrease of 4.2 percent from the 1.68 million started
in 1999. The decline in this sector does not appear to be short-lived, as
the rate of permits fell to 1.51 million in December 2000 from 1.60 million
in the previous month. For all of 2000, the average number of building
permits authorized fell 6.0 percent. The Northeast region of the United
States experienced a similar decline. The annual rate of new home sales in
this region fell 6.6 percent in 2000, while the number of housing starts
fell 1.3 percent.

Mortgage rates were turbulent for most of 2000. The FOMC raised interest
rates 50 basis points in the first quarter and another 50 basis points in
the second. In response to the tightening, the average rate on a fixed rate
mortgage increased 38 basis points by the end of the second quarter.
However, with the speed of economic growth in check, the FOMC refrained
from further tightening in 2000. Average mortgage rates fell back to year-
end 1999 levels by the end of the third quarter, before falling another 53
basis points by the end of the fourth quarter in anticipation of the FOMC's
easing at the beginning of 2001. Despite the mortgage rate swings and the
downturn in the housing market, real estate lending for banks remained
steady in 2000. The aggregate dollar amount of real estate loans for all
commercial banks grew to $1.7 trillion at December 31, 2000, from $1.5
trillion at the end of 1999.

The FOMC's 100 basis point tightening in the first half of 2000 drove up
the cost of borrowing for consumers and businesses. The prime rate also
increased 100 basis points in the first two quarters of 2000, but remained
constant in the second half of 2000 and closed the year at 9.50 percent.
Economic growth came to a halt in the fourth quarter, as consumer and
business spending slowed significantly. Although increasing 5.3 percent in
2000, consumer spending grew at an annual rate of only 2.8 percent in the
fourth quarter. Similarly, business spending, which increased 10.2 percent
for the year, declined at an annual rate of 3.7 percent in the fourth
quarter.  Financial institutions began to feel the effects of the slowdown.
Consumer loans outstanding at all FDIC-insured commercial banks grew $52.0
billion or 9.4 percent to $606.8 billion at December 31, 2000, from $554.8
billion at December 31, 1999. The aggregate of commercial and industrial
loans in the Nation's banks grew $79.9 billion or 7.9 percent to $1,096.3
billion at the end of 2000, from $1,016.4 billion at year-end 1999.
However, for both consumer and commercial loans, approximately 90.0 percent
of the growth occurred in the first nine months of the year.

Congruous with the economic data presented above, loan officers surveyed in
the Federal Reserve Board's January of 2001 "Senior Loan Officer Opinion
Survey on Bank Lending Practices," reported weaker demand for commercial
and industrial loans, commercial real estate loans and consumer loans, but
reported no change in demand for residential mortgages. The survey results
indicate further tightening of standards for commercial and consumer loans.
With regard to commercial and industrial loans, 50.0 percent of domestic
banks reported decreased demand for these loans from large- and middle-
market firms, while 30.0 percent indicated weaker demand from small firms
over the past three months. The survey cited almost 60.0 percent of
domestic banks tightened standards on commercial and industrial loans to
large- and middle-market firms and 45.0 percent tightened standards for
small firms over the same period. In addition, nearly 75.0 percent of
domestic banks reported charging higher premiums on riskier loans to large-
and middle-market firms, while 50.0 percent tightened loan covenants and
60.0 percent increased spreads of loan rates over their cost of funds for
these borrowers. Domestic banks cited a less favorable economic outlook,
worsening industry-specific problems and a reduced tolerance for risk as
the reasons for tightening standards. Weaker demand for commercial real
estate loans was reported by 30.0 percent of domestic banks.  More than
40.0 percent of domestic banks tightened their standards for commercial
real estate loans by raising spreads and demanding higher debt-service
coverage ratios. Again, a less favorable economic outlook was cited as the
reason for increased tightening. On the consumer side, 35.0 percent of
domestic banks reported that demand had weakened over the past three
months. Tighter standards for consumer loans were reported by 20.0 percent
of domestic banks surveyed. Both demand and credit standards for
residential mortgages were reported as unchanged over the past three
months. It appears as if the erosion of confidence has spread to the
banking industry. Increased tightening standards could compound the
economic slowdown if bankers deprive borrowers the funds needed to expand
or finance their businesses.

With regard to our commercial loan practices, we were ranked 11th out of 191
Pennsylvania banks in 2000 by the U.S. Small Business Administration's
Office of Advocacy for our "small business friendly" lending activities.

Four variables are used to rank small business lending activities:

   -  The ratio of small business loans, loans less than $250, to total
      assets,
   -  The ratio of small business loans to total business loans,
   -  The dollar value of small business loans, and
   -  The number of small business loans.

The composition of the loan portfolio at year-end for the past five years
is summarized as follows:

<TABLE>
<CAPTION>

DISTRIBUTION OF LOAN PORTFOLIO

                                         2000             1999             1998             1997             1996
                                   ---------------  ---------------  ---------------  ---------------  ---------------
DECEMBER 31                          AMOUNT    %      AMOUNT    %      AMOUNT    %      AMOUNT    %      AMOUNT    %
----------------------------------------------------------------------------------------------------------------------
<S>                                <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
Commercial, financial and others.. $ 49,476  16.63% $ 43,907  15.86% $ 31,044  12.51% $ 38,996  15.58% $ 36,416  15.44%
Real estate:
  Construction....................    3,546   1.19     3,164   1.14     2,108   0.85     2,096   0.84     3,657   1.55
  Mortgage........................  205,771  69.16   198,423  71.67   186,004  74.96   180,123  71.98   165,868  70.34
Consumer, net.....................   37,800  12.70    30,830  11.14    28,984  11.68    29,012  11.60    29,862  12.67
Lease financing, net..............      937   0.32       526   0.19
                                   -------- ------  -------- ------  -------- ------  -------- ------  -------- ------
  Loans, net of unearned income...  297,530 100.00%  276,850 100.00%  248,140 100.00%  250,227 100.00%  235,803 100.00%
                                            ======           ======           ======           ======           ======
Less: allowance for loan losses...    3,285            3,799            4,050            3,798            3,944
                                   --------         --------         --------         --------         --------
    Net loans..................... $294,245         $273,051         $244,090         $246,429         $231,859
                                   ========         ========         ========         ========         ========

</TABLE>

Our loan portfolio consists of one-to-four family residential mortgage
loans, commercial loans, commercial mortgage loans, lease financing and
consumer loans. Loans, net of unearned income, totaled $297.5 million at
December 31, 2000, an increase of $20.6 million or 7.4 percent, from $276.9
million at December 31, 1999. Although we experienced strong demand for all
our credit products, commercial and consumer lending activities contributed
significantly to the growth in the loan portfolio.  Together, commercial
loans and leases and commercial mortgages grew to $102.1 million at year-
end 2000, an increase of $8.4 million or 9.0 percent, compared to $93.7
million at the end of 1999.  Consumer loans grew $7.0 million or 22.7
percent to $37.8 million at December 31, 2000, from $30.8 million at
December 31, 1999. Expansion of our indirect lending activities accounted
for approximately 81.0 percent of the consumer loan growth. Also
contributing to the growth of our portfolio was a $5.2 million or 3.4
percent increase in residential mortgage loans. Demand for commercial loan
products and residential mortgages was consistent throughout 2000. However,
similar to that experienced by the banking industry, our demand for
consumer loans was concentrated in the first nine months of the year.

The composition of our loan portfolio continued to evolve in 2000.  With
the opening of our Corporate Center and two new branch offices in 1999, our
banking network expanded into more populated urban areas with a higher
concentration of commercial business activity. As a result, greater
emphasis was placed on commercial lending and indirect lending. These
factors, in addition to subdued demand for residential mortgages caused the
mix of our loan portfolio to shift in 2000.  As a percentage of loans, net
of unearned income, commercial loans and leases and commercial mortgage
loans equaled 34.3 percent at December 31, 2000, compared to 31.5 percent
at December 31, 1999. Consumer loans as a percentage of loans, net of
unearned income, increased to 12.7 percent at year-end 2000, from 11.1
percent at the end of the previous year. On the other hand, residential
mortgage loans as a percentage of loans, net of unearned income, declined
to 53.0 percent, at December 31, 2000, compared to 57.4 percent at December
31, 1999.

Loans averaged $289.2 million in 2000, an increase of $31.0 million or 12.0
percent, compared to the $258.2 million averaged for 1999.  Due to the
strong loan demand, loans played a more significant role in the earning
assets mix during 2000. The ratio of average loans to average earning
assets equaled 75.2 percent in 2000, compared to 69.0 percent in 1999.
Similarly, the ratio of average loans to average total assets increased to
71.1 percent in 2000, compared to 65.2 percent in 1999. This ratio is
significantly higher than that of our peer group. In comparison, for our
peer group, this ratio equaled 63.9 percent in 2000 and 61.4 percent in
1999.

Our loan yields reacted to the 100 basis point increase in the prime rate
in the first half of 2000. The tax-equivalent yield on our loan portfolio
increased 16 basis points to 8.49 percent in 2000, compared to 8.33 percent
in 1999. Loan yields progressed upward through the first three quarters of
2000 before declining slightly in the fourth quarter. Significant increases
in the tax-equivalent yield took place in the first and third quarters of
2000. The tax-equivalent yield increased 14 basis points in first quarter
to 8.37 percent, from 8.23 percent in the fourth quarter of 1999. The yield
increased another 21 basis points in the third quarter to 8.61 percent,
from 8.40 percent in the second. However in January of 2001, the prime rate
has already dropped 100 basis points due to the actions of the FOMC.
Further easing by the FOMC is expected in order to spur the economy. Should
these actions occur, loan yields could be negatively impacted.

Turbulent mortgage rates throughout most of 2000, caused a significant
reduction in the number of homeowners seeking to refinance. The average
rate on a fixed-rate first mortgage reached a high of 8.52 percent in the
second quarter of 2000 before falling to 7.38 percent at the end of the
year. Most homeowners already have mortgages with rates significantly lower
than those offered during 2000. Our volume of refinanced residential
mortgages declined significantly in 2000, by $6.8 million. The number of
refinanced mortgages in 2000 totaled 60, with an aggregate dollar volume of
$4.9 million, compared to 135, with an aggregate dollar volume of $11.7
million in 1999.

Our secondary mortgage banking program originates mortgage loans for sale
in the secondary market. This program allows us to competitively price
conforming one-to-four family residential mortgage loans while, at the same
time, reduce our exposure to IRR, increase liquidity and provide an
additional source of noninterest income. We retain the servicing rights of
the loans sold under this program. During 2000 and 1999, we sold $0.8
million and $3.4 million of residential mortgage loans to one investor, the
Federal National Mortgage Association ("FNMA"). Net gains on the sale of
these loans included in noninterest income were $18 and $57 in 2000 and
1999. There were $62 of residential mortgage loans held for sale at
December 31, 2000. There were no residential mortgage loans held for sale
at December 31, 1999.  At December 31, 2000, total residential mortgage
loans serviced for the FNMA totaled $5.9 million.

For a discussion of the recent SFAS issued by the FASB related to loans
sold on the secondary market, refer to the note entitled, "Summary of
significant accounting policies-Mortgage servicing rights," in the Notes to
Consolidated Financial Statements to this Annual Report.

Mortgage servicing rights, retained after the sale of residential mortgages
in the secondary market, are included in other assets.  Amortization of the
rights is included in noninterest income as a charge against mortgage
servicing fees. At December 31, 2000 and 1999, the cost of the mortgage
servicing rights approximated their fair value.

Recently, management began the project of restructuring the loan
department.  This undertaking arose as a result of a need to enhance the
administration of this department for the following reasons:

   -  Increased demand for commercial loans due to logistical changes in our
      branch network into areas with greater business lending
      concentrations. Because of their nature, commercial loans involve a
      higher degree of credit risk than other loan products.  Due to this
      high degree of risk, it is imperative that adequate procedures are in
      place to properly manage this lending function.

   -  The need for improvement in our asset quality. In recent years, we
      have experienced increased volumes of net loan charge-offs. In
      addition, in past years, nonperforming assets reached levels
      management has deemed unacceptable. We believe enhancements to the
      administration of special assets and troubled loans will result in
      continued asset quality improvement.

The following measures were taken, or will be completed early in 2001, as
part of the restructuring process:

   -  Promotion of a vice president with a high degree of administrative
      experience to senior vice president and chief credit officer. This
      professional will be in charge of the administration and
      reorganization of the loan department into functional areas.

   -  Revision of our loan policy.  Previously, loan policy guidelines were
      generalized to the entire lending function.  The policy was rewritten,
      segmenting and specifying guidelines for each specific loan product.

   -  Development of a new loan procedures manual. This manual will set
      forth explicit credit extension and approval criteria for each type
      of lending activity.  This will aid loan officers in extending credits
      and strengthen our investment in quality assets.

   -  Centralization of the approval, documentation and administration of
      commercial loans, including commercial mortgage loans, and residential
      mortgage loans. Consumer lending will continue to be decentralized at
      the branch level. However, the new procedures manual incorporates
      strict guidelines for consumer lending, with conservative limits on
      consumer credit extensions.

   -  Redirection of loan personnel from other branch locations to the
      centralized location.  This redirection will provide greater internal
      controls through the segregation of duties and facilitate the entire
      lending function.

   -  Addition of professional, human resources to critical areas. Specific
      areas included special assets management and commercial credit
      underwriting.

In addition to this restructuring process, we will initiate a project for
the imaging of all loan documentation in 2001. The imaging system will
enhance the control and monitoring of credits, facilitate the
identification and follow up of problem loans, and assist current borrowers
with obtaining additional credit, as all documents will be on-line.

In the normal course of business, we are a party to financial instruments
with off-balance sheet risk to meet the financing needs of our customers.
These instruments involve, to varying degrees, elements of credit and IRR
in excess of the amount recognized in the financial statements.  We do not
anticipate that losses, if any, that may occur as a result of funding off-
balance sheet commitments, would have a material adverse effect on our
results of operations or financial position.

Our involvement in, and exposure to, credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit, unused portions of home equity and credit
card lines and commercial letters of credit is represented by the
contractual amounts of those instruments. Commitments to extend credit are
agreements to lend to a customer as long as the conditions of the contract
are not violated. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Commercial
letters of credit are conditional commitments issued by us to support
customers in the purchase of commercial goods. The letters of credit are
automatically renewable upon their anniversary date unless canceled at our
option prior to that date.

We employ the same credit policies and requirements in making off-balance
sheet credit commitments as we do for on-balance sheet instruments.
Allowance for credit losses, if any, on off-balance sheet commitments is
reported separately as a liability.  No allowance was deemed necessary at
December 31, 2000 and 1999.  These commitments are generally issued for one
year or less and often expire unused in whole or part by the customer. The
amount of collateral obtained is based on the credit evaluation of the
customer. The type of collateral varies but may include property, plant and
equipment, residential properties, and to a lesser extent, income-producing
properties. Our exposure related to off-balance sheet commitments was $31.1
million at December 31, 2000, and $26.4 million at December 31, 1999.

At December 31, 2000, we had no loan concentrations exceeding 10.0 percent
of total loans, excluding locational concentrations, to individuals or
multiple borrowers engaged in activities that would cause them to be
similarly affected by changes in economic or other conditions. We limit our
exposure to concentrations of credit risk by the nature of our lending
limits, as approximately 53.0 percent of total loans outstanding are
secured by residential properties. The average mortgage outstanding on a
residential property was $42 at December 31, 2000. In addition, our loan
policy restricts loan-to-value ratios to no greater than 80.0 percent of
the fair market value of the properties held as collateral. Furthermore,
the loan portfolio does not consist of any form of credit involving highly-
leveraged transactions, defined as financing transactions that involve the
buyout, acquisition or re-capitalization of an existing business and
include credits extended to highly-leveraged individuals.

Based on our asset/liability simulation model, management feels confident
that it can facilitate loan demand through payments and prepayments on
investments and loans and increases in core deposits. Management expects to
receive approximately $94.7 million from repayments on loans and investment
securities during 2001. In the event an unforeseen increase in loan demand
arises, we could facilitate the demand by aggressively competing for
deposits or by utilizing various credit products available through the
Federal Home Loan Bank of Pittsburgh ("FHLB-Pgh").

The maturity distribution and repricing information of the loan portfolio
by major classification at December 31, 2000, is summarized as follows:

<TABLE>
<CAPTON>

MATURITY DISTRIBUTION AND INTEREST SENSITIVITY OF LOAN PORTFOLIO

                                                                       AFTER ONE
                                                           WITHIN      BUT WITHIN       AFTER
DECEMBER 31, 2000                                         ONE YEAR     FIVE YEARS     FIVE YEARS        TOTAL
-------------------------------------------------------------------------------------------------------------
<S>                                                       <C>          <C>            <C>            <C>
Maturity schedule:
Commercial, financial and others......................... $ 27,900       $ 16,125       $  5,451     $ 49,476
Real estate:
  Construction...........................................    3,546                                      3,546
  Mortgage...............................................   30,402         67,048        108,321      205,771
Consumer, net............................................   12,620         20,482          4,698       37,800
Lease financing, net.....................................      348            589                         937
                                                          --------       --------       --------     --------
    Total................................................ $ 74,816       $104,244       $118,470     $297,530
                                                          ========       ========       ========     ========

Repricing schedule:
Predetermined interest rates............................. $ 35,341       $ 76,641       $109,589     $221,571
Floating- or adjustable-interest rates...................   75,959                                     75,959
                                                          --------       --------       --------     --------
    Total................................................ $111,300       $ 76,641       $109,589     $297,530
                                                          ========       ========       ========     ========
</TABLE>


We continually examine the maturity distribution and interest rate
sensitivity of the loan portfolio in an attempt to limit IRR and liquidity
strains. Approximately 37.4 percent of the loan portfolio is expected to
reprice within the next twelve months. This percentage increased in
comparison to 35.6 percent repricing within the same time period at
December 31, 1999. As a result of heightened commercial lending activities,
adjustable-rate loans increased significantly for the second year in a row.
Adjustable-rate loans totaled $76.0 million at December 31, 2000, an
increase of $13.9 million or 22.4 percent from $62.1 million at year-end
1999. Adjustable-rate loans accounted for 25.5 percent of the loan
portfolio at the end of 2000, compared to 22.4 percent at December 31,
1999. Fixed-rate loans increased $6.8 million to $221.6 million at December
31, 2000, from $214.8 million at December 31, 1999. However, as a
percentage of the total loan portfolio, fixed-rate loans declined to 74.5
percent at year-end 2000, compared to 77.6 percent at the end of 1999. As
part of our asset/liability management strategy to reduce the amount of IRR
in the loan portfolio, we price loan products to increase our holdings of
adjustable-rate loans and reduce the average term of fixed-rate loans.

ASSET QUALITY:

Despite the economic slowdown in the fourth quarter, favorable economic
conditions persisted throughout much of 2000. As a result, the total number
of bankruptcy filings fell for the second straight year. According to the
most recent data released by the Administrative Office of the U.S. Courts,
the total number of new bankruptcy cases filed within the 12-month period
ended September 30, 2000, declined 6.8 percent in comparison to the same
12-month period of 1999. The number of personal bankruptcy cases also
declined 7.7 percent to 1.2 million from 1.3 million for the respective
periods of 2000 and 1999. In addition, the number of business failings
declined 6.6 percent over the same time frame.

The decline in bankruptcies did little to aid the deteriorating asset
quality experienced by the banking industry. According to the FDIC,
nonperforming loans and leases for all FDIC-insured commercial banks
increased $9.9 billion to $42.9 billion at December 31, 2000, from $33.0
billion at year-end 1999. For all commercial banks, the ratio of
nonperforming assets to total assets increased to 0.74 percent at the end
of 2000, from 0.63 percent at the end of the previous year. The Nation's
largest banks experienced the worst deterioration. For banks with assets
greater than $10.0 billion, this ratio weakened to 0.79 percent at the end
of 2000, from 0.66 percent at year-end 1999. The deterioration was not
concentrated in any specific industry or region. For the most part, the
weakening resulted from lax underwriting standards for commercial and
industrial loans in previous years, coupled with the recent economic
slowdown, which hampered the performance of large syndicated loans. Banks
with asset sizes similar to ours also experienced asset quality
deterioration, but not to the extent of large banks. This ratio, for banks
with asset sizes ranging from $100.0 million to $1.0 billion, was 0.61
percent and 0.57 percent at December 31, 2000 and 1999.

Pennsylvania commercial banks experienced only slight asset quality
deterioration. The ratio of nonperforming assets to total assets remained
constant at 0.66 percent at December 31, 2000 and 1999. However, their
ratio of nonperforming loans, impaired loans and accruing loans past due 90
days or more, to total loans, weakened to 0.93 percent at year-end 2000
from 0.89 percent at the end of the previous year.

We are committed to developing and maintaining sound, quality assets
through our credit risk management procedures. Credit risk is the risk to
earnings or capital which arises from a borrower's failure to meet the
terms of their loan agreement. Credit risk was, and will continue to be, a
major concern addressed in the process of restructuring the loan department
and the revision of the loan policy and procedures. We manage credit risk
by diversifying the loan portfolio and applying policies and procedures
designed to foster sound lending practices. These policies include certain
standards that assist lenders in making judgments regarding the character,
capacity, capital structure and collateral of the borrower. In addition,
the lender must determine the borrower's ability to repay the credit based
on prevailing and expected business conditions. The Board of Directors
establishes the lending authority of all credit officers, in the case of
commercial loans and branch managers, in the case of consumer loans, and
reviews this authority at least annually.  Credits beyond the scope of the
lending officers and branch managers are forwarded to the Loan Committee.
This committee, comprised of senior lending management and board members,
attempts to assure the quality of the loan portfolio through careful
analysis of credit applications, adherence to credit policies and
examination of outstanding loans and delinquencies. These procedures assist
in the early detection and timely follow-up of problem loans. Credits in
excess of $1.0 million are subject to approval by the Board of Directors.

Credit risk is also minimized by an annual internal loan review of our
portfolio. In addition, we contract with an external loan review company to
perform an annual independent review of the portfolio. The independent loan
review aids management in identifying deteriorating financial conditions of
borrowers, allowing them to assist customers in remedying these situations.
The results of an independent loan review conducted by an external reviewer
at June 30, 2000, indicated no material difference from the assets
identified through our own loan review program.

In accordance with generally accepted accounting principles ("GAAP"), we
consider a loan impaired when, based on current information and events, it
is probable that we will be unable to collect all amounts due according to
the contractual terms of the loan agreement. Impairment is measured based
on the present value of expected future cash flows discounted at a loan's
effective interest rate, or the fair value of collateral if the loan is
collateral-dependent. When the measure of an impaired loan is less than the
recorded investment in the loan, the impairment is recognized by adjusting
the allowance for loan losses with a corresponding charge to the provision
for loan losses. We utilize the specific identification method when
considering each loan for impairment disclosure.

Nonperforming assets consist of nonperforming loans and foreclosed assets.
Nonperforming loans include accruing loans past due 90 days or more and
impaired loans. Impaired loans consist of nonaccrual and restructured
loans.  A loan is classified as nonaccrual when it is determined that the
collection of all or a portion of interest or principal is doubtful or when
a default of interest or principal has existed for 90 days or more, unless
the loan is well secured and in the process of collection. When a loan is
placed on nonaccrual, interest accruals discontinue and uncollected accrued
interest is reversed against income in the current period. Interest
collections, after a loan has been placed on nonaccrual status, are
credited to a suspense account until either the loan is returned to
performing status or charged-off.  The interest accumulated in the suspense
account is credited to income if the loan is returned to performing status.
However, if the loan is charged-off, the accumulated interest is applied as
a principal reduction at the time the loan is charged-off. A nonaccrual
loan is returned to performing status when the loan is current as to
principal and interest and has performed with the contractual terms for a
minimum of six months.

Restructured loans are loans with original terms, interest rates, or both,
that have been modified as a result of a deterioration in the borrower's
financial condition. Interest income on restructured loans is recognized
when earned using the interest method. We had the same one restructured
loan during 2000 and 1999.

Foreclosed assets are comprised of properties acquired through foreclosure
proceedings or acceptance of a deed-in-lieu of foreclosure and loans
classified as in-substance foreclosures. These properties are included in
other assets. A loan is classified as in-substance foreclosure when we have
taken possession of the collateral regardless of whether formal foreclosure
proceedings take place. Foreclosed assets are recorded at the lower of the
related loan balance or 80.0 percent of its fair market value for
residential properties and 75.0 percent of its fair market value for
commercial properties at the time of acquisition. Any excess of the loan
balance over the recorded value is charged to the allowance for loan
losses.  Subsequent declines in the recorded value of the property prior to
its disposal and costs to maintain the assets are included in other
expenses.  No allowance for losses has been established subsequent to the
acquisition of foreclosed assets at December 31, 2000 and 1999. In
addition, any gain or loss realized upon disposal is included in
noninterest income or expense.  The historical average holding period for
such properties is less than twelve months.

Information concerning nonperforming assets for the past five years is
summarized as follows. The table includes credits classified for regulatory
purposes and all material credits that cause management to have serious
doubts as to the borrowers' ability to comply with present loan repayment
terms.

<TABLE>
<CAPTION>

DISTRIBUTION OF NONPERFORMING ASSETS

DECEMBER 31                                                          2000     1999     1998     1997     1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                <C>      <C>      <C>      <C>      <C>
Nonaccrual loans:
Commercial, financial and others.................................. $  141   $  166   $   78   $  197   $  251
Real estate:
  Construction....................................................
  Mortgage........................................................  1,469    2,272    2,223    2,063    1,018
Consumer, net.....................................................     74       33        7       12
Lease financing, net..............................................
                                                                   ------   ------   ------   ------   ------
    Total nonaccrual loans........................................  1,684    2,471    2,308    2,272    1,269
                                                                   ------   ------   ------   ------   ------
Restructured loans................................................    124      149      174      189      225
                                                                   ------   ------   ------   ------   ------
    Total impaired loans..........................................  1,808    2,620    2,482    2,461    1,494
                                                                   ------   ------   ------   ------   ------

Accruing loans past due 90 days or more:
Commercial, financial and others..................................     23      726      131      321      359
Real estate:
  Construction....................................................
  Mortgage........................................................    449    2,768    1,035    2,536    1,247
Consumer, net.....................................................    353      471      387      312      291
Lease financing, net..............................................
                                                                   ------   ------   ------   ------   ------
    Total accruing loans past due 90 days or more.................    825    3,965    1,553    3,169    1,897
                                                                   ------   ------   ------   ------   ------
    Total nonperforming loans.....................................  2,633    6,585    4,035    5,630    3,391
                                                                   ------   ------   ------   ------   ------
Foreclosed assets.................................................  1,391      359      240      405      420
                                                                   ------   ------   ------   ------   ------
    Total nonperforming assets.................................... $4,024   $6,944   $4,275   $6,035   $3,811
                                                                   ======   ======   ======   ======   ======

Ratios:
Impaired loans as a percentage of loans, net......................   0.61%    0.95%    1.00%    0.98%    0.63%
Nonperforming loans as a percentage of loans, net.................   0.88     2.38     1.63     2.25     1.44
Nonperforming assets as a percentage of loans, net................   1.35%    2.51%    1.72%    2.41%    1.62%

</TABLE>

Unlike most commercial banks, our asset quality improved significantly from
the previous year, as evidenced by the $2.9 million or 42.0 percent decline
in nonperforming assets to $4.0 million at December 31, 2000, from $6.9
million at December 31, 1999. As a percentage of loans, net of unearned
income, nonperforming assets equaled 1.35 percent at December 31, 2000,
compared to 2.51 percent at the end of 1999. Foreclosed assets increased
$1,032 during 2000. Fourteen loans totaling $1,556 were transferred to
foreclosed assets. Thirteen properties with an aggregate carrying value of
$456 were sold for $399, resulting in a net realized loss of $57.
Writedowns charged to noninterest expense on foreclosed assets amounted to
$31 in 2000. In addition, two properties with an aggregate carrying value
of $37 were donated to an area nonprofit organization.  The carrying values
of all foreclosed properties at December 31, 2000, did not exceed 80.0
percent of their collateral values in the case of residential properties,
and 75.0 percent of their collateral values in the case of commercial
properties.

During the past two years, we hired additional staff in our Special Assets
and Collections Departments in order to improve the management and recovery
of nonperforming assets. Efforts in this area focused on improving and
consistently applying procedures regarding delinquent credits. These
procedures focus on early detection and timely follow-up of past due loans
in order to identify potential problem loans and attempt to correct them
before they deteriorate.

As a result of these efforts, nonperforming loans declined $4.0 million in
2000. A decrease in the amount of accruing loans past due 90 days or more,
and to a lesser extent, nonaccrual loans, caused the improvement. We
experienced a reduction in the amount of accruing loans past due 90 days or
more of $3.2 million or 80.0 percent. In addition, the amount of nonaccrual
loans improved $0.8 million or 32.0 percent. Our ratio of nonperforming
loans as a percentage of loans, net of unearned income, declined to 0.88
percent at December 31, 2000, from 2.38 percent at year-end 1999. The asset
quality improvement brings our ratio in line with that of our peer group,
who also experienced an improvement. This ratio for our peer group equaled
0.78 percent and 0.94 percent at December 31, 2000 and 1999.

At December 31, 2000 and 1999, we had a recorded investment in impaired
loans of $1,808 and $2,620. The recorded investment in impaired loans
averaged $2,473 in 2000 and $2,564 in 1999. At December 31, 2000, the
amount of recorded investment in impaired loans for which there was a
related allowance for loan losses and the amount of the allowance was
$1,684 and $405. Comparatively, the amount of these loans and their related
allowance was $2,471 and $613, at December 31, 1999. The amount of recorded
investment for which there was no related allowance for loan losses was
$124 and $149 at December 31, 2000 and 1999.  During 2000, activity in the
allowance for loan losses account related to impaired loans included a
provision charged to operations of $116 and losses charged to the allowance
of $324. There were no recoveries of impaired loans during 2000. The 1999
activity in the allowance for loan losses account related to impaired loans
included a provision charged to operations of $472, losses charged to the
allowance of $546 and recoveries of impaired loans previously charged-off
of $45. Interest income related to impaired loans would have been $293 in
2000 and $253 in 1999, had the loans been current and the terms of the
loans not been modified. Interest recognized on impaired loans amounted to
$104 in 2000 and $53 in 1999. Included in these amounts was interest
recognized on a cash basis of $104 and $53. Cash received on impaired loans
applied as a reduction of principal totaled $264 in 2000 and $266 in 1999.
There were no commitments to extend additional funds to customers with
impaired loans at December 31, 2000 and 1999.

Classified assets are those cited by bank examiners, or by the bank's
internal rating system, as having an undesirable degree of risk.
Regulators separate classified assets into three major categories based on
degree of risk:

     -  Substandard,
     -  Doubtful, and
     -  Loss.

Accordingly, as part of their routine annual examination process,
regulators classified our assets in 2000. The result of the review
indicated that the ratio of risk-weighted classified assets as a percentage
of Tier I capital plus the allowance for loan losses remained relatively
unchanged from the 1999 examination.

Our allowance for loan losses account is established through charges to
earnings as a provision for loan losses. Loans, or portions of loans
determined to be uncollectible, are charged against the allowance account
with any subsequent recoveries being credited to the account.  Nonaccrual,
restructured and large delinquent commercial and real estate loans are
reviewed monthly to determine if carrying value reductions are warranted.
Consumer loans are considered losses when they are 120 days past due,
except those expected to be recovered through insurance or collateral
disposition proceeds.  Under GAAP, the allowance for loan losses related to
impaired loans is based on discounted cash flows using the loan's initial
effective interest rate or the fair value of the collateral for certain
collateral-dependent loans. We maintain the allowance for loan losses at a
level believed adequate to absorb estimated potential credit losses. We
employ the federal banking regulatory agencies' Interagency Policy
Statement on the Allowance for Loan Losses as the primary analytical tool
in assessing the adequacy of the allowance account by assigning qualitative
factors to each element of the allowance.  The allowance for loan losses
consists of two elements: allocated and unallocated.

The allocated element consists of a formula portion and a specific portion.
We utilize the loss mitigation method for estimating the formula portion of
the allocated element of the allowance for loan losses. Loss mitigation
involves determining the percentage of each classification of individual
loans and loan pools that are expected to ultimately result in loss based
on historical experience. This estimating method and the assumptions used
for the method have been followed in a consistent manner. Commercial loans
and commercial real estate loans are classified and have historical
percentages applied on an asset-by-asset basis. Residential mortgages and
consumer loans have historical percentages applied on a pool-by-pool basis.
The historical loss percentages are updated quarterly and are based on the
actual amount of loans in each classification that resulted in loss over
the past eight quarters.  The historical loss experience is only a starting
point for estimating the allowance for loan losses. We add to these
historical loss percentages a qualitative percentage representing a number
of other relevant factors that may cause estimated credit losses associated
with our current portfolio to differ from historical loss. These risk
factors include:

     -  Changes in lending policies and procedures,
     -  Economic conditions,
     -  Nature and volume of the portfolio,
     -  Loan review system,
     -  Volumes of past due and impaired loans,
     -  Concentrations,
     -  Borrowers' financial status,
     -  Collateral value,
     -  Experience, ability and depth of lending management,
     -  Volume of net charge-offs, and
     -  Other factors deemed relevant.

Specific allowances are established for individual loans, on a case-by-case
basis, where management has identified that certain conditions or
circumstances are present that indicate the probability of a loss will be
incurred. Specific reserves are determined through assessment of the
borrower's ability to repay and the fair value of the collateral, if the
loan is collateral-dependent.  If the carrying amount of the loan exceeds
the discounted expected cash flows or the value of the underlying
collateral, the excess is specifically reserved.

The unallocated portion is used to cover inherent losses that exist as of
the evaluation date, but which have not been identified by the loss
mitigation method due to limitations in the process. One such limitation is
that it does not take into account deviations of current losses from
historical experience. This may cause estimated credit losses associated
with our current portfolio to differ from historical loss experience
resulting in an allowance that is higher or lower than the appropriate
level. We establish the unallocated element of the allowance judgementally
by considering a number of the risk factors similar to the ones used for
determining the allocated element.

We monitor the adequacy of the allocated portion of the allowance quarterly
and adjust the allowance for any deficiencies through normal operations.
This self-correcting mechanism reduces potential differences between
estimates and actual observed losses. In addition, the unallocated portion
of the allowance is examined to ensure that it remains relatively constant
in relation to the total allowance unless there are changes in the related
criteria that would indicate a need to either increase or decrease it.  The
determination of the allowance for loan loss level inherently involves a
high degree of uncertainty due to the fact that knowledge of the portfolio
may be incomplete. Accordingly, we cannot ensure that charge-offs in future
periods will not exceed the allowance for loan losses or that additional
increases in the allowance for loan losses will not be required resulting
in an adverse impact on operating results.

The volume of the allowance for loan losses and the composition of its
elements varied throughout 2000 based on changes in many of these risk
factors.  There are no known trends which would lead us to believe that the
current level of the allowance for loan losses is not adequate to cover
expected loan losses.

In addition to classifying our assets, regulatory agencies, as an integral
part of their examination process, periodically review our allowance for
loan losses.  These agencies may require us to recognize additions to the
allowance based on information available to them at the time of their
examination.  We are unaware of any such requirements based on the results
of our latest regulatory examination at September 30, 2000.

The composition of the allowance for loan losses for the past five years is
summarized as follows:

<TABLE>
<CAPTION>

COMPOSITION OF THE ALLOWANCE FOR LOAN LOSSES

DECEMBER 31,                                                 2000       1999       1998       1997       1996
-------------------------------------------------------------------------------------------------------------
<S>                                                        <C>        <C>        <C>        <C>        <C>
Allocated allowance:
  Formula................................................. $2,067     $2,420     $2,620     $2,238     $2,087
  Specific................................................               937        957        124         73
                                                           ------     ------     ------     ------     ------
    Total allocated allowance.............................  2,067      3,357      3,577      2,362      2,160
Unallocated allowance.....................................  1,218        442        473      1,436      1,784
                                                           ------     ------     ------     ------     ------
    Total allowance for loan losses....................... $3,285     $3,799     $4,050     $3,798     $3,944
                                                           ======     ======     ======     ======     ======
</TABLE>


The formula portion of the allocated allowance was $2,067 at December 31,
2000, and $2,420 at December 31, 1999. The $353 decrease resulted primarily
from a decline in the amount of certain classified commercial loans and
commercial real estate loans, which had higher historical loss percentages.

There were no specific allocations to the allowance at year-end 2000.
Specific allocations totaled $937 at the end of 1999. Loans designated by
management as having the probability for loss at the end of 1999 were
either tranferred to foreclosed assets or charged-off. There were no loans
designated as having the probability for loss at December 31, 2000.

At December 31, 2000 and 1999, the unallocated allowance was $1,218 and
$442.  The unallocated allowance is based on management's evaluation of the
underlying inherent losses in the loan portfolio. In evaluating the
appropriateness of the change in the unallocated allowance, we considered
the following factors:

  -  The increase in the loan portfolio in relation to total earning
     assets.  The average volume of loans, net of unearned income, as a
     percentage of average earning assets increased to 75.2 percent at
     December 31, 2000, from 69.0 percent at the end of 1999.

  -  The change in the composition of the loan portfolio.  As a
     percentage of the total loan portfolio, commercial loans, which
     have inherently more risk than loans secured by real estate,
     increased to 16.6 percent at year-end 2000, from 15.9 percent at
     the end of the previous year.

  -  The volume of net charge-offs.  The volume of net loans charged-off
     has consistently increased over the past five years.

  -  Economic uncertainty.  The economic outlook in the near future
     appears to be deteriorating due to the recent slowdown. In
     addition, recent layoff announcements made by businesses in our
     market area could have an adverse effect on our asset quality.

A reconciliation of the allowance for loan losses and illustration of
charge-offs and recoveries by major loan category for the past five years
are summarized as follows:

<TABLE>
<CAPTION>

RECONCILIATION OF ALLOWANCE FOR LOAN LOSSES

DECEMBER 31                                                          2000     1999     1998     1997     1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                <C>      <C>      <C>      <C>      <C>
Allowance for loan losses at beginning of period.................. $3,799   $4,050   $3,798   $3,944   $3,903
Loans charged-off:
Commercial, financial and others..................................    580      587      410      271      523
Real estate:
  Construction....................................................
  Mortgage........................................................    158      108      119      211       88
Consumer, net.....................................................    291      269      260      175      115
Lease financing, net..............................................
                                                                   ------   ------   ------   ------   ------
    Total.........................................................  1,029      964      789      657      726
                                                                   ------   ------   ------   ------   ------

Loans recovered:
Commercial, financial and others..................................     29       57       67       15      284
Real estate:
  Construction....................................................
  Mortgage........................................................      4       50       46       40      130
Consumer, net.....................................................     62       71       73       96       53
Lease financing, net..............................................
                                                                   ------   ------   ------   ------   ------
    Total.........................................................     95      178      186      151      467
                                                                   ------   ------   ------   ------   ------
Net loans charged-off.............................................    934      786      603      506      259
                                                                   ------   ------   ------   ------   ------
Provision for loan losses.........................................    420      535      855      360      300
                                                                   ------   ------   ------   ------   ------
Allowance for loan losses at end of period........................ $3,285   $3,799   $4,050   $3,798   $3,944
                                                                   ======   ======   ======   ======   ======

Ratios:
Net loans charged-off as a percentage of average loans outstanding   0.32%    0.30%    0.24%    0.21%    0.12%
Allowance for loan losses as a percentage of period end loans.....   1.10%    1.37%    1.63%    1.52%    1.67%

</TABLE>

The allowance for loan losses was $3.3 million at December 31, 2000, and
$3.8 million at December 31, 1999.  The decrease in the allowance was
caused by net loans charged-off exceeding the provision for loan losses.
As a percentage of loans, net of unearned income, the allowance for loan
losses equaled 1.10 percent at year-end 2000, compared to 1.37 percent at
the end of the previous year. The decline in this ratio was due to a higher
volume of net charge-offs, coupled with the significant growth of our loan
portfolio.  In comparison, for our peer group, the allowance account
equaled 1.18 percent and 1.17 percent of loans, net of unearned income, at
December 31, 2000 and 1999.

At December 31, 2000, the coverage ratio, the allowance for loan losses
account as a percentage of nonperforming loans, equaled 124.8 percent,
compared to 57.7 percent at the end of the previous year. The allowance
covered 81.6 percent and 54.7 percent of nonperforming assets at December
31, 2000 and 1999. We will continue to make provisions to the allowance in
2001 based on our evaluations of the allowance for loan losses account.

Past due loans not satisfied through repossession, foreclosure or related
actions, are evaluated individually to determine if all or part of the
outstanding balance should be charged against the allowance for loan
losses.  Any subsequent recoveries are credited to the allowance account.
Net charge-offs amounted to $934 or 0.32 percent of average loans
outstanding in 2000 compared to $786 or 0.30 percent in 1999. Net charge-
off levels for our peer group were 0.15 percent and 0.18 percent in 2000
and 1999.

DEPOSITS:

A major problem that has plagued the banking industry in recent years is
attracting low-cost core deposits. Substantial stock market gains in recent
years caused a sense of wealth for individuals.  Personal income growth was
soon used up by eager-to-spend consumers. As a result, personal savings
rates declined. Lower savings rates, coupled with increased loan demand in
recent years, forced banks to fund the demand with higher-costing time
deposits and wholesale borrowings. Disposable personal income rose 5.3
percent, however the personal savings rate declined 0.1 percent in 2000.
Although the banking industry experienced solid deposit growth in 2000,
much of the growth was derived from higher-costing time deposits. Total
deposits for all FDIC-insured commercial banks increased $346 billion to
$4,177 billion at December 31, 2000, from $3,831 billion at the end of
1999. For these institutions, noninterest-bearing deposits increased $63
billion or 8.9 percent, while interest-bearing deposits rose $283 billion
or 9.1 percent. Higher volumes of expensive time deposits primarily
accounted for the increase in interest-bearing accounts. FDIC-insured banks
with total assets ranging from $100.0 million to $1.0 billion also
experienced deposit growth, but to a lesser extent.  For these banks, total
deposits increased $21 billion or 3.4 percent.  Similarly, deposit growth
for FDIC-insured Pennsylvania banks was not significant, at 2.5 percent.

Our local peer group experienced a solid 7.8 percent increase in total
deposits and a 6.3 percent increase in interest-bearing deposits. Contrary
to all FDIC-insured commercial banks, the role of interest-bearing deposits
as part of the total deposit mix declined. The ratio of interest-bearing
deposits to total deposits declined from 89.5 percent in 1999 to 88.2
percent in 2000. With respect to our deposit growth, we experienced an
increase in average deposits of 3.6 percent in 2000. Average interest-
bearing deposits grew 3.6 percent, while average noninterest-bearing
deposits increased 3.3 percent. As part of our total deposit mix, interest-
bearing deposits remained constant at 89.6 percent of total deposits. The
majority of our interest-bearing deposit growth was concentrated in two
areas, savings accounts and time deposits $100 or more. Average savings
accounts increased 7.7 percent, which arose from a 35.8 percent increase in
our cash management system ("CMS") accounts. Through a CMS account,
commercial customers can earn interest on excess funds in their business
checking accounts. At then end of each business day, excess funds are swept
into an interest-bearing account. Growth in CMS accounts was directly
related to the recent expansion into areas with a higher concentration of
commercial activity. The volume of average time deposits $100 or more rose
42.2 percent in 2000. The increase resulted from stronger deposit
relationships with local area school districts.

In response to the FOMC's further tightening actions, deposit rates
continued to increase throughout the first half of 2000. By mid-year,
deposit rates leveled off before declining by year-end. These actions had
very little effect on the cost of transaction accounts, however costs paid
for certificates of deposit fluctuated dramatically throughout 2000. For
Northeastern Pennsylvania banks, the average rate paid for a six-month
certificate of deposit increased 48 basis points to 5.08 percent at June
30, 2000, from 4.60 percent at the end of 1999. The rates paid for a one-
year certificate and a five-year certificate rose 64 basis points and 32
basis points. With market rates stabilizing and no further actions taken by
the FOMC for the remainder of the year, certificate of deposit rates fell,
to varying degrees, by the end of 2000. Competition for short-term
certificates of deposit within our market area remained intense. As a
result, the average six-month certificate of deposit rate declined only 4
basis points to 5.04 percent at December 31, 2000.  In comparison, the rate
paid for a one-year certificate fell 14 basis points to 5.46 percent at the
end of 2000. The rate paid on a five-year certificate dropped even further,
24 basis points to 5.65 percent at year-end 2000. At the end of the second
quarter of 2000, we changed our deposit-pricing strategy to attract
maturing certificates of deposits into shorter-term maturities. The
strategy involved inverting our deposit yield curve to more closely
resemble that of U.S. Treasuries.  Shorter-term maturities yielded higher
rates than longer-term maturities. The yield on the one-year U.S. Treasury
was 6.43 percent at June 30, 2000. Whereas, the five-year U.S. Treasury
yield was 6.31 percent. Similarly, we raised the rates on our six-month and
one-year certificates to 6.10 percent and 6.15 percent, from 5.00 percent
at June 30, 2000, and lowered the rates on our longer-term certificates
below the shorter-term certificates. Specifically, we lowered the rate on
our five-year certificate to 6.01 percent from 6.59 percent. We took this
action in anticipation of lower market rates as the FOMC moved their bias
from tightening to accommodating due to increasing evidence of a slowdown
in the economy. By year-end 2000, the U.S. Treasury curve had fallen
significantly and had inverted even further. The one-year U.S. Treasury
yielded 5.60 percent, 43 basis points higher than the five-year at 5.17
percent. At December 31, 2000, our deposit curve remained inverted.
Specifically, the rates paid for a six-month, one-year and five-year
certificate were 5.75 percent, 6.05 percent and 5.39 percent. Local
community banks in our market area retained a traditional deposit curve,
where longer-term certificates are paid higher rates than shorter-term
certificates.  Local community banks paid on average 5.29 percent, 5.70
percent and 5.89 percent for their respective-term certificates. We believe
that the inverted deposit curve will be advantageous to our overall cost of
deposits, as a greater amount of certificates will be repricing in the near
term when deposit rates are significantly lower.

The average amount of, and the rate paid on, the major classifications of
deposits for the past five years are summarized as follows:

<TABLE>
<CAPTION>


DEPOSIT DISTRIBUTION

                                   2000              1999              1998              1997              1996
                              ---------------   ---------------   ---------------   ---------------   ---------------
                              AVERAGE AVERAGE   AVERAGE AVERAGE   AVERAGE AVERAGE   AVERAGE AVERAGE   AVERAGE AVERAGE
YEAR ENDED DECEMBER 31        BALANCE    RATE   BALANCE    RATE   BALANCE    RATE   BALANCE    RATE   BALANCE    RATE
---------------------------------------------------------------------------------------------------------------------
<S>                          <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C.      <C>      <C>
Interest-bearing:
Money market accounts....... $ 20,710    3.55% $ 19,466    3.12% $ 17,643    3.13% $ 16,854    3.16% $ 18,144    2.92%
NOW accounts................   25,569    2.37    24,671    2.45    21,366    2.19    18,464    2.18    16,661    2.02
Savings accounts............   73,171    2.52    67,920    2.38    64,113    2.58    65,081    2.92    67,144    3.00
Time deposits less than $100  175,522    5.66   181,164    5.42   175,954    5.61   165,487    5.70   157,271    5.67
Time deposits $100 or more..   32,302    5.98    22,710    5.69    23,936    5.89    29,092    6.17    27,755    5.93
                             --------          --------          --------          --------          --------
  Total interest-bearing....  327,274    4.60%  315,931    4.41%  303,012    4.60%  294,978    4.77%  286,975    4.69%
Noninterest-bearing.........   37,953            36,757            32,550            27,448            26,329
                             --------          --------          --------          --------          --------
  Total deposits............ $365,227          $352,688          $335,562          $322,426          $313,304
                             ========          ========          ========          ========          ========

</TABLE>

Deposits totaled $378.7 million at December 31, 2000, an increase of $16.2
million compared to $362.5 million at December 31, 1999.  Noninterest-
bearing transaction accounts increased $3.2 million, while interest-bearing
deposits rose $13.0 million.  The increase in transaction accounts resulted
from additional commercial relationships.  The growth in interest-bearing
deposits was mainly due to an increase in money market accounts and time
deposits $100 or more. Money market accounts grew $3.5 million to $28.9
million at December 31, 2000, from $25.4 million at the end of 1999.  Large
dollar time deposits totaled $33.7 million at year-end 2000, an increase of
$10.4 million, compared to $23.3 million at the end of the previous year.
The growth in both categories was directly attributable to further deposit
relationships with school districts located within our market area.
Deposits averaged $365.2 million in 2000, an increase of $12.5 million
compared to $352.7 million averaged in 1999. As previously mentioned, the
average deposit growth resulted from an increase in time deposits $100 or
more, due to our relationships with area school districts, and savings
accounts, which resulted from growth in our CMS accounts. The growth was
partially offset by a decline in time deposits less than $100. We did not
aggressively compete for these deposits in the first half of the year due
to the high cost of such funds. Once interest rates stabilized and we began
competitively pricing shorter-term certificates, growth for these types of
deposits resumed in the fourth quarter.

The additional tightening actions of the FOMC resulted in higher costs for
the banking industry.  As a percentage of average earning assets, the cost
of funds for all FDIC-insured commercial banks increased 63 basis points to
4.34 percent in 2000, compared to 3.71 percent in 1999. The cost of funds
for insured Pennsylvania banks and banks in our peer group rose 41 basis
points and 36 basis points. We also experienced an increase in our costs,
however the increase was not as severe as that experienced by our peer
group. Our cost of deposits increased 19 basis points to 4.60 percent in
2000, from 4.41 percent in 1999. The majority of the increase in our
deposit costs occurred in the first and fourth quarters of 2000. Deposit
costs averaged 12 basis points higher in the first quarter of 2000,
compared to the fourth quarter of 1999. The rise in general market rates
and competitive pressures caused the increase. Our deposit costs leveled
off in the second and third quarters before increasing 18 basis points in
the fourth quarter. The fourth quarter increase resulted from competitively
pricing our short-term certificates of deposits. We expect our deposit cost
to decline in the near term due to the lowering of interest rates by the
FOMC beginning in January 2001. As a result, these short-term certificates
of deposit will reprice in the near future when market rates are lower. We
also plan to continue attracting a higher concentration of low-costing
transaction accounts of larger balance commercial customers. Furthermore,
as part of our sales and service program, employees will be trained in
cross-selling techniques to promote lower-costing deposit products.

Volatile deposits, time deposits $100 or more, totaled $33.7 million at
December 31, 2000, an increase of $10.4 million compared to $23.3 million
at December 31, 1999.  As previously mentioned, the increase resulted from
strengthening relationships with area school districts.  Large denomination
certificates of deposit are typically short-term, high-cost funds. We
continued to be less reliant on this type of funding as compared to the
peer group in 2000.  Average volatile deposits, as a percentage of average
total assets, equaled 7.9 percent in 2000, compared to 11.6 percent for the
peer group. Our average cost of these funds increased 29 basis points to
5.98 percent in 2000, from 5.69 percent in 1999. The peer group experienced
a 41 basis point increase in their cost for volatile deposits.

Maturities of time deposits $100 or more for the past five years are
summarized as follows:

<TABLE>
<CAPTION>

MATURITY DISTRIBUTION OF TIME DEPOSITS $100 OR MORE

DECEMBER 31                                                  2000       1999       1998       1997       1996
-------------------------------------------------------------------------------------------------------------
<S>                                                       <C>        <C>        <C>        <C>        <C>
Within three months...................................... $17,281    $ 3,752    $ 7,956    $ 3,195    $ 8,598
After three months but within six months.................   3,357      5,240      4,939      2,819      9,958
After six months but within twelve months................   5,761      5,411      8,802      6,334     11,262
After twelve months......................................   7,327      8,850      5,391      8,484      6,047
                                                          -------    -------    -------    -------    -------
  Total.................................................. $33,726    $23,253    $27,088    $20,832    $35,865
                                                          =======    =======    =======    =======    =======

</TABLE>

Many financial institutions relied on wholesale borrowing as an alternative
funding source because of reduced deposit growth in 2000. Although our
average volume of borrowed funds rose from $1,433 in 1999 to $2,411 in
2000, this rise was primarily for meeting temporary funding requirements.
Furthermore, we do not expect to rely on wholesale borrowing as a permanent
source of our funding.

Short-term borrowings available to us consist of a line of credit and
advances with the FHLB-Pgh secured under terms of a blanket collateral
agreement by a pledge of FHLB-Pgh stock and certain other qualifying
collateral, such as investment and mortgage-backed securities and mortgage
loans.  The line is limited to our maximum borrowing capacity ("MBC") with
the FHLB-Pgh, which is based on a percentage of qualifying collateral
assets.  At December 31, 2000, our MBC was $170.8 million. Interest accrues
daily on the line based on the rate of FHLB-Pgh discount notes.  This rate
resets each day.  The line is renewable annually on its anniversary date
and carries no associated commitment fees.  The FHLB-Pgh has the right to
reduce or terminate the line at any time without prior notice and we may
repay the line at any time without incurring prepayment penalties.
Short-term advances are issued with maturities less than one year based on
the FHLB-Pgh's current cost of funds rate.  Advances are limited to our MBC
and are not prepayable.  There are no commitment fees associated with the
advances, except for those of forward settlement that are based on FHLB-Pgh
hedging costs.

We had no short-term borrowings outstanding at December 31, 2000.  Short-
term borrowings outstanding at December 31, 1999, under the line of credit
agreement were $5,500. The average daily balance and weighted-average rate
on aggregate short-term borrowings was $2,374 at 6.3 percent in 2000 and
$1,393 at 5.3 percent in 1999. The maximum amount of all short-term
borrowings outstanding at any month-end was $11,200 during 2000 and $7,025
during 1999.  Short-term borrowings during 2000 and 1999 consisted entirely
of the FHLB-Pgh line of credit.

Long-term debt at December 31, 2000 and 1999, consisted entirely of a 7.5
percent fixed-rate, amortizing advance from the FHLB-Pgh Community
Investment Program. This advance matures on September 2, 2009. The
scheduled principal payments on the note for the next five years total $3
for each of the three years 2001 through 2003 and $4 for 2004 and 2005. The
prepayment fee applicable to the advance is equal to the present value of
the difference between cash flows generated at the advance rate from the
date of the prepayment until the original maturity date, and the cash flows
that would result from the interest rate posted by the FHLB-Pgh on the date
of prepayment for an advance of comparable maturity.  The note is secured
under terms of a blanket collateral agreement by a pledge of qualifying
investment and mortgage-backed securities, certain mortgage loans and a
lien on FHLB-Pgh stock. The average daily balance on long-term debt in 2000
was $37 with a weighted-average rate of 7.5 percent.  For 1999, the average
daily balance on long-term debt was $40 with a weighted-average rate of 7.5
percent.

MARKET RISK SENSITIVITY:

Market risk is the risk to our earnings or financial position resulting
from adverse changes in market rates or prices, such as interest rates,
foreign exchange rates or equity prices.  Our exposure to market risk is
primarily IRR associated with our lending, investing and deposit-gathering
activities.  During the normal course of business, we are not exposed to
foreign currency exchange risk or commodity price risk. Our exposure to IRR
can be explained as the potential for change in our reported earnings
and/or the market value of our net worth.  Variations in interest rates
affect earnings by changing net interest income and the level of other
interest-sensitive income and operating expenses.  Interest rate changes
also affect the underlying economic value of our assets, liabilities and
off-balance sheet items.  These changes arise because the present value of
future cash flows, and often the cash flows themselves, change with
interest rates.  The effects of the changes in these present values reflect
the change in our underlying economic value, and provide a basis for the
expected change in future earnings related to the interest rate.  IRR is
inherent in the role of banks as financial intermediaries. However, a bank
with a high IRR level may experience lower earnings, impaired liquidity and
capital positions, and most likely, a greater risk of insolvency.
Therefore, banks must carefully evaluate IRR to promote safety and
soundness in their activities.

In accordance with regulation, each bank is required to develop its own IRR
management program depending on its structure, including certain
fundamental components which are mandatory to ensure sound IRR management.
These elements include appropriate board and management oversight as well
as a comprehensive risk management process that effectively identifies,
measures, monitors and controls risk.  Should a bank have material
weaknesses in its risk management process or high exposure relative to its
capital, the bank regulatory agencies will take action to remedy these
shortcomings.  Moreover, the level of a bank's IRR exposure and the quality
of its risk management process is a determining factor when evaluating a
bank's capital adequacy.

The responsibility for our market risk sensitivity management has been
delegated to the Asset/Liability Committee ("ALCO").  Specifically, ALCO
utilizes several computerized modeling techniques to monitor and attempt to
control the influence that market changes have on RSA and RSL.

We utilize the tabular presentation alternative in complying with
quantitative and qualitative disclosure rules.  Information with respect to
maturities and fair values of other financial instruments at December 31,
2000, is summarized as follows.  For expected maturity distributions, other
financial assets and liabilities are presented based on their carrying
values, except for investment securities, which are based on amortized
costs. Investment distributions and their related weighted-average interest
rates are based on contractual maturities, with the exception of mortgage-
backed securities and equity securities. Mortgage-backed securities are
presented based upon estimated principal cash flows and related weighted-
average interest rates, assuming no change in the current interest rate
environment. The amount of, and weighted-average interest rate earned on
equity securities, are included in the "Thereafter" maturity category.
Loans and their related weighted-average interest rates are categorized
based on payment due dates, assuming no change in current interest rates.
For noninterest-bearing deposits, money market, NOW and savings accounts
that have no contractual maturity, principal cash flows and related
weighted-average interest rates are presented based on our historical
experience, judgment and statistical analysis, as applicable, concerning
their most likely withdrawal behaviors.  The table presents distributions
and related weighted-average interest rates for time deposits, short-term
borrowings and long-term debt based on contractual maturities assuming no
change in current interest rates. The weighted-average yields of tax-exempt
securities and loans have been computed on a tax-equivalent basis using the
statutory tax rate of 34.0 percent. For additional information on the
assumptions used to determine fair values, refer to the note entitled
"Summary of significant accounting policies-Fair value of financial
instruments," in the Notes to Consolidated Financial Statements to this
Annual Report.

<TABLE>
<CAPTION>

MARKET RISK DISCLOSURES

                                                              EXPECTED MATURITY DATE
                                   --------------------------------------------------------------------------
                                                                                    THERE-               FAIR
                                       2001     2002     2003     2004     2005     AFTER     TOTAL     VALUE
                                   --------------------------------------------------------------------------
<S>                                <C>       <C>      <C>      <C>      <C>      <C>       <C>       <C>
Other financial assets:
Cash and due from banks........... $ 11,919                                                $ 11,919  $ 11,919
Average interest rate.............
Federal funds sold................   25,500                                                  25,500    25,500
Average interest rate.............     4.50%                                                   4.50%
Investment securities:
U.S. Treasuries and agencies......    3,006                    $ 1,009                        4,015     4,026
Average interest rate.............     5.03%                      6.20%                        5.32%
State and municipals..............    1,460  $   510  $   625      190  $   100  $ 16,398    19,283    20,075
Average interest rate.............     6.53%    6.98%    7.39%    5.91%    8.50%     7.99%     7.82%
Mortgage-backed securities........   15,451   13,528    9,087    4,668    1,779       992    45,505    45,269
Average interest rate.............     5.93%    5.97%    5.97%    5.97%    5.97%     6.02%     5.96%
Equity securities.................                                                  1,823     1,823     1,876
Average interest rate.............                                                   6.94%     6.94%
                                   --------  -------  -------  -------  -------  --------  --------  --------
  Total...........................   19,917   14,038    9,712    5,867    1,879    19,213    70,626    71,246
  Average interest rate...........     5.84%    6.01%    6.06%    6.01%    6.10%     7.79%     6.46%
Loans held for sale, net..........       62                                                      62        63
Average interest rate.............     8.38%                                                   8.38%
Net loans:
Fixed-rate........................   34,950   23,547   20,508   17,598   14,139   108,383   219,125   211,699
Average interest rate.............     9.06%    8.83%    8.73%    8.58%    8.47%     7.99%     8.40%
Adjustable-rate...................   39,040   10,591   12,069    3,467    1,174     8,779    75,120    75,120
Average interest rate.............     9.73%    8.86%    9.08%    8.53%    9.19%     9.36%     9.40%
                                   --------  -------  -------  -------  -------  --------  --------   -------
  Total...........................   73,990   34,138   32,577   21,065   15,313   117,162   294,245   286,819
  Average interest rate...........     9.41%    8.84%    8.86%    8.57%    8.53%     8.09%     8.66%
Accrued interest receivable.......    2,014                                                   2,014     2,014
Average interest rate.............
                                   --------  -------  -------  -------  -------  --------  --------  --------
  Total........................... $133,402  $48,176  $42,289  $26,932  $17,192  $136,375  $404,366  $397,561
                                   ========  =======  =======  =======  =======  ========  ========  ========

Other financial liabilities:
Noninterest-bearing deposits...... $  8,245  $ 7,460  $ 6,675  $ 5,889  $ 5,105  $  5,889  $ 39,263  $ 39,263
Average interest rate.............
Interest-bearing liabilities:
Money market, NOW and savings.....   26,970   24,401   21,832   19,264   16,695    19,266   128,428   128,428
Average interest rate.............     2.74%    2.74%    2.74%    2.74%    2.74%     2.74%     2.74%
Time deposits.....................  113,834   48,566   21,457    7,259   19,250       664   211,030   212,822
Average interest rate.............     5.78%    5.79%    5.98%    5.66%    6.29%     6.78%     5.85%
Long-term debt....................        3        3        3        4        4        19        36        36
Average interest rate.............     7.49%    7.49%    7.49%    7.49%    7.49%     7.49%     7.49%
                                   --------  -------  -------  -------  -------  --------  --------  --------
  Total...........................  140,807   72,970   43,292   26,527   35,949    19,949   339,494   341,286
  Average interest rate...........     5.20%    4.77%    4.35%    3.54%    4.64%     2.88%     4.67%
Accrued interest payable..........    2,014                                                   2,014     2,014
Average interest rate.............
                                   --------  -------  -------  -------  -------  --------  --------  --------
  Total........................... $151,066  $80,430  $49,967  $32,416  $41,054  $ 25,838  $380,771  $382,563
                                   ========  =======  =======  =======  =======  ========  ========  ========
</TABLE>


At December 31, 2000, investments of $19.9 million with a weighted-average,
tax-equivalent yield of 5.84 percent were scheduled to mature within one
year.  Net loans scheduled to mature within the same time frame totaled
$74.0 million with a weighted-average, tax-equivalent yield of 9.41
percent. In addition, we had $25.5 million in federal funds sold with a
weighted-average yield of 4.50 percent at December 31, 2000. Overall,
interest-earning assets scheduled to mature within one year totaled $119.5
million with a weighted-average, tax-equivalent yield of 7.77 percent.
With respect to interest-bearing liabilities, based on historical
withdrawal patterns, interest-bearing transaction accounts, defined as
money market, NOW and savings accounts, of $27.0 million with a weighted-
average cost of 2.74 percent were scheduled to mature within one year. In
addition, time deposits totaling $113.8 million with a weighted-average
cost of 5.78 percent were scheduled to mature in the same time frame.
Total interest-bearing liabilities scheduled to mature within one year
equaled $140.8 million with a weighted-average rate of 5.20 percent.

Limitations of the market risk disclosure model include, among others:

  -  Magnitude,
  -  Timing, and
  -  Frequency of interest rate changes of other financial assets and
     liabilities.

Historical withdrawal patterns with respect to interest-bearing and
noninterest-bearing transaction accounts are not necessarily indicative of
future performance, as the volume of cash flows may increase or decrease.
Loan information is presented based on payment due dates, which may
materially differ from actual results due to prepayments caused by changes
in:

   -  Interest rates,
   -  Sociological conditions,
   -  Demographics, and
   -  Economic climate.

Maturity distributions and fair values are primarily based on contractual
maturities or payment due dates and do not consider repricing frequencies
for adjustable-rate assets and liabilities. The table does not include
maturity distribution and fair value information on certain assets and
liabilities, which are not considered financial, and does not anticipate
future business activity. Actual results will, more likely than not, differ
from results presented in the table.

Additionally, we supplement the market risk disclosure model through
simulation analysis utilizing interest rate shocks. The model analyzes the
effects instantaneous parallel shifts of plus or minus 100 basis points
will have on the economic values of other financial instruments.  The
results of the model at December 31, 2000, are summarized as follows:

<TABLE>
<CAPTION>

CHANGES IN FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS

                                                                    FAIR VALUE
                                                         ------------------------------
DECEMBER 31, 2000                                        +100 BPS      LEVEL   -100 BPS
---------------------------------------------------------------------------------------
<S>                                                      <C>        <C>        <C>
Other financial assets:
Cash and due from banks................................. $ 11,919   $ 11,919   $ 11,919
Federal funds sold......................................   25,500     25,500     25,500
Investment securities...................................   69,951     71,246     73,035
Loans held for sale, net................................       63         63         63
Net loans...............................................  278,705    286,819    295,633
Accrued interest receivable.............................    2,014      2,014      2,014
                                                         --------   --------   --------
  Total................................................. $388,152   $397,561   $408,164
                                                         ========   ========   ========

Other financial liabilities:
Noninterest-bearing deposits............................ $ 39,263   $ 39,263   $ 39,263
Money market, NOW and savings accounts..................  128,428    128,428    128,428
Time deposits...........................................  210,169    212,822    215,561
Long-term debt..........................................       36         36         36
Accrued interest payable................................    2,014      2,014      2,014
                                                         --------   --------   --------
  Total................................................. $379,910   $382,563   $385,302
                                                         ========   ========   ========
</TABLE>


Models that consider repricing frequencies of RSA and RSL in addition to
maturity distributions are also used to monitor IRR. One such technique
utilizes a static gap report, which attempts to measure our interest rate
exposure by calculating the net amount of RSA and RSL that reprice within
specific time intervals. A positive gap, indicated by a RSA/RSL ratio
greater than 1.0, implies that earnings will be impacted favorably if
interest rates rise and adversely if interest rates fall during the period.
A negative gap, a RSA/RSL ratio less than 1.0, tends to indicate that
earnings will be affected inversely to interest rate changes.

Our interest rate sensitivity gap position, illustrating RSA and RSL at
their related carrying values, is summarized as follows.  The distributions
in the table are based on a combination of maturities, call provisions,
repricing frequencies and prepayment patterns. Adjustable-rate assets and
liabilities are distributed based on the repricing frequency of the
instrument. Mortgage instruments are distributed in accordance with
estimated cash flows, assuming there is no change in the current interest
rate environment.

<TABLE>
<CAPTION>

INTEREST RATE SENSITIVITY

                                                    DUE AFTER        DUE AFTER
                                                 THREE MONTHS         ONE YEAR
                                   DUE WITHIN      BUT WITHIN       BUT WITHIN        DUE AFTER
DECEMBER 31, 2000                THREE MONTHS   TWELVE MONTHS       FIVE YEARS       FIVE YEARS         TOTAL
-------------------------------------------------------------------------------------------------------------
<S>                              <C>            <C>                 <C>              <C>             <C>
Rate-sensitive assets:
Investment securities............... $  7,143        $ 12,710         $ 31,356         $ 20,037      $ 71,246
Loans held for sale, net............       62                                                              62
Loans, net of unearned income.......   89,285          22,015           76,641          109,589       297,530
Federal funds sold..................   25,500                                                          25,500
                                     --------        --------         --------         --------      --------
  Total............................. $121,990        $ 34,725         $107,997         $129,626      $394,338
                                     ========        ========         ========         ========      ========

Rate-sensitive liabilities:
Money market accounts...............                 $ 28,888                                        $ 28,888
NOW accounts........................                   24,938                                          24,938
Savings accounts....................                                  $ 74,602                         74,602
Time deposits less than $100........ $ 28,402          63,050           85,360         $    492       177,304
Time deposits $100 or more..........   17,281           9,118            7,155              172        33,726
Long-term debt......................        1               2               14               19            36
                                     --------        --------         --------         --------      --------
  Total............................. $ 45,684        $125,996         $167,131         $    683      $339,494
                                     ========        ========         ========         ========      ========

Rate-sensitivity gap:
  Period............................ $ 76,306        $(91,271)        $(59,134)        $128,943
  Cumulative........................ $ 76,306        $(14,965)        $(74,099)        $ 54,844      $ 54,844

RSA/RSL ratio:
  Period............................     2.67            0.28             0.65           189.79
  Cumulative........................     2.67            0.91             0.78             1.16          1.16

</TABLE>

Our cumulative one-year, RSA/RSL ratio was 0.91 at December 31, 2000.  This
was a significant improvement from 0.75 at the end of 1999. Both ratios
fall within our asset/liability guidelines of 0.70 and 1.30. We experienced
a greater increase in RSA repricing within one year, over that of RSL,
comparing December 31, 2000 to December 31, 1999. At December 31, 2000, RSA
repricing within one year totaled $156.7 million, an increase of $36.5
million. Loans, net of unearned income, repricing within one year totaled
$111.3 million, an increase of $12.6 million. A higher amount of
adjustable-rate commercial loans was responsible for the increase. In
addition, at December 31, 2000, we had $25.5 million in federal funds sold,
compared to $5.5 million in short-term borrowings at December 31, 1999.
Partially mitigating the effects of the increase in RSA was an $11.6
million increase in RSL repricing within one year. The increase in RSL
resulted from an increase in time deposits $100 or more and, to a lesser
extent, time deposits less than $100 offset partially by the decrease in
short-term borrowings. A $12.0 million increase in time deposits $100 or
more, repricing within one year resulted primarily from increased deposit
relationships with local area school districts.  At December 31, 2000, time
deposits $100 or more repricing within this time frame amounted to $26.4
million, compared to $14.4 million last year. At the end of the second
quarter, we inverted our deposit yield curve in an attempt to attract
maturing certificates of deposit into shorter-term maturities. We took this
action in anticipation of lower market rates as the FOMC moved their bias
from tightening to accommodating due to the slowing economy. As a result,
time deposits less than $100 repricing within one year increased $2.2
million to $91.5 million at December 31, 2000, from $89.3 million at the
end of 1999.

According to the results of the static gap report, we were liability rate-
sensitive for the cumulative one-year period. This indicates that should
general market rates increase, the likelihood exists that net interest
income would be adversely affected. Conversely, a decline in general market
rates would likely have a favorable effect on net interest income. However,
these forward-looking statements are qualified in the aforementioned
section entitled "Forward-Looking Discussion" in this Management's
Discussion and Analysis.

Our three-month RSA/RSL ratio increased to 2.67 at December 31, 2000, from
2.18 at December 31, 1999. Similar to the one-year ratio, the volume of RSA
repricing within three months increased to a greater extent than that of
RSL.  Total RSA repricing within this time frame increased $39.8 million.
Specifically, $25.5 million in federal funds sold, coupled with a $14.1
million increase in the volume of loans, net of unearned income, repricing
within three months, caused the majority of the increase. Partially
offsetting the increase in RSA, was an $8.0 million increase in RSL. Time
deposits $100 or more increased $13.5 million to $17.3 million at December
31, 2000, from $3.8 million at December 31, 1999.  We had no short-term
borrowings at year-end 2000. There were short-term borrowings of $5.5
million at the end of the previous year. The reasons explaining the changes
in RSA and RSL repricing within three months are the same as those
discussed for the changes in RSA and RSL repricing within one year.

Static gap analysis, although a credible measuring tool, does not fully
illustrate the impact of interest rate changes on future earnings. First,
market rate changes normally do not equally or simultaneously affect all
categories of assets and liabilities.  Second, assets and liabilities that
can contractually reprice within the same period may not do so at the same
time or to the same magnitude. Third, the interest rate sensitivity table
presents a one-day position, variations occur daily as we adjust our rate
sensitivity throughout the year. Finally, assumptions must be made in
constructing such a table. For example, the conservative nature of our
Asset/Liability Management Policy assigns money market and NOW accounts to
the due after three but within twelve months repricing interval.  In
reality, these items may reprice less frequently and in different
magnitudes than changes in general interest rate levels.

As the static gap report fails to address the dynamic changes in the
balance sheet composition or prevailing interest rates, we utilize a
simulation model to enhance our asset/liability management.  This model is
used to create pro forma net interest income scenarios under various
interest rate shocks.  Model results at December 31, 2000, substantiate the
results indicated by the one-year static gap position. Specifically,
instantaneous and parallel shifts in general market rates of plus 100 basis
points will cause net interest income to decrease by $60 or 0.4 percent
over the subsequent twelve months. Conversely, a shift of the same
magnitude in the opposite direction will cause a $70 or 0.4 percent
increase in net interest income for the same time period. We will attempt
to maintain our favorable IRR position in 2001 through the administration
of deposit and loan pricing strategies and the directed reinvestment of
loan and investment payments and prepayments.

Financial institutions are affected differently, by inflation, than
commercial and industrial companies that have significant investments in
fixed assets and inventories.  Most of our assets are monetary in nature
and change correspondingly with variations in the inflation rate.  It is
difficult to precisely measure the impact inflation has on us, however we
believe that our exposure to inflation can be mitigated through
asset/liability management.

LIQUIDITY:

Liquidity is defined as the ability to generate cash at a reasonable cost
to fulfill lending commitments and support asset growth, while satisfying
the withdrawal demands of customers and any borrowing requirements. Our
principle sources of liquidity are core deposits and loan and investment
payments and prepayments. Providing a secondary source of liquidity is our
available-for-sale portfolio. As a final source of liquidity, we can
exercise existing credit arrangements. We manage liquidity daily, thus
enabling us to effectively monitor fluctuations in the liquidity position
and to adapt our position according to market fluctuations.  We believe our
liquidity is adequate to meet both present and future financial obligations
and commitments on a timely basis. There are presently no known trends,
demands, commitments, events or uncertainties that have resulted or are
reasonably likely to result in material changes with respect to our
liquidity.

We develop a liquidity plan annually.  The plan's mission is to ensure the
generation of cash at a reasonable cost in order to satisfy commitments to
borrowers as well as to meet the demands of depositors and debtholders.
The liquidity plan assesses the current liquidity position and includes
determining appropriate standards for the volume, mix, price and maturity
of loans, investments and deposits. In addition, we ascertain the
appropriate level of short-term assets required to fund normal day-to-day
operations and to ensure the ability to meet off-balance sheet commitments
and unanticipated deposit withdrawals.  The plan includes controls and
monitoring procedures for evaluating the daily liquidity position.
Finally, the plan introduces strategies to ensure future liquidity.  These
strategies, which we consider proprietary in nature, include the
maintenance of a minimum net federal funds sold cushion, a capital
contingency strategy and enhanced strategies on loan and deposit pricing.
Based on the 2001 liquidity plan, our ratio of core deposits to total
assets is expected to exhibit the same strength at 82.2 percent as was
evidenced at year-end 2000. Core deposits are important in maintaining a
strong liquidity position as they represent a stable and relatively low-
cost source of funds.

We experienced dramatic improvement in our liquidity position from the end
of 1999.  The improvement is best illustrated by the change in our net
noncore and net short-term noncore funding dependence ratios, which explain
the degree of reliance on noncore liabilities to fund long-term assets. At
December 31, 2000, our net noncore funding dependence ratio, the difference
between noncore funds, time deposits $100 or more and brokered time
deposits under $100, and short-term investments to long-term assets, was
negative 3.4 percent, compared to 0.5 percent at December 31, 1999.  Our
net short-term noncore funding dependence ratio, noncore funds maturing
within one year, including borrowed funds, less short-term investments to
long-term assets equaled negative 5.5 percent at the end of 2000, compared
to negative 0.5 percent at year-end 1999. These ratios indicate at December
31, 2000, we had no reliance on noncore deposits and borrowings to fund our
long-term assets, namely loans and investments. In comparison, these ratios
for our peer group were 16.9 percent and 10.6 percent at December 31, 2000.
We believe that by maintaining adequate volumes of short-term investments
and implementing competitive pricing strategies on deposits, we can ensure
adequate liquidity to support future growth.

The Consolidated Statements of Cash Flows present the change in cash and
cash equivalents from operating, investing and financing activities.  Cash
and cash equivalents consist of cash on hand, cash items in the process of
collection, noninterest-bearing deposits with other banks, balances with
the Federal Reserve Bank of Philadelphia ("FRB") and FHLB-Pgh and federal
funds sold. Cash and cash equivalents totaled $37.4 million at December 31,
2000, an increase of $26.4 million from $11.0 million reported at the end
of 1999. Net cash provided by investing activities, and to a lesser extent,
financing activities and operating activities caused the greater volume of
cash and cash equivalents at year-end 2000. Net income of $4.2 million was
the primary source of the $6.5 million in cash provided by operating
activities in 2000.

The net cash provided by investing activities totaled $12.4 million in
2000. Proceeds received from repayments and sales of investment securities
available-for-sale of $21.8 million and $16.7 million, were partially
offset by funds expended for an increase in lending activities of $23.1
million and purchases of investment securities of $2.4 million.
Additionally, in 2000, we received $0.4 million from the sale of foreclosed
assets and had expenditures for purchases of premises and equipment of $1.0
million.

With regard to financing activities, an influx of monies from increased
deposits, partially offset by cash outflows for repayment of short-term
borrowings, common stock repurchases and net dividends, resulted in
additional cash of $7.5 million in 2000. Time deposits and transaction
accounts increased $11.5 million and $4.7 million. In addition, we repaid
$5.5 million in short-term borrowings with the FHLB-Pgh, repurchased and
retired $2.1 million of common stock and paid net cash dividends to
stockholders of $1.1 million in 2000.

We expect continued improvement in our liquidity position in 2001.  Due to
recent drops in the Dow Jones Industrial Average and the NASDAQ-Registered
Trademark- Composite, confidence in the stock market is beginning to wane.
With the stock market out of favor with investors, we anticipate an
increase in our deposit products, as people move funds into safer bank
deposits. A similar situation occurred in the second half of 1998 when the
Dow Jones Industrial Average dropped 800 points.  Shortly after this
occurrence, we experienced a greater inflow of monies from depositors.
However, we cannot guarantee movements in the stock market. Should the
stock market rebound, we may not benefit by a change in consumer investment
preferences. Regardless of the outcome, we believe we have the means to
provide adequate liquidity for funding normal operations in 2001.

CAPITAL ADEQUACY:

We believe a strong capital position is essential to our continued growth
and profitability. A solid capital base provides depositors and
stockholders with a margin of safety, while allowing us to take advantage
of profitable opportunities, support future growth and provide protection
against any unforseen losses.

At December 31, 2000, stockholders' equity totaled $37.6 million, an
increase of $2.1 million from $35.5 million at December 31, 1999. A
fundamental source of capital is earnings retention. Net income of $4.2
million in 2000, offset partially by net cash dividends declared of $1.2
million, was the primary factor contributing to the increase. Also
affecting capital in 2000 were other comprehensive income of $1.2 million,
consisting entirely of unrealized holding gains on investment securities
available-for-sale, and common stock repurchases of $2.1 million.

During the second quarter of 1999, the Board of Directors approved a
program for the repurchase and retirement of 10.0 percent or 220,000 of the
then outstanding shares of our common stock.  After successfully completing
the acquisition of the 220,000 shares in 2000, the Board of Directors
ratified the purchase of an additional 3.0 percent or 60,000 shares. We
repurchased and retired 57,400 shares for $2.1 million in 2000 and 177,647
shares for $5.7 million in 1999. At December 31, 2000, 44,953 shares were
available to be repurchased.  Management will consider the buyback of the
available shares in 2001, if upon analysis such repurchases meet our
targeted internal rate of return and after-tax return  on investment.

Our dividend payout ratio increased to 33.2 percent in 2000, from 26.0
percent in 1999. In comparison, the dividend payout ratio for our peer
group was 43.3 percent in 2000 and 35.8 percent in 1999. Total dividends
declared in 2000 were $1,395, compared to $1,196 in 1999.  On a per share
basis, dividends declared increased 22.8 percent to $0.70 per share in 2000
from $0.57 per share in 1999. It is the intention of our Board of Directors
to continue to pay cash dividends in the future.  However, these decisions
are based on our operating results, financial and economic conditions,
capital and growth objectives, appropriate dividend restrictions and other
relevant factors.  The primary source of funds for payment of dividends has
been the dividends received from our subsidiary, Community Bank. Community
Bank's ability to pay dividends is subject to federal and state
regulations. Accordingly, Community Bank, without prior regulatory
approval, may declare dividends to us totaling $2,599 at December 31, 2000.

Our dividend reinvestment plan ("DRP") offers stockholders the opportunity
to automatically reinvest their dividends in shares of our common stock.
Under the DRP, 300,000 shares are registered with the Securities and
Exchange Commission ("SEC"). The DRP not only provides stockholders with a
convenient means to invest in our common stock without brokerage
commissions, but also furnishes us with additional funds for general
corporate purposes. During the years ended December 31, 2000 and 1999,
7,015 shares and 6,409 shares were issued under the plan.

For a discussion of the recent SFAS issued by the FASB related to capital,
refer to the note entitled, "Summary of significant accounting policies-
Capital structure," in the Notes to Consolidated Financial Statements to
this Annual Report.

Bank regulatory agencies consider capital to be a significant factor in
ensuring the safety of a depositor's accounts. These agencies, in light of
past bank failures, adopted minimum capital adequacy requirements that
include mandatory and discretionary supervisory actions for noncompliance.
These requirements, otherwise known as risk-based capital standards,
generally measure the amount of a bank's required capital in relation to
the degree of risk perceived in its assets and its off-balance sheet
exposure. According to bank regulation, at a minimum, banks must maintain
a Tier I capital to risk-adjusted assets ratio of 4.0 percent and a total
capital to risk-adjusted assets ratio of 8.0 percent. Additionally, banks
must maintain a Leverage ratio of 3.0 percent. The minimum Leverage ratio
of 3.0 percent only applies to institutions with a composite rating of one
under the Uniform Interagency Bank Rating System, that are not anticipating
or experiencing significant growth and have well-diversified risk. An
additional 100 to 200 basis points are required for all but these highly-
rated institutions.  Our minimum Leverage ratio was 4.0 percent at December
31, 2000 and 1999. If an institution is deemed to be undercapitalized under
these standards, banking law prescribes an increasing amount of regulatory
intervention, including the required institution of a capital restoration
plan. Restrictions are applied to significantly or critically
undercapitalized institutions, including restrictions on interest payable
on accounts, dismissal of management and appointment of a receiver. For
well capitalized institutions, banking law provides authority for
regulatory intervention where the institution is deemed to be engaging in
unsafe and unsound practices or receives a less than satisfactory
examination report rating.

Our and Community Bank's capital ratios at December 31, 2000 and 1999, as
well as the required minimum ratios for capital adequacy purposes and to be
well capitalized under the prompt corrective action provisions as defined
by the Federal Deposit Insurance Corporation Improvement Act of 1991, are
summarized as follows:

<TABLE>
<CAPTION>

RISK-ADJUSTED CAPITAL
                                                                                         MINIMUM TO BE WELL
                                                                                          CAPITALIZED UNDER
                                                                 MINIMUM FOR CAPITAL      PROMPT CORRECTIVE
                                                  ACTUAL           ADEQUACY PURPOSES      ACTION PROVISIONS
                                          -----------------------------------------------------------------
DECEMBER 31                                   2000      1999       2000         1999        2000       1999
-----------------------------------------------------------------------------------------------------------
<S>                                       <C>       <C>         <C>          <C>         <C>        <C>
Basis for ratios:
Tier I capital to risk-adjusted assets:
  Consolidated........................... $ 35,287  $ 33,848    $10,024      $ 9,271
  Community Bank.........................   33,537    32,619      9,967        9,216     $14,951    $13,824
Total capital to risk-adjusted assets:
  Consolidated...........................   38,421    36,757     20,047       18,543
  Community Bank.........................   36,654    35,510     19,935       18,432      24,919     23,040
Tier I capital to total average assets
 less intangibles:
  Consolidated...........................   35,287    33,848     16,198       15,752
  Community Bank.........................   33,537    32,619    $16,126      $15,641     $20,158    $19,551

Risk-adjusted assets:
  Consolidated...........................  235,446   218,915
  Community Bank.........................  234,040   217,526
Risk-adjusted off-balance sheet items:
  Consolidated...........................   15,145    12,871
  Community Bank.........................   15,145    12,871
Average assets for Leverage ratio:
  Consolidated...........................  404,946   393,794
  Community Bank......................... $403,152  $391,016

Ratios:
Tier I capital as a percentage of risk-
 adjusted assets and off-balance sheet
 items:
  Consolidated...........................     14.1%     14.6%       4.0%         4.0%
  Community Bank.........................     13.5      14.2        4.0          4.0         6.0%       6.0%
Total of Tier I and Tier II capital as a
 percentage of risk-adjusted assets and
 off-balance sheet items:
  Consolidated...........................     15.3      15.9        8.0          8.0
  Community Bank.........................     14.7      15.4        8.0          8.0        10.0       10.0
Tier I capital as a percentage of total
 average assets less intangibles:
  Consolidated...........................      8.7       8.6        4.0          4.0
  Community Bank.........................      8.3%      8.3%       4.0%         4.0%        5.0%       5.0%

</TABLE>


Our Tier I and total capital to risk-adjusted assets were 14.1 percent and
15.3 percent at December 31, 2000. In comparison, these ratios at the end
of 1999 were 14.6 percent and 15.9 percent. The decline in our ratios
resulted from an increase in risk-adjusted assets over the previous year,
coupled with the repurchase and retirement of common shares under the stock
repurchase program. At December 31, 2000, risk-adjusted assets and off-
balance sheet items totaled $250.6 million, an increase of $18.8 million
from $231.8 million at year-end 1999. Additionally, common stock
repurchases in 2000 reduced capital by $2.1 million. Community Bank's Tier
I and total capital ratios also declined for similar reasons to those
discussed for the consolidated ratios. In addition to Community Bank's
risk-adjusted assets and off-balance sheet items increasing $18.8 million,
repurchases of our common stock were funded through dividends received from
Community Bank. Despite the decline, each of these ratios for us and
Community Bank well exceeded the minimum levels of 4.0 percent and 8.0
percent required for adequately capitalized institutions at December 31,
2000 and 1999. Contrary to the decline in our Tier I capital and total
capital ratios, our Leverage ratio was 8.7 percent at December 31, 2000, a
slight improvement from 8.6 percent reported at the end of the previous
year. Community Bank's Leverage ratio was constant at 8.3 percent at
December 31, 2000 and 1999. Similar to the Tier I and total capital ratios,
the Leverage ratio for us and Community Bank well exceeded the minimum of
4.0 percent for capital adequacy purposes. Based on the most recent
notification from the FDIC, Community Bank was categorized as well
capitalized under the regulatory framework for prompt corrective action at
December 31, 2000 and 1999. There are no conditions or events since this
notification that management believes have changed Community Bank's
category.

The ALCO continually reviews our capital position.  As part of its review,
the ALCO considers:

     -  The current and expected capital requirements, including the
        maintenance of capital ratios in excess of minimum regulatory
        guidelines,

     -  The market value of our securities and the resulting effect on
        capital,

     -  Any planned asset growth,

     -  The anticipated level of net earnings and capital position, taking
        into account the projected asset/liability position and exposure to
        changes in interest rates, and

     -  The source and timing of additional funds to fulfill future capital
        requirements.

REVIEW OF FINANCIAL PERFORMANCE:

As aforementioned, the composite group of all FDIC-insured commercial banks
reported a $380 million decline in net income in 2000. The ROAA declined 12
basis points to 1.19 percent and the ROAE declined 127 basis points to
14.07 percent in 2000. Net interest margin compression, asset quality
problems and tempered noninterest income growth, all factored into the
banking industry's first earnings decline in nine years. Offsetting some of
these adverse effects was an improvement in operating efficiency. The net
interest margin for all insured commercial banks declined 12 basis points
in 2000. In addition, higher inventories of nonperforming loans, coupled
with a greater amount of loan losses, forced banks to increase their loan
loss provisions. In aggregate, this group's loan loss provision increased
33.8 percent in 2000. Moreover, banks could not rely on noninterest income
growth to counter the effects of margin compression. Noninterest income as
a percentage of average earning assets declined 10 basis points comparing
1999 to 2000. Operating efficiency improved during 2000, as evidenced by a
14 basis point reduction in the ratio of noninterest expense to average
earning assets. FDIC-insured Pennsylvania banks fared better in comparison
to the overall banking industry posting an 8.5 percent earnings increase.
In 2000, the ROAA improved 13 basis points to 1.46 percent while the ROAE
improved 221 basis points to 17.35 percent. Similar to the composite group,
Pennsylvania banks experienced a significant deterioration in declines in
margins, noninterest income and noninterest expense. However, contrary to
the overall industry, Pennsylvania banks did not experience a significant
deterioration in asset quality to cause increases in the provision. As a
percentage of average earning assets, tax-equivalent net interest income,
noninterest income and noninterest expense declined 14 basis points, 17
basis points and 44 basis points in 2000. As a result of the stability in
asset quality, loan loss provisions declined 3.2 percent. Similar to the
composite group, profitability for local commercial banks deteriorated in
2000. The ROAA and ROAE declined from 1.14 percent and 12.83 percent in
1999 to 1.06 percent and 12.04 percent in 2000. Net interest margin
compression and overhead cost expansion overshadowed noninterest income
improvements to cause the earnings decline. As a percentage of average
earning assets, tax-equivalent net interest income declined 3 basis points
to 4.04 percent while noninterest income and noninterest expense rose 2
basis points to 0.56 percent and 9 basis points to 2.74 percent in 2000.
The provision for loan losses was constant over 1999 and 2000.

Our net income in 2000 amounted to $4.2 million, compared to $4.6 million
in 1999.  On a per share basis, net income equaled $2.11 in 2000 and $2.17
in 1999.  Higher net interest income and noninterest income, were more than
offset by a 17.4 percent increase in noninterest expense. ROAE and ROAE
were 1.03 percent and 11.72 percent in 2000.  Comparative 1999 ratios were
1.16 percent and 12.02 percent.

Comprehensive income totaled $5.4 million in 2000, more than double the
$2.4 million reported in 1999. Primarily due to market appreciation of our
municipal obligations caused by the inversion of the yield curve, we
recorded other comprehensive income, net of income taxes, of $1.2 million
in 2000. Conversely, we recognized an other comprehensive loss, net of
income taxes, of $2.2 million in 1999.

For a discussion of recently issued SFASs issued by the FASB related to net
income, refer to the notes entitled, "Summary of significant accounting
policies-Comprehensive income," and "Summary of significant accounting
policies-Earnings per common share," in the Notes to Consolidated Financial
Statements to this Annual Report.

Tax-equivalent net interest income improved $571 or 3.8 percent to $15,550
in 2000, from $14,979 in 1999.  An increase of $1,761 or 6.1 percent in
tax-equivalent interest revenue, was partially mitigated by a $1,190 or 8.5
percent increase in interest expense. The rise in tax-equivalent interest
revenue primarily resulted from a 24 basis point improvement in our tax-
equivalent yield on earning assets to 8.00 percent in 2000, from 7.76
percent in 1999. Also contributing to the rise in interest revenue was a
net increase of $10.7 million in average earning assets. Average loan
growth of $31.0 million was partially offset by a $20.3 million decline in
average investments and federal funds sold. The increase in interest
expense resulted from a 19 basis point increase in the cost of funds,
coupled with a $12.3 million growth in average interest-bearing
liabilities. As a result of the higher competitive interest rate
environment which persisted through most of 2000, our cost of funds rose to
4.61 percent in 2000, compared to 4.42 percent in 1999.

The provision for loan losses totaled $420 in 2000 and $535 in 1999.
Included in the 1999 provision was a $410 replenishment to the allowance
for loan losses, which resulted from a partial charge-off of a loan to one
commercial customer.  There were no such replenishment charges in 2000.

Noninterest income amounted to $2,457 in 2000 and $2,112 in 1999.  Service
charges, fees and commissions improved $418 or 25.4 percent to $2,065 in
2000, from $1,647 in the previous year. Also included in noninterest income
were gains on the sale of investment securities and gains on the sale of
residential mortgages of $374 and $18 in 2000, and $408 and $57 in 1999.

For the year ended December 31, 2000, noninterest expense totaled $11,069,
an increase of $1,640 or 17.4 percent from $9,429 recorded for the same
period of 1999. Salaries and benefits expense increased $395, net occupancy
and equipment expense rose $347 and other expenses grew $898 in 2000.
Additional staffing requirements and overhead costs associated with the
1999 delivery system expansion caused the majority of the increase in
noninterest expense.

NET INTEREST INCOME:

Despite the continued industry-wide effort to build noninterest income, net
interest income is still the fundamental source of earnings generation in
commercial banks. In addition, fluctuations in the level of noninterest
income can have the greatest impact on net profits. As previously
mentioned, tighter net interest margins were a primary restraint to the
earnings growth of commercial banks. For all FDIC-insured commercial banks,
net interest margins were 3.95 percent in 2000, compared to 4.07 percent in
1999. The compression resulted from the cost of funds accelerating faster
than the yield on earning assets. As a percentage of average earning
assets, the cost of funds for all insured commercial banks increased 63
basis points to 4.34 percent in 2000, from 3.71 percent in 1999, while the
yield on earning assets improved 51 basis points to 8.29 percent in 2000,
from 7.78 percent in 1999. Raising low-costing core deposits was a major
problem plaguing commercial banks.  Banks were forced to fund earning asset
growth with high-costing funds.  Pennsylvania banks also experienced margin
decline. For these banks, the yield on earning assets rose 27 basis points
in 2000, however their cost of funds, as a percentage of average earning
assets, jumped 41 basis points. As a result, their average net interest
margins fell 14 basis points from 3.91 percent in 1999 to 3.77 percent in
2000. Community banks in the local market area reported a similar decline
in net interest margin in 2000. The local peer group's tax-equivalent
margin compressed 3 basis points from 4.07 percent in 1999 to 4.04 percent
in 2000.

Our principle source of operating income is net interest income.  Net
interest income is defined as the difference between income, interest and
fees from earning assets, and the cost of interest-bearing liabilities
supporting those assets.  The primary sources of earning assets are loans
and investment securities, while deposits, short-term borrowings and long-
term debt comprise interest-bearing liabilities.  Net interest income is
impacted by:

     -  Variations in the volume, rate and composition of earning assets
        and interest-bearing liabilities,
     -  Changes in general market rates, and
     -  The level of nonperforming assets.

Changes in net interest income are measured by the net interest spread and
net interest margin.  Net interest spread, the difference between the
average yield earned on earning assets and the average rate incurred on
interest-bearing liabilities, illustrates the effects changing interest
rates have on profitability.  Net interest margin, net interest income as
a percentage of earning assets, is a more comprehensive ratio, as it
reflects not only the spread, but also the change in the composition of
interest-earning assets and interest-bearing liabilities. Tax-exempt loans
and investments carry pre-tax yields lower than their taxable counterparts.
Therefore, in order to make the analysis of net interest income more
comparable, tax-exempt income and yields are reported on a tax-equivalent
basis using the prevailing statutory tax rate of 34.0 percent.

One of our primary concerns is the maintenance of an adequate net interest
margin. Rising interest rates experienced in the first half of 2000, caused
bank interest margins to tighten. With the recent slowing of the economy,
the FOMC has begun to ease interest rates.  Lower interest rates could aid
banks by alleviating net interest margin compression. However, no assurance
can be given as to how general market conditions will change or how such
changes will affect net interest income. Therefore, we believe following
prudent deposit-pricing practices, coupled with careful investing and loan
pricing, will keep our net interest margin strong.

We analyze interest income and interest expense by segregating rate and
volume components of earning assets and interest-bearing liabilities.  The
impact changes in the interest rates earned and paid on assets and
liabilities, along with changes in the volumes of earning assets and
interest-bearing liabilities have on net interest income are summarized as
follows. The net change attributable to the combined impact of rate and
volume has been allocated proportionately to the change due to rate and the
change due to volume.

<TABLE>
<CAPTION>

NET INTEREST INCOME CHANGES DUE TO RATE AND VOLUME

                                                          2000 VS. 1999                 1999 VS. 1998
                                                      ------------------------      ------------------------
                                                       INCREASE (DECREASE)           INCREASE (DECREASE)
                                                         ATTRIBUTABLE TO               ATTRIBUTABLE TO
                                                      ------------------------      ------------------------
                                                       TOTAL                         TOTAL
                                                      CHANGE    RATE    VOLUME      CHANGE    RATE    VOLUME
                                                      ------    ----    ------      ------    ----    ------
<S>                                                   <C>     <C>       <C>         <C>      <C>      <C>
Interest income:
Loans:
  Taxable............................................ $2,683  $1,127    $1,556       $ 292   $(412)   $  704
  Tax-exempt.........................................    343     187       156          31     (68)       99
Investments:
  Taxable............................................   (896)     31      (927)        818     (77)      895
  Tax-exempt.........................................   (371)    (23)     (348)       (226)    (41)     (185)
Federal funds sold...................................      2       9        (7)       (394)    (49)     (345)
                                                      ------  ------    ------       -----   -----    ------
    Total interest income............................  1,761   1,331       430         521    (647)    1,168
                                                      ------  ------    ------       -----   -----    ------

Interest expense:
Money market accounts................................    127      87        40          56      (2)       58
NOW accounts.........................................      1     (10)       11         138      60        78
Savings accounts.....................................    228      98       130         (36)   (154)      118
Time deposits less than $100.........................    120     405      (285)        (42)   (334)      292
Time deposits $100 or more...........................    638      69       569        (116)    (46)      (70)
Short-term borrowings................................     77      17        60          62      (1)       63
Long-term debt.......................................     (1)               (1)                  1        (1)
                                                      ------  ------    ------       -----   -----    ------
    Total interest expense...........................  1,190     666       524          62    (476)      538
                                                      ------  ------    ------       -----   -----    ------
    Net interest income.............................. $  571  $  665    $  (94)      $ 459   $(171)   $  630
                                                      ======  ======    ======       =====   =====    ======

</TABLE>

For the year ended December 31, 2000, tax-equivalent net interest income
totaled $15,550, an increase of $571 or 3.8 percent compared to $14,979
reported for the same period of 1999. The change in tax-equivalent net
interest income was primarily a function of the variations in rates from
the previous year. An increase in the tax-equivalent yield on earning
assets more than counteracted the increase in the average cost incurred on
interest-bearing liabilities. The tax-equivalent yield on earning assets
improved 24 basis points to 8.00 percent in 2000, from 7.76 percent in 1999
and accounted for a $1,331 increase in interest revenue.  Specifically, the
tax-equivalent yield on our loan portfolio improved 16 basis points to 8.49
percent in 2000, from 8.33 percent in 1999. This improvement accounted for
$1,314 or 98.7 percent of the increase in tax-equivalent interest income
due to rate. Higher interest rates in the first half of 2000, although
having a positive effect on loan yields, also drove up deposit and
borrowing costs. Our cost of funds increased 19 basis points to 4.61
percent in 2000, from 4.42 percent in 1999 and caused a $666 increase in
interest expense. We experienced increases in the average rate paid on
every deposit category except NOW accounts.  The most significant increase
was in the average rate paid on time deposits less than $100, which
increased 24 basis points to 5.66 percent in 2000 from 5.42 percent in
1999.  Overall, variations in rates had a $665 positive effect on tax-
equivalent net interest income.

Although we experienced substantial growth in our deposit and loan
products, the affect changes in volumes of earning assets and interest-
bearing liabilities had on net interest income was negligible.  The $12.3
million growth in average interest-bearing liabilities was slightly more
than the $10.7 million growth in average earning assets causing net
interest income to be reduced by $94 due to changes in volumes. The
increase in earning assets resulted from average loan growth of 12.0
percent partially offset by a 17.5 percent decline in average investments.
Average loans, net of unearned income, grew $31.0 million to $289.2 million
in 2000, from $258.2 million in 1999 and caused a favorable effect to net
interest income of $1,712.  Average investments totaled $92.7 million in
2000, a decrease of $19.8 million, from $112.5 million in 1999, which
resulted in a $1,275 reduction in net interest income.  Maturities and
repayments of investment securities were used as a source of liquidity to
fund the increased loan demand. The increase in interest-bearing
liabilities resulted primarily from growth in time deposits $100 or more
and savings accounts, offset in part by a decline in time deposits less
than $100. Stronger deposit relationships with local area school districts
resulted in an increase in large dollar denomination time deposits of $9.6
million.  Accounting for the majority of the $5.3 million growth in average
savings accounts was an increase in our CMS accounts of $3.9 million.
Growth in average time deposits $100 or more and savings accounts had an
unfavorable impact on net interest income of $569 and $130. Partially
mitigating these unfavorable variances was a $285 favorable volume variance
due to a decline in average time deposits less than $100. Time deposits
less than $100 averaged $175.5 million in 2000, a decline of $5.7 million
compared to $181.2 million in 1999.

The average balances of assets and liabilities, corresponding interest
income and expense and resulting average yields or rates paid are
summarized as follows. Earning assets averages include nonaccrual loans.
Investment averages include available-for-sale securities at amortized
cost. Income on investment securities and loans are adjusted to a tax-
equivalent basis using the statutory tax rate of 34.0 percent.

<TABLE>
<CAPTION>


SUMMARY OF NET INTEREST INCOME

                                                           2000                            1999
                                               ----------------------------    ----------------------------
                                                         INTEREST  AVERAGE               INTEREST  AVERAGE
                                                AVERAGE  INCOME/   INTEREST     AVERAGE  INCOME/   INTEREST
                                                BALANCE  EXPENSE     RATE       BALANCE  EXPENSE     RATE
                                               --------  --------  --------    --------  --------  --------
<S>                                            <C>       <C>       <C>         <C>       <C>       <C>
ASSETS:
Earning assets:
Loans:
  Taxable..................................... $278,931   $23,562      8.45%   $249,789   $20,879      8.36%
  Tax-exempt..................................   10,228       977      9.55       8,381       634      7.56
Investments:
  Taxable.....................................   60,810     3,567      5.87      76,500     4,463      5.83
  Tax-exempt..................................   31,915     2,492      7.81      35,956     2,863      7.96
Federal funds sold............................    2,679       164      6.12       3,282       162      4.94
                                               --------   -------              --------   -------
    Total earning assets......................  384,563    30,762      8.00%    373,908    29,001      7.76%
Less: allowance for loan losses...............    3,492                           3,997
Other assets..................................   25,797                          26,293
                                               --------                        --------
    Total assets.............................. $406,868                        $396,204
                                               ========                        ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
Money market accounts......................... $ 20,710       735      3.55%   $ 19,466       608      3.12%
NOW accounts..................................   25,569       606      2.37      24,671       605      2.45
Savings accounts..............................   73,171     1,846      2.52      67,920     1,618      2.38
Time deposits less than $100..................  175,522     9,942      5.66     181,164     9,822      5.42
Time deposits $100 or more....................   32,302     1,931      5.98      22,710     1,293      5.69
Short-term borrowings.........................    2,374       150      6.32       1,393        73      5.24
Long-term debt................................       37         2      7.50          40         3      7.50
                                               --------   -------              --------   -------
    Total interest-bearing liabilities........  329,685    15,212      4.61%    317,364    14,022      4.42%
Noninterest-bearing deposits..................   37,953                          36,757
Other liabilities.............................    3,402                           3,810
Stockholders' equity..........................   35,828                          38,273
                                               --------                        --------
    Total liabilities and stockholders' equity $406,868                        $396,204
                                               ========   -------              ========   -------
    Net interest/income spread................            $15,550      3.39%              $14,979      3.34%
                                                          =======                         =======
    Net interest margin.......................                         4.04%                           4.01%
Tax-equivalent adjustments:
Loans.........................................            $   332                         $   215
Investments...................................                847                             974
                                                          -------                         -------
    Total adjustments.........................            $ 1,179                         $ 1,189
                                                          =======                         =======






Note: Average balances were calculated using average daily balances. Average balances for loans include
nonaccrual loans.  Available-for-sale securities, included in investment securities, are stated at amortized cost
with the related average unrealized holding loss of $810 in 2000 and average unrealized holding gains of $689
in 1999, $2,829 in 1998, $1,193 in 1997 and $337 in 1996 included in other assets.  Tax-equivalent adjustments
were calculated using the prevailing statutory tax rate of 34.0 percent.

</TABLE>

<TABLE>
<CAPTION>

SUMMARY OF NET INTEREST INCOME (CONTINUED)



             1998                                   1997                                   1996
 ----------------------------           ----------------------------           ----------------------------
           INTEREST  AVERAGE                      INTEREST  AVERAGE                      INTEREST  AVERAGE
  AVERAGE  INCOME/   INTEREST            AVERAGE  INCOME/   INTEREST            AVERAGE  INCOME/   INTEREST
  BALANCE  EXPENSE     RATE              BALANCE  EXPENSE     RATE              BALANCE  EXPENSE     RATE
 --------  --------  --------           --------  --------  --------           --------  --------  --------
 <C>       <C>       <C>                <C>       <C>       <C>

 $240,658   $20,587      8.55%          $233,001   $19,916      8.55%          $213,071   $18,444      8.66%
    7,267       603      8.30              8,876       717      8.08              5,724       470      8.21

   61,138     3,645      5.96             60,975     3,406      5.59             74,233     4,022      5.42
   38,276     3,089      8.07             37,818     3,116      8.24             35,923     3,005      8.37
   10,164       556      5.47              5,265       291      5.53              5,508       300      5.45
 --------   -------                     --------   -------                     --------   -------
  357,503    28,480      7.97%           345,935    27,446      7.93%           334,459    26,241      7.85%
    3,881                                  3,919                                  4,014
   23,797                                 17,334                                 16,834
 --------                               --------                               --------
 $377,419                               $359,350                               $347,279
 ========                               ========                               ========




 $ 17,643       552      3.13%          $ 16,854       533      3.16%          $ 18,144       529      2.92%
   21,366       467      2.19             18,464       403      2.18             16,661       337      2.02
   64,113     1,654      2.58             65,081     1,899      2.92             67,144     2,016      3.00
  175,954     9,864      5.61            165,487     9,425      5.70            157,271     8,925      5.67
   23,936     1,409      5.89             29,092     1,796      6.17             27,755     1,647      5.93
      185        11      5.95                138         8      5.80                 51         3      5.88
       43         3      6.98                 45         4      8.89              2,122        93      4.38
 --------   -------                     --------   -------                     --------   -------
  303,240    13,960      4.60%           295,161    14,068      4.77%           289,148    13,550      4.69%
   32,550                                 27,448                                 26,329
    3,213                                  3,913                                  2,968
   38,416                                 32,828                                 28,834
 --------                               --------                               --------
 $377,419                               $359,350                               $347,279
 ========   -------                     ========   -------                     ========   -------
            $14,520      3.37%                     $13,378      3.16%                     $12,691      3.16%
            =======                                =======                                =======
                         4.06%                                  3.87%                                  3.79%

            $   206                                $   244                                $   160
              1,050                                  1,060                                  1,022
            -------                                -------                                -------
            $ 1,256                                $ 1,304                                $ 1,182
            =======                                =======                                =======

</TABLE>







PROVISION FOR LOAN LOSSES:

In 2000, the banking industry faced the problem of deteriorating credit
quality. This deterioration is attributed to an overabundance of commercial
loans written during the mid- to late-1990s, a period of sustained economic
growth and loose underwriting standards. Higher interest rates and a
slowing economy have made it difficult for these commercial borrowers to
service debt, resulting in a 30.0 percent increase in nonperforming loans
for all FDIC-insured commercial banks. Due to the uncertainty of domestic
as well as foreign economic conditions, banks are bracing themselves for a
continued rise in nonperforming loans and increased charge-offs by
increasing provisions for loan losses.  For all insured commercial banks,
provisions for loan losses increased $7.4 billion or 33.8 percent in 2000.

We evaluate the adequacy of the allowance for loan losses account on a
quarterly basis. As previously mentioned, we take into consideration
certain factors such as composition of the loan portfolio, volumes of
nonperforming loans, volumes of net charge-offs, prevailing economic
conditions and other relevant factors when determining the adequacy of the
allowance for loan losses account. We make monthly provisions to the
allowance for loan losses account in order to maintain the allowance at the
appropriate level indicated by our evaluations.  Based on our most current
evaluation at December 31, 2000, management believes that the allowance is
adequate to absorb any known or potential losses in the portfolio.

The provision for loan losses equaled $420 in 2000 and $535 in 1999. The
1999 provisions included a replenishment to the reserve totaling $410 for
one commercial loan charged-off in response to an unforeseen change in its
regulatory classification. Adjusting for the replenishment charge, the
provision for loan losses increased $295 in 2000, primarily as a result of
an increase to the unallocated allowance. We consider the increase
appropriate in light of an overall increase and change in the composition
of the loan portfolio, increasing volumes of net charge-offs and the
uncertainty of economic conditions. Based on the results of our latest
regulatory examination, we know of no other charge-offs or changes in
classifications of loans that should have occurred in 2000.

NONINTEREST INCOME:

Noninterest income growth slowed in 2000 for the banking industry.  For all
FDIC-insured commercial banks, noninterest income rose only 4.1 percent in
2000, compared to 14.0 percent in 1999. Sluggish fee income growth, coupled
with significant losses realized from investment security sales, factored
into the lower growth percentage. Despite the slower growth, banks
recognize that revenues generated from nontraditional sources are
beneficial as they provide a buffer against net interest income
fluctuations due to changes in market interest rates. Recent industry
deregulation should aid noninterest income growth by allowing banks to
enter into nontraditional lines of business.

As part of our business strategy in 2000, management sought to enhance
current and develop new noninterest revenue streams. Fee-based revenue
growth is important in improving profitability, as it lessens reliance on
spread-based income. The majority of our noninterest income is derived from
service charges on customer deposit accounts. In the first half of 2000, we
conducted a study of our deposit service charge structure and how it
compared to that of our peer group. In many cases, our charges were
substantially lower than those charged by others. Based on these
evaluations, we changed our structure, effective July 1, 2000. One specific
change was the manner in which commercial checking customers were service
charged. Previous to the change, business customers were required to keep
a minimum average daily balance. Accounts falling below the balance
requirement during a statement cycle were charged a flat fee. We now charge
commercial customers a fee, net of an earnings credit for deposits, based
on a per item analysis of the type and quantity of transactions made to
their accounts.

In addition, late in the fourth quarter of 2000, we began offering
insurance, asset management and retirement products and services through
Comm Financial. Commissions received on product sales in these areas will
provide us with a new source of fee-based income in 2001. We did not
receive any commissions in 2000 from the operation of Comm Financial.

For the year ended December 31, 2000, noninterest income totaled $2,457, an
increase of $345 or 16.3 percent compared to $2,112 for the same period of
1999. Gains on the sale of investment securities, included in noninterest
income, were $374 in 2000 and $408 in 1999. As a result of the change in
fee structure, service charges on deposit accounts increased 7.7 percent to
$1,396 in 2000 from $1,296 in 1999.  Overall, as a percentage of average
total assets, noninterest income improved to 0.60 percent in 2000 from 0.53
percent in 1999. In comparison, this ratio for our peer group equaled 0.53
percent in 2000.  As previously mentioned, noninterest income included net
gains on the sale of investment securities of $374 in 2000 and $408 in
1999. Both gains resulted primarily from the sale of certain municipal
securities having shorter call features and maturity dates as part of our
strategy to reduce the amount of optionality risk in, and extend the term
of, our investment portfolio.

We expect noninterest income levels to rise and become a more significant
part of our total revenue. In 2001, we anticipate a further increase in
service charges on deposit accounts, as the new structure will be in force
for a full year.  In addition, commissions received from the operation of
Comm Financial are expected to further strengthen our noninterest revenue
streams.

NONINTEREST EXPENSE:

In 2000, banks focused on cost control measures to alleviate some of the
pressure on earnings caused by net interest margin compression and asset
quality problems. As a result, the average efficiency ratios for all
insured commercial banks improved from 58.7 percent in 1999 to 58.5 percent
in 2000.  In addition, noninterest expense as a percentage of average
earning assets declined to 4.2 percent for the year ended December 31,
2000, from 4.3 percent for the same period of 1999. Insured Pennsylvania
banks were also successful in implementing cost control measures, as
evidenced by a significant improvement in this ratio to 3.7 percent in
2000, from 4.2 percent in 1999.

In general, noninterest expense is categorized into three main groups:
employee-related expenses, occupancy and equipment expenses and other
expenses. Employee-related expenses are costs associated with providing
salaries, including payroll taxes, and benefits to our employees.
Occupancy and equipment expenses, the costs related to the maintenance of
facilities and equipment, include depreciation, general maintenance and
repairs, real estate taxes, rental expense offset by any rental income, and
utility costs.  Other expenses include general operating expenses such as
advertising, contractual services, insurance including FDIC assessment,
other taxes and supplies.  Several of these costs and expenses are variable
while the remainder are fixed. We utilize budgets and other related
strategies in an effort to control the variable expenses.

Increases in all our major expense categories caused a $1,640 or 17.4
percent increase in noninterest expense in 2000. For the year ended
December 31, 2000, noninterest expense totaled $11,069, compared to $9,429
for the same period of 1999. As a result, our productivity weakened in
2000. This weakening can be evidenced by the change in our operating
efficiency ratio, a key industry ratio which measures productivity. This
ratio, noninterest expense less other real estate expense to net interest
income and noninterest income less any nonrecurring gains, rose to 66.1
percent compared to only 60.8 percent in 1999. Another productivity measure
is the overhead ratio, noninterest expense as a percentage of average total
assets. This ratio also deteriorated, declining to 2.7 percent in 2000 from
2.4 percent in 1999. On the contrary, our peer group's productivity
improved slightly. The peer group's efficiency and overhead ratios were
63.3 percent and 3.1 percent in 2000, compared to 64.1 percent and 3.2
percent in 1999.

The major components of noninterest expense for the past five years are
summarized as follows:

<TABLE>
<CAPTION>

NONINTEREST EXPENSE

YEAR ENDED DECEMBER 31                                               2000     1999     1998     1997     1996
-------------------------------------------------------------------------------------------------------------
<S>                                                               <C>       <C>      <C>      <C>      <C>
Salaries and employee benefits expense:
Salaries and payroll taxes....................................... $ 4,419   $4,169   $3,767   $3,420   $3,251
Employee benefits................................................     800      655      678      678      557
                                                                  -------   ------   ------   ------   ------
  Salaries and employee benefits expense.........................   5,219    4,824    4,445    4,098    3,808
                                                                  -------   ------   ------   ------   ------

Net occupancy and equipment expense:
Net occupancy expense............................................     781      610      532      579      602
Equipment expense................................................     911      735      761      620      611
                                                                  -------   ------   ------   ------   ------
  Net occupancy and equipment expense............................   1,692    1,345    1,293    1,199    1,213
                                                                  -------   ------   ------   ------   ------

Other expenses:
Marketing expense................................................     365      322      401      269      242
Other taxes......................................................     315      320      273      255      218
Stationery and supplies..........................................     406      431      437      375      226
Contractual services.............................................   1,183      916    1,006      864      871
Insurance, including FDIC assessment.............................     164      124       93       74       84
Other............................................................   1,725    1,147    1,416      822      721
                                                                  -------   ------   ------   ------   ------
  Other expenses.................................................   4,158    3,260    3,626    2,659    2,362
                                                                  -------   ------   ------   ------   ------
    Total noninterest expense.................................... $11,069   $9,429   $9,364   $7,956   $7,383
                                                                  =======   ======   ======   ======   ======

</TABLE>

Salaries and employee benefits expense constitutes the majority of our
noninterest expense. Total personnel costs increased $395 or 8.2 percent to
$5,219 in 2000, from $4,824 in 1999. Costs for employee salaries and
payroll taxes rose $250 or 6.0 percent for the year ended December 31,
2000. A full year of staffing expense for the two new branch offices opened
in 1999, coupled with normal annual employee merit increases, caused the
variance. Employee benefit costs rose $145 or 22.1 percent, primarily as a
result of an increase in employee health and life insurance premiums.
Although we experienced an increase in compensation costs, we have been
successful in managing these costs in comparison to our peer group. Our
total compensation costs per full-time equivalents were $31 in 2000 and $29
in 1999. In comparison, the peer group's total compensation costs per full-
time equivalents equaled $35 and $34 in 2000 and 1999. We anticipate
salaries and employee benefits expense to increase slightly in 2001 due to
annual merit increases relative to performance evaluations and rate
increases from insurance carriers.

For a discussion of the recent SFAS issued by the FASB related to salaries
and benefits, refer to the note entitled, "Summary of significant
accounting policies-Employee benefit plans," in the Notes to Consolidated
Financial Statements to this Annual Report.

Net occupancy and equipment expense increased $347 or 25.8 percent from
$1,345 in 1999, compared to $1,692 in 2000. An increase of $171 in net
occupancy expense, in conjunction with a $176 rise in equipment expense,
caused the overall increase. The increase in net occupancy expense is
directly attributable to higher depreciation, maintenance, real estate
taxes and utility costs associated with a full-year of operation of the
corporate center and new branch offices. Higher equipment expense resulted
from depreciation and periodic maintenance costs on computer and office
equipment for these facilities. Additional depreciation and technical
support costs related to CoreDirector, our new Windows-based processing
system, also factored into the increase in equipment expense. We anticipate
further increases in depreciation, maintenance and technical support
resulting from capital outlays for a new teller platform, Internet banking
program and document imaging system.

Other expenses increased $898 or 27.5 percent to $4,158 for the year ended
December 31, 2000, from $3,260 for the same period of 1999. An increase in
legal and consulting fees related to strategic planning initiatives, was
primarily responsible for the $267 increase in expenses for contractual
services. An increase of $42 for routine maintenance, real estate taxes and
utility costs for properties held in other real estate, coupled with $125
in losses on the disposition of such properties, also contributed to the
rise in other expenses. Finally, we incurred costs in the fourth quarter of
2000 associated with the implementation of the new customer sales and
service program and marketing costs related to the development of a new
advertising campaign.

As previously mentioned, we began developing our Internet-banking program
in 2000. Our program will be hosted by an Internet service provider,
accessed through our web site. As part of the program, we were required to
purchase hardware, software and communications equipment necessary to
operate the program. In addition, once the program is operational, we will
incur a monthly hosting fee paid to the service provider. Costs incurred in
2000 for the purchase of hardware, software and telecommunications
equipment were capitalized as part of premises and equipment and totaled
$71. Once the program is operational, the periodic hosting fee will be
expensed as incurred.

For a discussion of consensus positions of the Emerging Issues Task Force
("EITF") issued by the FASB related to web site development costs, refer to
the note entitled, "Summary of significant accounting policies-Premises and
equipment, net," in the Notes to Consolidated Financial Statements to this
Annual Report.

Recently, the FDIC decided to retain the existing Bank Insurance Fund
("BIF") and Savings Association Insurance Fund ("SAIF") assessment
schedules of 0 to 27 basis points per year for the first semiannual
assessment period of 2001. According to FDIC statistics:

  -  93.0 percent of all BIF-member institutions and 90.1 percent of
     SAIF-member institutions are estimated to be listed in the lowest
     risk category, thus paying no premiums,

  -  Only 0.1 percent of BIF-member institutions and SAIF-member
     institutions are estimated to be in the highest risk category,
     paying a premium of 27 cents per 100 dollars in deposits,

  -  The average annual assessment rate is projected to be 14 cents per
     100 dollars and 29 cents per 100 dollars for BIF-member and SAIF-
     member institutions,

  -  The FDIC-approved rate schedules are expected to maintain the
     reserve ratios for both the BIF and SAIF above the Congressional
     mandated 1.25 percent through June 30, 2001,

  -  At June 30, 2000, the BIF reserve ratio was 1.34 percent and the
     SAIF reserve ratio was 1.44 percent, and

  -  There will continue to be a separate levy assessed on all FDIC-
     insured institutions to bear the cost of bonds sold by the Finance
     Corporation ("FICO") between 1987 and 1989 in support of the former
     Federal Savings and Loan Insurance Corporation. The 1996 law
     required the FICO rate on BIF-assessable deposits to be one-fifth
     the rate for SAIF-assessable deposits.

The FDIC recently released a comprehensive deposit insurance reform
proposal. According to the proposal, the current system has three
fundamental flaws: deposit premiums are ineffectively priced; charges for
deposit insurance occur at the wrong time in the business cycle; and the
value of coverage shrinks over time. Specifically, the FDIC proposal
recommends:

  -  Merging the BIF and SAIF into one fund,

  -  Eliminating the "hard target" reserve ratio of 1.25 percent,
     maintaining a more flexible target range,

  -  Pricing insurance to be steadier over the business cycle,

  -  Pricing insurance more closely to an institution's risk,

  -  Establishing an adjustment mechanism to prevent the fund from
     becoming too large or too small, and

  -  Indexing deposit insurance coverage levels to an appropriate base
     year of the Consumer Price Index.

We were included in the 93.0 percent of all BIF-member institutions
classified in the well capitalized supervisory risk subgroup, under the
current assessment system, at December 31, 2000.  Accordingly, we will be
exempt from paying a BIF assessment for the first half of 2001.

However, along with all banks, we continue to be assessed quarterly for
assistance in interest payments on FICO bonds used to capitalize the SAIF.
Our assessment was $74 and $40 for the years ended December 31, 2000 and
1999.

INCOME TAXES:

For the year ended December 31, 2000, income tax expense was $1,139
compared to $1,338 for the same period of 1999. Lower net income before
income taxes in 2000 combined with the same amount of tax-exempt income as
1999 caused a reduction in our effective tax rate from 22.5 percent in 1999
to 21.3 percent in 2000. Our tax position is comparable to that of our peer
group. For 2000 and 1999, the peer group reported an effective tax rate of
21.2 percent and 23.0 percent. We expect income tax expense to remain
constant in 2001 as higher levels of pre-tax income are offset through
greater amounts of tax-exempt income. In addition to income on tax-exempt
loans and investments, we utilize investment tax credits available through
our investment in an elderly and low- to moderate-income residential
housing program to mitigate our tax burden. By utilizing these credits, we
reduced our income tax expense by $80 in 2000 and 1999. The aggregate
amount of tax credits available from this project that will be recognized
over ten years ending 2003 is $895.

The difference between the amount of income tax currently payable and the
provision for income tax expense reflected in the income statements arise
from temporary differences.  Temporary differences are differences between
the tax bases of assets and liabilities and their reported amounts in the
financial statements, which result in deferred tax assets or liabilities.
We perform quarterly reviews on the tax criteria related to the recognition
of deferred tax assets. We decided not to establish a valuation reserve for
the deferred tax assets since it is likely that these assets will be
realized through carry-back to taxable income in prior years and by future
reversals of existing taxable temporary differences or, to a lesser extent,
through future taxable income.

COMM BANCORP, INC.
INDEPENDENT AUDITORS' REPORT
                            ----------------------------------------------

Board of Directors
 and Stockholders
Comm Bancorp, Inc.
Clarks Summit, Pennsylvania


We have audited the accompanying consolidated balance sheets of Comm
Bancorp, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income and comprehensive income, changes
in stockholders' equity and cash flows for each of the years in the three-
year period ended December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Comm
Bancorp, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2000, in conformity with generally
accepted accounting principles.



January 31, 2001


/s/ Kronick Kalada Berdy & Co.
-------------------------------
KRONICK KALADA BERDY & CO., P.C.
Kingston, Pennsylvania

<TABLE>
<CAPTION>


COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                          ---------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31                                                             2000       1999       1998
-------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>        <C>        <C>
INTEREST INCOME:
Interest and fees on loans:
  Taxable....................................................................   $23,562    $20,879    $20,587
  Tax-exempt.................................................................       645        419        397
Interest and dividends on investment securities available-for-sale:
  Taxable....................................................................     3,437      4,341      3,493
  Tax-exempt.................................................................     1,645      1,889      2,039
  Dividends..................................................................       130        122        152
Interest on federal funds sold...............................................       164        162        556
                                                                                -------    -------    -------
    Total interest income....................................................    29,583     27,812     27,224
                                                                                -------    -------    -------

INTEREST EXPENSE:
Interest on deposits.........................................................    15,060     13,946     13,946
Interest on short-term borrowings............................................       150         73         11
Interest on long-term debt...................................................         2          3          3
                                                                                -------    -------    -------
    Total interest expense...................................................    15,212     14,022     13,960
                                                                                -------    -------    -------
    Net interest income......................................................    14,371     13,790     13,264
Provision for loan losses....................................................       420        535        855
                                                                                -------    -------    -------
    Net interest income after provision for loan losses......................    13,951     13,255     12,409
                                                                                -------    -------    -------

NONINTEREST INCOME:
Service charges, fees and commissions........................................     2,065      1,647      1,502
Net gains on sale of loans...................................................        18         57         43
Net gains on sale of investment securities available-for-sale................       374        408      1,128
                                                                                -------    -------    -------
    Total noninterest income.................................................     2,457      2,112      2,673
                                                                                -------    -------    -------

NONINTEREST EXPENSE:
Salaries and employee benefits expense.......................................     5,219      4,824      4,445
Net occupancy and equipment expense..........................................     1,692      1,345      1,293
Other expenses...............................................................     4,158      3,260      3,626
                                                                                -------    -------    -------
    Total noninterest expense................................................    11,069      9,429      9,364
                                                                                -------    -------    -------
Income before income taxes...................................................     5,339      5,938      5,718
Provision for income tax expense.............................................     1,139      1,338      1,218
                                                                                -------    -------    -------
    Net income...............................................................     4,200      4,600      4,500
                                                                                -------    -------    -------

OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized holding gains (losses) on investment securities available-for-sale     2,180     (2,891)       816
Reclassification adjustment for gains included in net income.................      (374)      (408)    (1,128)
Income tax expense (benefit) related to other comprehensive income (loss)....       614     (1,122)      (106)
                                                                                -------    -------    -------
    Other comprehensive income (loss), net of income taxes...................     1,192     (2,177)      (206)
                                                                                -------    -------    -------
    Comprehensive income.....................................................   $ 5,392    $ 2,423    $ 4,294
                                                                                =======    =======    =======

PER SHARE DATA:
Net income...................................................................   $  2.11    $  2.17    $  2.04
Cash dividends declared......................................................   $  0.70    $  0.57    $  0.37
Average common shares outstanding............................................ 1,995,834  2,125,164  2,205,545


See Notes to Consolidated Financial Statements.

</TABLE>


<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
                           ----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31                                                                                  2000        1999
-------------------------------------------------------------------------------------------------------------
<S>                                                                                      <S>         <S>
ASSETS:
Cash and due from banks................................................................. $ 11,919    $ 10,991
Federal funds sold......................................................................   25,500
Investment securities available-for-sale................................................   71,246     105,630
Loans held for sale, net................................................................       62
Loans, net of unearned income...........................................................  297,530     276,850
  Less: allowance for loan losses.......................................................    3,285       3,799
                                                                                         --------    --------
Net loans...............................................................................  294,245     273,051
Premises and equipment, net.............................................................    9,708       9,537
Accrued interest receivable.............................................................    2,014       2,166
Other assets............................................................................    5,046       5,737
                                                                                         --------    --------
    Total assets........................................................................ $419,740    $407,112
                                                                                         ========    ========

LIABILITIES:
Deposits:
  Noninterest-bearing................................................................... $ 39,263    $ 36,061
  Interest-bearing......................................................................  339,458     326,422
                                                                                         --------    --------
    Total deposits......................................................................  378,721     362,483
Short-term borrowings...................................................................                5,500
Long-term debt..........................................................................       36          39
Accrued interest payable................................................................    2,014       1,976
Other liabilities.......................................................................    1,351       1,639
                                                                                         --------    --------
    Total liabilities...................................................................  382,122     371,637
                                                                                         --------    --------

STOCKHOLDERS' EQUITY:
Common stock, par value $0.33, authorized 12,000,000 shares, issued and outstanding:
 2000, 1,985,399 shares; 1999, 2,035,784 shares.........................................      655         672
Capital surplus.........................................................................    6,244       6,199
Retained earnings.......................................................................   30,310      29,387
Accumulated other comprehensive income (loss)...........................................      409        (783)
                                                                                         --------    --------
    Total stockholders' equity..........................................................   37,618      35,475
                                                                                         --------    --------
    Total liabilities and stockholders' equity.......................................... $419,740    $407,112
                                                                                         ========    ========













See Notes to Consolidated Financial Statements.

</TABLE>



<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                          ---------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                   ACCUMULATED
                                                                                         OTHER         TOTAL
                                                     COMMON  CAPITAL  RETAINED   COMPREHENSIVE  STOCKHOLDERS'
FOR THE THREE YEARS ENDED DECEMBER 31, 2000           STOCK  SURPLUS  EARNINGS    INCOME(LOSS)        EQUITY
-------------------------------------------------------------------------------------------------------------
<S>                                                  <C>     <C>      <C>        <C>            <C>
BALANCE, DECEMBER 31, 1997............................ $727   $6,385   $27,390         $ 1,600       $36,102
Net income............................................                   4,500                         4,500
Dividends declared: $0.37 per share...................                    (816)                         (816)
Dividend reinvestment plan: 4,617 shares issued.......    2      152                                     154
Net changes in other comprehensive income (loss)......                                    (206)         (206)
                                                       ----   ------   -------         -------       -------
BALANCE, DECEMBER 31, 1998............................  729    6,537    31,074           1,394        39,734
Net income............................................                   4,600                         4,600
Dividends declared: $0.57 per share...................                  (1,196)                       (1,196)
Dividend reinvestment plan: 6,409 shares issued.......    2      195                                     197
Repurchase and retirement: 177,647 shares.............  (59)    (533)   (5,091)                       (5,683)
Net changes in other comprehensive income (loss)......                                  (2,177)       (2,177)

BALANCE, DECEMBER 31, 1999............................  672    6,199    29,387            (783)       35,475
Net income............................................                   4,200                         4,200
Dividends declared: $0.70 per share...................                  (1,395)                       (1,395)
Dividend reinvestment plan: 7,015 shares issued.......    2      217                                     219
Repurchase and retirement: 57,400 shares..............  (19)    (172)   (1,882)                       (2,073)
Net changes in other comprehensive income (loss)......                                   1,192         1,192
                                                       ----   ------   -------         -------       -------
BALANCE, DECEMBER 31, 2000............................ $655   $6,244   $30,310         $   409       $37,618
                                                       ====   ======   =======         =======       =======









See Notes to Consolidated Financial Statements.

</TABLE>

<TABLE>
<CAPTION>

COMM BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     -----------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31                                                              2000      1999      1998
------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................................... $  4,200  $  4,600  $  4,500
Adjustments:
  Provision for loan losses....................................................      420       535       855
  Depreciation, amortization and accretion.....................................    1,788     1,787     1,317
  Amortization of loan fees....................................................     (101)     (161)     (186)
  Deferred income tax expense (benefit)........................................      393        60       (95)
  Gains on sale of investment securities available-for-sale....................     (374)     (408)   (1,128)
  Losses (gains) on foreclosed assets..........................................      125       (20)      139
  Losses on disposition of equipment...........................................       24                  87
  Changes in:
    Loans held for sale, net...................................................      (62)      503      (503)
    Accrued interest receivable................................................      152       131       278
    Other assets...............................................................      329       511        (9)
    Accrued interest payable...................................................       38       236        26
    Other liabilities..........................................................     (421)     (883)      571
                                                                                --------  --------  --------
      Net cash provided by operating activities................................    6,511     6,891     5,852
                                                                                --------  --------  --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment securities available-for-sale.................   16,734    11,128     1,659
Proceeds from repayments of investment securities available-for-sale...........   21,758    39,061    45,175
Purchases of investment securities available-for-sale..........................   (2,395)  (49,707)  (50,198)
Proceeds from sale of foreclosed assets........................................      399       280       275
Net decrease (increase) in lending activities..................................  (23,069)  (29,714)    1,421
Purchases of premises and equipment............................................   (1,027)   (3,197)   (3,940)
                                                                                --------  --------  --------
      Net cash provided by (used in) investing activities......................   12,400   (32,149)   (5,608)
                                                                                --------  --------  --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in:
  Money market, NOW, savings and noninterest-bearing accounts..................    4,722    23,846     3,901
  Time deposits................................................................   11 516    (5,616)    7,971
  Short-term borrowings........................................................   (5,500)    5,500    (9,575)
Payments on long-term debt.....................................................       (3)       (2)       (3)
Proceeds from the issuance of common shares....................................      219       197       154
Repurchase and retirement of common shares.....................................   (2,073)   (5,683)
Cash dividends paid............................................................   (1,364)   (1,157)     (793)
                                                                                --------  --------  --------
      Net cash provided by financing activities................................    7,517    17,085     1,655
                                                                                --------  --------  --------
      Net increase (decrease) in cash and cash equivalents.....................   26,428    (8,173)    1,899
      Cash and cash equivalents at beginning of year...........................   10,991    19,164    17,265
                                                                                --------  --------  --------
      Cash and cash equivalents at end of year................................. $ 37,419  $ 10,991  $ 19,164
                                                                                ========  ========  ========

SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
  Interest..................................................................... $ 15,174  $ 13,786  $ 13,934
  Income taxes.................................................................      952     1,379     1,066
Noncash items:
  Transfers of loans to foreclosed assets......................................    1,556       379       249
  Unrealized losses (gains) on investment securities available-for-sale, net... $ (1,192) $  2,177  $    206







See Notes to Consolidated Financial Statements.
</TABLE>


COMM BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                          --------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF OPERATIONS:

Comm Bancorp, Inc., a bank holding company incorporated under the laws of
Pennsylvania, provides a full range of financial services through its
wholly-owned subsidiaries: Community Bank and Trust Company ("Community
Bank"), including its subsidiaries, Community Leasing Corporation and Comm
Financial Services Corporation; and Comm Realty Corporation (collectively,
the "Company").  The Company services its individual and commercial
customers through fourteen full-service branches located within the
Lackawanna, Susquehanna, Wayne and Wyoming counties of Pennsylvania.

Community Bank's primary product is loans to finance one-to-four family
residential properties. Other lending products include loans to individuals
and small- and medium-sized businesses. Community Bank primarily funds its
loans by offering certificates of deposit to commercial enterprises and
individuals. Other deposit product offerings include various demand and
savings accounts. In addition, Community Bank provides fiduciary services
through its Trust Division.

On May 27, 1999, the Commonwealth of Pennsylvania's Department of Banking
approved the formation of Community Leasing Corporation, a wholly-owned
subsidiary of Community Bank. Community Leasing Corporation provides
equipment lease financing to small- and middle-market commercial customers.

On December 28, 2000, the Commonwealth of Pennsylvania's Department of
Banking approved the formation of Comm Financial Services Corporation as a
wholly-owned subsidiary of Community Bank.  Comm Financial Services
Corporation engages in selling insurance products and services and in
providing asset management services to individuals and small- and medium-
sized businesses.

Comm Realty Corporation, incorporated on November 21, 2000, holds, manages
and sells foreclosed or distressed assets on behalf of Community Bank.

The Company faces competition primarily from commercial banks, thrift
institutions and credit unions within the Northeastern Pennsylvania market,
many of which are substantially larger in terms of assets and capital. In
addition, mutual funds and security brokers compete for various types of
deposits, and consumer, mortgage, leasing and insurance companies compete
for various types of loans and leases.  Principle methods of competing for
banking and permitted nonbanking services include price, nature of product,
quality of service and convenience of location.

The Company is subject to regulations of certain federal and state
regulatory agencies and undergoes periodic examinations.

BASIS OF PRESENTATION:

The consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles ("GAAP"),
Regulation S-X, Item 302 of Regulation S-K and reporting practices applied
in the banking industry.  All significant intercompany balances and
transactions have been eliminated in the consolidation. The Company also
presents herein condensed parent company only financial information
regarding Comm Bancorp, Inc. ("Parent Company").

Prior period amounts are reclassified when necessary to conform with the
current year's presentation.

SEGMENT DISCLOSURE:

On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 131, "Disclosures About Segments of an Enterprise
and Related Information."  This Statement establishes standards for the way
public companies report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
stockholders. A public business enterprise must report financial and
descriptive information about its reportable operating segments.  Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers.

SFAS No. 131 states that two or more operating segments may be aggregated
into a single segment if the segments have similar: (i) economic
characteristics; (ii) products and services; (iii) operating processes;
(iv) customer bases; (v) delivery systems; and (vi) regulatory oversight.
The Company's fourteen branch banking offices, all similar with respect to
these characteristics, have exhibited similar long-term financial
performance.  Therefore, they were aggregated into a single operating
segment.

Community Leasing Corporation, Comm Financial Services Corporation and Comm
Realty Corporation did not meet the quantitative thresholds for required
segment disclosure under SFAS No. 131.

USE OF ESTIMATES:

The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions.  These estimates and
assumptions affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting periods.  Significant estimates that are
particularly susceptible to material change in the next year relate to the
allowance for loan losses, fair value of financial instruments, and the
valuations of real estate acquired through foreclosure and intangible
assets.  Actual results could differ from those estimates.

Management maintains the allowance for loan losses at a level it believes
adequate to absorb estimated potential credit losses. The Company employs
the federal banking regulatory agencies' Interagency Policy Statement on
the Allowance for Loan Losses as the primary analytical tool in assessing
the adequacy of the allowance account by assigning qualitative factors to
each element of the allowance.  The allowance for loan losses consists of
two elements: allocated and unallocated.

The allocated element consists of a formula portion and a specific portion.
The Company utilizes the loss mitigation method for estimating the formula
portion of the allocated element of the allowance for loan losses. Loss
mitigation involves determining the percentage of each classification of
individual loans and loan pools that are expected to result ultimately in
loss based on historical experience. Commercial loans and commercial real
estate loans are classified and have historical percentages applied on an
asset-by-asset basis. Residential mortgage and consumer loans have
historical percentages applied on a pool-by-pool basis. The historical loss
percentages are updated quarterly and are based on the actual amount of
loans in each classification that resulted in loss over the past eight
quarters.  The historical loss experience is only a starting point for
estimating the allowance for loan losses. Management adds to these
historical loss percentages a qualitative percentage representing a number
of other relevant factors that may cause estimated credit losses associated
with the current portfolio to differ from historical loss. These risk
factors include: (i) changes in lending policies and procedures; (ii)
economic conditions; (iii) nature and volume of the portfolio; (iv) loan
review system; (v) volumes of past due and impaired loans; (vi)
concentrations; (vii) borrowers' financial status; (viii) collateral value;
(ix) experience, ability and depth of lending management; (x) volume of net
charge-offs; and (xi) other factors deemed relevant.

Specific allowances are established for individual loans, on a case-by-case
basis, where management has identified that certain conditions or
circumstances are present that indicate the probability of a loss will be
incurred. Specific reserves are determined through assessment of the
borrower's ability to repay and the fair value of the collateral, if the
loan is collateral-dependent. If the carrying amount of the loan exceeds
the discounted expected cash flows or the value of the underlying
collateral, the excess is specifically reserved.

The unallocated portion is used to cover inherent losses that exist as of
the evaluation date, but which have not been identified by the loss
mitigation method due to limitations in the process. One such limitation is
that it does not take into account deviations of current losses from
historical experience. This may cause estimated credit losses associated
with the current portfolio to differ from historical loss experience
resulting in an allowance that is higher or lower than the appropriate
level. Management establishes the unallocated element of the allowance
judgmentally by considering a number of the risk factors similar to the
ones used for determining the allocated element.

Management monitors the adequacy of the allocated portion of the allowance
quarterly and adjusts the allowance for any deficiencies through normal
operations. This self-correcting mechanism reduces potential differences
between estimates and actual observed losses. In addition, the unallocated
portion of the allowance is examined to ensure that it remains relatively
constant in relation to the total allowance unless there are changes in the
related criteria that would indicate a need to either increase or decrease
it.  The determination of the allowance for loan loss level is inherently
subjective as it requires estimates that are susceptible to significant
revision as more information becomes available. Accordingly, management
cannot ensure that charge-offs in the future periods will not exceed the
allowance for loan losses or that additional increases in the allowance for
loan losses will not be required resulting in an adverse impact on
operating results.

Additionally, regulatory agencies, as an integral part of their examination
process, periodically review the Company's allowance for loan losses and
foreclosed real estate. These agencies may require the Company to recognize
additions to the allowance based on information available to them at the
time of their examination. Management is unaware of any such requirements
based on the results of the Company's latest regulatory examination at
September 30, 2000.

As subsequently discussed in this note, in cases where quoted market prices
are not available, fair values of financial instruments are based on
estimates using present value or other valuation techniques which are
subject to change.

Real estate acquired in connection with foreclosures or in satisfaction of
loans is written-down to the lower of the related loan balance or 80.0
percent of fair market value for residential properties and 75.0 percent of
fair market value for commercial properties based upon estimates derived
through independent appraisals.  However, proceeds realized from sales may
ultimately be higher or lower than those estimates.

Intangible assets include goodwill that resulted from the acquisition of
The First National Bank of Nicholson and a core deposit intangible that
resulted from the assumption of deposit liabilities in the acquisition of
two branches.  However, if the future benefits are not derived, estimated
amortization may increase and/or a charge for impairment may be recognized.

INVESTMENT SECURITIES:

Investment securities are classified and accounted for as either held-to-
maturity, available-for-sale or trading based on management's intent at the
time of acquisition. Management is required to reassess the appropriateness
of the classifications at each reporting date.  The Company does not buy or
hold securities principally for the purpose of selling them in the near
term in order to generate profits from market appreciation.  Accordingly,
there were no investment securities classified as trading at December 31,
2000 and 1999.

The Company classifies debt securities as held-to-maturity when management
has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at cost, adjusted for amortization
of premium and accretion of discount. The Company did not have any
investment securities classified as held-to-maturity at December 31, 2000
and 1999.

Investment securities are designated as available-for-sale when they are to
be held for indefinite periods of time for the purpose of implementing
management's asset/liability strategies. The Company may also sell these
securities in response to changes in interest rates, prepayment risk,
liquidity requirements or other circumstances identified by management.

Available-for-sale securities are carried at estimated fair value with
unrealized gains and losses and their related income tax effect included in
other comprehensive income, which is reported as a separate component of
stockholders' equity, net of income tax, except for restricted equity
investment securities of the Federal Home Loan Bank of Pittsburgh ("FHLB-
Pgh") and Federal Reserve Bank of Philadelphia ("FRB") which are carried at
cost.  Estimated fair values for investment securities are based on quoted
market prices from a national electronic pricing service. Except for
restricted equity investment securities, all of the Company's investments
trade actively in a liquid market.

Realized gains and losses are computed using the specific identification
method and are included in noninterest income.  Premiums are amortized and
discounts are accreted over the contractual lives of investment securities
using the interest method, except for mortgage-backed securities, where
amortization and accretion are prorated based on principal repayments.

Management periodically evaluates each investment security to determine if
a decline in fair value below its amortized cost is other than temporary.
If a decline is judged to be other than temporary, the individual security
is written-down to fair value with the amount of the write-down included in
earnings.

Transfers of securities between categories are recorded at fair value at
the date of the transfer. The accounting for the resulting unrealized gains
or losses is determined by the category into which the security is
transferred.

On June 15, 2000, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." This Statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," by addressing a limited
number of issues causing implementation difficulties for a large number of
entities getting ready to apply SFAS 133. On July 7, 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133." This
Statement delayed the effective date of SFAS No. 133 for one year.  SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, collectively referred to as derivatives, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the consolidated balance sheets and measure those
instruments at fair value.  The accounting for changes in the fair value of
a derivative depends on the intended use of the derivative and the
resulting designation.  If certain conditions are met, a derivative may be
specifically designated as: (i) a hedge of certain exposure to changes in
the fair value of a recognized asset or liability or an unrecognized firm
commitment; (ii) a hedge of the exposure to variable cash flows of a
forecasted transaction; or (iii) a hedge of foreign currency exposures.
SFAS No. 133 was originally scheduled to be effective for fiscal years
beginning after June 15, 1999.  SFAS No. 137 amended SFAS No. 133 making
the Statement effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000, with earlier adoption encouraged. The
adoption of these Statements on January 1, 2001, is not expected to have a
material effect on operating results or financial position, as the Company
has no instruments that qualify as derivatives or hedges.

The Company adopted SFAS No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise," on January 1, 1999.  This Statement
amends SFAS No. 65, "Accounting for Certain Mortgage Banking Activities,"
to require that after securitization of mortgage loans held for sale, an
entity engaged in mortgage banking activities classify the resulting
mortgage-backed securities or other retained interests as held-to-maturity,
available-for-sale or trading, based on its ability and intent to sell or
hold those investments, in accordance with the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
Statement also requires a mortgage banking enterprise to classify as
trading any retained mortgage-backed securities that it commits to sell
before or during the securitization process. The adoption of SFAS No. 134
did not have a material effect on the Company's operating results or
financial position as it has no retained mortgage-backed securities or
other interests from the securitization of mortgage loans held for sale.

LOANS HELD FOR SALE, NET:

Loans held for sale consist of one-to-four family residential mortgages
originated and intended for sale in the secondary market. The loans are
carried in aggregate at the lower of cost or estimated market value, based
upon current delivery prices in the secondary mortgage market. Net
unrealized losses are recognized through a valuation allowance by
corresponding charges to income. Gains or losses on the sale of these loans
are recognized in noninterest income at the time of sale using the specific
identification method.  Loan origination fees, net of certain direct loan
origination costs, are included in net gains or losses upon the sale of the
related mortgage loan.  All loans are sold without recourse.

LOANS:

Loans, including direct financing leases, are stated at outstanding
principal balances, net of unearned interest and net deferred loan fees.
Interest income is accrued on the principal amount outstanding, except for
certain scheduled payment loans for which interest is accrued based on a
predetermined amortization schedule. Unearned interest on leases and
installment loans is recognized over the respective loan terms using the
effective interest method.  Loan origination fees, net of certain direct
loan origination costs, are deferred and recognized over the contractual
life of the related loan as an adjustment to yield using the effective
interest method. For direct financing leases, any gain or loss realized
upon disposal of equipment returned at the end of the lease term is
included in other income or expense.

NONPERFORMING ASSETS:

A loan is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement.
Impairment is measured based on the present value of expected future cash
flows discounted at a loan's effective interest rate, or the fair value of
the collateral if the loan is collateral-dependent.  When the value of an
impaired loan is less than the recorded investment in the loan, the
impairment is recognized by adjusting the allowance for loan losses with a
corresponding charge to the provision for loan losses.  The Company
utilizes the specific identification method in considering each loan for
impairment disclosure.

Nonperforming assets consist of nonperforming loans and foreclosed assets.
Nonperforming loans include accruing loans past due 90 days or more and
impaired loans.  Impaired loans consist of nonaccrual and restructured
loans.  Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due.  Generally, a loan is
classified as nonaccrual when it is determined that the collection of all
or a portion of interest or principal is doubtful or when a default of
interest or principal has existed for 90 days or more, unless the loan is
well secured and in the process of collection.  When a loan is placed on
nonaccrual, interest accruals discontinue and uncollected accrued interest
is reversed against income in the current period.  Interest collections,
after a loan has been placed on nonaccrual status, are credited to a
suspense account until either the loan is returned to performing status or
charged-off. The interest accumulated in the suspense account is credited
to income if the nonaccrual loan is returned to performing status. However,
if the nonaccrual loan is charged-off, the accumulated interest is applied
as a reduction to principal at the time the loan is charged-off. A
nonaccrual loan is returned to performing status when the loan is current
as to principal and interest and has performed according to the contractual
terms for a minimum of six months.

Restructured loans are loans with original terms, interest rate, or both,
that have been modified as a result of a deterioration in the borrower's
financial condition.  Interest income on restructured loans is recognized
when earned, using the interest method.  The Company had the same one
restructured loan during 2000 and 1999.

Foreclosed assets are comprised of properties acquired through foreclosure
proceedings or acceptance of a deed-in-lieu of foreclosure and loans
classified as in-substance foreclosures. The Company includes such
properties in other assets. A loan is classified as in-substance
foreclosure when the Company has taken possession of the collateral
regardless of whether formal foreclosure proceedings take place.
Foreclosed assets are recorded at the lower of the related loan balance or
80.0 percent of its fair market value for residential properties and 75.0
percent of its fair market value for commercial properties at the time of
acquisition. Any excess of the loan balance over the recorded value is
charged to the allowance for loan losses. Subsequent declines in the
recorded value of the property prior to its disposal and costs to maintain
the assets are included in other expenses. No allowance for losses has been
established subsequent to the acquisition of foreclosed assets during the
three years ended December 31, 2000. Any gain or loss realized upon
disposal of foreclosed assets is included in noninterest income or expense.
The historical average holding period for such properties is less than
twelve months.

ALLOWANCE FOR LOAN LOSSES:

The allowance for loan losses account is established through charges to
earnings as a provision for loan losses.  Loans, or portions of loans,
determined to be uncollectible are charged against the allowance account
and subsequent recoveries, if any, are credited to the account.

Nonaccrual, restructured and large delinquent commercial and real estate
loans are reviewed monthly to determine if carrying value reductions are
warranted or classifications should be changed. Consumer loans are
considered losses when they are 120 days past due, except those expected to
be recovered through insurance or collateral disposition proceeds. The
allowance for loan losses related to impaired loans is based on discounted
cash flows using the loan's initial effective interest rate or the fair
value of the collateral for certain collateral-dependent loans.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:

In the ordinary course of business, the Company has entered into
off-balance sheet financial instruments consisting of commitments to extend
credit, commitments under home equity and credit card arrangements, and
commercial letters of credit.  These financial instruments are recorded in
the financial statements when they are exercised. Fees on commercial
letters of credit and on unused, available lines of credit are recorded as
service charges, fees and commissions and are included in noninterest
income when earned.

PREMISES AND EQUIPMENT, NET:

Land is stated at cost.  Premises, equipment and leasehold improvements are
stated at cost less accumulated depreciation. The cost of routine
maintenance and repairs is expensed as incurred.  The costs of major
replacements, renewals and betterments are capitalized.  When assets are
retired or otherwise disposed of, the cost and related accumulated
depreciation are eliminated and any resulting gain or loss is reflected in
noninterest income or noninterest expense.  Depreciation is computed
principally using the straight-line method based on the following useful
lives:

Premises.................................................... 15-45 years
Equipment...................................................  3-10 years
Leasehold improvements......................................    15 years

On March 16, 2000, the FASB's Emerging Issues Task Force ("EITF") reached
a consensus on Issue No. 00-2, "Accounting for Web Site Development Costs."
The EITF provides accounting guidance for certain web site development
costs.  The costs addressed in Issue No. 00-2 include those related to the
planning stage, web site application and infrastructure development stage,
graphics development, content development and operating stage. The
consensuses in this Issue are effective for web site development costs
incurred for fiscal quarters beginning after June 30, 2000, with earlier
application encouraged. During 2000, the Company capitalized costs of $71
in developing this web site. The Company's adoption of EITF Issue No. 00-2
on July 1, 2000, did not have a material effect on operating results or
financial position.

MORTGAGE SERVICING RIGHTS:

On September 29, 2000, the FASB issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities."  This Statement replaces the similarly titled SFAS No. 125.
SFAS No. 140 revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but carries over most of the provisions of SFAS No. 125
without reconsideration. The standards continue to be based on a consistent
application of a "financial-components approach" that focuses on control.
Under this approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has
been surrendered, and derecognizes liabilities when extinguished. The
Statement is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The
accounting provisions of the Statement are generally effective for
recognition and reclassification of collateral and for disclosures relating
to securitization transactions and collateral for fiscal years ending after
December 15, 2000.  The adoption of the accounting provisions of SFAS No.
140 in 2000, did not have a material effect on operating results or
financial position.

A mortgage servicing right is determined by allocating the total costs
incurred between the loan sold and the servicing right, based on their
relative fair values at the date of the sale.  The servicing right is
amortized in proportion to, and over the period of, estimated net servicing
income.  In addition, a servicing right is assessed for impairment at each
reporting date based on the fair value of the right.

To determine the fair value of the servicing right, the Company estimates
the present value of future cash flows incorporating assumptions such as
cost of servicing, discount rates, prepayment speeds and default rates.
For purposes of measuring impairment, the rights are stratified by loan
type, term and interest rate.  The amount of impairment recognized, through
a valuation allowance, is the amount by which the mortgage servicing rights
for a stratum exceed their fair value. Mortgage servicing rights are
included in other assets.  Amortization of the rights is included in
noninterest income as a charge against mortgage servicing fees.

INTANGIBLE ASSETS:

Goodwill, the excess cost over the net assets acquired in a business
combination accounted for as a purchase, is included in other assets and
amortized on a straight-line basis over 15 years. The core deposit
intangible that resulted from branch acquisitions is included in other
assets and amortized on a straight-line basis over eight years.
Management, on a periodic basis, reviews goodwill and the core deposit
intangible and evaluates events or changes in circumstances that may
indicate impairment in the carrying amount of these assets. Impairment, if
any, is measured based on the fair value of the intangible asset.  As of
December 31, 2000 and 1999, there were no events or changes in
circumstances that would lead management to believe that the carrying
amounts of these assets may not be recoverable.

EMPLOYEE BENEFIT PLANS:

On January 1, 1998, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The
Statement: (i) revised employers' disclosures about pensions and other
postretirement benefit plans. It did not change the measurement or
recognition of pensions or other postretirement benefit plans; (ii)
standardized the disclosure requirements for benefits of such plans to the
extent practicable; (iii) required additional information on changes in the
benefit obligations and fair value of plan assets that will facilitate
financial analysis; and (iv) eliminated certain disclosures that are no
longer useful as they were when Statements No. 87, "Employers' Accounting
for Pensions," No. 88, "Employers' Accounting for Settlement and
Curtailment of Defined Benefit Pension Plans and for Termination Benefits,"
and No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," were issued. Most of the changes in the disclosure provisions of
SFAS No. 132 address defined benefit plans.  The adoption of this Statement
did not change the Company's disclosures nor did it have any effect on
operating results or financial position.

The Company has a defined contribution plan covering all employees who have
completed 1,000 hours of service, attained 21 years of age and have been
employed by the Company for at least one year.  Contributions to the plan
are determined by the Board of Directors and are based on a prescribed
percentage of annual net income allocated to each participant based on
their pro rata share of annual compensation.  Pension costs are accrued
monthly to salaries and benefits expense with the plan being funded
annually.

TRUST ASSETS:

Assets held in a fiduciary or agency capacity for customers are not
included in the accompanying consolidated balance sheets since they are not
the Company's assets.  Trust income is recorded on a cash basis, which is
not materially different than if reported on an accrual basis, and is
included in noninterest income. Trust services revenue did not meet any of
the quantitative thresholds for required segment disclosure under SFAS No.
131.

STATEMENTS OF CASH FLOWS:

The Statements of Cash Flows are presented using the indirect method.  For
the purpose of cash flow, cash and cash equivalents include cash on hand,
cash items in the process of collection, noninterest-bearing deposits with
other banks, balances with the FRB and FHLB-Pgh and federal funds sold.
Federal funds sold are highly-liquid investments sold for one-day periods.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

Fair value estimates are based on existing financial instruments without
attempting to estimate the value of anticipated future business and the
value of assets and liabilities that are not considered financial.
Accordingly, such assets and liabilities are excluded from disclosure
requirements.   For example, no benefit is recorded for the value of low-
cost funding subsequently discussed.  In addition, Community Bank's Trust
Division contributes fee income annually.  Trust assets and liabilities are
not considered financial instruments for this disclosure, and their values
have not been incorporated into the fair value estimates. Other significant
items that are not considered financial instruments include deferred tax
assets, premises and equipment, foreclosed assets and intangibles.
Accordingly, the net aggregate fair value amounts presented do not
represent the underlying value of the Company.

The Company's assets that were considered financial instruments
approximated 96.5 percent and 96.2 percent at December 31, 2000 and 1999.
Liabilities that were considered financial instruments approximated 99.6
percent at December 31, 2000 and 1999. In cases where quoted market prices
are not available, fair values are based on estimates using present value
or other valuation techniques.  Those techniques are significantly affected
by the assumptions used, including the discount rate and estimates of
future cash flows. In that regard, the derived fair value estimates cannot
be substantiated by comparison to independent markets.  In many cases,
these values cannot be realized in immediate settlement of the instrument.

The following methods and assumptions were used by the Company to construct
the summary table in Note 11 containing the fair values and related
carrying amounts of financial instruments:

CASH AND CASH EQUIVALENTS: The carrying values of cash and cash equivalents
as reported on the balance sheet approximate fair value.

INVESTMENT SECURITIES: The fair value of investment securities is based on
quoted market prices.  The carrying values of restricted equity securities
approximate fair value.

LOANS HELD FOR SALE, NET: The fair value of loans held for sale, net, are
based on quoted market prices.

NET LOANS: For adjustable-rate loans that reprice frequently and with no
significant credit risk, fair values are based on carrying values.  The
fair values of all other loans are estimated using discounted cash flow
analysis, using interest rates currently offered for loans with similar
terms to borrowers of similar credit risk.  Fair values for impaired loans
are estimated using discounted cash flow analysis determined by the loan
review function or underlying collateral values, where applicable.

ACCRUED INTEREST RECEIVABLE: The carrying value of accrued interest
receivable as reported on the balance sheet approximates fair value.

DEPOSITS WITHOUT STATED MATURITIES: The fair value of demand deposits,
savings accounts and certain money market accounts is the amount payable on
demand at the reporting date.  The fair value estimates do not include the
benefit that results from such low-cost funding provided by the deposit
liabilities compared to the cost of borrowing funds in the market.

DEPOSITS WITH STATED MATURITIES: The carrying value of adjustable-rate,
fixed-term time deposits approximates their fair value at the reporting
date.  For fixed-rate time deposits, the present value of future cash flows
is used to estimate fair value.  The discount rates used are the current
rates offered for time deposits with similar maturities.

SHORT-TERM BORROWINGS: The carrying value of short-term borrowings at a
variable interest rate approximates fair value.

LONG-TERM DEBT: The fair value of the fixed-rate, long-term debt is
estimated based on rates currently available to the Company for debt with
similar terms.

ACCRUED INTEREST PAYABLE: The carrying value of accrued interest payable as
reported on the balance sheet approximates fair value.

COMMITMENTS: The majority of commitments to extend credit, unused portions
of home equity and credit card lines and letters of credit carry current
market interest rates if converted to loans.  Because such commitments are
generally unassignable by either the Company or the borrower, they only
have value to the Company and the borrower. The estimated fair value
approximates the recorded deferred fee amounts and is included in net
loans.

COMPREHENSIVE INCOME:

Effective in the first reporting period of 1998, the Company adopted SFAS
No. 130, "Reporting Comprehensive Income."  This Statement established
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources.  Items falling under the scope of SFAS
No. 130 include foreign currency items and unrealized gains and losses on
available-for-sale debt and equity securities.  According to the Statement,
all items that are required to be recognized as components of comprehensive
income are to be reported in a financial statement that is displayed with
the same prominence as other financial statements. The components of
comprehensive income and their related tax effects are reported in the
Consolidated Statements of Income and Comprehensive Income. The accumulated
other comprehensive income included in the Consolidated Statements of
Changes in Stockholders' Equity relates to the unrealized gains or losses
on available-for-sale securities.

ADVERTISING COSTS:

Advertising costs are expensed as incurred and totaled $293 in 2000, $279
in 1999 and $281 in 1998.

INCOME TAXES:

The Company recognizes the current and deferred tax consequences of all
transactions that have been recognized in the financial statements using
the provisions of the enacted tax laws. Deferred tax assets and liabilities
are recognized for the estimated future tax effects of temporary
differences by applying enacted statutory tax rates to differences between
the financial statement carrying amounts and the tax basis of existing
assets and liabilities. The amount of deferred tax assets is reduced, if
necessary, to the amount that, based on available evidence, will more
likely than not be realized.  As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.

The Parent Company and its subsidiaries file a consolidated federal income
tax return.  The subsidiaries provide for income taxes on a separate return
basis, and remit amounts determined to be currently payable to the Parent
Company.

EARNINGS PER COMMON SHARE:

The Company adopted SFAS No. 128, "Earnings Per Share" in 1998.  The object
of SFAS No. 128 was to simplify the earnings per share ("EPS")  calculation
and to make the United States' standard for computation compatible with the
EPS standards of other countries and with those of the International
Accounting Standards Committee.

Under SFAS No. 128, two EPS calculations are required: basic EPS, computed
by dividing net income by the weighted-average common shares outstanding;
and dilutive EPS, computed by dividing net income by the weighted-average
common shares outstanding plus all dilutive potential common shares
outstanding.

The Company had no dilutive potential common shares outstanding during the
three-year period ended December 31, 2000, therefore, the per share data
presented on the face of the Consolidated Statements of Income and
Comprehensive Income relates to basic per share amounts.

CAPITAL STRUCTURE:

Simultaneously with its adoption of SFAS No. 128, the Company also adopted
SFAS No. 129, "Disclosure of Information about Capital Structure."  This
Statement does not establish any new disclosure standards but rather
codifies certain previously-required disclosures. Specifically, it requires
information regarding the pertinent rights and privileges of the various
components of an entity's capital structure such as: (i) dividend and
liquidation preferences; (ii) participation rights; (iii) call prices and
dates; (iv) conversion prices and dates; (v) unusual voting rights; and
(vi) terms of contracts to issue additional shares.  Since this Statement
contains no change in disclosure requirements, the Company's adoption had
no effect on financial statement presentation.

2. CASH AND DUE FROM BANKS:

The Federal Reserve Act, as amended, imposes reserve requirements on all
member depository institutions. The Company's required reserve balances,
which were satisfied through the restriction of vault cash, were $853 and
$4,077 at December 31, 2000 and 1999, respectively. These reserve
requirements averaged $3,782 in 2000 and $3,611 in 1999.

Community Bank maintains compensating balances with the FRB and various
other correspondent banks, most of which are not required, to offset
specific charges for check clearing and other services. Balances maintained
for this purpose were $7,972 and $4,941 at December 31, 2000 and 1999,
respectively.  Compensating balances with correspondent banks averaged
$5,373 in 2000 and $4,625 in 1999.

3. INVESTMENT SECURITIES:

All investment securities were classified as available-for-sale for the
years ended December 31, 2000 and 1999. The amortized cost and fair value
of available-for-sale securities at December 31, 2000 and 1999, are
summarized as follows:

<TABLE>
<CAPTION>

                                            AMORTIZED  UNREALIZED  UNREALIZED      FAIR
DECEMBER 31, 2000                                COST       GAINS      LOSSES     VALUE
---------------------------------------------------------------------------------------
<S>                                         <C>        <C>         <C>          <C>
U.S. Treasury securities....................  $ 3,006                    $  5   $ 3,001
U.S. Government agencies....................    1,009        $ 16                 1,025
State and municipals........................   19,283         795           3    20,075
Mortgage-backed securities..................   45,505          50         286    45,269
Equity securities...........................    1,823          53                 1,876
                                              -------        ----        ----   -------
  Total.....................................  $70,626        $914        $294   $71,246
                                              =======        ====        ====   =======

                                            AMORTIZED  UNREALIZED  UNREALIZED      FAIR
DECEMBER 31, 1999                                COST       GAINS      LOSSES     VALUE
---------------------------------------------------------------------------------------
<S>                                         <C>        <C>         <C>         <C>
U.S. Treasury securities.................... $  3,631                  $   36  $  3,595
U.S. Government agencies....................    1,661                      26     1,635
State and municipals........................   34,928        $108         255    34,781
Mortgage-backed securities..................   64,748           2       1,227    63,523
Equity securities...........................    1,848         248                 2,096
                                             --------        ----      ------  --------
  Total..................................... $106,816        $358      $1,544  $105,630
                                             ========        ====      ======  ========

</TABLE>

Proceeds from the sales of available-for-sale securities amounted to
$16,734 in 2000, $11,128 in 1999 and $1,659 in 1998. Gross gains of $383,
$408 and $1,128 were realized on the sale of securities in 2000, 1999 and
1998, respectively.  Gross losses of $9 were realized on the sale of
securities in 2000.  There were no gross losses realized on the sale of
securities in 1999 and 1998. The income tax provision applicable to net
realized gains amounted to $127, $139 and $383 in 2000, 1999 and 1998,
respectively.

Net unrealized holding gains and losses on available-for-sale securities
are included, as a separate component, in stockholders' equity. The Company
had a net unrealized holding gain of $409, net of deferred income taxes of
$211 at December 31, 2000, and a net unrealized holding loss of $783, net
of deferred income tax benefits of $403, at December 31, 1999.

Investment securities with an amortized cost of $41,918 at December 31,
2000, and $35,157 at December 31, 1999, were pledged to secure deposits, to
qualify for fiduciary powers and for other purposes required or permitted
by law.  The fair value of these securities was $41,678 at December 31,
2000, and $34,406 at December 31, 1999.

The maturity distribution of the amortized cost, fair value and weighted-
average tax-equivalent yield of the available-for-sale portfolio at
December 31, 2000, is summarized in the table that follows.  The weighted-
average yield based on amortized cost has been computed for state and
municipals on a tax-equivalent basis using the statutory tax rate of 34.0
percent. The distributions are based on contractual maturity with the
exception of mortgage-backed securities, including collateralized mortgage
obligations ("CMOs"), and equity securities.  Mortgage-backed securities
and CMOs have been presented based upon estimated cash flows, assuming no
change in the current interest rate environment.  Equity securities with no
stated contractual maturities are included in the "After ten years"
maturity distribution.  Expected maturities may differ from contracted
maturities, or estimated maturities for mortgage-backed securities and
CMOs, because borrowers have the right to call or prepay obligations with
or without call or prepayment penalties.


<TABLE>
<CAPTION>

                                               AFTER ONE       AFTER FIVE
                                WITHIN         BUT WITHIN      BUT WITHIN         AFTER
                               ONE YEAR        FIVE YEARS      TEN YEARS        TEN YEARS          TOTAL
                            --------------------------------------------------------------------------------
DECEMBER 31, 2000           AMOUNT  YIELD    AMOUNT  YIELD   AMOUNT  YIELD    AMOUNT  YIELD    AMOUNT  YIELD
------------------------------------------------------------------------------------------------------------
<S>                        <C>      <C>     <C>      <C>     <C>     <C>     <C>      <C>     <C>      <C>
Amortized cost:
U.S. Treasury securities.. $ 3,006   5.03%                                                    $ 3,006   5.03%
U.S. Government agencies..                  $ 1,009   6.20%                                     1,009   6.20
State and municipals......   1,460   6.53     1,425   7.13   $4,467   7.82%  $11,931   8.06%   19,283   7.82
Mortgage-backed securities  15,451   5.93    29,062   5.97      992   6.02                     45,505   5.96
Equity securities.........                                                     1,823   6.94     1,823   6.94
                           -------          -------          ------          -------          -------
  Total................... $19,917   5.84%  $31,496   6.03%  $5,459   7.49%  $13,754   7.91%  $70,626   6.46%
                           =======          =======          ======          =======          =======

Fair value:
U.S. Treasury securities.. $ 3,001                                                            $ 3,001
U.S. Government agencies..                  $ 1,025                                             1,025
State and municipals......   1,461            1,431          $4,674          $12,509           20,075
Mortgage-backed securities  15,391           28,900             978                            45,269
Equity securities.........                                                     1,876            1,876
                           -------          -------          ------          -------          -------
  Total................... $19,853          $31,356          $5,652          $14,385          $71,246
                           =======          =======          ======          =======          =======

</TABLE>


Except for U.S. Treasury securities and U.S. Government agencies, including
mortgage-backed securities, there were no securities of any individual
issuer that exceeded 10.0 percent of stockholders' equity at December 31,
2000 and 1999.  All securities, except for $249 of tax-exempt obligations
of local municipalities, are considered "investment grade," receiving a
rating of "Baa" or higher from Moody's or "BBB" or higher from Standard and
Poor's rating services at December 31, 2000.

4. LOANS, NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES:

The major classifications of loans outstanding, net of unearned interest of
$3,284 and $2,148 and loan fees of $458 and $532 at December 31, 2000 and
1999, respectively, are summarized as follows:


<TABLE>
<CAPTION>

DECEMBER 31                                                            2000        1999
---------------------------------------------------------------------------------------
<S>                                                                <C>         <C>
Commercial, financial and others.................................. $ 49,476    $ 43,907
Real estate:
  Construction....................................................    3,546       3,164
  Mortgage........................................................  205,771     198,423
Consumer, net.....................................................   37,800      30,830
Lease financing, net..............................................      937         526
                                                                   --------    --------
    Total......................................................... $297,530    $276,850
                                                                   ========    ========

</TABLE>

Fixed-rate loans totaled $221,571 at December 31, 2000, while loans with
adjustable interest rates totaled $75,959.  At December 31, 1999, fixed-
rate loans totaled $214,778 and adjustable-rate loans totaled $62,072.

The maturity distribution of the loan portfolio by major classification at
December 31, 2000, is summarized as follows:

<TABLE>
<CAPTION>

                                                 AFTER ONE
                                     WITHIN      BUT WITHIN       AFTER
DECEMBER 31, 2000                   ONE YEAR     FIVE YEARS     FIVE YEARS        TOTAL
---------------------------------------------------------------------------------------
<S>                                 <C>          <C>            <C>            <C>
Maturity schedule:
Commercial, financial and others.... $27,900       $ 16,125       $  5,451     $ 49,476
Real estate:
 Construction.......................   3,546                                      3,546
 Mortgage...........................  30,402         67,048        108,321      205,771
Consumer, net.......................  12,620         20,482          4,698       37,800
Lease financing, net................     348            589                         937
                                     -------       --------       --------     --------
    Total........................... $74,816       $104,244       $118,470     $297,530
                                     =======       ========       ========     ========
</TABLE>


Loans outstanding to directors, executive officers, principal stockholders
or to their affiliates totaled $2,524 at December 31, 2000, and $4,134 at
December 31, 1999. Advances and repayments during 2000 totaled $1,516 and
$3,126, respectively. These loans are made during the ordinary course of
business at normal credit terms.  There were no related party loans that
were classified as nonaccrual, past due, restructured or considered a
potential credit risk at December 31, 2000 and 1999.

At December 31, 2000, substantially all of the Company's loans were at
least partially secured by real estate in Lackawanna, Susquehanna, Wayne
and Wyoming counties of Northeastern Pennsylvania. Therefore, a primary
concentration of credit risk is directly related to the real estate market
in the Northeastern Pennsylvania area.  Changes in the general economy,
local economy or in the real estate market could affect the ultimate
collectibility of this portion of the loan portfolio.  Management does not
believe there are any other significant concentrations of credit risk that
could affect the loan portfolio.

The analysis of changes affecting the allowance for loan losses account for
each of the three years ended December 31, 2000, 1999 and 1998, is
summarized as follows:

<TABLE>
<CAPTION>

                                                                   2000    1999    1998
---------------------------------------------------------------------------------------
<S>                                                             <C>      <C>     <C>
Balance, January 1............................................. $ 3,799  $4,050  $3,798
Provision for loan losses......................................     420     535     855
Loans charged-off..............................................  (1,029)   (964)   (789)
Loans recovered................................................      95     178     186
                                                                -------  ------  ------
Balance, December 31........................................... $ 3,285  $3,799  $4,050
                                                                =======  ======  ======
</TABLE>


Information concerning nonperforming assets at December 31, 2000 and 1999,
is summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                                2000    1999
---------------------------------------------------------------------------------------
<S>                                                                      <C>     <C>
Nonaccrual loans:
Commercial, financial and others........................................ $  141  $  166
Real estate:
  Construction..........................................................
  Mortgage..............................................................  1,469   2,272
Consumer, net...........................................................     74      33
Lease financing, net....................................................
                                                                         ------  ------
    Total nonaccrual loans..............................................  1,684   2,471
                                                                         ------  ------
Restructured loans......................................................    124     149
                                                                         ------  ------
    Total impaired loans................................................  1,808   2,620
                                                                         ------  ------

Accruing loans past due 90 days or more:
Commercial, financial and others........................................     23     726
Real estate:
  Construction..........................................................
  Mortgage..............................................................    449   2,768
Consumer, net...........................................................    353     471
Lease financing, net....................................................
                                                                         ------  ------
    Total accruing loans past due 90 days or more.......................    825   3,965
                                                                         ------  ------
    Total nonperforming loans...........................................  2,633   6,585
Foreclosed assets.......................................................  1,391     359
                                                                         ------  ------
    Total nonperforming assets.......................................... $4,024  $6,944
                                                                         ======  ======
</TABLE>


Information relating to the recorded investment in impaired loans at
December 31, 2000 and 1999, is summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                                2000    1999
---------------------------------------------------------------------------------------
<S>                                                                      <C>     <C>
Impaired loans:
With a related allowance................................................ $1,684  $2,471
With no related allowance...............................................    124     149
                                                                         ------  ------
  Total................................................................. $1,808  $2,620
                                                                         ======  ======
</TABLE>


The analysis of changes affecting the allowance for loan losses related to
impaired loans at December 31, 2000, 1999 and 1998, is summarized as
follows:

<TABLE>
<CAPTION>

                                                                   2000    1999    1998
---------------------------------------------------------------------------------------
<S>                                                               <C>     <C>     <C>
Balance, January 1............................................... $ 613   $ 642   $ 541
Provision for loan losses........................................   116     472     342
Loans charged-off................................................  (324)   (546)   (286)
Loans recovered..................................................            45      45
                                                                  -----   -----   -----
Balance, December 31............................................. $ 405   $ 613   $ 642
                                                                  =====   =====   =====
</TABLE>


Interest income on impaired loans that would have been recognized had the
loans been current and the terms of the loans not been modified, the
aggregate amount of interest income recognized and the amount recognized
using the cash-basis method and the average recorded investment in impaired
loans for the three-years ended December 31, 2000, is summarized as
follows:

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                                             2000    1999    1998
---------------------------------------------------------------------------------------
<S>                                                              <C>     <C>     <C>
Gross interest due under terms.................................. $  293  $  253  $  175
Interest income recognized......................................    104      53      98
                                                                 ------  ------  ------
Interest income not recognized.................................. $  189  $  200  $   77
                                                                 ======  ======  ======

Interest income recognized (cash-basis)......................... $  104  $   53  $   98

Average recorded investment in impaired loans................... $2,473  $2,564  $1,867

</TABLE>

Cash received on impaired loans applied as a reduction of principal totaled
$264 in 2000, $266 in 1999 and $650 in 1998.  There were no commitments to
extend additional funds to customers with impaired loans at December 31,
2000 and 1999.

5. COMMITMENTS, CONCENTRATIONS AND CONTINGENT LIABILITIES:

In the normal course of business, the Company is a party to financial
instruments with off-balance sheet risk to meet the financing needs of its
customers.  These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
financial statements.  Management does not anticipate that losses, if any,
that may occur as a result of funding off-balance sheet commitments, would
have a material adverse effect on the results of operations or financial
position.

The contractual amounts of off-balance sheet commitments at December 31,
2000 and 1999, are summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                               2000     1999
---------------------------------------------------------------------------------------
<S>                                                                    <C>      <C>
Commitments to extend credit.......................................... $25,873  $22,338
Unused portions of home equity and credit card lines..................   3,904    2,981
Commercial letters of credit..........................................   1,278    1,057
                                                                       -------  -------
  Total............................................................... $31,055  $26,376
                                                                       =======  =======
</TABLE>


The Company's involvement in, and exposure to, credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit, unused portions of home equity and credit
card lines and commercial letters of credit is represented by the
contractual amounts of those instruments.  Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract.  Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a
fee.  Commercial letters of credit are conditional commitments issued by
the Company to support customers in the purchase of commercial goods.
These letters of credit are automatically renewable upon their anniversary
date unless canceled prior to such date at the option of the Company.

The Company employs the same credit policies and requirements in making
off-balance sheet credit commitments as it does for on-balance sheet
instruments. Allowance for credit losses, if any, on off-balance sheet
commitments is reported separately as a liability. No allowance was deemed
necessary at December 31, 2000 and 1999.  These commitments are generally
issued for one year or less and often expire unused in whole or in part by
the customer.

The Company provides deposit and loan products and other financial services
to consumer and corporate customers in its four-county market area of
Lackawanna, Susquehanna, Wayne and Wyoming.  There are no significant
concentrations of credit risk from any individual counterparty or groups of
counterparties, except for locational concentrations.  The concentrations
of the credit portfolio by loan type are set forth in Note 4.  Collateral
is required for all real estate exposure and for most other loans,
including off-balance sheet commitments upon extension of credit.
Loan-to-value ratios of no greater than 80.0 percent are maintained, except
in the case of loans secured by deposits or U.S. Government securities.
The amount of collateral obtained is based on management's credit
evaluation of the customer. Collateral varies but may include property,
plant and equipment, primary residential properties, and to a lesser
extent, income-producing properties.  Although the credit portfolio is
diversified, the Company and its borrowers are dependent on the continued
viability of the Northeastern Pennsylvania economy.  The loan portfolio
does not include any form of credit involving highly-leveraged
transactions, defined as financing transactions that involve the buyout,
acquisition or recapitalization of an existing business, including credit
extended to highly-leveraged industries.

Securities and short-term investment activities are conducted with a
diverse group of government entities, corporations and depository
institutions.  The counterparty's creditworthiness and type of collateral
is evaluated on a case-by-case basis.  At December 31, 2000 and 1999, there
were no significant concentrations of credit risk from any one issuer with
the exception of U.S. Treasury securities and U.S. Government agencies,
including mortgage-backed securities.

Neither the Company or any of its property is subject to any material legal
proceedings.  Management, after consultation with legal counsel, does not
anticipate that the ultimate liability, if any, arising out of pending and
threatened lawsuits will have a material effect on the results of
operations or financial position.

6. PREMISES AND EQUIPMENT, NET:

Premises and equipment at December 31, 2000 and 1999, are summarized as
follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                               2000     1999
---------------------------------------------------------------------------------------
<S>                                                                    <C>      <C>
Land.................................................................. $ 2,213  $ 2,213
Premises..............................................................   8,698    8,467
Leasehold improvements................................................     291      232
Furniture and equipment...............................................   6,135    5,557
                                                                       -------  -------
  Total premises and equipment........................................  17,337   16,469
Less: accumulated depreciation........................................   7,629    6,932
                                                                       -------  -------
  Premises and equipment, net......................................... $ 9,708  $ 9,537
                                                                       =======  =======
</TABLE>


Amounts charged to noninterest expense for depreciation amounted to $832 in
2000, $676 in 1999 and $609 in 1998.  Occupancy expense has been reduced by
rental income from premises leased to others in the amount of $59 in 2000,
$49 in 1999 and $65 in 1998. At December 31, 2000, the Company had no
material commitments for capital expenditures.

Certain facilities are leased under operating lease agreements expiring at
various dates until the year 2009.  Two leases contain escalation clauses
that provide for inflation adjustments, and several contain renewal
options.  The realty leases require the Company to pay real estate taxes,
insurances, utilities  and repair costs. Rental expense on operating leases
amounted to $110 in 2000, $114 in 1999 and $153 in 1998.

Future minimum annual rentals required under noncancellable leases are
summarized as follows:

<TABLE>
<CAPTION>

<S>                                                                                <C>
2001.............................................................................. $106
2002..............................................................................   94
2003..............................................................................   94
2004..............................................................................   69
2005..............................................................................   62
2006 and thereafter...............................................................  219
                                                                                   ----
  Total........................................................................... $644
                                                                                   ====
</TABLE>


As part of its Year 2000 ("Y2K") readiness, the Company evaluated and
tested all computer hardware and software to determine Y2K compliance.
Based on this evaluation, noncompliant assets having a net book value of
$87 were disposed of in 1998.  This loss on disposition was included in
noninterest expense in 1998.  There were no such Y2K remediation costs
incurred during 2000 or 1999.

7. OTHER ASSETS:

The major components of other assets at December 31, 2000 and 1999, are
summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                                2000    1999
---------------------------------------------------------------------------------------
<S>                                                                      <C>     <C>
Goodwill................................................................ $  567  $  785
Core deposit intangible.................................................  1,350   1,620
Deferred income taxes...................................................    735   1,742
Foreclosed assets.......................................................  1,391     359
Mortgage servicing rights...............................................     47      49
Other...................................................................    956   1,182
                                                                         ------  ------
  Total................................................................. $5,046  $5,737
                                                                         ======  ======
</TABLE>


Amortization expense of goodwill amounted to $218 per year for 2000, 1999
and 1998. Amortization expense of the core deposit intangible amounted to
$270 in 2000, 1999 and 1998.

The net costs of operating foreclosed assets, including gains and losses on
the sale of such properties, were $191 in 2000, $4 in 1999 and $193 in
1998.

The Company originates one-to-four family residential mortgage loans for
sale on the secondary market with servicing rights retained.  Mortgage
loans serviced for others are not included in the accompanying Consolidated
Balance Sheets.  The unpaid principal balances of mortgage loans serviced
for others were $5,923 at December 31, 2000, and $5,505 at December 31,
1999.  Custodial escrow balances maintained in connection with the loan
servicing and included in demand deposits, were $2 and $7 at December 31,
2000 and 1999, respectively.

The analysis of the changes in the balances of mortgage servicing assets
for each of the three years ended December 31, 2000, 1999 and 1998, is
summarized as follows:

<TABLE>
<CAPTION>

                                                                   2000    1999    1998
---------------------------------------------------------------------------------------
<S>                                                                <C>     <C>     <C>
Balance, January 1................................................. $49     $21
Additions..........................................................   8      35     $21
Amortization.......................................................  10       7
                                                                    ---     ---     ---
Balance, December 31............................................... $47     $49     $21
                                                                    ===     ===     ===
</TABLE>


At December 31, 2000, 1999 and 1998, the fair value of the mortgage
servicing assets approximated their carrying value, therefore, no valuation
allowance was deemed necessary.

8. DEPOSITS:

The major components of interest-bearing and noninterest-bearing deposits
at December 31, 2000 and 1999, are summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                             2000       1999
---------------------------------------------------------------------------------------
<S>                                                                 <C>        <C>
Interest-bearing deposits:
  Money market accounts............................................ $ 28,888   $ 25,401
  NOW accounts.....................................................   24,938     25,408
  Savings accounts.................................................   74,602     76,099
  Time deposits less than $100.....................................  177,304    176,261
  Time deposits $100 or more.......................................   33,726     23,253
                                                                    --------   --------
    Total interest-bearing deposits................................  339,458    326,422
Noninterest-bearing deposits.......................................   39,263     36,061
                                                                    --------   --------
    Total deposits................................................. $378,721   $362,483
                                                                    ========   ========
</TABLE>


Deposits of directors, executive officers, principal stockholders or their
affiliates are accepted on the same terms and at the prevailing interest
rates offered at the time of deposit for comparable transactions with
unrelated parties.  The amount of related party deposits totaled $4,221 at
December 31, 2000, and $3,026 at December 31, 1999.

The maturity distribution of time deposits $100 or more at December 31,
2000 and 1999, is summarized as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                               2000     1999
---------------------------------------------------------------------------------------
<S>                                                                    <C>      <C>
Within three months................................................... $17,281  $ 3,752
After three months but within six months..............................   3,357    5,240
After six months but within twelve months.............................   5,761    5,411
After twelve months...................................................   7,327    8,850
                                                                       -------  -------
  Total............................................................... $33,726  $23,253
                                                                       =======  =======
</TABLE>


Interest expense on time deposits $100 or more amounted to $1,931 in 2000,
$1,293 in 1999 and $1,409 in 1998.

The aggregate amounts of maturities for all time deposits at December 31,
2000, are summarized as follows:

<TABLE>
<CAPTION>

<S>                                                                            <C>
2001.......................................................................... $113,834
2002..........................................................................   48,566
2003..........................................................................   21,457
2004..........................................................................    7,259
2005..........................................................................   19,250
2006 and thereafter...........................................................      664
                                                                               --------
  Total....................................................................... $211,030
                                                                               ========
</TABLE>


The aggregate amount of deposits reclassified as loans was $91 at December
31, 2000, and $160 at December 31, 1999.  Management evaluates transaction
accounts that are overdrawn for collectibility as part of its evaluation
for credit losses.  At December 31, 2000 and 1999, no allowance was deemed
necessary for these accounts.  During 2000 and 1999, no deposits were
received on terms other than those available in the normal course of
business.

9. SHORT-TERM BORROWINGS:

Short-term borrowings available to the Company consist of a line of credit
and advances with the FHLB-Pgh secured under terms of a blanket collateral
agreement by a pledge of FHLB-Pgh stock and certain other qualifying
collateral, such as investment and mortgage-backed securities and mortgage
loans.  The line is limited to the Company's maximum borrowing capacity
("MBC") with the FHLB-Pgh, which is based on a percentage of qualifying
collateral assets. At December 31, 2000, the MBC was $170.8 million.
Interest accrues daily on the line based on the rate of FHLB-Pgh discount
notes.  This rate resets each day.  The line is renewable annually on its
anniversary date and carries no associated commitment fees.  The FHLB-Pgh
has the right to reduce or terminate the line at any time without prior
notice and the Company may repay the line at any time without incurring
prepayment penalties.  Short-term advances are issued with maturities less
than one year based on the FHLB-Pgh's current cost of funds rate.  Advances
are limited to the MBC and are not prepayable.  There are no commitment
fees associated with the advances, except those for forward settlement that
are based on FHLB-Pgh hedging costs.

There were no short-term borrowings outstanding at December 31, 2000.
Short-term borrowings outstanding at December 31, 1999, under the line of
credit agreement, were $5,500. The average daily balance and weighted-
average rate on aggregate short-term borrowings was $2,374 at 6.3 percent
in 2000 and $1,393 at 5.3 percent in 1999.  The maximum amount of all
short-term borrowings outstanding at any month-end was $11,200 during 2000
and $7,025 during 1999. Short-term borrowings during 2000 and 1999
consisted entirely of the FHLB-Pgh line of credit.

10. LONG-TERM DEBT:

Long-term debt at December 31, 2000 and 1999, consisted entirely of a 7.5
percent fixed-rate, amortizing advance from the FHLB-Pgh Community
Investment Program.  This advance matures on September 2, 2009.  The
scheduled principal payments on the note for the next five years total $3
for each of the three years 2001 through 2003 and $4 for 2004 and 2005.
The prepayment fee applicable to the advance is equal to the present value
of the difference between cash flows generated at the advance rate from the
date of the prepayment until the original maturity date, and the cash flows
that would result from the interest rate posted by the FHLB-Pgh on the date
of prepayment for an advance of comparable maturity.  The note is secured
under terms of a blanket collateral agreement by a pledge of qualifying
investment and mortgage-backed securities, certain mortgage loans and a
lien on FHLB-Pgh stock. The average daily balance on long-term debt in 2000
was $37 with a weighted-average rate of 7.5 percent.  For 1999, the average
daily balance on long-term debt was $40 with a weighted-average rate of 7.5
percent.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair value of financial instruments at December 31, 2000 and
1999, is summarized as follows:

<TABLE>
<CAPTION>

                                                     2000                  1999
                                              -------------------   -------------------
                                              CARRYING       FAIR   CARRYING       FAIR
DECEMBER 31                                      VALUE      VALUE      VALUE      VALUE
---------------------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>        <C>
Financial assets:
Cash and cash equivalents.................... $ 37,419   $ 37,419   $ 10,991   $ 10,991
Investment securities available-for-sale.....   71,246     71,246    105,630    105,630
Loans held for sale, net.....................       62         63
Net loans....................................  294,245    286,819    273,051    271,774
Accrued interest receivable..................    2,014      2,014      2,166      2,166
                                              --------   --------   --------   --------
  Total...................................... $404,986   $397,561   $391,838   $390,561

Financial liabilities:
Deposits without stated maturities........... $167,691   $167,691   $162,969   $162,969
Deposits with stated maturities..............  211,030    212,822    199,514    201,561
Short-term borrowings........................                          5,500      5,500
Long-term debt...............................       36         36         39         39
Accrued interest payable.....................    2,014      2,014      1,976      1,976
                                              --------   --------   --------   --------
  Total...................................... $380,771   $382,563   $369,998   $372,045
                                              ========   ========   ========   ========
</TABLE>


12. EMPLOYEE BENEFIT PLANS:

The Company has a defined contribution plan covering all employees who meet
the age and service requirements. Contributions to the plan, included in
salaries and employee benefits expense, were $89 in 2000, $46 in 1999 and
$64 in 1998.

13. INCOME TAXES:

For the years ended December 31, 2000, 1999 and 1998, the current and
deferred amounts of the provision for income tax expense (benefit) are
summarized as follows:

<TABLE>
<CAPTION>


YEAR ENDED DECEMBER 31                                             2000    1999    1998
---------------------------------------------------------------------------------------
<S>                                                              <C>     <C>     <C>
Current......................................................... $  746  $1,278  $1,313
Deferred........................................................    393      60     (95)
                                                                 ------  ------  ------
  Total......................................................... $1,139  $1,338  $1,218
                                                                 ======  ======  ======
</TABLE>


A reconciliation between the effective income tax expense and the amount of
income tax expense that would have been provided at the federal statutory
tax rate of 34.0 percent for the years ended December 31, 2000, 1999 and
1998, is summarized as follows:

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                                            2000     1999    1998
---------------------------------------------------------------------------------------
<S>                                                             <C>      <C>     <C>
Federal income tax at statutory rate........................... $1,815   $2,019  $1,944
Differences resulting from:
  Tax-exempt interest, net.....................................   (671)    (675)   (709)
  Goodwill.....................................................     74       74      74
  Residential housing program tax credit.......................    (80)     (80)    (80)
  Other........................................................      1              (11)
                                                                ------   ------  ------
    Federal income tax on income before income taxes........... $1,139   $1,338  $1,218
                                                                ======   ======  ======
</TABLE>


For the years ended December 31, 2000, 1999 and 1998, sources of change in
deferred income taxes and the related tax effects are summarized as
follows:

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                                            2000     1999    1998
---------------------------------------------------------------------------------------
<S>                                                             <C>     <C>       <C>
Allowance for loan losses...................................... $  211  $    94   $ (86)
Loans, net of unearned income..................................     25       40      60
Accrued interest receivable....................................     60      (70)     27
Premises and equipment, net....................................    139       38     (54)
Core deposit intangible........................................    (42)     (42)    (42)
                                                                ------  -------   -----
  Change in deferred income taxes affecting the statements of
   income......................................................    393       60     (95)
Deferred income taxes on investment securities recognized in
 stockholders' equity..........................................    614   (1,122)   (106)
                                                                ------  -------   -----
    Total change in deferred income taxes...................... $1,007  $(1,062)  $(201)
                                                                ======  =======   =====


The temporary differences that give rise to deferred tax assets and
liabilities at December 31, 2000 and 1999, are summarized as follows:


</TABLE>
<TABLE>
<CAPTION>

DECEMBER 31                                                                2000    1999
---------------------------------------------------------------------------------------
<S>                                                                      <C>     <C>
Deferred tax assets:
  Investment securities available-for-sale..............................         $  403
  Allowance for loan losses............................................. $  905   1,116
  Loans, net of unearned income.........................................    156     181
  Accrued interest receivable...........................................    161     221
  Core deposit intangible...............................................    128      86
                                                                         ------  ------
    Total...............................................................  1,350   2,007
                                                                         ------  ------
Deferred tax liabilities:
  Investment securities available-for-sale..............................    211
  Premises and equipment, net...........................................    404     265
                                                                         ------  ------
    Total...............................................................    615     265
                                                                         ------  ------
    Net deferred tax assets............................................. $  735  $1,742
                                                                         ======  ======
</TABLE>


The Company has determined that the establishment of a valuation reserve
for the deferred tax assets is not required, since it is more likely than
not that the net deferred tax assets could be principally realized through
carryback to taxable income in prior years, and by future reversals of
existing taxable temporary differences, or to a lesser extent, through
future taxable income.  A review of the tax criteria related to the
recognition of deferred tax assets is performed quarterly. Banks in
Pennsylvania are not subject to state or local income taxes, however, they
pay a tax on capital. This tax is included in other expenses.

Income tax expense (benefit) related to unrealized holding gains and losses
and the reclassification adjustments included in other comprehensive income
for the three years ended December 31, 2000, 1999 and 1998, were calculated
using the prevailing statutory tax rate of 34.0 percent and are summarized
as follows:

<TABLE>
<CAPTION>

DECEMBER 31                                                                           2000     1999     1998
------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>     <C>        <C>
Income tax expense (benefit):
  Unrealized holding gains (losses) on investment securities available-for-sale.... $ 741   $  (983)   $ 277
  Reclassification adjustment for gains included in net income.....................  (127)     (139)    (383)
                                                                                    -----   -------    -----
    Income tax expense (benefit) related to other comprehensive income............. $ 614   $(1,122)   $(106)
                                                                                    =====   =======    =====
</TABLE>




14. PARENT COMPANY FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>

CONDENSED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31                                            2000     1999     1998
----------------------------------------------------------------------------------------
<S>                                                             <C>     <C>       <C>
Income:
Dividends from subsidiaries.................................... $3,832  $ 6,744   $  752
Management fees from subsidiaries..............................    212      296      340
Other income...................................................      6        7       44
                                                                ------  -------   ------
  Total income.................................................  4,050    7,047    1,136
                                                                ------  -------   ------
Expense:
Occupancy and equipment expenses...............................     77       76       91
Other expenses.................................................    480      584      592
                                                                ------  -------   ------
  Total expenses...............................................    557      660      683
                                                                ------  -------   ------
Income before income taxes and undistributed income (loss) of
 subsidiaries..................................................  3,493    6,387      453
Income tax benefits............................................   (122)    (128)    (118)
                                                                ------  -------   ------
Income before undistributed income (loss) of subsidiaries......  3,615    6,515      571
Equity in undistributed income (loss) of subsidiaries..........    585   (1,915)   3,929
                                                                ------  -------   ------
  Net income................................................... $4,200  $ 4,600   $4,500
                                                                ======  =======   ======

CONDENSED BALANCE SHEETS

DECEMBER 31                                                                2000     1999
----------------------------------------------------------------------------------------
Assets:
Cash................................................................... $   147  $    12
Investment in bank subsidiary..........................................  35,833   34,082
Investment in nonbank subsidiary.......................................     505
Investment securities available-for-sale...............................      92      948
Other assets...........................................................   1,742    1,552
                                                                        -------  -------
  Total assets......................................................... $38,319  $36,594
                                                                        =======  =======

Liabilities:
Dividends payable...................................................... $   357  $   326
Other liabilities......................................................     344      793
                                                                        -------  -------
  Total liabilities....................................................     701    1,119
Stockholders' equity...................................................  37,618   35,475
                                                                        -------  -------
  Total liabilities and stockholders' equity........................... $38,319  $36,594
                                                                        =======  =======
</TABLE>




CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                                           2000     1999     1998
---------------------------------------------------------------------------------------
<S>                                                           <C>      <C>      <C>
Cash flows from operating activities:
Net income................................................... $ 4,200  $ 4,600  $ 4,500
Adjustments:
  Equity in undistributed (income) loss of subsidiaries......    (585)   1,915   (3,929)
  Depreciation and amortization..............................     294      294      294
  Changes in:
    Other assets.............................................    (266)     (38)    (401)
    Other liabilities........................................    (384)     201       39
                                                              -------  -------  -------
      Net cash provided by operating activities..............   3,259    6,972      503
                                                              -------  -------  -------

Cash flows from investing activities:
Proceeds from repayments of investment securities............     599        3
Purchases of investment securities...........................             (599)     (30)
Capital contribution in nonbank subsidiary...................    (505)
                                                              -------  -------  -------
      Net cash provided by (used in) investing activities....      94     (596)     (30)
                                                              -------  -------  -------

Cash flows from financing activities:
Issuance of common stock.....................................     219      197      154
Repurchase and retirement of common shares...................  (2,073)  (5,683)
Cash dividends paid..........................................  (1,364)  (1,157)    (793)
                                                              -------  -------  -------
      Net cash used in financing activities..................  (3,218)  (6,643)    (639)
                                                              -------  -------  -------
      Net increase (decrease) in cash........................     135     (267)    (166)
      Cash at beginning of year..............................      12      279      445
                                                              -------  -------  -------
      Cash at end of year.................................... $   147  $    12  $   279
                                                              =======  =======  =======

</TABLE>

15. REGULATORY MATTERS:

Under the Pennsylvania Business Corporation Law of 1988, as amended, the
Company may not pay a dividend if, after payment, either the Company could
not pay its debts as they become due in the usual course of business, or
the Company's total assets would be less than its total liabilities.  The
determination of total assets and liabilities may be based upon: (i)
financial statements prepared on the basis of GAAP; (ii) financial
statements that are prepared on the basis of other accounting practices and
principles that are reasonable under the circumstances; or (iii) a fair
valuation or other method that is reasonable under the circumstances.

In addition, the Company is subject to dividend restrictions under the
Pennsylvania Banking Code of 1965, as amended, which allows cash dividends
to be declared and paid out of accumulated net earnings.  More stringent
dividend restrictions apply under Federal Reserve Regulation H, which
restricts calendar year dividend payments of member banks to the total of
its net profits for that year combined with its retained net profits of the
preceding two calendar years, less any required transfer to surplus, unless
a bank has received prior approval from the Board of Governors of the
Federal Reserve System ("Federal Reserve Board").  Accordingly, Community
Bank, without prior approval from the Federal Reserve Board, may declare
dividends to the Parent Company of $2,599 at December 31, 2000.

Although subject to the aforementioned regulatory restrictions, the
Company's consolidated retained earnings at December 31, 2000 and 1999,
were not restricted under any borrowing agreement as to payment of
dividends or reacquisition of common stock.

The Company has paid cash dividends since its formation as a bank holding
company in 1983.  It is the present intention of the Board of Directors to
continue this dividend payment policy, however, further dividends must
necessarily depend upon earnings, financial condition, appropriate legal
restrictions and other factors relevant at the time the Board of Directors
considers payment of dividends.

The amount of funds available for transfer from Community Bank to the
Parent Company in the form of loans and other extensions of credit is also
limited.  Under the provisions of Section 23A of the Federal Reserve Act,
transfers to any one affiliate are limited to 10.0 percent of capital and
surplus. At December 31, 2000, the maximum amount available for transfer
from Community Bank to the Parent Company in the form of loans amounted to
$3,818. At December 31, 2000 and 1999, there were no loans outstanding, nor
were any advances made during 2000 and 1999.

The Company and Community Bank are subject to certain regulatory capital
requirements administered by the federal banking agencies, which are
defined by Section 38 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA").  Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Company's and Community Bank's financial
statements. In the event an institution is deemed to be undercapitalized by
such standards, FDICIA prescribes an increasing amount of regulatory
intervention, including the required institution of a capital restoration
plan and restrictions on the growth of assets, branches or lines of
business.  Further restrictions are applied to the significantly or
critically undercapitalized institutions including restrictions on interest
payable on accounts, dismissal of management and appointment of a receiver.
For well capitalized institutions, FDICIA provides authority for regulatory
intervention where the institution is deemed to be engaging in unsafe and
unsound practices or receives a less than satisfactory examination report
rating. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and Community Bank must meet specific
capital guidelines that involve quantitative measures of their assets,
liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices.  The capital amounts and classification
are also subject to qualitative judgements by the regulators about
components, risk weightings, and other factors.  Prompt corrective action
provisions are not applicable to bank holding companies.

Community Bank was categorized as well capitalized under the regulatory
framework for prompt corrective action at December 31, 2000 and 1999, based
on the most recent notification from the Federal Deposit Insurance
Corporation. To be categorized as well capitalized, Community Bank must
maintain minimum Tier I, total and Tier I Leverage ratios as set forth in
the following tables.  The Tier I Leverage ratio is defined as Tier I
capital to total average assets less intangible assets.  There are no
conditions or events since the most recent notification that management
believes have changed Community Bank's category.

The Company's and Community Bank's capital ratios at December 31, 2000 and
1999, as well as the required minimum ratios for capital adequacy purposes
and to be well capitalized under the prompt corrective action provisions as
defined by FDICIA, are summarized as follows:

<TABLE>
<CAPTION>

                                                                                          MINIMUM TO BE WELL
                                                                                           CAPITALIZED UNDER
                                                                      MINIMUM FOR CAPITAL  PROMPT CORRECTIVE
                                                          ACTUAL        ADEQUACY PURPOSES  ACTION PROVISIONS
                                                   ---------------------------------------------------------
DECEMBER 31, 2000                                    AMOUNT    RATIO      AMOUNT   RATIO      AMOUNT   RATIO
------------------------------------------------------------------------------------------------------------
<S>                                                <C>         <C>       <C>       <C>       <C>       <C>
Tier I capital to risk-adjusted assets:
  Consolidated.................................... $ 35,287     14.1%    $10,024     4.0%
  Community Bank..................................   33,537     13.5       9,967     4.0     $14,951     6.0%
Total capital to risk-adjusted assets:
  Consolidated....................................   38,421     15.3      20,047     8.0
  Community Bank..................................   36,654     14.7      19,935     8.0      24,919    10.0
Tier I capital to total average assets
 less intangible assets:
  Consolidated....................................   35,287      8.7      16,198     4.0
  Community Bank.................................. $ 33,537      8.3%    $16,126     4.0%    $20,158     5.0%

Risk-adjusted assets:
  Consolidated.................................... $235,446
  Community Bank..................................  234,040
Risk-adjusted off-balance sheet items:
  Consolidated....................................   15,145
  Community Bank..................................   15,145
Average assets for Leverage ratio:
  Consolidated....................................  404,946
  Community Bank.................................. $403,152


                                                                                          MINIMUM TO BE WELL
                                                                                           CAPITALIZED UNDER
                                                                      MINIMUM FOR CAPITAL  PROMPT CORRECTIVE
                                                          ACTUAL        ADEQUACY PURPOSES  ACTION PROVISIONS
                                                   ---------------------------------------------------------
DECEMBER 31, 1999                                    AMOUNT    RATIO      AMOUNT   RATIO      AMOUNT   RATIO
------------------------------------------------------------------------------------------------------------
<S>                                                <C>         <C>       <C>       <C>       <C>       <C>
Tier I capital to risk-adjusted assets:
  Consolidated.................................... $ 33,848     14.6%    $ 9,271     4.0%
  Community Bank..................................   32,619     14.2       9,216     4.0     $13,824     6.0%
Total capital to risk-adjusted assets:
  Consolidated....................................   36,757     15.9      18,543     8.0
  Community Bank..................................   35,510     15.4      18,432     8.0      23,040    10.0
Tier I capital to total average assets
 less intangible assets:
  Consolidated....................................   33,848      8.6      15,752     4.0
  Community Bank.................................. $ 32,619      8.3%    $15,641     4.0%    $19,551     5.0%

Risk-adjusted assets:
  Consolidated.................................... $218,915
  Community Bank..................................  217,526
Risk-adjusted off-balance sheet items:
  Consolidated....................................   12,871
  Community Bank..................................   12,871
Average assets for Leverage ratio:
  Consolidated....................................  393,794
  Community Bank.................................. $391,016

</TABLE>

On April 21, 1999, the Board of Directors approved a stock repurchase
program, which authorized management to purchase up to 220,000 shares or
10.0 percent of the Company's outstanding common stock. After successfully
completing the acquisition of the 220,000 in 2000, the Board of Directors
ratified the purchase of an additional 3.0 percent or 60,000 shares of its
outstanding common stock pursuant to the program. During 2000 and 1999,
57,400 shares and 177,647 shares having an aggregate cost of $2,073 and
$5,683, respectively, were purchased and retired under the program. At
December 31, 2000, 44,953 shares were available to be repurchased under the
program.

The Company offers its stockholders a Dividend Reinvestment Plan ("DRP").
Under the DRP, the Company registered with the Securities and Exchange
Commission 300,000 shares of its common stock to be sold pursuant to this
plan.  The DRP provides stockholders with a simple and convenient method to
invest cash dividends in the Company's common stock without payment of any
brokerage commissions, while also furnishing the Company with additional
funds for general corporate purposes.  Main features of the DRP include the
following: (i) shares will be purchased from original issuances; (ii) no
optional cash payments; (iii) eligibility for all registered and street
name stockholders; (iv) no minimum or maximum number of shares
participation restrictions; and (v) availability of full or partial
dividend reinvestment.  During the years ended December 31, 2000, 1999 and
1998, 7,015 shares, 6,409 shares and 4,617 shares, respectively, were
issued under the DRP.

16. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>

                                                    2000                                  1999
                                    ------------------------------------  ------------------------------------
QUARTER ENDED                       MARCH 31  JUNE 30  SEPT. 30  DEC. 31  MARCH 31  JUNE 30  SEPT. 30  DEC. 31
--------------------------------------------------------------------------------------------------------------
<S>                                 <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>
Interest income:
Interest and fees on loans:
  Taxable............................ $5,561   $5,768    $6,066   $6,167    $5,000  $ 5,082    $5,340   $5,457
  Tax-exempt.........................    179      179       147      140        93       97       112      117
Interest and dividends on investment
 securities available-for-sale:
  Taxable............................    964      893       821      759     1,009    1,133     1,149    1,050
  Tax-exempt.........................    476      407       392      370       504      489       477      419
  Dividends..........................     33       31        32       34        30       30        32       30
Interest on federal funds sold.......      9       20        12      123        48       50         6       58
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Total interest income............  7,222    7,298     7,470    7,593     6,684    6,881     7,116    7,131
                                      ------   ------    ------   ------    ------  -------    ------   ------

Interest expense:
Interest on deposits.................  3,710    3,729     3,690    3,931     3,377    3,423     3,504    3,642
Interest on short-term borrowings....     68       29        53                  1       15        44       13
Interest on long-term debt...........      1        1                            1        1                  1
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Total interest expense...........  3,779    3,759     3,743    3,931     3,379    3,439     3,548    3,656
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Net interest income..............  3,443    3,539     3,727    3,662     3,305    3,442     3,568    3,475
Provision for loan losses............     90       90       120      120        30       30        30      445
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Net interest income after
     provision for loan losses.......  3,353    3,449     3,607    3,542     3,275    3,412     3,538    3,030
                                      ------   ------    ------   ------    ------  -------    ------   ------

Noninterest income:
Service charges, fees and
 commissions.........................    440      485       579      561       380      370       432      465
Net gains on sale of loans...........      1                  4       13        32        4        17        4
Net gains on sale of investments.....    172        1                201                                   408
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Total noninterest income ........    613      486       583      775       412      374       449      877
                                      ------   ------    ------   ------    ------  -------    ------   ------

Noninterest expense:
Salaries and employee benefits
 expense.............................  1,279    1,300     1,337    1,303     1,164    1,194     1,253    1,213
Net occupancy and equipment expense..    391      399       424      478       348      302       363      332
Other expenses.......................    957    1,002       976    1,223       716      870       816      858
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Total noninterest expense........  2,627    2,701     2,737    3,004     2,228    2,366     2,432    2,403
                                      ------   ------    ------   ------    ------  -------    ------   ------
Income before income taxes...........  1,339    1,234     1,453    1,313     1,459    1,420     1,555    1,504
Provision for income tax expense.....    279      264       293      303       319      310       355      354
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Net income ......................  1,060      970     1,160    1,010     1,140    1,110     1,200    1,150
                                      ------   ------    ------   ------    ------  -------    ------   ------

Other comprehensive income (loss):
Unrealized holding gains(losses) on
 investment securities available-
 for-sale............................     89      249       741    1,101      (427)  (1,476)     (191)    (797)
Reclassification adjustment for gains
 included in net income..............   (172)      (1)              (201)                                 (408)
Income tax expense (benefit) related
 to other comprehensive income (loss)    (28)      84       252      306      (146)    (501)      (65)    (410)
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Other comprehensive income
     (loss), net of income tax.......    (55)     164       489      594      (281)    (975)     (126)    (795)
                                      ------   ------    ------   ------    ------  -------    ------   ------
    Comprehensive income............. $1,005   $1,134    $1,649   $1,604    $  859  $   135    $1,074   $  355
                                      ======   ======    ======   ======    ======  =======    ======   ======

Per share data:
Net income........................... $ 0.53   $ 0.48    $ 0.59   $ 0.51    $ 0.52  $  0.51    $ 0.58   $ 0.56
Cash dividends declared.............. $ 0.17   $ 0.17    $ 0.18   $ 0.18    $ 0.13  $  0.13    $ 0.15   $ 0.16

</TABLE>

COMM BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS 1999 VERSUS 1998
                                                     -----------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

OPERATING ENVIRONMENT:

As was the case in the previous year, 1999 marked another year of torrid
expansion, as well as subdued inflation for the United States economy.
Strong productivity growth was the key factor spurring both the continued
expansion and low inflationary conditions. In attempting to slow the
economy and mitigate potential inflationary conditions, the Federal Open
Market Committee ("FOMC") raised the federal funds rate by 25 basis point
increments on three separate occasions, June 30, 1999, August 24, 1999, and
November 16, 1999. Despite the FOMC's efforts to bring economic growth into
check, the gross domestic product ("GDP"), the total output of goods and
services produced within the United States, grew at a robust rate of 4.2
percent in 1999. This was the third consecutive year GDP grew by more than
4.0 percent.  GDP grew 4.4 percent in 1998 and 4.5 percent in 1997. The
continued growth, however, did not lead to higher inflation. The consumer
price index ("CPI") increased 2.7 percent, while the producer price index
("PPI") increased 3.0 percent in 1999.  For 1998, the CPI registered an
increase of 1.6 percent while the PPI went unchanged.

The interest rate increases did not dampen consumer and business
confidence, which remained high in 1999.  This was evidenced by increases
in both the University of Michigan's Sentiment Index and the Conference
Board Confidence Level.  The University of Michigan's Sentiment Index rose
from 104.6 in 1998 to 105.8 in 1999, while the Conference Board Confidence
Level rose from 131.7 in 1998 to 135.3 in 1999.  Improved productivity, low
inflation, ideal employment conditions, higher personal income levels, and
a wealth effect driven by stock market gains all contributed to the greater
confidence. Both consumer and business spending flourished as a result of
the improved confidence. Consumer spending rose 5.3 percent while business
spending increased 6.6 percent in 1999.

Solid productivity growth was a passport to the low inflationary
environment during 1999 and 1998. Workforce productivity surged at 2.9
percent in 1999 and 2.8 percent in 1998. Favorable employment conditions
continued throughout 1999. Despite the 1.3 percent increase in the civilian
workforce, the unemployment rate fell to a 30-year low of 4.1 percent at
year-end 1999, from 4.3 percent at year-end 1998.  The labor market,
although tight, did not adversely affect employment costs. The annual
increase in wages and salaries slowed to 3.5 percent in 1999, compared to
3.7 percent in 1998.

The wealth effect, caused by the booming stock market, had a direct effect
on consumer spending levels. The NASDAQ Stock Market-Registered Trademark-
Composite increased an incredible 85.6 percent in 1999. In addition, the
Standard and Poor's 500 and the Dow Jones Industrial Averages rose 19.5
percent and 25.2 percent. In addition, annual personal income grew 5.9
percent in 1999, which caused personal spending to rise 5.3 percent in
1999. Americans relied on future stock market gains to help them meet long-
term financial goals. As a result, the annual savings rate declined sharply
to 2.4 percent in 1999 from 3.7 percent in 1998.

Economic activity in our four-county market area kept pace with that of the
Nation and Commonwealth, as indicated by unemployment reductions and wage
gains. The unemployment rate for Lackawanna County declined beyond the
levels of the United States and Pennsylvania to 3.6 percent in 1999. Wayne
and Wyoming Counties recorded significant unemployment rate reductions in
1999 of 1.0 percent and 1.5 percent from year-end 1998, while the
unemployment rate for Susquehanna County remained in line with that of the
Nation and Commonwealth.  Service-producing industries, especially retail
trade and personal and business services, posted the largest job gains
during 1999, and offset decreases in manufacturing and construction. During
1999, the average hourly earnings of a local manufacturing employee rose 24
cents or 1.9 percent, only slightly lower compared to the 28 cents or 2.0
percent increase for all Pennsylvania workers. The average hourly rates
paid to a manufacturing employee at December 31, 1999, throughout the
Nation, Commonwealth and market area were $13.44, $14.48 and $13.14.
Contrary to the Nation, our market area and the Commonwealth experienced
increases in their average workweeks. Average hours worked for our market
area and the Commonwealth increased 0.4 hours and 0.1 hours in 1999.

The Nation's financial institutions continued to perform well during 1999.
Improvements in noninterest income and noninterest expense, coupled with
lower loan loss provisions, helped to mitigate the effects of compressed
net interest margins. The FOMC's easing of monetary policy and overall
declines in interest rates during 1998 caused interest margins to trend
lower. In order to alleviate the effects of margin compression on earnings,
banks placed more significance on fee revenue. Noninterest income continued
to account for a greater percentage of total revenues as compared to the
past. With respect to noninterest expense, the industry did not experience
the significant one-time restructuring charges for merger and acquisitions
and year 2000 ("Y2K") remediation expenses in 1999, as it did in 1998.
Furthermore, banks lowered their provisions for loan losses in response to
flat or lower relevant credit ratios.

Most segments of the banking industry fared well in 1999. Net income for
all Federal Deposit Insurance Corporation ("FDIC")-insured commercial banks
increased $9.8 billion in 1999. Large financial institutions, those with
assets greater than $10.0 billion, accounted for the majority of the
improvement. Net income for financial institutions with assets of less than
$100.0 million and those with assets of between $1.0 billion and $10.0
billion declined slightly from 1998 to 1999. The net income of insured
commercial banks most closely related to our asset size, total assets
between $100.0 million and $1.0 billion, improved 8.9 percent comparing
1998 to 1999. For all insured commercial banks located in Pennsylvania, net
income declined $197 million or 7.1 percent from $2.8 million in 1998 to
$2.6 million in 1999.

Bank merger and acquisition activity was limited in 1999.  The devaluation
of bank stocks, earnings problems and century date change issues all played
a role in the reduced number of deals in 1999. The number of bank deals
throughout the Nation, the majority of which were completed during the
first half of the year, totaled 267 in 1999, compared to 413 in 1998. The
aggregate deal value decreased significantly to $68.4 billion in 1999, from
$261.8 billion in 1998. The average price to book value for financial
institution mergers in 1999 was 2.3 times, while the median price to
earnings was 21.8 times. For 1998, the comparable multiples of book and
earnings were 2.7 times and 22.3 times.

REVIEW OF FINANCIAL POSITION:

Our assets increased $18.8 million to $407.1 million at December 31, 1999,
from $388.3 million at December 31, 1998. The single most important factor
affecting our asset growth in 1999 was the expansion of our delivery system
through additional branch banking offices.  Total assets averaged $396.2
million in 1999, an increase of $18.8 million or 5.0 percent as compared to
the $377.4 million in 1998.  The composition of our earning assets remained
relatively constant in 1999 as compared to 1998.  Average investments and
federal funds sold to average earning assets equaled 31.0 percent and 30.7
percent in 1999 and 1998. Average loans as a percentage of average earning
assets was 69.0 percent in 1999 and 69.3 percent in 1998. In total, average
earning assets as a percentage of average total assets equaled 94.4 percent
in 1999 and 94.7 percent in 1998.

Total investments decreased $4.0 million to $105.6 million at December 31,
1999, from $109.6 million at December 31, 1998.  In 1999, investments
averaged $13.1 million or 13.2 percent higher at $112.5 million, compared
to $99.4 million averaged in 1998.  The composition of our investment
portfolio continued to shift in 1999, as cash flows from maturing U.S.
Treasury securities were reinvested into short-term U.S. Government agency
mortgage-backed securities to serve future liquidity requirements. The tax-
equivalent yield on the investment portfolio declined 26 basis points to
6.51 percent in 1999 from 6.77 percent in 1998.

Loans, net of unearned income, totaled $276.9 million at December 31, 1999,
an increase of $28.8 million from $248.1 million at December 31, 1998.
Average loans outstanding grew $10.3 million or 4.2 percent to $258.2
million in 1999 from $247.9 million in 1998.  Increases in commercial loans
and real estate loans, both commercial and residential, significantly
influenced the overall expansion of our loan portfolio.  The tax-equivalent
yield on our loan portfolio decreased 22 basis points to 8.33 percent in
1999, from 8.55 percent in 1998.

Nonperforming assets increased $2.6 million to $6.9 million at December 31,
1999, from $4.3 million at year-end 1998. The ratios of nonperforming loans
and nonperforming assets as a percentage of loans, net of unearned income,
equaled 2.38 percent and 2.51 percent at the end of 1999, compared to 1.63
percent and 1.72 percent at the end of 1998.  As a percentage of loans, net
of unearned income, the allowance for loan losses decreased to 1.37 percent
at December 31, 1999, from 1.63 percent at December 31, 1998.  A lower
provision for loan losses, coupled with increased net charge-offs,
contributed to the lower ratio.

Total deposits increased $18.2 million to $362.5 million at December 31,
1999, from $344.3 million at December 31, 1998. Total deposits averaged
$352.7 million in 1999, an increase of $17.1 million or 5.1 percent,
compared to $335.6 million averaged in 1998. Similar to the previous year,
we experienced significant growth in average noninterest-bearing deposits
of 12.9 percent. Our cost of funds declined 18 basis points to 4.42 percent
in 1999 from 4.60 percent in 1998, as a result of improvements in the
deposit mix to lower-costing transaction accounts and a general decline in
rates paid.

Our interest sensitivity position improved while our liquidity position
weakened from year-end 1998 to year-end 1999.  Interest sensitivity, as
measured by the ratio of cumulative one-year, rate sensitive assets ("RSA")
to rate sensitive liabilities ("RSL"), improved from 0.70 at December 31,
1998, to 0.75 at December 31, 1999.  The net noncore funding dependence and
net short-term noncore funding dependence ratios best illustrate our
liquidity position. The net noncore funding dependence ratio equaled 0.5
percent at December 31, 1999, as compared to negative 4.0 percent at
December 31, 1998. Our short-term noncore funding dependence ratio at
December 31, 1999 and 1998, was negative 0.5 percent and negative 5.7
percent.

Stockholders' equity totaled $35.5 million at December 31, 1999, compared
to $39.7 million one year earlier.  The primary factor contributing to the
$4.2 million reduction in capital was $5.7 million in common stock
repurchases.  Also affecting stockholders' equity was net income of $4.6
million, net cash dividends of $1.0 million and a net unrealized loss on
securities of $2.1 million.  Pursuant to the buyback of common stock, our
Leverage ratio,  Tier I capital as a percentage of total average assets
less intangibles, decreased to 8.6 percent at December 31, 1999, from 9.5
percent at December 31, 1998. We exceeded all relevant regulatory capital
measurements and were considered well capitalized at December 31, 1999 and
1998.

INVESTMENT PORTFOLIO:

The total return on our investment portfolio was 3.9 percent in 1999,
compared to 7.2 percent in 1998. Despite the decline, our performance
ranked in the 90th percentile among all financial institutions insured by
the FDIC. Similar to the approach taken in assessing our performance with
respect to return, we evaluate our risk in comparison to all other
financial institutions. Risk is assessed by quantifying the average life of
the investment portfolio as compared to U.S. Treasury securities. Average
life is derived from the standard deviation, or volatility, of our total
return to that of U.S. Treasury securities over a one-year time horizon.
This risk measure deteriorated slightly from 1.0 years in 1998 to 2.4 years
in 1999.

Proceeds from the sale of available-for-sale securities amounted to $11.1
million in 1999 and $1.7 million in 1998.  During the fourth quarter of
1999, we began selling municipal obligations with shorter maturities and
call features, replacing them with the same quality municipal securities
having longer maturities and call dates.  Net gains generated as a result
of the 1999 sales totaled $408. The 1998 investment sales consisted of
certain equity securities of local financial institutions. The Investment
Committee made the decision to sell these securities in the third and
fourth quarters of 1998 as a result of general declines in the values of
bank stocks and the high price multiples of these specific holdings as
compared to peers. In 1998, we recognized net gains of $1.1 million.
Repayments from investment securities totaled $39.1 million in 1999 and
$45.2 million in 1998. Investment purchases amounted to $49.7 million in
1999. Specifically, we purchased $3.7 million in short-term U.S. Treasury
securities, $1.0 million in U.S. Government agencies, $34.3 million in
short-term collateralized mortgage obligations ("CMOs"), and $10.7 million
in intermediate-term state and municipal obligations.

We reported a net unrealized holding loss of $783, net of income tax
benefits of $403, at December 31, 1999, and a net unrealized holding gain
of $1,394, net of income taxes of $719, at December 31, 1998. The tax-
equivalent yield on the investment portfolio declined from 6.77 percent in
1998 to 6.51 percent in 1999.

At December 31, 1999, investment securities with an amortized cost of
$35,157 were pledged to secure deposits, to qualify for fiduciary powers
and for other purposes required or permitted by law.  At December 31, 1998,
the amortized cost of pledged securities equaled $28,895.

LOAN PORTFOLIO:

Loans, net of unearned income, increased $28.8 million or 11.6 percent to
$276.9 million at December 31, 1999, from $248.1 million at December 31,
1998. Although we experienced an increase in all major lending activities,
the growth in our loan portfolio is primarily attributable to an increase
in commercial lending. Commercial loan activity heightened due to our
entrance into the Clarks Summit and Dickson City market areas. Commercial
loans grew $12.9 million or 41.6 percent to $43.9 million at December 31,
1999, from $31.0 million at the end of 1998. In addition, commercial
mortgages grew $6.6 million or 15.5 percent from year-end 1998. With regard
to retail lending, one-to-four family residential mortgage loans rose $5.8
million or 4.0 percent, and consumer loans rose $1.9 million or 6.4 percent
in 1999. Our volume of refinanced residential mortgages declined $0.8
million in 1999 to $11.7 million from $12.5 million in 1998.

The rate increases in 1999 had little impact on loan yields, as financial
institutions were still feeling the effects of the FOMC's easing of
monetary policy and overall declines in interest rates during 1998.
Moreover, competitive pricing pressure restricted financial institutions to
the extent they were allowed to raise loan rates.  As a result, the tax-
equivalent yield on our loan portfolio declined 22 basis points from 8.55
percent in 1998 to 8.33 percent in 1999.

During 1999 and 1998, we sold $3.4 million and $2.1 million of residential
mortgage loans to one investor, the Federal National Mortgage Association
("FNMA"). Net gains on the sale of these loans included in noninterest
income were $57 and $43 in 1999 and 1998. At December 31, 1999, we did not
have any residential mortgage loans held for sale. There were $503 of
residential mortgage loans held for sale at December 31, 1998. In addition,
at December 31, 1999, we serviced loans for the FNMA in the amount of $5.5
million.

Our exposure related to off-balance sheet commitments, made in the normal
course of business, was $26.4 million at December 31, 1999, and $18.1
million at December 31, 1998. At December 31, 1999 and 1998, we had no loan
concentrations exceeding 10.0 percent of total loans or any form of credit
involving highly leveraged transactions.

Adjustable-rate loans increased $13.5 million to $62.1 million at December
31, 1999, from $48.6 million at December 31, 1998. Fixed-rate loans
increased $15.3 million to $214.8 million at year-end 1999, from $199.5
million at the end of 1998.

ASSET QUALITY:

Nonperforming assets, comprised of nonperforming loans and foreclosed
assets, totaled $6.9 million at December 31, 1999, compared to $4.3 million
at December 31, 1998. Foreclosed assets increased $119 during 1999.  Nine
loans totaling $379 were transferred to foreclosed assets. Seven properties
with an aggregate carrying value of $260 were sold for $280, resulting in
a net realized gain of $20. Nonperforming loans, consisting of accruing
loans past due 90 days or more and impaired loans, increased $2.6 million
from $4.0 million at December 31, 1998, to $6.6 million at December 31,
1999. The increase in nonperforming loans primarily resulted from an
increase in accruing loans past due 90 days or more. The ratio of
nonperforming assets to loans, net of unearned income, increased to 2.51
percent at December 31, 1999, from 1.72 percent at December 31, 1998. Our
ratio of impaired loans to loans, net of unearned income, improved to 0.95
percent at the end of 1999, compared to 1.00 percent one year earlier.

At December 31, 1999 and 1998, we had a recorded investment in impaired
loans of $2,620 and $2,482.  The recorded investment in impaired loans
averaged $2,564 in 1999 and $1,867 in 1998.  At December 31, 1999, the
amount of recorded investment in impaired loans for which there was a
related allowance for loan losses and the amount of the allowance was
$2,471 and $613. Comparatively, the amount of these loans and their related
allowance was $2,308 and $642, at December 31, 1998. The amount of recorded
investment for which there was no related allowance for loan losses was
$149 and $174 at December 31, 1999 and 1998.  During 1999, activity in the
allowance for loan losses account related to impaired loans included a
provision charged to operations of $472, losses charged to the allowance of
$546 and recoveries of impaired loans previously charged-off of $45. The
1998 activity in the allowance for loan losses account related to impaired
loans included a provision charged to operations of $342, losses charged to
the allowance of $286 and recoveries of impaired loans previously charged-
off of $45. Interest income related to impaired loans would have been $253
in 1999 and $175 in 1998, had the loans been current and the terms of the
loans not been modified. Interest recognized on impaired loans amounted to
$53 in 1999 and $98 in 1998. Included in these amounts was interest
recognized on a cash basis of $53 and $98.  Cash received on impaired loans
applied as a reduction of principal totaled $266 in 1999 and $650 in 1998.
There were no commitments to extend additional funds to customers with
impaired loans at December 31, 1999 and 1998.

At December 31, 1999, the allowance for loan losses, against which loans
are charged-off, equaled $3.8 million and represented 1.37 percent of
loans, net of unearned income. The allowance was $4.1 million and
represented 1.63 percent of loans, net of unearned income, at December 31,
1998. As a percentage of nonperforming loans, the allowance account covered
57.7 percent at December 31, 1999.  The coverage ratio was 100.4 percent at
December 31, 1998.  The allowance covered 54.7 percent and 94.7 percent of
nonperforming assets at December 31, 1999 and 1998. Net charge-offs were
$786 or 0.30 percent of average loans outstanding in 1999 compared to $603
or 0.24 percent in 1998.

DEPOSITS:

Deposit volumes increased from $344.3 million at December 31, 1998, to
$362.5 million at December 31, 1999. The $18.2 million improvement was
attributable to increases of $7.5 million in money market accounts, $3.2
million in NOW accounts and $13.1 million in savings deposits partially
offset by declines of $5.6 million in time deposits. As aforementioned, the
increase in transaction accounts resulted from additional commercial
relationships, whereas the decline in time deposits is a combination of not
aggressively bidding for large denomination time deposits and increased
competitive conditions for time deposits under $100.

The FOMC's easing of monetary policy and overall declines in interest rates
during 1998 more than offset the interest rate increases in 1999. As a
result of increased volumes of lower-costing transaction accounts and the
steep decline in interest rates during 1998, our cost of deposits decreased
from 4.60 percent in 1998 to 4.41 percent in 1999.

Volatile deposits, time deposits $100 or more, decreased from $27.1 million
at December 31, 1998, to $23.3 million at December 31, 1999. Our average
cost of these funds declined 20 basis points from 5.89 percent in 1998 to
5.69 percent in 1999.

At December 31, 1999, we had short-term borrowings of $5,500 outstanding.
There were no short-term borrowings outstanding at December 31, 1998, under
the line of credit agreement. The average daily balance and weighted-
average rate on aggregate short-term borrowings was $1,393 at 5.3 percent
in 1999 and $185 at 6.0 percent in 1998. The maximum amount of all short-
term borrowings outstanding at any month-end was $7,025 during 1999 and
$695 during 1998.  Short-term borrowings during 1999 and 1998 consisted
entirely of a line of credit with the Federal Home Loan Bank of Pittsburgh
("FHLB-Pgh").

Long-term debt at December 31, 1999 and 1998, consisted entirely of a 7.5
percent fixed-rate, amortizing advance from the FHLB-Pgh Community
Investment Program. This advance matures on September 2, 2009. The average
daily balance on long-term debt in 1999 was $40 with a weighted-average
rate of 7.5 percent.  In 1998, the average daily balance on long-term debt
was $43 with a weighted-average rate of 7.0 percent.

MARKET RISK SENSITIVITY:

We utilize various computerized modeling techniques for market risk
management. One such technique utilizes a tabular presentation of fair
value information and contract terms relevant to determine the future cash
flows of market risk sensitive instruments, categorized by expected
maturity dates.

According to the results of this presentation at December 31, 1999,
investments of $21.8 million with a weighted-average, tax-equivalent yield
of 5.99 percent were scheduled to mature within one year.  In addition, net
loans of $62.9 million with a weighted-average, tax-equivalent yield of
8.61 percent were scheduled to mature within the same timeframe.  Overall,
interest-earning assets scheduled to mature within one year totaled $84.7
million with a weighted-average, tax-equivalent yield of 7.94 percent.
With respect to interest-bearing liabilities, based on historical
withdrawal patterns, interest-bearing transaction accounts, defined as
money market, NOW and savings accounts, of $26.6 million with a weighted-
average cost of 2.78 percent were scheduled to mature within one year. In
addition, time deposits totaling $103.7 million with a weighted-average
cost of 5.37 percent were scheduled to mature in the same timeframe.
Finally, there were $5.5 million in short-term borrowings with a weighted-
average cost of 5.25 percent scheduled to mature within one year. Total
interest-bearing liabilities scheduled to mature within one year equaled
$135.9 million with a weighted-average rate of 4.86 percent.

In addition to monitoring market risk based on this tabular presentation,
we analyze changes in the fair value of other financial instruments
utilizing interest rate shocks. Specifically, we analyze the effects
instantaneous parallel shifts of plus or minus 100 basis points have on the
economic values of other financial instruments. The results of the model at
December 31, 1999, indicated fair value declines of 3.5 percent in other
financial assets and 0.7 percent in other financial liabilities given a
parallel and instantaneous rise of 100 basis points in interest rates.
Conversely, a 100 basis point decline in general market rates would result
in fair value appreciation of 5.0 percent in other financial assets and 0.7
percent in other financial liabilities.

We also use models that consider repricing frequencies of RSA and RSL in
addition to maturity distributions. One such technique utilizes a static
gap report, which attempts to measure our interest rate exposure by
calculating the net amount of RSA and RSL that reprice within specific time
intervals.

At December 31, 1999, our cumulative one-year, RSA/RSL ratio was 0.75, a
slight improvement from 0.70 at year-end 1998. This ratio fell within our
asset/liability guidelines of 0.70 and 1.30.  A reduction in the amount of
time deposits repricing within one year was primarily responsible for the
improvement. The goal of our deposit pricing strategy in 1999 was to
effectively shift the average lives of repricing time deposits into longer-
term maturities. At December 31, 1999, time deposits maturing or repricing
within one year totaled $103.7 million, a decline of $24.9 million from one
year earlier. In addition, loans, net of unearned income, repricing within
one year increased by $21.5 million from the same period last year.
Partially offsetting the positive effects of the improved loan repricing
frequency were declines in investment securities repricing within one year
and federal funds sold. We had $7.7 million in federal funds sold
outstanding at December 31, 1998. Conversely, at December 31, 1999, we had
outstanding short-term borrowings of $5.5 million.

Similar to the results of the cumulative one-year ratio, our three-month
RSA/RSL ratio increased from 2.02 at December 31, 1998, to 2.18 at December
31, 1999.  A rise in the volume of RSA repricing within three months was
primarily responsible for the increase.  In total, the volume of RSA
repricing within three months increased $8.1 million.  Loans, net of
unearned income, increased $19.5 million, while loans held for sale,
investments and federal funds sold declined $0.5 million, $3.2 million and
$7.7 million.  The explanations for the changes in RSA repricing within
three months are similar to those discussed for the changes in RSA
repricing within one year. RSL repricing within three months remained
relatively stable.  At December 31, 1999, RSL repricing within three months
totaled $37.7 million compared to $36.7 million at year-end 1998. An
increase in short-term borrowings of $5.5 million was almost entirely
offset by a decrease in time deposits $100 or more of $4.2 million.

As a final tool to assist in managing market risk sensitivity, we enhance
our asset/liability management by using a simulation model. This model is
used to create pro forma net interest income scenarios under various
interest rate shocks. Model results at December 31, 1999, indicated an
instantaneous and parallel shift in general market rates of plus 100 basis
points would cause net interest income to decrease by $280 or 1.9 percent
in 2000. Conversely, a shift of the same magnitude in the opposite
direction would cause a $277 or 1.8 percent increase in net interest income
in 2000.

LIQUIDITY:

Our liquidity position declined in 1999, however our position remained
superior to that of our peer group. This was evidenced by recording
stronger comparable net noncore funding dependence and net short-term
noncore funding dependence ratios. Our net noncore funding dependence ratio
was 0.5 percent and negative 4.0 percent at December 31, 1999 and 1998. The
peer group's comparable ratios were 14.7 percent and 10.0 percent. The net
short-term noncore funding dependence ratio weakened slightly to negative
0.5 percent at year-end 1999 from negative 5.7 percent at year-end 1998.
The peer group experienced a similar deterioration in its short-term ratio
to 8.3 percent from 3.6 percent.

The Consolidated Statements of Cash Flows present the change in cash and
cash equivalents from operating, investing and financing activities. Cash
and cash equivalents totaled $11.0 million at December 31, 1999, compared
to $19.2 million at the end of 1998. Net cash provided by operating
activities totaled $6.9 million and resulted primarily from net income of
$4.6 million in 1999.

The net cash used in investing activities totaled $32.1 million in 1999.
Greater demand for commercial loans and commercial mortgage loans fueled a
$29.7 million net increase in lending activities, which primarily accounted
for the net cash outflow. Expenditures for premises and equipment,
principally related to the new corporate center and two branch banking
offices totaling $3.2 million, also affected the net cash outflow. Proceeds
from repayments and sales of available-for-sale investment securities of
$39.1 million and $11.1 million were almost entirely offset by purchases of
such securities of $49.7 million.

Net increased volumes of deposits and short-term borrowings, partially
offset by cash outflows for repurchases of common stock and dividends,
resulted in net cash provided by financing activities of $17.1 million in
1999.  Increases in transaction accounts and short-term borrowings provided
funds of $23.8 million and $5.5 million, while decreases in time deposits
reduced funds $5.6 million.  Funds used to purchase and retire outstanding
shares, relative to the stock repurchase program, totaled $5.7 million. In
addition, cash dividends paid amounted to $1.2 million.

CAPITAL ADEQUACY:

Stockholders' equity totaled $35.5 million at December 31, 1999, compared
to $39.7 million at December 31, 1998.  The primary factor contributing to
the $4.2 million reduction was $5.7 million in common stock repurchases.
Net income of $4.6 million, net cash dividends of $1.0 million and a net
unrealized loss on securities of $2.1 million also affected the change in
stockholders' equity. The FOMC actions taken in the second half of 1999 had
a negative effect on the market value of our investment portfolio.  As a
result, we sustained a net unrealized holding loss of $2,891, net of an
applicable income tax benefit of $983, which was increased by a $408
reclassification adjustment, net of applicable income taxes of $139, for
gains realized on the sale of securities.  At December 31, 1999, the net
unrealized holding loss totaled $783.  The net unrealized holding gain was
$1,394 at December 31, 1998.

Total dividends declared for the year ended December 31, 1999, totaled
$1,196 compared to $816 for the same period of 1998.  On a per share basis,
dividends declared increased 54.1 percent to $0.57 per share in 1999 from
$0.37 per share in 1998.  In 1999, the dividend payout ratio increased to
26.0 percent from 18.1 percent in 1998. During the years ended December 31,
1999 and 1998, 6,409 shares and 4,617 shares were issued under the dividend
reinvestment plan.

During 1999, our capital ratios declined as a direct result of the common
stock repurchases.  The Leverage ratio was 8.6 percent at December 31,
1999, as compared to 9.5 percent at December 31, 1998.  The Tier I capital
and total capital to risk-adjusted assets ratios were 14.6 percent and 15.9
percent at December 31, 1999.  In comparison, these ratios at December 31,
1998, were 17.7 percent and 18.9 percent. Despite the decline, each of
these ratios still exceeded the minimum levels required for adequately
capitalized institutions of 4.0 percent, 4.0 percent and 8.0 percent, and
the levels required for well capitalized institutions of 5.0 percent, 6.0
percent and 10.0 percent at December 31, 1999.

REVIEW OF FINANCIAL PERFORMANCE:

Higher amounts of fee income, better control of operating expenses and
lower provisions for loan losses all contributed to the earnings
performance improvement for commercial banks in 1999. For all FDIC insured
commercial banks, the return on average assets ("ROAA") and return on
average equity ratios ("ROAE") improved from 1.19 percent and 13.95 percent
in 1998 to 1.31 percent and 15.34 percent in 1999. Nationally, institutions
having a similar asset size as us also showed improvement growing from 1.31
percent and 13.57 percent in 1998 to 1.36 percent and 14.24 percent in
1999. Our peer group, consisting of 20 community banks located in
Northeastern Pennsylvania, posted a ROAA of 1.14 percent in 1998 and 1999.
Moreover, the ROAE of this group remained strong exceeding 12.00 percent in
1998 and 1999.

We reported net income of $4.6 million or $2.17 per share in 1999, compared
to $4.5 million or $2.04 per share in 1998.  Higher net interest income
primarily contributed to the improved earnings.  Our return on average
assets and return on average equity in 1999 were 1.16 percent and 12.02
percent. In 1998, these ratios were 1.19 percent and 11.71 percent.

Net interest income on a tax-equivalent basis improved $459 or 3.2 percent
to $14,979 in 1999 from $14,520 in 1998. Tax-equivalent interest revenue
rose $521, meanwhile interest expense grew only $62.

The provision for loan losses amounted to $535 in 1999, compared to $855 in
1998. The provisions in 1999 and 1998 include replenishments to the reserve
of $410 and $435 for loans charged-off in response to a change in the
regulatory classification of certain loans.

Noninterest income for the year ended December 31, 1999, totaled $2,112, a
decline of $561 compared to $2,673 for the same period of 1998.  Included
in noninterest income were gains on the sale of investment securities of
$408 in 1999 and $1,128 in 1998. Gains on the sale of one-to-four family
residential mortgage loans totaled $57 in 1999 and $43 in 1998. Service
charges, fees and commissions increased $145 or 9.7 percent to $1,647 for
the year ended December 31, 1999, from $1,502 for the same period in 1998.

We experienced a less than 1.0 percent increase in noninterest expense in
1999 compared to 1998. Noninterest expense increased $65 or 0.7 percent to
$9,429 in 1999, from $9,364 in 1998. Salaries and employee benefits expense
and net occupancy and equipment expense rose $379 and $52, while other
expenses declined $366 in 1999.

NET INTEREST INCOME:

Tax-equivalent net interest income totaled $14,979 in 1999, an increase of
$459 or 3.2 percent from $14,520 in 1998. Growth in average volumes of
earning assets over average volumes of interest-bearing liabilities,
coupled with an 18 basis point improvement in the cost of funds, caused the
increase.  A 21 basis point decline in the tax-equivalent yield on earning
assets partially offset the above factors. Our average volume of taxable
investments grew $15.4 million or 25.2 percent to $76.5 million in 1999
from $61.1 million in 1998. In addition, our average loans grew $10.3
million or 4.2 percent to $258.2 million for the year ended December 31,
1999, from $247.9 million for the same period in 1998.  Specifically, the
growth in average taxable investments and average loans favorably affected
net interest income by $895 in 1999 and $803 in 1998.  A reduction in the
average volumes of tax-exempt investments and federal funds sold partially
offset the effects of the growth in average taxable investments and loans.
The average volume of tax-exempt investments and federal funds sold
declined $2.3 million and $6.9 million and reduced net interest income by
$185 and $345. Overall, the growth in average earning assets caused a
positive effect on net interest income of $1,168. Average interest-bearing
liabilities increased $14.1 million and partially offset the positive
effect of growth in average earning assets with a reduction to net interest
income of $538.  Growth in average time deposits less than $100 of $5.2
million and average savings accounts of $3.8 million were primarily
responsible for the unfavorable volume variance with respect to interest-
bearing liabilities.  The variances in time deposits and savings accounts
increased interest expense $292 and $118 in 1999.

A 21 basis point decline in the average yield on earning assets to 7.76
percent in 1999 from 7.97 percent in 1998 caused a reduction to net
interest income of $647. Due to the competitive environment, the average
tax-equivalent yield on the loan portfolio declined 22 basis points to 8.33
percent in 1999 from 8.55 percent in 1998.  In addition, the tax-equivalent
yield on the investment portfolio was 6.51 percent in 1999, a 26 basis
point decline compared to 6.77 percent in 1998.  These declines in average
tax-equivalent yields on the loan and investment portfolios equated to a
$480 and $118 reduction in net interest income. Almost entirely offsetting
the effect of the lower average yield on earning assets was an 18 basis
point reduction in the cost of funds to 4.42 percent in 1999 from 4.60
percent in 1998.  The lower cost of funds favorably affected net interest
income by $476.  We experienced reductions in the average rate paid for all
major categories of interest-bearing deposits, except for NOW accounts.  As
a result of our continued prudent pricing strategies, average interest
rates for time deposits less than $100 fell 19 basis points, while average
interest rates for savings accounts and time deposits $100 or more each
fell 20 basis points. These average rate reductions favorably impacted net
interest income by $334, $154 and $46.

PROVISION FOR LOAN LOSSES:

The provision for loan losses equaled $535 in 1999 and $855 in 1998. The
1999 and 1998 provisions included replenishments to the reserve totaling
$410 and $435 for loans charged-off in response to changes in the
regulatory classifications of certain loans.

NONINTEREST INCOME:

We reported noninterest income of $2,112 in 1999 and $2,673 in 1998.
Included in noninterest income were gains on the sale of investment
securities of $408 in 1999 and $1,128 in 1998.  Adjusting for these gains,
recurring noninterest income improved $159 or 10.3 percent. Increases in
service charges, fees and commissions of $145 and net gains on the sale of
loans of $14 factored into the improvement. As a percentage of average
total assets, noninterest income equaled 0.53 percent in 1999.

NONINTEREST EXPENSE:

Noninterest expense totaled $9,429 in 1999, an increase of $65 compared to
$9,364 in 1998.  Increases in salaries and employee benefits expense and
net occupancy and equipment expense, offset almost entirely by a decline in
other expenses, contributed to the slight overall increase. Our operating
efficiency ratio improved to 60.8 percent in 1999 compared to 61.6 percent
in 1998.  Similarly, the overhead ratio also improved to 2.4 percent in
1999 from 2.5 percent in 1998.

Salaries and employee benefits expense constitutes the majority of our
noninterest expense.  For the year ended December 31, 1999, personnel
related expenses totaled $4,824 or 51.2 percent of noninterest expense, an
increase of $379 or 8.5 percent compared to the same period of 1998.
Additional staffing requirements for our Clarks Summit and Dickson City
branch offices, together with annual merit increases based on employee
performance evaluations, contributed to the increase.

Net occupancy and equipment expense increased $52 or 4.0 percent to $1,345
in 1999, compared to $1,293 in 1998. An increase of $78 in net occupancy
expense, partially offset by a $26 reduction in equipment expense caused
the overall increase.  The increase in net occupancy expense was directly
attributable to additional expenses, such as depreciation, maintenance,
real estate taxes and utility costs, associated with the operation of the
new corporate center and branch offices.  The reduction in equipment
expense resulted from a decline in contracted and periodic maintenance
costs.

Other expenses declined $366 or 10.1 percent for the year ended December
31, 1999, to $3,260 from $3,626 for the same period of 1998. Cost control
efforts in 1999 and nonrecurring charges in 1998 contributed to the
decline. Other expenses in 1998 included write-downs of properties included
in other real estate of $111 and dispositions of equipment determined to be
Y2K noncompliant of $87. We incurred no such charges in 1999.

INCOME TAXES:

We reported income tax expense of $1,338 in 1999 and $1,218 in 1998.  A
higher level of earnings, coupled with lower amounts of tax-exempt income,
resulted in an increase in the effective tax rate from 21.3 percent in 1998
to 22.5 percent in 1999. Tax-exempt interest income as a percentage of
total interest income declined slightly from 8.9 percent in 1998 to 8.3
percent in 1999.



COMM BANCORP, INC.
DIRECTORS AND OFFICERS
                      ----------------------------------------------------

BOARD OF DIRECTORS
COMM BANCORP, INC.
------------------
DAVID L. BAKER
Senior Vice President,
Community Bank and Trust Company

THOMAS M. CHESNICK
Retired

WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD, ACTING PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Retired

JUDD B. FITZE
Attorney, Farr, Davis & Fitze

JOHN P. KAMEEN
SECRETARY
Publisher, Forest City News

WILLIAM A. KERL
President, Carbondale Concrete Company, Inc.,
Kerl Coal, Oil and Trucking Company, Inc.

ERWIN T. KOST
President, Kost Tire Distributors, Inc.

WILLIAM B. LOPATOFSKY
Retired

ROBERT A. MAZZONI
Attorney, Mazzoni and Karam

J. ROBERT McDONNELL
VICE PRESIDENT
Owner, McDonnell's Restaurant

JOSEPH P. MOORE, III
President, J.J. Motors, Inc.

THEODORE W. POROSKY
Owner, Porosky Lumber Company

ERIC G. STEPHENS
Auto Dealer, H.L. Stephens and Son



CORPORATE OFFICERS
COMM BANCORP, INC.
------------------
WILLIAM R. BOYLE
Senior Vice President
Chief Credit Officer

WILLIAM F. FARBER, SR.
Chairman of the Board, Acting President
and Chief Executive Officer

JOHN P. KAMEEN
Secretary

J. ROBERT McDONNELL
Vice President

SCOTT A. SEASOCK
Senior Vice President
Chief Financial Officer

THOMAS E. SHERIDAN
Senior Vice President
Chief Operations Officer




BOARD OF DIRECTORS
COMMUNITY BANK AND TRUST COMPANY
--------------------------------
DAVID L. BAKER
SENIOR VICE PRESIDENT

THOMAS M. CHESNICK
Retired

WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD, ACTING PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Retired

JUDD B. FITZE
Attorney, Farr, Davis & Fitze

JOHN P. KAMEEN
SECRETARY
Publisher, Forest City News

WILLIAM A. KERL
President, Carbondale Concrete Company, Inc.,
Kerl Coal, Oil and Trucking Company, Inc.

ERWIN T. KOST
President, Kost Tire Distributors, Inc.

WILLIAM B. LOPATOFSKY
Retired

ROBERT A. MAZZONI
Attorney, Mazzoni and Karam

J. ROBERT McDONNELL
VICE PRESIDENT
Owner, McDonnell's Restaurant

JOSEPH P. MOORE, III
President, J.J. Motors, Inc.

JOSEPH P. MOORE, JR.
President, Elk Mountain Ski Resort, Inc.

THEODORE W. POROSKY
Owner, Porosky Lumber Company

ERIC G. STEPHENS
Auto Dealer, H.L. Stephens and Son



DIRECTOR EMERITUS
-----------------
MICHAEL T. GOSKOWSKI
Owner, Kartri Sales Mfg.




ADVISORY BOARDS
COMMUNITY BANK AND TRUST COMPANY
--------------------------------


CARBONDALE BRANCH
-----------------
JOSEPH J. BRENNAN
Brennan and Brennan Funeral Home

JOHN J. CERRA
Attorney, Walsh and Cerra

HENRY E. DEECKE
Henry E. Deecke Real Estate

ROBERT W. FARBER
R.W.F. Computer Consulting Co.

SUSAN MANCUSO
Mancuso and Mancuso



CLIFFORD BRANCH
---------------
WILLIAM F. FARBER, JR.
Manager, Farber's Restaurants

THOMAS J. LOPATOFSKY, JR.
Lenox Propane

JOSEPH T. McGRAW
Attorney, McGraw and McGraw

ERIC G. STEPHENS
Auto Dealer, H.L. Stephens and Son



EATON TOWNSHIP,
LAKE WINOLA AND
TUNKHANNOCK BRANCHES
--------------------
JUDD B. FITZE
Attorney, Farr, Davis & Fitze

DOUG GAY
Gay's True Value

THOMAS KUKUCHKA
Sheldon-Kukuchka Funeral Home

GLEN LAYAOU
Eaton Hills Development Corp.
Layaou Construction Co.

HOWARD TRAUGER
Trauger's, Inc.



FOREST CITY BRANCH
------------------
THOMAS BAILEYS
President, Fire Risk Management
and NMEB, Inc.

RICHARD CURTIS
Owner, Rich's Auto Service
and CUBE Auto Supply

JOSEPH LUCCHESI, D.D.S.
Dentist

SCOTT MISKOVSKY
Pharmacist, Red Cross Pharmacy

LINDA RICHARDS
Sparkware Associates, Inc.

STEVEN TOURJE
NEP Telephone Company



MONTROSE BRANCH
---------------
EDGAR B. BAKER
Consultant

DUANE JERAULD
Retired

TOM KERR
Tom Kerr Chevrolet

ROBERT LEE
Lee's Furniture Store

DONNA WILLIAMS
Livestock Dealer/Farmer



NICHOLSON BRANCH
----------------
RICHARD LOCHEN
Lochen's Market

MARK NOVITCH
Sales-Leasing Manager,
Pinnacle Truck Sales

DAVID SCHMIDT, JR.
Proctor and Gamble



SIMPSON BRANCH
--------------
FRANCIS LAPERA
Lapera Oil Company

ROBERT M. McDONNELL
McDonnell's Restaurant

GERALD SALKO, D.D.S.
Dentist



OFFICERS
COMMUNITY BANK AND TRUST COMPANY
--------------------------------
CAROL AMES
Lake Winola Branch Manager

DAVID L. BAKER
Senior Vice President

WILLIAM R. BOYLE
Senior Vice President
Chief Credit Officer

THOMAS A. BYRNE
Vice President
Commercial Loan Officer

DEBRA CARR
Dickson City Branch Manager

MARK E. CATERSON
Vice President
Senior Trust Officer

KATHLEEN DELEO
Internal Loan Review Officer

WILLIAM F. FARBER, SR.
Acting President and
Chief Executive Officer

STEPHANIE A. GANZ, CPA
Vice President of Finance

DEBRA GAY
Eaton Township Branch Manager

DAVID A. JONES
Vice President
Mortgage Department Administrator

RANDOLPH LaCROIX
Clifford Branch Manager

GARY LAVELLE
Vice President
Special Assets Officer

ANNETTE LYNCH
Loan Administrator

PAMELA S. MAGNOTTI
Compliance Officer

BARBARA MARSICANO
Lakewood Branch Manager

PETER MISURA
Eynon Branch Manager

MARY ANN MUSHO
Assistant Cashier
Human Resource Officer

ROBERT O'MALLEY
Indirect Loan Officer

M. EVELYN PANTZAR
Vice President
Internal Auditor

JOHN PASH
Comptroller

MARYBETH PASQUALICCHIO
Marketing Director

CHERYL RUPP
Simpson Branch Manager

WALTER SARAFINKO
Vice President
Clarks Summit and Factoryville Branch Manager

SCOTT A. SEASOCK
Senior Vice President
Chief Financial Officer

THOMAS W. SHEPPARD
Vice President
Senior Commercial Loan Officer

THOMAS E. SHERIDAN
Senior Vice President
Chief Operations Officer

RONALD K. SMITH
Vice President
Montrose Branch Manager

TAMI L. SNYDER
Vice President
Information Services

HAROLD STOUT
Tunkhannock Branch Manager

BRIAN URBAS
Forest City Branch Manager

STEVEN URSICH
Carbondale Branch Manager



BOARD OF DIRECTORS
COMM REALTY CORPORATION
-----------------------
DAVID L. BAKER

WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD

SCOTT A. SEASOCK



OFFICERS
COMM REALTY CORPORATION
-----------------------
GARY LAVELLE
President

STEPHANIE A. GANZ, CPA
Treasurer

THOMAS A. BYRNE
Secretary



BOARD OF DIRECTORS
COMMUNITY LEASING CORPORATION
-----------------------------
DAVID L. BAKER
PRESIDENT

WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD

SCOTT A. SEASOCK



OFFICERS
COMMUNITY LEASING CORPORATION
-----------------------------
DAVID L. BAKER
President

STEPHANIE A. GANZ, CPA
Treasurer

THOMAS A. BYRNE
Secretary



BOARD OF DIRECTORS
COMM FINANCIAL SERVICES CORPORATION
-----------------------------------
WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD

JOHN P. KAMEEN

ERIC G. STEPHENS



OFFICERS
COMM FINANCIAL SERVICES CORPORATION
-----------------------------------
GEORGE COBB
President

JOHN PASH
Treasurer

MARYANN MUSHO
Secretary
































COMM BANCORP, INC.
OTHER INFORMATION
                 ---------------------------------------------------------

LOCATIONS
COMMUNITY BANK AND TRUST COMPANY
--------------------------------
CARBONDALE BRANCH*
37 Dundaff Street
Carbondale, PA 18407
570-282-7500

CLARKS SUMMIT BRANCH*
125 North State Street
Clarks Summit, PA 18411
570-586-6876

CLIFFORD BRANCH*
Route 106
Clifford, PA 18413
570-222-3168

DICKSON CITY BRANCH*
1601 Main Street
Dickson City, PA 18519
570-489-8900

EATON TOWNSHIP BRANCH*
Cross Country Complex
Route 29
Eaton Township, PA 18657
570-836-1008

EYNON BRANCH*
Eynon Plaza
Route 6
Eynon, PA 18403
570-876-4881

FACTORYVILLE BRANCH*
97 College Avenue
Factoryville, PA 18419
570-945-5137

FOREST CITY BRANCH*
521 Main Street
Forest City, PA 18421
570-785-3181

LAKE WINOLA BRANCH*
Winola Plaza
Lake Winola, PA 18625
570-378-3195

LAKEWOOD BRANCH
Lake Como Road
Lakewood, PA 18439
570-798-2900

MONTROSE BRANCH*
61 Church Street
Montrose, PA 18801
570-278-3824

NICHOLSON BRANCH*
57 Main Street
Nicholson, PA 18446
570-942-6135

SIMPSON BRANCH*
347 Main Street
Simpson, PA 18407
570-282-4821

TUNKHANNOCK BRANCH*
Route 6 West
Tunkhannock, PA 18657
570-836-5555

TRUST SERVICES
125 North State Street
Clarks Summit, PA 18411
800-217-3501

REMOTE ATM LOCATION
Keystone College
College Avenue
LaPlume, PA 18440

COMM REALTY CORPORATION
-----------------------
125 North State Street
Clarks Summit, PA 18411
570-586-0377

COMMUNITY LEASING CORPORATION
-----------------------------
125 North State Street
Clarks Summit, PA 18411
570-586-0377

COMM FINANCIAL SERVICES CORPORATION
-----------------------------------
125 North State Street
Clarks Summit, PA 18411
570-586-0377

KLICK-SM- BANKING VIA THE INTERNET
www.combk.com
Customer Service:
800-420-4642, Ext. 109

* ATM Locations


STOCKHOLDER INFORMATION
-----------------------

CORPORATE HEADQUARTERS:
125 North State Street
Clarks Summit, PA 18411

LEGAL COUNSEL:
Saul, Ewing, Remick & Saul LLP
Penn National Insurance Tower
North Second Street, 7th Floor
Harrisburg, PA  17101

INDEPENDENT AUDITORS:
Kronick Kalada Berdy & Co., P.C.
190 Lathrop Street
Kingston, PA  18704

TRANSFER AGENT:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY  10007

MARKET MAKERS:
Ferris, Baker, Watts, Inc.
100 Light Street
Baltimore, MD 21202
800-638-7411

M.H. Meyerson & Co., Inc.
525 Washington Blvd.
Jersey City, NJ  07303-0260
201-459-9500

Ryan, Beck & Co.
80 Main Street
West Orange, NJ  07052
888-231-7226

Sandler O'Neill & Partners, L.P.
Two World Trade Center
104th Floor
New York, NY 10048
212-466-7740

SEC REPORTS AND ADDITIONAL INFORMATION:
Copies of Comm Bancorp Inc.'s Annual Report on Form
10-K and Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission or additional
financial information concerning Comm Bancorp, Inc.
may be obtained without charge by writing to Scott A.
Seasock, Chief Financial Officer, at corporate
headquarters.

COMMUNITY REINVESTMENT:
Copies of Community Bank and Trust Company's community
reinvestment statement may be obtained without charge
by writing to Pamela Magnotti, Compliance Officer, at
corporate headquarters.


COMMON STOCK MARKET INFORMATION:
Shares of Comm Bancorp, Inc. common stock are listed on
The NASDAQ Stock Market-Registered Trademark- ("NASDAQ")
as CommBcp under the symbol "CCBP". As of March 15, 2001,
four firms were listed on the NASDAQ system as market
makers for the Company's common stock.

The high and low closing sale prices and dividends per
share of the Company's common stock for the four quarters
of 2000 and 1999 are summarized as follows:


<TABLE>
<CAPTION>

                                          CASH DIVIDENDS
2000:                    HIGH        LOW        DECLARED
                       ------     ------  --------------
<S>                    <C>        <C>     <C>
First Quarter......... $40.50     $33.25        $0.17
Second Quarter........  35.50      27.25         0.17
Third Quarter.........  27.50      25.13         0.18
Fourth Quarter........ $30.75     $25.38        $0.18
1999:
First Quarter......... $28.00     $25.50        $0.13
Second Quarter........  32.00      24.00         0.13
Third Quarter.........  42.00      30.00         0.15
Fourth Quarter........ $40.50     $37.25        $0.16

</TABLE>

DIVIDEND REINVESTMENT:
Comm Bancorp, Inc. offers a Dividend Reinvestment Plan
whereby stockholders can increase their investment in
additional shares of common stock without incurring fees
or commissions.  A prospectus and enrollment form may be
obtained by contacting American Stock Transfer & Trust
Company, Dividend Reinvestment Department, 59 Maiden Lane,
New York, NY 10007, 1-800-278-4353.

DIVIDEND DIRECT DEPOSIT:
Comm Bancorp, Inc. stockholders not participating in the
Dividend Reinvestment Plan may opt to have their dividends
deposited directly into their bank account by contacting
American Stock Transfer and Trust Company at 1-800-937-
5449.

WORLD WIDE WEB INFORMATION:
The Company's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q are filed electronically through the
Electronic Data Gathering, Analysis and Retrieval System
("EDGAR"), which performs automated collection,
validation, indexing, acceptance and forwarding of
submissions to the Securities and Exchange Commission and
is accessible by the public on the Internet at
http//www.sec.gov/edgarhp.htm.

Additional financial and nonfinancial information can be
accessed electronically using the Company's web site at
http://www.combk.com.